Technological constraints to firm performance: The moderating effects of firm linkages and cooperation

Manufacturing and services SMEs in Africa face challenges and constraints exacerbated by ineffectual government policies, environmental turbulence and the near absence of institutional support. The purpose of this paper is to investigate if informal linkages and formal cooperation are helping firms to overcome constraints to uptake of technological innovations in Nigeria.

The paper is based on quantitative data obtained from structured interviews of 631 Nigerian firms. These firms were selected using stratified random sampling from a total population of 18,906 manufacturing and services companies in the national database obtained from the National Bureau of Statistics.

The result of the binary logistic regression indicates that while informal linkages appear to be insignificant, formal inter-firm cooperation is an effective moderator of barriers to technological innovations.

The paper focusses only on technological, rather than non-technological, innovations.

The paper recommends that, in addition to other interventions to promote diffusion of technological innovations, governments should give priority to interventions that support formal cooperation among SMEs.

Previous studies have generally looked at the impact of cooperative networks on firms’ innovation uptake. This paper provides original insights into the “how” of cooperative impact, specifically with respect to helping SMEs to overcome constraints. The paper also delineates formal cooperation from informal linkages.