Skip to main content
SpringerLink
Log in

Do Productive Capabilities Affect Export Performance? Evidence from African Firms

  • Special Issue Article
  • Published:
The European Journal of Development Research Aims and scope Submit manuscript

Abstract

There is limited empirical evidence measuring productive capabilities and analysing their effect on firm-level export performance in Africa. This paper constructs novel indicators of productive capabilities and examines their effects on the export performance of African firms. Using recent firm-level data from the World Bank Enterprise Survey across 29 African countries, the paper builds new indicators of productive capabilities, which are conceptualised as a combination of technological and production capabilities. Estimating a censored regression model, we find that both technological and production capabilities are important drivers of firms’ direct export performance. This suggests that superior productive capabilities enhance the efficiency and competitiveness of firms, leading to improvements in their export performance. The findings underscore the importance of policies that support the strengthening of productive capabilities in African countries.

Résumé

Il n’existe que de peu d’évidence empirique qui mesure les capabilités productives, et leur effet sur la performance à l’exportation au niveau des entreprises en Afrique. Cet étude construit des nouveaux indicateurs des capacités productives, et examine leurs effets sur les résultats à l’exportation des entreprises Africaines. Utilisant des données récentes au niveau des entreprises de la Banque Mondiale (« World Bank Enterprise Survey » en Anglais) sur 29 pays Africains, cet étude construit des nouveaux indicateurs de capacités productives, qui sont conceptualisés comme une combinaison de capacités technologiques et productives. Utilisant un méthode de régression censuré, nous trouvons que tant les capabilités technologiques que de production sont des facteurs importants de la performance à l’export des entreprises. Cela suggère que des capacités productives supérieures améliorent l’efficience et la compétitivité des entreprises, ce qui renforce leur performance à l’exportation. Nos résultats soulignent l’importance des politiques qui soutiennent le renforcement des capacités productives dans les pays d’Afrique.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. Recent empirical works measuring productive capabilities have done so either using aggregated indicators, such as the economic complexity index (Archibugi et al. 2009; Daude et al. 2016; Hausmann 2016; Hidalgo and Hausman 2009; Javorcik et al. 2017), the economic fitness index (for example Roster et al. 2018) or country-level data (Fagerberg and Srholec 2008, 2017).

  2. See “Measuring Firm-Level Productive Capabilities” section for additional details.

  3. See Table 5 in the “Appendix” for a list of countries and the respective years of the surveys.

  4. Using country-level data for 114 countries, Fagerberg and Srcholec (2017) also found a trade-off between data quality and the sample size.

  5. See Table 6 in the “Appendix” for definitions of all indicators used in the construction of the technological and production capability indicators.

  6. See Fagerberg and Srholec (2008, 2017) for details of this procedure.

  7. Polychoric correlation allows us to take into account the fact that some of the dimensions we employ are continuous, others are dummies and others are categorical, with more than two categories. Using the oblique oblimin rotation helps us to obtain more interpretable factors, with a simpler structure than would be obtained with an orthogonal rotation. In many applications [for example, after factor and principal component analysis (PCA)], the factors before rotation are identified to be orthogonal (uncorrelated), whereas the oblique rotated factors are correlated.

  8. To estimate the Heckman model, we assume firms with 0% of sales from direct export do not engage in export activities and therefore have a value zero in the selection equation.

References

  • Acquaah, M. 2012. Social networking relationships, firm-specific managerial experience and firm performance in a transition economy: A comparative analysis of family owned and nonfamily firms. Strategic Management Journal 33 (10): 1215–1228.

    Google Scholar 

  • Adusah-Poku, F., and K. Takeuchi. 2019. Household energy expenditure in Ghana: A double-hurdle model approach. World Development 117: 266–277.

    Google Scholar 

  • Álvarez, R., A. Zahler, and C. Bravo-Ortega. 2015. Innovation and productivity in services: Evidence from Chile. Emerging Markets Finance and Trade 51 (3): 593–611.

    Google Scholar 

  • Amemiya, T. 1984. Tobit models: A survey. Journal of Econometrics 24: 3–61.

    Google Scholar 

  • Anderson, P., and M. Tushman. 1990. Technological discontinuities and dominant designs: A cyclical model of technological change. Administrative Science Quarterly 35 (4): 604–633.

