Innovative performance effects of institutional quality: an empirical investigation from the Triad

Luigi Aldieria , Cristian Barraa , Nazzareno Ruggieroa & Concetto Paolo Vincia Department of Economics and Statistics, University of Salerno , Fisciano, Italy CONTACT Luigi Aldieri laldieri@unisa.it Department of Economic and Statistical Sciences, University of Salerno , Via Giovanni Paolo II, 132 – 84084, Fisciano, SA, Italy ABSTRACT Using data for a set of 823 R&D-intense manufacturing firms within the Triad and the Quality of Government (QoG) dataset over the 2002–2010 period, this article investigates the effects of institutional quality upon firms’ inefficiency, through the application of a Stochastic Frontier Approach (SFA). Empirical evidence, which is robust to alternative specifications of the technology employed and different lag structures in R&D activities, reveals that improvements in the quality of institutions significantly reduce firms’ inefficiency and suggests that, among the set of relevant institutional factors considered, a pre-eminent role is found for the rule of law.