Internet capabilities and innovation in the Balkan countries: The role of foreign technology licensing

The article has been published in the “The Electronic Journal of Information Systems in Developing Countries”. The Electronic Journal of Information Systems in Developing Countries (EJISDC) was established in 2000 and is now widely recognized as a leading international journal in which practitioners, academics, researchers, and policymakers share their knowledge and experience in the design, development, implementation, management, and evaluation of information systems in the Global South. In this article, we investigated the effects of firms' Internet capabilities on innovation and the moderating role of foreign technology licensing on this relationship.

Very few studies have focused on Internet capabilities on innovation in developing countries. Instead, they have explored the direct effect of foreign licensed technology but overlooked its moderating role. We started with the fundamental concept, namely Internet capabilities, product innovation, process innovation, and foreign technology licensing, due to the liability surrounding newness concept issues that continue to obscure this research field. Then, we conceptually and empirically explored the direct effect of Internet capabilities on product and process innovation in the Balkan countries and the moderating role of foreign technology licensing. Our research adds new knowledge to the literature from the perspective of emerging economies. The previous literature has examined digital technologies and their role in enhancing innovation, particularly companies in developed countries or mutual market economies.

Main results of the study

The results indicate a positive effect of Internet capabilities on product and process innovation in the Balkan countries that are in line with findings in developed countries. Our findings suggest that Internet capabilities enhance product and process innovation. In Balkan countries, we can say that by integrating Internet capabilities that represent basic digital and information systems infrastructure, firms may achieve unique product and process innovation based on the positive effects of Internet capabilities. The study has implications for managers and policymakers interested in promoting innovation. The study provides managers with helpful guidance regarding Internet capabilities. For instance, besides entrepreneurial and market orientation, Internet capabilities directly enhance product and process innovation outcomes.

The internet and innovation have had a significant impact on the growth of companies in developing countries. The widespread availability of high-speed internet and advancements in technology have enabled companies to reach a wider audience, increase efficiency, and drive innovation.

 

Examples of companies who have benefited from internet capabilities

One example of a company that has greatly benefited from internet capabilities and innovation in a developing country is Jumia, an e-commerce company based in Nigeria. Jumia leverages the internet to connect consumers with a wide range of products and services, including fashion, electronics, and household goods. The company's ability to use technology to improve logistics and delivery, and to offer a seamless online shopping experience has helped it to grow rapidly and become the leading e-commerce platform in Africa.

Another example is Paytm, an Indian e-commerce payment system and financial services company, which enables millions of customers to make digital transactions and payments. The company's mobile app and website allow users to pay bills, transfer money, and purchase goods and services online. With over 350 million registered users, Paytm has become one of the most widely used digital payment platforms in India.

Using the resource-based view and knowledge spillover, this study investigates the direct effects of Internet capabilities (communication, platform, and connection capabilities) on product and process innovation across 10 Balkan countries from 2007 to 2019. The study examines the role of foreign technology licensing in moderating these relationships. In line with findings from developed countries, the empirical results show that Internet capabilities positively influence product and process innovation. Surprisingly, foreign technology licensing was unable to enhance the positive effects of Internet capabilities on process and product innovation due to the overlapped benefits and the potential costs and risks involved in the Balkan countries. As a result, our study enhances the literature's understanding of Internet capabilities' effects on innovation and the role of foreign technology licensing, enriching current knowledge and providing practical implications for the developing context of the Balkan countries.

We recommend that you continue updating yourself on the latest trends and acquire the right knowledge about internet capabilities and innovation. We invite you to take a look at our Master’s Degree in Digital Business.