    Google Scholar 

  • Andreoni, A. 2010. A capability theory of production: Learning in time, complementarities and proximities. In Paper presented at the DIME workshop on “Production theory” process, technology, and organisation: Towards a useful theory of production, November 2010. Pisa: Scuola Superiore Sant’Anna. Accessed 18 February 2019.

  • Andreoni, A. 2011. Productive capabilities indicators for industrial policy design. UNIDO Development Policy, Statistics and Research Branch Working Paper 17/2011. https://eprints.soas.ac.uk/19235/1/2011%20Productive%20Capabilities%20Indicators%20UNIDO.pdf. Accessed 1 June 2019.

  • Andreoni, A. 2014. Structural learning: Embedding discoveries and the dynamics of production. Structural Change and Economic Dynamics 29: 58–74.

    Google Scholar 

  • Andreoni, A., and H.J. Chang. 2017. Bringing production and employment back into development: Alice Amsden’s legacy for a new developmentalist agenda. Cambridge Journal of Regions, Economy and Society 10 (1): 173–187.

    Google Scholar 

  • Andreoni, A., and F. Tregenna. 2020. Escaping the middle-income technology trap: A comparative analysis of industrial policies in China, Brazil and South Africa. Structural Change and Economic Dynamics 54: 324–340.

    Google Scholar 

  • Archibugi, D., M. Denni, and M. Filippetti. 2009. The global innovation scoreboard 2008: The dynamics of the innovative performances of countries. Available at Social Science Research Network (SSRN). https://ssrn.com/abstract=1958833 or http://dx.doi.org/https://doi.org/10.2139/ssrn.1958833. Accessed 22 February 2019.

  • Ariffin, N. 2000. The internationalisation of innovative capabilities: The Malaysian electronics industry. Doctoral Dissertation, University of Sussex, Brighton.

  • Ariffin, N., and P.N. Figueiredo. 2004. Internationalization of innovative capabilities: Counter-evidence from the electronics industry in Malaysia and Brazil. Oxford Development Studies 32 (4): 559–583.

    Google Scholar 

  • Avenyo, E.K., M. Konte, and P. Mohnen. 2020. Product innovations and informal market competition in sub-Saharan Africa: Firm-level evidence. Journal of Evolutionary Economics. https://doi.org/10.1007/s00191-020-00688-2.

    Article  Google Scholar 

  • Bartz-Zuccala, W., P. Mohnen, and H. Schweiger. 2018. The role of innovation and management practices in determining firm productivity. Comparative Economic Studies 60 (4): 502–530.

    Google Scholar 

  • Bell, M., and M. Albu. 1999. Knowledge systems and technological dynamism in industrial clusters in developing countries. World Development 27 (9): 1715–1734.

    Google Scholar 

  • Bell, M., and K. Pavitt. 1993. Technological accumulation and industrial growth: Contrasts between developed and developing countries. Industrial and Corporate Change 2 (2): 157–210.

    Google Scholar 

  • Bell, M., and K. Pavitt. 1995. The development of technological capabilities. Trade, Technology and International Competitiveness 22 (4831): 69–101.

    Google Scholar 

  • Blalock, G., and D.H. Simon. 2009. Do all firms benefit equally from downstream FDI? The moderating effect of local suppliers’ capabilities on productivity gains. Journal of International Business Studies 40: 1095–1112.

    Google Scholar 

  • Bronwyn, H.H., F. Lotti, and J. Mairesse. 2009. Innovation and productivity in SMEs: Empirical evidence from Italy. Small Business Economics 33 (1): 13–33.

    Google Scholar 

  • Brown, F., and A. Guzmán. 2014. Innovation and productivity across Mexican manufacturing. Journal of Technology Management and Innovation 9 (4): 36–52.

    Google Scholar 

  • Cavusgil, T., P.N. Ghauri, and A.A. Akcal. 2013. Doing business in emerging markets, 2nd ed. London: Sage Publications.

    Google Scholar 

  • Chan, K.-Y.A., L.A. Oerlemans, and M.W. Pretorius. 2011. Innovation outcomes of South African new technology-based firms: A contribution to the debate on the performance of science park firms. South African Journal of Economic and Management Sciences 14 (4): 361–378.

    Google Scholar 

  • Cirera, X. 2015. Catching up to the technological frontier? Understanding firm-level innovation and productivity in Kenya. Working Paper No. 94671. Washington, DC: World Bank Group.

