Innovation in an emerging economy : firm-level evidence from Turkey

Abstract

The emerging economy (EE) of Turkey is one of the leading economic and financial centers between Europe and Asia. The country’s unique location and close proximity to both economically advanced as well as emerging neighboring markets provides many business opportunities for its domestic firms and multinational enterprises (MNEs). Nevertheless, the globalized world economy and increasing foreign direct investments (FDIs) from MNEs have intensified the economic competition within the domestic market and put additional pressure on Turkish firms. Turkey is thus facing the major challenge of simultaneously supporting its domestic corporate landscape in upgrading and innovation strategies, increasingly investing in a knowledge and technology-based economic development and continuing to be an attractive location for further FDIs. Therefore, the questions arise as to how different types of firms operate in this highly dynamic environment, what kind of internationalization and innovation strategies firms pursue and what role university-industry collaborations (UICs) and national policy play. Employing a mixed-method approach to answer these research questions, I hence conduct a firm-level survey of the manufacturing industry in Istanbul and interview several local research and development (R&D) experts from universities, firms and politics. Consequently, I examine the regional setting for innovation activities of the differentiated corporate landscape in Istanbul. With this thesis, I thus contribute to the understanding of distinct firm characteristics, varying internationalization motives and usage of domestic political support, the interplay between R&D resources, innovation success and internationalization strategies, as well as perceived barriers of using UICs for achieving innovation. Moreover, the study provides separate findings for three diverse types of firms: domestic Turkish firms, Turkish MNEs and foreign MNEs. In this regard, domestic Turkish firms notably benefit from tax incentives and increased contact to collaboration partners and workforce, primarily target advanced markets and use their internal R&D resources to successfully achieve innovation. Turkish MNEs particularly profit from investment and export incentives, target economically advanced markets and use their internal R&D capacities as well as external market knowledge for achieving innovation. Foreign MNEs likewise benefit from investment and export incentives, from establishing political connections in Turkey and make use of external market knowledge as a key factor for their innovation success. In terms of perceived barriers to UICs, insufficient knowledge about UICs opportunities as well as insufficient financial political support or incentives for UICs are the two main obstacles that inhibit the use of UICs for achieving innovation over all types of firms. On basis of the survey results and contextual insights from my interviews, I provide several theoretical and policy implications to the growing literature of the EEs research field.