Are small- and medium-sized enterprises more likely to innovate when facing informal competition? Evidence from Kazakhstan
International Journal of Sociology and Social Policy
ISSN: 0144-333X
Article publication date: 15 January 2024
Issue publication date: 30 May 2024
Abstract
Purpose
This paper aims to investigate whether Kazakh small- and medium-sized enterprises (SMEs) that claim to compete with the informal sector are more likely to invest in innovation than their competitors who do not perceive such pressure.
Design/methodology/approach
Logistic regression and classification trees are performed on the Business Environment and Enterprise Performance Survey (2018–2020) to examine whether the degree of informal competition correlates with a firm's propensity to innovate.
Findings
The findings show that informal sector competition is a critical factor that shapes the organizational behaviour of Kazakh SMEs. There is a stimulating positive effect of informal competition on both product and process innovation, depending on its perceived intensity.
Originality/value
This study challenges conventional thinking that still views informal sector competition as a barrier to innovation and entrepreneurship by assessing whether innovation is compatible with informal entrepreneurial practice.
Keywords
Acknowledgements
This research was realized as part of the EU Commission Horizon 2020 MSCA Innovative Training Networks (MSCA-ITN) project MARKETS: Mapping Uncertainties, Challenges and Future Opportunities of Emerging Markets: Informal Barriers, Business Environments and Future Trends in Eastern Europe, The Caucasus and Central Asia, Grant agreement ID: 861034.
Citation
Aguzzi, T., Ianole-Calin, R. and Durst, S. (2024), "Are small- and medium-sized enterprises more likely to innovate when facing informal competition? Evidence from Kazakhstan", International Journal of Sociology and Social Policy, Vol. 44 No. 5/6, pp. 499-515. https://doi.org/10.1108/IJSSP-11-2023-0303
Publisher
:Emerald Publishing Limited
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