Interplay Between Innovation Barriers and Cooperation in Latin America: Lessons for Public Policy

This paper investigates whether firms in Latin America that confront more barriers to innovation are more likely to engage in cooperative innovative efforts with other economic actors. Data from the Harmonized Latin American Innovation Surveys Database (LAIS) allows us to explore the relationship between these obstacles and the cooperation of innovation-active manufacturing firms with other economic agents in innovative activities. Our findings robustly suggest that cooperation is a coping strategy for innovation obstacles: firms perceiving obstacles tend to cooperate more, especially with research institutions. For small and (some) medium-sized companies, we also find a positive relationship between financial barriers and cooperation with other firms, and between market obstacles and cooperation with research institutions. These results suggest that, from a public policy perspective, efforts to increase innovation should go beyond a financial market failure approach and embrace a more comprehensive systemic failure approach.