Social Capital and Enterprise Innovative Performance: A Multi-Level Analysis of Developing Nations

The basic objectives of this paper are to explore the relation between social capital and the innovative performance of enterprise for a sample of 27 developing nations in different regions of the world. Social capital has been defined in various ways and this paper works with the notion of social capital defined as connections among individuals and social networks. A multi-level regression approach is used with national-level indicators of social capital being derived from different waves of the World Values Survey. Enterprise-level data are derived from the results of different waves of the World Bank Enterprise Survey, a unique micro-level data set using a common survey design to measure the characteristics of enterprises including their innovative activities for a large number of developing nations. The results of the analysis demonstrate a positive impact of the level of social capital in a nation on the likelihood that an enterprise innovates. The analysis also investigates the relation between the firm's absorptive capacity and its expenditures on R&D.