GAZIANTEP INNOVATION SURVEY 2015 Technical Assistance for Development of the Research & Technological Infrastructure of Gaziantep Technopark

BİLİM, SANAYİ VE TEKNOLOJİ BAKANLIĞI

REPORT INFORMATION

This report has been prepared within the framework of the following project: Technical Assistance for Development of the Research & Technological - Infrastructure of Gaziantep Technopark Reference Number: EuropeAid/128720/D/SER/TR Contract Number : TR07R1.03-01/001

Disclaimer The views and opinions expressed in this report are solely those of the authors and do not necessarily reflect the official position of Gaziantep Teknopark or any other legal entity.

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EXECUTIVE SUMMARY In recent years, the causes and effects of regional variations in economic performance and their link with innovation have attracted considerable attention by policy makers and various scholars. It is evident from the literature on regional competitiveness and innovation that the role of the firm has been seen as critical within the innovation system of a region. Therefore, this report seeks to cast some light on the innovation performance and characteristics of the firms operating in the Gaziantep province. The Turkish Statistical Institute (Turkstat) collects data related to innovation at the national level. According to 2013 data, 48.5 percent of all companies in Turkey (including large corporates) are innovative companies. Turkstat provides only aggregated data at the national level, which does not allow unveiling particular characteristics of the companies such as name of the company, its regional base, development stage, industry focus and number of employees. Hence, in order to probe beyond the Turkstat aggregated figures which are provided at the national level and to perform a meaningful analysis for companies based in the Gaziantep province, disaggregated data for Gaziantep based companies has been collected through an online survey. Using a relatively large set of data collected through the online survey, this report looks at both the characteristics and also the attitudes of local companies towards innovation, thus enabling the examination of several factors associated with innovation performance. More particularly, this research report has three objectives: • To provide a broader assessment of the R&D and innovation needs of all Gaziantep SMEs • To assess the current understanding and attitude of Gaziantep SMEs towards innovation • To enable the identification of suitable training and capacity building actions targeting local SMEs

To our knowledge, this is the first attempt to empirically analyse the innovation performance of the Gaziantep SMEs using self-reported data. Using survey data from 303 companies (254 SMEs and 49 large companies), the research identified that:

*Turkstat Innovation Statistics: http://www.turkstat.gov.tr/PreTablo.do?alt_id=1039

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REPORT INFORMATION Innovation performance of Gaziantep SMEs • Using a proxy for innovation, the survey results suggest that 54.7 percent of the surveyed Gaziantep based companies are innovative companies (51.8 percent for SMEs). • There is no relationship between innovation and company age in the sample, suggesting that innovative companies in Gaziantep could be both young and old companies. • In contrasts, the number of company employees is positively and statistically significant correlated with innovation, suggesting that larger companies are more innovative than smaller companies in the Gaziantep province. • Companies that export their products to European, neighbouring or any other countries are more likely to be innovative than those that do not export. In contrast, the majority of companies that operate within 100km from Gaziantep are non-innovative companies. Innovation characteristics of Gaziantep SMEs • 79 percent of the surveyed SMEs have invested in machinery, equipment or software in order to introduce a new or significantly improved product to the market, in the last three years. • 63 percent, have organised a training program for their employees in order to promote or maintain innovation processes within the company, in the last three years. • Only 31 percent acquired technical knowledge or a patented and unpatented inventions licensed by other institutions, in the last three years. • 86 percent plan to undertake R&D activities in the future. • Only one quarter of them have collaborated with a university or an R&D centre in the last three years. • 46 percent of the surveyed companies responded that are not aware of government’s research and development funding and any related tax benefits. Main sources of innovation 71.2 percent of surveyed SMEs consider customer markets as an extremely important source for innovation. The second most important source of innovation is intra-organisation units (i.e. company employees), followed closely by trade shows, suppliers and competitors. Interestingly, internal R&D departments are extremely important to only 29.2. Universities and other research institutes are considered to be en extremely important source of innovation to only 25.1 and 20

