Paper/Speech Details of Conference Program for the 25th NISPAcee Annual Conference Program Overview Main Conference Theme Author(s) Marko Ropret University of Ljubljana Ljubljana Slovenia Aristovnik Aleksander, Mencinger Jernej, Title The Influence of Innovation Governance in the Public Sector on Private Sector Innovativeness File Paper files are available only for conference participants, please login first. Presenter Abstract The paper was motivated by the lack of comprehensive studies evaluating the influence of innovation governance factors in the public sector (hereinafter: institutional innovation factors) on a firm’s innovation results. Therefore, the aim of our study is to contribute scientific evidence regarding the extent to which public administrations’ institutional factors foster the private sector’s innovation results. Our research was guided by the main research question: How strongly do the institutional factors influence a firm's innovation results? Together with the relevance of the research question came the challenging task of how to encompass the institutional and firm data in the most holistic manner possible. We overcame this challenge by applying recent Global Competitiveness Index data in an original way, enabling us to rank the institutional factors by importance (influence on innovation results compared to the firms' internal factors). The results of the linear regression analysis performed interestingly showed a considerably weaker influence on innovativeness by the institutional factors than in the case of the firms' own internal innovation factors. In fact, the influence of the firms’ innovation factors (sophistication of business processes, on-the-job training, efficient use of talent) on the firms’ innovation results (R&D & Innovation capacity) was significant and strong, while the institutional factors (public administration institutions' performance, primary education, quantity and quality of higher education) also showed a statistically significant influence, yet a weak one. The lower influence of the institutional support factors does not of course mean state institutions do not have any important role in fostering firms’ innovations. Moreover, it should be noted that the institutional role is important, but at the same time it has its own limitations. We live in a globalized world, characterized by strong international competitors and market forces which dictate to firms what to innovate and which capabilities are then needed. In such conditions, institutions can primarily have a supportive role (e.g. with state co-funding, transparent law & administrative procedures, intellectual property protection mechanisms, and a proper education system), but not the role of intervening in what and how something should be produced. As underlined by the modern dynamic capabilities view theory, it is chiefly the role of the firm to ensure its competitive advantage by means of transforming its internal fundamental capabilities. This study provides guidance for such efficient use of institutional and internal resources, which proves to be particularly important due to the effects of the economic crisis. Moreover, it provides researchers with valuable insights into the importance of further systemic studies, encompassing both institutional and firm innovation factors.