Does crime affect firm innovation? Evidence from Trinidad and Tobago

Research has shown that a suitable business environment supports growth by encouraging investment and higher productivity which in turn impacts enterprise performance and accelerate economic growth. In Trinidad and Tobago, there has been an attempt to encourage investment in innovation through the provision of an enhanced business environment. According to a World Bank report (2007), there is a positive correlation between low rates of business expansion and investments and the increasing incidence of crime within the Caribbean region. This paper uses the 2010 Enterprise Survey dataset for Trinidad and Tobago produced by the World Bank to examine the link between crime and firm innovation. The results obtained in this study suggest that firms which are experiencing losses as a result of crime are less likely to adopt measures of innovation over their lifespan with past losses having both immediate and long-term impacts.