Innovation and Firm Productivity: Empirical Evidence from Ghana

The study investigates empirically the impact of innovation on firm productivity in Ghana. In examining the relationship between innovation and firm productivity, two robust Instrumental Variable estimation techniques (Two Stage Least Squares and Optimal Generalized Methods of Moment) have been employed so as to cure any endogeneity problems that may exist in our models.The study realized that innovation impacts positively on the productivity of firms. Both process and product innovation have strong positive relationship with firm productivity in Ghana. It is also noted that while most employees in Ghanaian firms have got formal education, less practical or on-job training is offered to the employees by the firms. This study does not only serve as a reference work for subsequent investigations on the impact of innovation on productivity in Ghana, but it also serves as a guide to policy makers on drafting innovation policies.