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EXECUTIVE SUMMARY percent of the survey respondents, respectively. Finally, independent consultancies are by far the least important source of innovation amongst the surveyed companies. Attitudes towards innovation Based on their responses, it appears that most surveyed companies have developed an innovation culture, which encourages innovation and puts the managers at the forefront of innovation activities. In addition, and in line with the current thinking in innovation management that argues that innovation comes from all employees and not just the R&D departments, one quarter of the surveyed companies stated that their R&D departments are not solely responsible for innovation activities, but instead, all departments of the company are involved in the innovation process. Interestingly, only approximately 30 percent of the surveyed companies reward their employees who are engaged with innovation activities in a regularly basis. 38.6 of them, reward their employees ‘sometimes’ while 32.3 percent of the companies stated that they either reward their employees on a ‘seldom’ basis or ‘never’. Ease of access to R&D and Innovation support One third of the surveyed companies responded that they receive assistance to access R&D and innovation related support ‘often’ or ‘very often’ from the local SMEs support organisations (i.e. Chamber of Commerce, Chamber of Industry, KOSGEB and Silk Road Development Agency). Equally, one third of them stated that they receive such assistance ‘sometimes,’ while the remaining one third of surveyed companies stated that they ‘rarely’ or ‘never’ receive such support. Interestingly, the perception of the surveyed companies regarding the level of assistance they receive does not significantly differentiate among the four local R&D and innovation support providers. The results also suggest that there is a proportionally large number of companies that have not benefited yet from R&D and innovation support. Factors hampering innovation The survey results suggest that ‘the lack of qualified personnel’ is the most important factor hampering innovation amongst the surveyed SMEs (52 percent). This is closely followed by ‘the lack of financial resources’ (49.4 percent). 37.2 percent of the survey companies stated that the recruitment of new and expensive technology is an extremely important reason that hampers

*Turkstat Innovation Statistics: http://www.turkstat.gov.tr/PreTablo.do?alt_id=1039

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EXECUTIVE SUMMARY innovation. Finally, only a relatively small proportion of surveyed companies believe that ‘resistance to innovation from employees’ is an extremely important factor which affects their ability to conduct innovation activities. Training needs The top five training needs for innovative companies include Marketing, Project Management Project Design, New Product Development, Creating a Brand Recognition and Basic Business Management. While the top five training needs for noninnovative companies includes Marketing, Business Development, Technology and Innovation Management, Basic Business Management, Human Resource Management. Looking only at the large companies (non SMEs), Marketing is not one of their top training needs. Large companies wish to receive training in the following areas: Technology and Innovation Management, Business Development, Project Management and Project Design, Creating a Brand Recognition and New Product Development.

Recommendations Based on the survey results and on face-to-face interviews with a large number of SMEs managers, a set of recommendations has been drafted: • Local companies operating in the Heavy and Middle Manufacturing industry are shown to be more innovative than those operating in different sectors. Innovation support organisations could put emphasis on supporting these two industries that have already exhibited innovative performance. In addition, the results suggest that innovation is not related to the company age, so the Gaziantep business support organisations should be aiming to support both start ups and well established companies. • In contrast, companies from the Manufacturing Light industry and the Food industry, appear to be less innovative than those operating in different sectors. Such companies may be targeted by support organisations as potential targets to receive training. In fact, 40 percent of all surveyed SMEs have not received any training in the last three years, indicating that there is a large a pool of local SMEs that could be suitable for training provided by the Teknopark and other relevant organisations. • Although local SMEs are keen to promote innovation and indeed allocate resources to improve their innovation performance, in general, such efforts take place in silos, without

