Effects of Informal Competition on Innovation Performance: The Case of Pacific Alliance

Abstract:
This study evaluates the impact of informal competition on the innovation performance of formal firms in emerging economies.

A theoretical model under the strategy tripod framework is proposed. It analyses the effects of institutional factors such as the quality of governance and market labour rigidities on innovation performance, and the mediating effect of informal competition. The study uses the Causal Mediation Analysis with data from 3,268 companies from the World Bank Enterprise Survey in the countries of the Pacific Alliance (Chile, Colombia, Mexico, and Peru).

The results state that informal competition has a negative effect on the innovation performance of formal companies. Based on these findings, this work suggests some promising avenues for future research, and it has managerial implications.

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Authors: Jorge Heredia, Alejandro Flores, Cristian Geldes and Walter Heredia
Full document: 2017, Heredia et al, Effects of Informal Competition on Innovation Performance- the Case of Pacific Alliance