Digital infrastructure and R&D intensity as drivers of marketing innovation performance in the EU-27: Evidence from heterogeneous panel and quantile regression models

Type of the article: Research ArticleAbstractThis study examines the long-run associations between digital infrastructure, research and development intensity, and marketing innovation performance across the 27 current member states of the European Union over the period 2010-2023. The empirical strategy first establishes the diagnostic properties of the panel through tests for cross-sectional dependence, slope homogeneity, second-generation unit roots, and cointegration. The Common Correlated Effects Mean Group and the Augmented Mean Group estimators provide the principal long-run elasticity estimates, the Method of Moments Quantile Regression model traces variations across the conditional distribution of marketing innovation, and Driscoll-Kraay estimator verify robustness. The baseline results show that a 1% increase in fixed broadband penetration is associated with a 0.247% higher marketing innovation performance indicator, and a 1% increase in R&D intensity is associated with a 0.312% increase, with both elasticities statistically significant at the 1% level. The quantile estimates reveal pronounced heterogeneity, as the conditional elasticity of digital infrastructure rises from 0.118 at the 10th percentile to 0.384 at the 90th percentile, indicating that member states at higher conditional innovation tiers exhibit higher marginal returns, a pattern consistent with cumulative advantage dynamics. Driscoll-Kraay estimates on the non-interpolated seven-year subsample corroborate the baseline elasticities. The findings imply that connectivity initiatives under the European Digital Decade program should be matched with localized capability-building to prevent a widening innovation divide within the Union.

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