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EXECUTIVE SUMMARY external collaboration. Companies operating in the Manufacturing sectors, tend to collaborate with external organisations more often than those operating in different sectors, suggesting that such companies may be more open to establishing collaborations with Gaziantep Teknopark or other local support organisations. • A striking 75 percent of the surveyed companies have not collaborated with Universities or other R&D centres in the last three years, suggesting that there is large gap in industry-academia collaboration and also a lot of scope for improving the links between the two. Gaziantep Teknopark can take an active role in closing this gap by becoming the bridge between industry and academia, through the organization of networking events and establishing collaborative R&D projects. • ‘Lack of qualified personnel’ tops the list of the most important factors hampering innovation among local SMEs. The role of the Teknopark could be twofold in order to address this problem. First, it could provide suitable training, based on the companies needs and second, it could offer a service to local companies that brings together outside expertise and local companies. • Access to finance and expensive equipment are also important factors that prevent local companies of becoming more innovative. With the tax incentives offered to its tenants, its laboratories and high tech equipments, the Teknopark could potentially soften this burden. • Based on the survey results, the most common training needs for the local companies is Marketing followed by Business Development and Brand Recognition. The Teknopark could provide specific training in these areas. In addition, non-innovative companies require training in Technology and Innovation, suggesting that they do understand the need to become more innovative. Such companies could be targeted by the Teknopark, both as training recipients and potential future tenants. • Around half of the surveyed companies responded that are not aware of government R&D funding and relevant tax benefits and local business support providers should take all necessary actions to fill this awareness gap. Gaziantep Teknopark should shout out louder about the tax incentives it offers to its tenants. Most of these companies have been operating for over 6 years but for less than 20 years. This suggests, that younger and older companies are more aware of the relevant government funding and tax incentives, perhaps reflecting the fact that start up and early stage companies are seeking more actively business support.

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EXECUTIVE SUMMARY • Around one third of the surveyed companies responded that they receive assistance to reach R&D support often or very often from the local SMEs support organisations (i.e. Chamber of Commerce, Chamber of Industry, KOSGEB and Silk Road Development Agency). This result suggest that there is proportionally large number of companies that have not benefited yet from the assistance provided by the local support organisation in order to reach R&D support. The local business support providers should increase their efforts in reaching this relatively large proportion of local SMEs that received very little or no assistance in getting R&D funding, either because they were unaware of such facility or they were aware, but never approached the local business support providers. • Another major obstacle local SMEs face concerns access to finance. 49.4 percent of the surveyed companies identified ‘lack of financial resources’ as extremely important factor, which hampers innovation. The local business support providers should facilitate greater access to finance, especially for start up and early stage companies and provide ‘investment readiness’ support. • Interestingly, only approximately 30 percent of the surveyed companies reward their employees who are engaged with innovation activities in a regularly basis. The literature suggests that rewarding employees, especially with no financial rewards, is one of the basic principles of innovation management. Local companies should put a system in place where employees will be rewarded for their participation in the innovation activities of the company. Such rewards could take the form of flexi time, time dedicated to generating innovation ideas etc. • 40 percent of the surveyed SMEs did not provide any training to their employees. Company managers should realize the importance of training and ensure that they identify the right training needs and provide suitable training opportunities to their employees.

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ACKNOWLEDGEMENT

This research report was written by Assoc. Prof. Dr. Tuba Direkci, University of Gaziantep, Assist. Prof. Dr. Hasan Aksoy, University of Gaziantep, and Dr. Yannis Pierrrakis, Techical Assistance to Gaziantep Teknopark (KE3) and Senior Lecturer at Kingston University, London. The authors are grateful to several people for their contribution to this research: Figen Celikturk Chamber of Commerce, Ibrahim Cali Chamber of Industry for their assistance when approaching local companies; Lauri Kuukasjarvi and Bugra Sofuoglou from the Technical Assictance to Gaziantep Teknopark for their help in the initial stage of the project and for their comments on earlier drafts. Finally, the aurthos would particularly like to thank the over 300 companies that took part in the survey.