  • Cohen, W., and D. Levinthal. 1990. Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly 35 (1): 128–152.

    Google Scholar 

  • Crépon, B., E. Duguet, and J. Mairesse. 1998. Research, innovation and productivity: An econometric analysis at the firm level. Economics of Innovation and New Technology 7 (2): 115–158.

    Google Scholar 

  • Crespi, G., E. Tacsir, and M. Pereira. 2019. Effects of innovation on employment in Latin America. Industrial and Corporate Change 28 (1): 139–159.

    Google Scholar 

  • Dahlman, C.J., B. Ross-Larson, and L.E. Westphal. 1987. Managing technological development: Lessons from the newly industrializing countries. World Development 15 (6): 759–775.

    Google Scholar 

  • Daude, C., A. Nangengast, and J.R. Perea. 2016. Productive capabilities: An empirical analysis of their drivers. The Journal of International Trade and Economic Development 25 (4): 504–535.

    Google Scholar 

  • Dutrénit, G., and A.O. Vera-Cruz. 2005. Technological capability accumulation in the ‘maquila industry’ in Mexico. Cadernos EBAPE BR 3 (SPE): 01–16.

    Google Scholar 

  • Fagerberg, J., and M. Srholec. 2008. National innovation systems, capabilities and economic development. Research Policy 37 (9): 1417–1435.

    Google Scholar 

  • Fagerberg, J., and M. Srholec. 2017. Capabilities, economic development, sustainability. Cambridge Journal of Economics 41 (3): 905–926.

    Google Scholar 

  • Figueiredo, P.N. 2001. Technological learning and competitive performance. Cheltenham: Edward Elgar.

    Google Scholar 

  • Figueiredo, P.N. 2002. Does technological learning pay off? Inter-firm differences in technological capability-accumulation paths and operational performance improvement. Research Policy 31 (2): 73–94.

    Google Scholar 

  • Figueiredo, P.N. 2008. Industrial policy changes and firm-level technological capability development: Evidence from Northern Brazil. World Development 36 (1): 55–88.

    Google Scholar 

  • Foss, N.J. 1996. Knowledge-based approaches to the theory of the firm: Some critical comments. Organization Science 7 (5): 470–476.

    Google Scholar 

  • Goedhuys, M. 2007. Learning, product innovation, and firm heterogeneity in developing countries: Evidence from Tanzania. Industrial and Corporate Change 16 (2): 269–292.

    Google Scholar 

  • Guiso, L., P. Sapienza, and L. Zingales. 2004. Does local financial development matter? The Quarterly Journal of Economics 119 (3): 929–969.

    Google Scholar 

  • Hausmann, R. 2016. Economic development and the accumulation of know-how. Welsh Economic Review 24: 13–16.

    Google Scholar 

  • Hidalgo, C.A., and R. Hausmann. 2009. The building blocks of economic complexity. Proceedings of the National Academy of Sciences of USA 106 (26): 10570–10575.

    Google Scholar 

  • Hobday, M. 1994. Export-led technology development in the Four Dragons: The case of electronics. Development and Change 25 (2): 333–361.

    Google Scholar 

  • Hobday, M. 1995. East Asian latecomer firms: Learning the technology of electronics. World Development 23 (7): 1171–1193.

    Google Scholar 

  • Hsu, C., and H. Chen. 2009. Foreign direct investment and capability development: A dynamic capabilities perspective. Management International Review 49 (5): 585–605.

    Google Scholar 

  • Hu, A.G., and Z. Liu. 2014. Trade liberalization and firm productivity: Evidence from Chinese manufacturing industries. Review of International Economics 22 (3): 488–512.

    Google Scholar 

  • King, K., and M. Fransman, eds. 1984. Technological capability in the third world. London: Palgrave Macmillan.

    Google Scholar 

  • Javorcik, B.S., A. LoTurco, and D. Maggioni. 2017. New and improved: Does FDI boost production complexity in host countries? The Economic Journal 128: 2507–2537.

    Google Scholar 

  • Ju, M., H.G. Fung, and H. Mano. 2013. Firm capabilities and performance. The Chinese Economy 46 (5): 86–104.

