Do government incentives increase indigenous innovation commercialisation? Empirical evidence from local Ghanaian firms

Government incentives are critical for successful indigenous innovation commercialisation, yet there are concerns about the efficacy of these incentives. Therefore, this study examines the effectiveness of government incentives on successful indigenous innovation commercialisation in the context of low-income economies by testing the effects of demand and supply-side incentives on firm performance in the small-scale industry in Ghana.

The theoretical framework for this study is built on the below-the-radar theory of innovation (Kaplinsky et al., 2009). Using a sample of 557 firms engaged in commercialising various indigenous innovations in the small-scale industry in Ghana, PLS-SEM was deployed to assess 11 hypothesised paths based on a validated questionnaire.

The model results, at a 5% significance level, indicate that supply-side incentives are statistically insignificant on sales and profitability but have significant positive effects on employment. The direct and moderating influence of supply-side incentives and market factors on overall firm performance is also insignificant, while demand-side incentives to buyers have significant positive effects on all the performance metrics and positively moderate the effects of market factors.

The research focused on commercialising indigenous innovation in the context of low-income economies. Few studies, if any, have separately explored the effect of demand and supply-side government incentives on indigenous innovation in the context of low-income economies. The findings suggest that innovation support should focus more on the demand side of the innovation value chain.