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TABLE OF CONTENTS

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1 1.1 1.2 1.3 1.4 1.5 1.6

METHODOLOGY Survey sample Questionnaire development Questionnaire validity Response rate Statistical data analysis techniques Research caveats

14 14 14 14 15 15 16

2 2.1 2.2 2.3 2.4 2.5 2.6

SURVEYED COMPANIES’ PROFILE

17 17 18 19 20 21 22

3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9

SMEs INNOVATION PERFORMANCE

23 23 25 29 33 34 35 36 36 38

Position within the company Work experience Years of incorporation Company size Geographical markets Industry operation

Innovation activities Defining innovation The sources of knowledge for innovation Innovation culture within the company Ease of access to R & D support Implementating organizational innovation Factors hampering innovation Innovation strategy Training needs analysis

LIST OF FIGURES Figure 1: Position within the company (N=250) Figure 2: Work experience (N=245) Figure 3: Years of incorporation (N=247) Figure 4: Company size (N=252) Figure 5: Geographical markets (N=252) Figure 6: Industry of operation (N=247) Figure 7: Innovation activities Figure 8: Innovative companies (N=254) Figure 9: Export activity and innovation (N=247) Figure 10: Source of knowledge for innovation Figure 11: Innovation culture within the company Figure 12: Ease of access to R&D support Figure 13: Implementation of organisational innovation (N=171) Figure 15: Type of innovation strategy followed (N=168) Figure 16: Training need for all SMEs (N=188) Figure 18: Training needs for innovative SMEs (N=124) Figure 19: Training needs for non-innovative SMEs (N=64)

17 18 19 20 21 22 24 26 27 30 33 34 35 36 38 39 40

LIST OF TABLES Table 1: Company characteristics that are associated with innovation Table 2: Relationship between company size, industry and innovation, Ordinary Least Square (OLS) regression analysis.

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1.METHODOLOGY This section of the report presents and justifies the research methodology employed.

1.1 Survey sample Several attempts were made to identify the correct sample of companies to be targeted by the survey. Due to the inconsistencies and severe biases amongst existing company samples of Gaziantep based companies, it was decided that the most appropriate way to proceed was to approach the total population of SMEs in the Gaziantep Province. Working closely with the Chamber of Commerce and Chamber of Industry, the online survey link was sent via email to all members of the two organisations: 3,867 members of the Chamber of Industry and over 14,000 members of the Chamber of Commerce. It is worth noting that by law, all SMEs have to be members of their local Chamber of Commerce. In order to ensure that the sample generated is representative of the population of the Gaziantep SMEs, a number of tests were conducted: the study sample was compared with the total population on two characteristics, industry specialisation and size. Both tests did not reveal a sample biased towards either company size or industry specialisation.

1.2 Questionnaire development The online questionnaire contained several distinctive sections, corresponding to the three objectives of this research (i.e. company characteristics, innovation performance, innovation culture, innovation related activities and training needs). The questionnaire was designed by the Technical Assistance Team (TAT), together with the NKEs (Prof Tuba Baskonus and Prof Hasan Aksoy) and in consultation with the Gaziantep Technopark Management Team, SPER, OCUD, the Chamber of Commerce and the Chamber of Industry. The online questionnaire was developed using www. gizmosurvey.com an online survey tool that provides all necessary functionalities required. The questionnaire can be accessed via the following link http://www.surveygizmo.com/s3/1824375/6277769f0265.

1.3 Questionnaire validity In order to establish validity of the questionnaire (the amount of systematic or builtin error in measurement), the following activities took place. Validity of the questionnaire was established

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using a panel of experts (academics and stakeholders) and a field test. Based on the feedback received from this exercise, several changes were made to the questionnaire. More particularly: The questionnaire itself was developed in three stages. In the first two stages the TDZ management team were consulted and asked to provide feedback on the draft questionnaire. At a second stage, the revised questionnaire was presented to 10 SMEs and similarly, their feedback was incorporated accordingly. During this process several questions were changed or added. When the questionnaire was ready, two SMEs were asked to complete it and provide feedback. The questionnaire was sent out via personalised emails in an electric format. The survey was completed in two stages. The first stage took place between 9th October and final reminder was sent out on the 19th October 2014. This was then followed by a number of personal telephone calls to randomly picked companies to encourage them to complete the survey. The survey closed on the 24th October 2014.