    Google Scholar 

  • Kraemer-Mbula, E., E. Lorenz, L. Takala-Greenish, O.O. Jegede, T. Garba, M. Mutambala, and T. Esemu. 2019. Are African micro- and small enterprises misunderstood? Unpacking the relationship between work organisation, capability development and innovation. International Journal of Technological Learning, Innovation and Development 11 (1): 1–30.

    Google Scholar 

  • Lall, S. 1992. Technological capabilities and industrialization. World Development 20 (2): 165–186.

    Google Scholar 

  • Liang, F.H. 2017. Does foreign direct investment improve the productivity of domestic firms? Technology spillovers, industry linkages, and firm capabilities. Research Policy 46 (2017): 138–159.

    Google Scholar 

  • Los, B., and B. Verspagen. 2000. R&D spillovers and productivity: Evidence from U.S. manufacturing industries. Empirical Economics 25: 127–148.

    Google Scholar 

  • Mairesse, J., and S. Robin. 2009. Innovation and productivity: A firm-level analysis for French manufacturing and services using CIS3 and CIS4 data (1998–2000 and 2002–2004). Paris: CREST-ENSAE. https://www.semanticscholar.org/paper/Innovation-and-productivity%3A-a-firm-level-analysis-Mairesse-Robin/3eeea791d6c6db617d5844aaead0f8e958121882.

  • Ndemezo, E., and C. Kayitana. 2020. Innovation and firms’ performance in the Rwandese manufacturing industry: A firm-level empirical analysis. In Rwandan economy at the crossroads of development, 99–114. Singapore: Springer.

  • Nelson, R.R., and S.G. Winter. 1982. An evolutionary theory of economic change. Cambridge: Belknap Press/Harvard University Press.

    Google Scholar 

  • Newey, W.K. 1987. Efficient estimation of limited dependent variable models with endogenous explanatory variables. Journal of Econometrics 36 (3): 231–250.

    Google Scholar 

  • Nübler, I. 2014. A theory of capabilities for productive transformation: Learning to catch up. In Transforming economies: Making industrial policy work for growth, jobs and development, ed. J.M. Salazar-Xirinachs, I. Nübler, and R. Kozul-Wright, 113–149. Geneva: United Nations (UNCTAD) and International Labour Organization.

    Google Scholar 

  • Oyelaran-Oyeyinka, B. 2003. Knowledge networks and technological capabilities in African clusters. Science, Technology and Society 8 (1): 1–24.

    Google Scholar 

  • Ozer, M., and W. Zhang. 2015. The effects of geographic and network ties on exploitative and exploratory product innovation. Strategic Management Journal 36 (7): 1105–1114.

    Google Scholar 

  • Penrose, E. 1959 [1995]. The theory of the growth of the firm. Oxford: Oxford University Press.

  • Pisano, G.P. 2015. A normative theory of dynamic capabilities: Connecting strategy, know-how, and competition. Harvard Business School Working Paper No. 16-036. https://www.hbs.edu/faculty/Publication%20Files/16-036_3be51325-1fb0-421a-afca-4571d958ebf9.pdf. Accessed 6 March 2019.

  • Raffo, J., S. Lhuilleryb, and L. Miottia. 2008. Northern and southern innovativity: A comparison across European and Latin American countries. The European Journal of Development Research 20 (2): 219–239.

    Google Scholar 

  • Reichert, F.M., and P.A. Zawislak. 2014. Technological capability and firm performance. Journal of Technology Management and Innovation 9 (4): 20–35.

    Google Scholar 

  • Richardson, G. 1972. The organisation of industry. The Economic Journal 82 (327): 883–896.

    Google Scholar 

  • Rosenberg, N. 1982. Inside the black box: Technology and economics. Cambridge: Cambridge University Press.

    Google Scholar 

  • Roster, K., L. Harrington, and M. Cader. 2018. Country case studies in economic fitness: Mexico and Brazil. Entropy 20 (10): 753.

    Google Scholar 

  • Smith, V., M. Dilling-Hansen, T. Eriksson, and E.S. Madsen. 2004. R&D and productivity in Danish firms: Some empirical evidence. Applied Economics 36 (16): 1797–1806.

    Google Scholar 

  • Sobanke, V., S. Adegbite, M. Ilori, and A. Egbetokun. 2014. Determinants of technological capability of firms in a developing country. Procedia Engineering 69: 991–1000.

