THE PRIVATE DEMAND FOR INNOVATION: THE CASE OF EX - YU COUNTRIES

Abstract

In the era of high sophisticated technology, the innovation is recognized as a key driver towards better national competitiveness and economic growth, creating opportunities for better employment and better responding to global social challenges. At the company level however, innovation improves efficiency, boosts company productivity and provides numerous benefits to the consumers. Being identified as a key variable for the importance of demand for innovation, buyer sophistication signals the ability of buyers to select products and services based on performance rather than price. Furthermore, the companies witnessing more sophisticated domestic market are likely to sell products with higher quality and to better understand the customers’ needs and how they perceive the value of the product. This paper aims to provide a comparative analysis of private demand for innovation in selected ex- YU countries using the two key indicators: “buyer sophistication” and “sales of new-to-market and new-to-firm product innovations for the period 2011-2016. Although sharing the same socio-political and historical background, the analysis of these selected countries show significant discrepancies among their business leaders’ assessments about the level of their customer demand for innovation and business sophistication.