1.4 Response rate It is impossible to accurately measure the response rate of the survey as the online survey link was sent to the email accounts that the Chamber of Commerce and Chamber of Industry holds for their members, and several of these emails are no longer in use. However, using the Surveygizmo software, it became apparent that approximately 650 companies clicked on the link to access the on line survey. 306 of them partially completed the survey (47 percent) while 195 of them completed the survey in full. However, it is not possible to know the number of SMEs that actually became aware of this survey.

1.5 Statistical data analysis techniques The responses collected were transformed into numbers in order to be analysed using SPSS and STATA (statistical software). T test and one-way ANOVA test have been generated to define the statistic and theoretical significances between the groups of each question and to identify relationships between different variables. For each question the normal curves were graphed but these were of non-statistical importance and therefore have been excluded from this report.

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1.6 Research caveats As with any research that is based on the collection of primary data via a survey, there are several caveats that one needs to take into consideration when interpreting the survey results. More particularly: 1. The results are based on self-reported on-line survey, which makes it impossible to validate the responses. 2. The survey was completely on a volunteer basis and therefore there is a possibility that only companies that are aware or interested in innovation took part in the survey and thus perhaps creating a sample biased towards more innovative companies. 3. The survey was sent to the email addresses that the Chamber of Commerce and Chamber of Industry currently holds in their databases for their members. However, there are no particular reasons to believe that this may have influenced the decision of the companies to complete, or not to complete, the survey. Despite the above caveats, to our knowledge, this research is the most comprehensive analysis on innovation in Gaziantep SMEs, which provides strong backing to the results of the qualitative analysis that has previously taken place within the framework of this project (i.e. stakeholders consultation). This research should be seen as the first step towards establishing a systematic way of measuring and monitoring innovation performance among Gaziantep-based companies.

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2.SURVEYED COMPANIES’ PROFILE The first set of survey questions was related to the company’s profile and the participant’s position and years of experience. The survey participants were asked to identify their role within the company by selecting one of the following options: business owner; general manager; board member; sales manager; R&D manager; marketing manager; other.

2.1 Position within the company Figure 1: Position within the company (N=250)

Marketing Manager 5%

Board Member 8%

General Manager 14%

R&D Manager 0%

Business Owner 46%

Other 27%

Business owners counted for 46 percent of the surveyed population, while 13,6 percent were general manager and 8.4 percent a board member. The survey participants were also asked to state their years of experience by selecting one of the following time intervals: up to 5 years, 6-10 years, 11-15 years, 16-20 years, 21-25 years, 26 and more than 26 years.

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2.2 Work experience Figure 2: Work experience (N=245)

16-20 years 1%

Over 26 years 21-25 9% years 9%

Up to 5 years 30%

11-15 years 25% 6-10 years 26%

Approximately, 30 percent of the survey responses have up to 5 years working experience while 26 percent of them have between 6 and 10 years. In total over half of all survey participants have 10 years or less of working experience. Survey participants were asked to state how long the company has been operating for by selecting one of the following time intervals: 1-5 years, 6-10 years, 11-15 years, 16-20 years, 21-25 years, 26 years and more than 26 years.

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2.3 Years of incorporation Figure 3: Years of incorporation (N=247)

21-25 years 4% 16-20 years 8%

Over 25 years 14%

11-15 years 16%

Less than 5 years 40%

6-10 years 18%

Figure 3 illustrates that 40 percent of the sample companies have started operations in the last 5 years while around 60 percent of them in the last 10 years. These results reveal that a large proportion of companies have been recently founded.

