Intricacies of firm-level innovation performance: An empirical analysis of latecomer process industries

Abstract This study examines the relationships between aspects of firm-level innovation performance from the perspective of under-researched process industries in an emerging economy. We consider primary evidence from 63 firms in five Brazilian process industries over a 10-year period to examine firm-level innovation input and output performance. Our results reveal the following: (1) Regarding innovation input performance, (a) although most firms upgraded their technological capability levels, more firms moved from production capability to basic and intermediate innovation capability levels than from intermediate to advanced capability, while only a few firms moved from advanced to world-leading innovation capability levels, and (b) combinations of the acquisition of external knowledge and the creation, sharing, integration, and codifying of knowledge within firms positively and significantly influenced firms' accumulation of capabilities, but these combinations' effectiveness varied depending on the accumulation of specific levels of capabilities. (2) Concerning innovation output performance, (a) firms' accumulated capability levels underpinned the implementation of non-RD (b) firms that accumulated high-level innovation capabilities were more productive, but accumulating technological capability had even greater positive effects on labour productivity for low-productivity firms; and (c) increasing technological capabilities for higher-exporting firms produced a higher proportion of exports in their revenue than for those that exported less. This study's comprehensive, nuanced analysis draws on mixed methods to advance our understanding of the intricacies involved in firm-level innovation performance, particularly from the perspective of a less R&D- and patenting-intensive setting. We also provide a basis for exploring this issue in other research contexts.