Jutta Günther (Halle Institute for Economic Research (IWH))

Innovation cooperation as a means to increase productivity – experiences from East and West Germany

East German business enterprises are still economically lagging behind their West German counterparts, especially with respect to productivity. This paper empirically investigates innovation cooperation in East and West Germany as a means to reduce the productivity gap. Besides a description of the general cooperation behavior, it focuses on the question whether cooperating enterprises are indeed more innovative and thus more productive than non-cooperating firms. It can be shown that there are no deficiencies in cooperation frequency or cooperation continuity in East Germany compared to West Germany, and differences in cooperation partner priorities only reflect the given structural differences of the two regions. Cooperating enterprises in East and West Germany are indeed more innovative than non-cooperating firms, but there remains a clear productivity gap between East and West German cooperating firms. Even more surprising, within East Germany non-cooperating firms are slightly more productive than cooperating firms. Possible reasons for these rather unexpected findings are being discussed in this paper.

Keywords: innovation, productivity, R&D and innovation cooperation

JEL Codes: O31, O32

Session: 2b   Room 2001   Category: Innovation 1

Paper