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2.4 Company size Figure 4: Company size (N=252)

Between 100 and 250 employees 10% Between 50 and 99 employees 7% Between 25 and 49 employees 13%

Between 10 and 24 employees 15%

Less than 10 employees 55%

Figure 4 indicates that 55 percent of the surveyed companies have between 1 and 9 employees and therefore are classified as micro companies (in terms of number of employees). 83.2 percent of the sample companies are small companies as they have less than 50 employees. Only a small number of companies (9.6 percent) in our sample have between 100 and 250 employees. It is clear that most of the surveyed companies in our sample are micro or small.

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2.5 Geographical markets Figure 5: Geographical markets (N=252)

European countries 8% Within 100km of the company base 23% Turkey national 39%

All other countries 16% Neighbouring countries 14%

Figure 5 provides information related to geographical market that the companies operate in. 43 percent of the sample companies operate at the national level (the whole Turkey), while one quarter of them operate within 100km from their base in Gaziantep. 14.3 percent of them operate (including exporting) to neighbouring countries and only 4.3 percent of them in European countries.

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2.6 Industry operation The first set of survey questions was related to the company’s profile and the participant’s position and years of experience. The survey participants were asked to identify their role within the company by selecting one of the following options: business owner; general manager; board member; sales manager; R&D manager; marketing manager; other. Figure 6: Industry of operation (N=247)

Manufacturing: Other

Manufacturing: Middle industry: carpets etc. Architecture and Engineering

Handling and Storage

Manufacturing: Food industry

Manufacturing: Heavy industry: metal …

Computing Technologies & Programming

Manufacturing: Light industry: apparel etc.

Finance and Insurance

Scienti�ic Research and Developmen

Publishing Operations

Mining and quarrying

0

10

Number of companies

20

30

40

50

60

Figure 6 illustrates the sectors which companies operate in. Not surprisingly, the most popular sector amongst the sample companies is manufacturing. Carpet manufacturers, architecture & engineering, handling and storage, food industry and heavy industry are among the most popular sectors in which the surveyed Gaziantep SMEs operate in.

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3. SMEs INNOVATION PERFORMANCE This section of the report analyses the innovation activity, sources of innovation knowledge and companies’ attitude towards innovation. Survey participants were invited to respond to the following questions and sub-questions: • Has your company being engaged in innovation activities during the last three years? • Which kind of source of knowledge has been used to make improvements in the company by level of importance? • What is your company’s attitude towards innovation? • Which factors affect the culture of innovation in the company? • Ease of access to R & D support • Which factors affect the organizational innovation? • Which factors hamper innovation? • Innovation strategies

3.1 Innovation activities This part of the survey includes a set of questions related to companies’ innovation source, requirement for innovative staff, acquisition of technical knowledge and future R&D plans.

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Figure 7: Innovation activities

Has your company purchased any machinery, equipment and software in order to develop new or signi�icantly improved product /service or process, in the last three years? (N=210)

79

Has your company organised any training for employees to promote or maintain innovation processes, in the last three years? (N=207)

63

Has your company purchased any technical knowledge or licences of patented and unpatented inventions from another organisations, in the last three years? (N=202)

37

31

69 86

Do you plan to make R & D activities in the future? (N=209) Has your company collaborated with universities or R&D centres in the last three years? (N=206)

Are you aware of the state’s �inancial support for R&D and innovation programs and do you know about the relevant tax bene�its that the state provides? (N=206)

21

14

25

0%

Yes

10%

No

75

20%

54

30%

40%

50%

60%

70%

46

80%

90%

100%

According to the Oslo Manual (2005) the minimum requirement for a change in a firm’s products or functions to be considered an innovation is that it is new (or significantly improved) to the firm. 79 percent of the sample companies have invested in machinery, equipment or software in order to introduce a new or significantly improved product in the market. A significant proposition of the surveyed companies, 63 percent, have organised a training program for their employees in order to promote or maintain innovation processes within the company (this may include training for the use of a new equipment). While, only 31 percent of the surveyed companies acquired any technical knowledge or a patented and unpatented invention licensed by other institutions. Although many companies do not tend to acquire any technical knowledge from other institutions, a striking 86 percent of them responded that they plan to undertake R&D activities in the future. Only one quarter of the surveyed companies have collaborated with a university or an R&D centre in the last three years. Companies that collaborate with universities or R&D centres tend to operate in the manufacturing sectors including the carpet industry. Most of the surveyed companies (75 percent) have not collaborated with other organization.

