Abstract: Competition is supposed to spur innovation. But the authors of this study found that the opposite is true for domestic firms in emerging economies. They examined 27 “transition” economies across eastern Europe and central Asia to understand how globalization — foreign direct investment, trade, and increased competition with firms operating in their home countries — affects markets and the likelihood that incumbents will develop new products and technologies. The authors looked at data from the 2002 and 2005 Business Environment and Enterprise Performance Survey.

Published: January 2008

Authors: Yuriy Gorodnichenko, Jan Svejnar, and Katherine Terrell

Link: strategy+business