The effects of informal sector competition on innovative activities of firms

Abstract:

This study investigates the effects of informal sector competition on innovative activities of firms using a global context. The research results using Probit regression for a sample containing more than 97,000 observations in 119 countries suggest that informal sector competition has a positive impact on firm innovation. The finding is consistent when using alternatives measures of innovation and informal sector competition. In addition, the positive association between competition from informal sector and innovation is confirmed when using various alternative econometric techniques.