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A striking 46 percent of the surveyed companies responded that are not aware of government R&D funding and tax benefits. Such companies do not operate in a particular sector and they are evenly spread amongst all examining sectors. In addition, the highest proportion of companies in the sample that are unaware of government R&D funding and relevant tax benefits are those that have been operating between 6 and 20 years. Younger and older companies are more aware of the relevant funding.

3.2 Defining innovation The Frascatti and Oslo Manuals link innovation with the introduction of new or significantly improved product into the market. Therefore, for the purpose of this research, a proxy of innovation was created and included all companies that answered positively to the following two questions: Has your company purchased any machinery, equipment and software in order to develop new or significantly improved poduct/service or process, in the last three years? And do you plan to make R&D investments in the next period? A total of 166 of all surveyed companies replied positively to both questions (132 SMEs and 34 large companies), indicating that 54.8 percent of all surveyed companies and 51.8 percent of SMEs can be classified as innovative companies for the purpose of this research. Although the methodology used in this research is different to the methodology used by Turkstat and therefore meaningful comparisons cannot be made, it is worth mentioning that according to Turkstat, 48.5 percent of all companies in Turkey are innovative companies.

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Figure 8: Innovative companies (N=254)

No 48,2%

Yes 51,8%

Table 1: Company characteristics that are associated with innovation

Company years of operation

Innovation

Company operation

0.078

1

years

of

0.171 Number of employees

0.143*

0.339*

0.013

0.000

The correlation coefficients suggest that there is no relationship between innovation and company age in the sample, suggesting that innovative companies are both young and old companies. In contrasts, number of employees is positive and statistically significant for both innovation and company’s age, suggesting that the more employees a company has the more innovative it is.

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Figure 9: Export activity and innovation (N=247)

90%

80%

83%

70% 50%

40%

40% 30% 20% 10%

0%

62%

60%

60%

38%

50% 50%

46%

54%

Non innovative companies

17%

European countries

All other countries

Neighbouring countries

Innovative companies

Turkey national

Within 100km of the company base

Companies that export their products to European, neighbouring or any other countries are more likely to be innovative companies. In contrast, the majority of companies that operate within 100km from Gaziantep are non-innovative companies.

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Table 2: Relationship between company size, industry and innovation, Ordinary Least Square (OLS) regression analysis VARIABLES

(1)

(2)

Innovation

Innovation 0.0311*

Number of employees

(0.0165) Manufacturing: Light industry (e.g. apparel)

-0.0868

-0.0963

(0.145)

(0.145)

-0.0626

-0.072

(0.106)

(0.108)

Manufacturing: Middle industry (e.g. carpets)

0.203**

0.146*

Manufacturing: Heavy industry (e.g. metals)

(0.0933) 0.260**

(0.0997) 0.250**

(0.113)

(0.113)

0.147*

0.118

(0.086)

(0.0871)

-0.0836

-0.0987

(0.118)

(0.118)

0.232

0.227

(0.178)

(0.19)

-0.311**

-0.290*

(0.153)

(0.153)

0.0933

0.0989

(0.101)

(0.101)

0.137

0.138

(0.133)

(0.133)

0.207

0.194

(0.13)

(0.13)

0.449***

0.389***

(0.0758)

(0.0852)

Observations

295

290

R-squared

0.095

0.104

Manufacturing: Food industry (e.g. pasta)

Manufacturing: Other Handling and Storage Publishing Operations Finance and Insurance Architectural and Engineering Scientific Research and Development Computing Technologies & Programming Constant

Standard errors in parentheses

*** p