The objective of this study is to show the effects of digitalization on the innovative capability of companies in Sub-Saharan Africa. To meet this objective, the authors used the World Bank data (Enterprise Survey) on survey of service companies and manufacturing industries in 2016. Making use of a binary probit model and a recursive bivariate probit model, they found that digitization has a significant effect on business innovation in Sub-Saharan Africa. Specifically, they found that when a company has a website, its probability of introducing an innovation in to the market increases by 27% as compared to companies without a website. However, when a company has its own website, the probability to introduce an incremental innovation is 0.34 higher than radical innovation. Thus, they can recommend to entrepreneurs in Sub-Saharan Africa to invest not only in the digitalization of their companies but also and above all in research and development, which is a translational and inevitable determinant for radical innovation.
TopIntroduction
Innovation is recognized as a major force for economic development (Fagerberg, 1987). It mainly refers to the thorough and complete introduction new ideas into operations, also a change in an existing product or process can be considered an innovation (Ozgen et al., 2013). However, existing literature, the question of its measurement remains a major concern. Some authors prefer a measure based on inputs (expenditure and staff in research and development) and, others on the other hand a measure based on outputs (patent filings, publications...). Still, others prefer a measure based on activities (ability and efficiency of the company to use her resources to achieve set objectives).
By revisiting the data of the World Intellectual Property Organization (OAPI), we can see that for the year 2018, some Sub-Saharan African countries such as South Africa (58th/126), Mauritius (75th/126) and Kenya (78th/126) have made efforts in terms of innovation, but majority of countries in this zone occupy the lowest rankings in the world. These include Togo (125th/126), Burkina Faso (124th/126), Cote d'Ivoire (123th/126), Niger (122th/126) and Cameroon (111th/126).
According to Biatour and Kegels (2008), three factors are considered as the main determinants of innovation: research and development efforts, workforce skills and the spreading of new information and communication technologies. Regarding information and communication technologies, several researchers have mentioned that digitization has an effect on business innovation. The digitalization of the company is considered as an organizational transformation related to the development and integration of digital collaboration technologies into the individual and collective practices of companies (Dudezert, 2018). Digital transformation started at the beginning of the internet, when mail was replaced by emails, salons by web forums, stores by e-commerce sites.
According to Berger (2017), though some Sub-Saharan African countries are moving closer to developed countries in terms of the internet's contribution to gross domestic product (e.g. Senegal: 3.3; Kenya: 2.9), Africa significantly lags behind (this index is 1.1 for Africa, 1.9 for emerging countries and 3.7 for developed countries).
The theoretical analysis of the link between digitisation and business innovation was carried out by Schon (1967) in his “technology push” approach. This approach has made the main assumption that the internal development of technologies is the only source of innovation (Schon, 1967). In this regard, some authors consider that digitisation requires huge investments that can reduce efficiency gains and innovation in companies, but Bharadwaj (2000) shows that firms that make significant investments in information and communication technologies achieve higher levels of innovation as compared to other firms. This result can be explained by the fact that ideas that become innovations are generally implemented by information and communication technology initiatives. Thus, reduced transaction costs, improved business processes, better coordination with suppliers and increased diversification resulting from the use of ICTs lead to efficiency gains that in turn will facilitate innovation (Koellinger, 2005). While it is therefore certain, firstly, that digitisation is a proven source of innovation, secondly, that the level of innovation is very low in Sub-Saharan Africa and, thirdly, that there is a very large digital divide between Sub-Saharan African countries and developed countries, it is worthy to ask if it is not this low level of digitisation that is responsible for the low level of innovation in Sub-Saharan Africa. Thus, the following research question deserves to be asked: what are the effects of digitalization on the innovative ability of companies in sub-Saharan Africa?
The objective of this study is to show the effects of digital transformation on the innovative capability of companies in Sub-Saharan Africa. Specifically, the aim is to highlight in the first place the effect of digitisation on the introduction of innovation and secondly the digitisation effect on the type of innovation introduced by Sub-Saharan African companies.
The remaining part of this work is organized as follows: Section 1 presents the literature review, Section 2 presents the methodology and finally Section 3 discusses the different results.