Does training explain innovation in transition economies?

• In transition economies there is a positive correlation between the extent of training conducted at the company level and both product and process innovation in these economies. • activities characterized as on-the-job training demonstrate a more favorable association with a firm's propensity for innovation compared to in-class training. • With regard to such relation results show that There is a geographical heterogeneity when product innovation is to be considered. This study investigates the impact of training programs on innovation for firms in transition economies. We exploit data from the World Bank Enterprise Surveys across 27 countries in Eastern Europe and Central Asia. Results, emerging from several specifications of bivariate probit models, show that: (i) communication training significantly enhances product and process innovation and (ii) on-the-job training proves to be more effective than in-class training to foster innovation. The key role of on-the-job training is even more pronounced focusing on manufacturing sector and at geographical level. These results may favour the attention of policymakers and firms in transition countries to invest in specific training programs to catch-up the innovation standards of developed economies.