What factors influence the innovation activity of companies? – The case of Hungary

Abstract

Our research focuses on the factors influencing the innovation activity of companies. The study is based on a Hungarian sample of 209 large and midsized companies. In addition to simple statistical methods, we use Heckit and probit regression analyses. We conclude that foreign firms do not significantly differ from Hungarian firms in terms of innovation activity and performance. High innovation costs, shortages of skilled labour, and weak innovation management constrain innovation the most. Corruption and the shadow economy hinder companies from innovating. Exporting companies spend more on innovation than companies focusing on domestic markets. Managerial competencies influence the firm’s propensity to innovate. The main limitation of this study is the relatively small cross-sectional sample.