    Google Scholar 

  • Song, J. 2002. Firm capabilities and technology ladders; Sequential: Foreign direct investments of Japanese electronics firms in East Asia. Strategic Management Journal 23 (3): 191–210.

    Google Scholar 

  • Teece, D.J. 2007. Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal 28 (13): 1319–1350.

    Google Scholar 

  • Teece, D.J. 2019. A capability theory of the firm: An economics and (strategic) management perspective. New Zealand Economic Papers 53 (1): 1–43.

    Google Scholar 

  • Teece, D.J., G. Pisano, and A.A. Shuen. 1997. Dynamic capabilities and strategic management. Strategic Management Journal 18: 504–534.

    Google Scholar 

  • Tidd, J., J. Bessant, and K. Pavitt. 1997. Managing innovation: Integrating technological, market and organisational change. Chichester: Wiley.

    Google Scholar 

  • Tobin, J. 1958. Estimation of relationships for limited dependent variables. Econometrica 26 (1): 24–36.

    Google Scholar 

  • Tsai, K.H. 2004. The impact of technological capability on firm performance in Taiwan’s electronics industry. Journal of High Technology Management Research 15: 183–195.

    Google Scholar 

  • Tybout, J.R., and M.D. Westbrook. 1995. Trade liberalization and the dimensions of efficiency change in Mexican manufacturing industries. Journal of International Economics 39 (1–2): 53–78.

    Google Scholar 

  • Weber, S. 2010. bacon: An effective way to detect outliers in multivariate data using Stata (and Mata). The Stata Journal 10 (3): 331–338.

    Google Scholar 

  • Weigelt, C. 2013. Leveraging supplier capabilities: The role of locus of capability deployment. Strategic Management Journal 34 (1): 1–21.

    Google Scholar 

  • Wignaraja, G. 2005. Competitiveness, productivity management and job creation in African enterprises: Evidence from Mauritius and Kenya. Series on Productivity and Competitiveness Management. MCC Working Paper No. 5. Geneva: International Labour Office. https://www.ilo.org/public/libdoc/ilo/2003/103B09_19_engl.pdf. Accessed 1 June 2019.

  • Winter, S.G. 1988. On coase, competence, and the corporation. Journal of Law, Economics, and Organization 4 (1): 163–180.

    Google Scholar 

  • Wooldridge, J.M. 2013. Introductory econometrics: A modern approach. Mason: South-Western Cengage Learning.

    Google Scholar 

Download references

Acknowledgements

Funding towards this research from the South African Research Chairs Initiative of the Department of Science and Technology and National Research Foundation of South Africa (Grant No. 110691), through the Community of Practice in Innovation and Inclusive Industrialisation under the DST/NRF South African Research Chair in Industrial Development, is hereby gratefully acknowledged.

Author information

Authors and Affiliations

  1. Oxford Department of International Development, QEH, University of Oxford, 3 Mansfield Road, Oxford, OX1 3TB, UK

    Elvis Korku Avenyo

  2. DST/NRF South African Research Chair in Industrial Development, University of Johannesburg, 31 Henley Rd, Auckland Park, Johannesburg, 2196, South Africa

    Elvis Korku Avenyo & Fiona Tregenna

  3. DST/NRF/Newton Fund Trilateral Research Chair in Transformative Innovation, the Fourth Industrial Revolution and Sustainable Development, University of Johannesburg, Corner of Barry Hertzog and Napier Rd, Milpark, Johannesburg, 2092, South Africa

    Erika Kraemer-Mbula

Authors
  1. Elvis Korku Avenyo
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Fiona Tregenna
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Erika Kraemer-Mbula
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Fiona Tregenna.

Ethics declarations

Conflict of interest

On behalf of all authors, the corresponding author states that there is no conflict of interest.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix

Appendix

See Tables 5 , 6 and 7 .

Table 5 List of countries, year of survey and population of firms in dataset
Full size table
Table 6 Definition of variables
Full size table
Table 7 First-stage estimation results
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Avenyo, E.K., Tregenna, F. & Kraemer-Mbula, E. Do Productive Capabilities Affect Export Performance? Evidence from African Firms. Eur J Dev Res 33, 304–329 (2021). https://doi.org/10.1057/s41287-021-00364-6

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s41287-021-00364-6

Keywords

JEL Classification

Search

Navigation