IMPACT OF NATIONAL COMPETENCIES OF PRODUCTION AND RESEARCH ON INNOVATION CAPABILITIES OF ORGANIZATIONS

Business firms, including the largest ones competing in global markets, are strongly influenced in their choice of technological strategies by the conditions existing in their home countries (Porter, 1990). The main national factors that influence the rate and direction of technological innovation in a country are the national market incentives and pressures to which firms have to respond, their competencies in production and research ,and the institutions of corporate governance (Patel and Pavitt, 1994). Local demand opportunities and competitive pressures will not result in innovation unless firms have the competencies that enable them to respond. This paper examines the influence of national competencies of production and research of the countries firms operate in on their innovation capabilities in contrast to the popular rational and incremental innovation strategies that rely heavily on the competencies internal to the organizations.Author believes that overestimating the usefulness of the 'resource-based strategies' of organizations for innovation can undermine the opportunities available to organizations in their search to identify technological fields and related product markets where specific national competencies are likely to be most supportive to corporate innovative activities. The statistical regression analysis is used to measure the influence of national competencies of production and research using prose, document, and quantitative skills of three segments of the population aged 16-65 years with differing levels of education and share of R&D expenditure of GDP, respectively against the innovation capabilities of organizations measured using a number of patents granted by the US patent office USPTO to firms and citizens residing in each of the countries selected for the research in the corresponding year . Keywords: Basic Research, Entrepreneurship, Innovation Capabilities, Literacy Skills, National Competencies, Technological Innovatio