The roles of formal and informal institutions on innovations activity
This paper analyses the impact of institutions on the innovation level of countries. This analysis is performed by segregating the dimension of institution into two, namely formal institutions and informal institutions. Using samples of 62 cross-section countries and employing robust standard erro...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2016
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| Online Access: | http://journalarticle.ukm.my/10788/ http://journalarticle.ukm.my/10788/ http://journalarticle.ukm.my/10788/1/jeko_50%282%29-14.pdf |
| Summary: | This paper analyses the impact of institutions on the innovation level of countries. This analysis is performed by
segregating the dimension of institution into two, namely formal institutions and informal institutions. Using samples of
62 cross-section countries and employing robust standard error ordinary least squares (OLS) estimation, this study has
found evidence that both formal and informal institutions affect the innovation level of countries. The results suggest
that countries with higher formal institutions (institutional quality) and higher informal institutions (social capital) are
associated with higher innovation levels. However, informal institutions demonstrate that at 10th percentile quantile
estimations it exhibit a significant positive impact on innovation, while the formal institutions show such impact after
exceeding the 50th percentile. Hence, this result suggests the formal institutions play important role when innovation level
in a country is high. Both formal and informal institutions are crucial in influencing the level of country’s innovation. |
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