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  • Journal of Financial and Quantitative Analysis, Volume 46, Issue 6
  • December 2011, pp. 1545-1580

Firm Innovation in Emerging Markets: The Role of Finance, Governance, and Competition

  • Meghana Ayyagari (a1), Asli Demirgüç-Kunt (a2) and Vojislav Maksimovic (a3)
  • DOI:
  • Published online: 01 June 2011

We investigate the firm characteristics associated with innovation in over 19,000 firms across 47 developing economies. While existing finance literature on innovation is limited to large public firms in developed markets such as the United States, our database includes public and private firms, and small and medium-sized enterprises. We define innovation broadly to include introduction of new products and technologies, knowledge transfers, and new production processes. We find that access to external financing is associated with greater firm innovation. Further, having highly educated managers, ownership by families, individuals, or managers, and exposure to foreign competition is associated with greater firm innovation.

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