CREB - Center for Research in Economics and Business

Innovation and Firm Performance in the Pakistani Textile Sector

Project members:
Waqar Wadho, Lahore School of Economics
Azam Chaudhry, Lahore School of Economics

The project has been developed under the International Growth Centre (IGC). Innovation and competitiveness are considered to be the backbone of private sector led economic growth and its sustainability. However, in Pakistan, very little is known about the nature and the extent of innovation as well as its determinants and obstacles. In the absence of such evidence, policies can be misdirected and ineffective. In this project, the researchers surveyed a sample of 500 textile firms in Punjab and Sindh. The survey measured both the technological (product and process) and the non-technological (organizational and marketing) aspects of innovation where an innovation is the introduction of a new or significantly improved product, process, organizational method, or marketing method by an enterprise. Through this survey, the researchers measure ‘innovation’ in at least four different ways: (1) Innovation rate (based on the response of enterprise if they had innovated during 2011-13, which is further be divided into four types of innovation; i.e. product, process, organizational and marketing), (2) Innovation input (given by the ratio of R&D expenditure to sales), (3) Innovation output (given by the ratio of new products sales to total sales), and (4) Innovation efficiency (given by the ratio of new product sales to R&D expenditure).

Through this study, the researchers answers the following research questions:

  • How innovative is the textiles sector of Pakistan (measured in four different ways as described above)?
  • What are the correlates (both in terms of promoting and hampering) of innovation? (such as firm type and size, market structure, product market i.e. local or international, government regulations and facilitations, sources and type of cooperation, management patterns, skill profile, ICT, access to finance and source of finances, information on technology and markets, and demand for innovations etc).