Paper Title
THE IMPORTANCE OF FOREIGN OWNERSHIP FOR THE CREATION OF INNOVATIONS: AN INTERESTING EXPERIENCE OF CENTRAL EUROPE REGIONS

Abstract
Abstract - Current research on innovation in catching-up Central and Eastern European (CEE) countries has clearly confirmed that these countries are associated with problems such as lower trust between cooperating partners, insufficient infrastructure, lack of funding and thus lower innovation performance, for example compared to more developed countries (typically countries from Western Europe). The application of innovative models and patterns of behaviour of Western states therefore proved to be insufficient, mainly due to the above-summarized problems and unpreparedness of individual actors within CEE countries. The arrival of foreign owners of firms in CEE countries seems to be one of the possible ways to achieve changes that could accelerate the process of catching up with more developed countries. This could be caused mainly by breaking old structures and bringing new experience, knowledge, and managerial practices, but also financial resources. This study aims therefore to analyse the influence of foreign ownership on the innovation activities of firms within catching-up CEE countries. More specifically, we compare firms from Central Europe (Czech Republic, Slovakia, and Poland) and from Baltic States (Estonia, Latvia, and Lithuania). For this study, we are using the World Banks´ Enterprise Survey data from 2019 and information about, in total, 3,361 firms from six catching-up CEE countries. The results point out that there are significant differences between Central European countries and Baltic States, whereas foreign ownership seems to be a significant determinant of innovation primarily within Baltic States. On the contrary, this study revealed patterns of behaviour that are identical and key for both groups of countries. Especially, these are internal research and development, acquisition of external sources (knowledge or research and development), and participation in firm groups. These results significantly contribute to the “catching-up literature” dealing with firm innovation in Central and Eastern Europe, where there is still a lack of studies dealing with the issue of the effects of foreign ownership. Keywords - Foreign Ownership; Catching-up Countries; Comparative Study; Central and Eastern European Countries.