Influence of Determinants on Innovations in Small KIBS Firms in the Czech Republic before COVID-19

Abstract

There is still a lack of empirical evidence prevalent about innovation in knowledge-intensive business services (KIBS), and more particular, about determinants of innovations in small firms to sustain their future development. Studies in this area suggest that different determinants will affect different forms of innovation outputs of KIBS. This paper investigates the direction and the significance of these influences on propensity to innovate. The empirical evidence is based on quantitative and firm-level data gathered through an email questionnaire, which yielded 128 qualified responses from small KIBS in the Czech Republic. The analysis is based on binary logistic regression to identify the effects of determinants on the propensity to innovate. In addition to the consistent results produced by studies in this area, we found reverse relationships between innovation and selected determinants. Negatively evolving knowledge (especially lack of qualified employees) and market determinants (lack of information about the market), positively stimulated small KIBS towards the propensity to introduce organizational innovations (structural and human resources practices), followed by increasing intensity of competition positively related to introducing a new service to the firm (especially t-KIBS) and insufficient availability of business partners increasing the marketing efforts. It's evident that some negatively evolving determinants perform as incentives or driving forces to specific types of innovations. The results of this study could also be useful for owners and managers in KIBS firms engaging in innovation activities and government support, or incentivize the propensity to innovate.There is still a lack of empirical evidence prevalent about innovation in knowledge-intensive business services (KIBS), and more particular, about determinants of innovations in small firms to sustain their future development. Studies in this area suggest that different determinants will affect different forms of innovation outputs of KIBS. This paper investigates the direction and the significance of these influences on propensity to innovate. The empirical evidence is based on quantitative and firm-level data gathered through an email questionnaire, which yielded 128 qualified responses from small KIBS in the Czech Republic. The analysis is based on binary logistic regression to identify the effects of determinants on the propensity to innovate. In addition to the consistent results produced by studies in this area, we found reverse relationships between innovation and selected determinants. Negatively evolving knowledge (especially lack of qualified employees) and market determinants (lack of information about the market), positively stimulated small KIBS towards the propensity to introduce organizational innovations (structural and human resources practices), followed by increasing intensity of competition positively related to introducing a new service to the firm (especially t-KIBS) and insufficient availability of business partners increasing the marketing efforts. It's evident that some negatively evolving determinants perform as incentives or driving forces to specific types of innovations. The results of this study could also be useful for owners and managers in KIBS firms engaging in innovation activities and government support, or incentivize the propensity to innovate.