Paraguay's Business Innovation System: Structure, Challenges and Opportunities
| Páginas | 70-87 |
| Fecha | 28 Diciembre 2025 |
| Fecha de publicación | 28 Diciembre 2025 |
| Autor | Romina María Sotto, Diego Daniel Sanabria, Patricia Gutti, Edgar Antonio Sánchez Báez |
| Materia | Derecho de las Nuevas Tecnologías |
J. Technol. Manag. Innov. 2025. Volume 20, Issue 4
70
ISSN: 0718-2724 - Journal of Technology Management & Innovation - www.jotmi.org
is journal and its contents are licensed under a Creative Commons Attribution-ShareAlike 4.0 International License (CC BY-SA 4.0)
Paraguay’s Business Innovation System: Structure, Challenges and Opportunities
Romina María Sotto1 , Diego Daniel Sanabria1 , Edgar Antonio Sánchez Báez1 , Patricia Noemi Gutti2
Abstract
is study analyzes Paraguay’s business innovation system during the 2018-2020 period using a neo-Schumpeterian approach. e research applies
social network analysis to innovation survey data, constructing bipartite networks with system actors and companies to examine linkages both at
the systemic level and by specic innovation objectives.
e analyzed network presents low density (0.012) and intermediate modularity (0.203), indicating strategic selectivity in relationships with six
distinct communities. Results reveal a hierarchical system dominated by commercial actors: Customers achieve perfect eigenvector centrality
(1.0) while Universities and Laboratories remain peripheral (centralities 0.2387 and 0.2174). Sectoral analysis shows manufacturing dominan-
ce (65.58%) with specialization of the information and communications sector in knowledge-intensive activities (38.42% in R&D networks).
Objective-specic networks exhibit signicant variation, with R&D showing the highest connectivity (density 0.030) and nancing the greatest
fragmentation (modularity 0.554).
e ndings reveal a pattern of “dominant commercial intermediation” in innovation systems of small emerging economies, where customer-
supplier relationships substitute traditional institutional linkages as the primary mechanism for knowledge transfer. is pattern aligns with
ECLAC’s identication of alternative innovation pathways in Latin America, suggesting that market networks provide system resilience. Key po-
licy implications include leveraging supplier networks for technology transfer, developing integrated nancing mechanisms, and creating shared
testing infrastructure while preserving existing advantages of business dynamics.
Keywords: Innovation systems; social network analysis; commercial intermediation; business networks; emerging economies; bipartite networks.
(1) Universidad Nacional de Asunción, Campus UNA San Lorenzo, Paraguay. 2Universidad Nacional de Quilmes, Bernal, Buenos Aires, Argentina.
*Corresponding author: rominasotto902@gmail.com
Submitted: November 6, 2025 / Approved: December 23, 2025
1. Introduction
Paraguay’s business innovation system oers a valuable context for
examining these structural dynamics. Despite limited formal R&D
infrastructure, the country has maintained innovation activities
through networks dominated by customer-supplier relationships
rather than the university-industry collaborations typical of develo-
ped economies. is structural pattern merits systematic documenta-
tion, particularly given the growing recognition that small emerging
economies may require dierent analytical frameworks than their
larger counterparts. Comparative studies document similar fragmen-
tation patterns across the region: Colombia shows negative scientic
source eects (Escorcia et al., 2022), Ecuador reports 71% coopera-
tion in information versus 40% in training (Rojas Loza et al., 2025),
while Brazil and Mexico maintain stronger university-industry linka-
ges (Dutrénit & Arza, 2010). However, systematic structural network
analysis documenting commercial intermediation dominance and
objective-specic fragmentation patterns remains absent for small
economies like Paraguay, limiting understanding of how system ar-
chitecture conditions innovation pathways in resource-constrained
contexts.
is study focuses on Paraguay as a representative case of small La-
tin American economies facing similar structural constraints: limited
institutional frameworks for innovation, weak university-industry
linkages (Paredes & Maldonado, 2022; Servín, 2016), and manufactu-
ring-dominated productive structures. Unlike larger regional econo-
mies (Brazil, Mexico, Argentina) with more developed institutional
coordination mechanisms (Dutrénit & Arza, 2010), small economies
like Paraguay, Ecuador, Bolivia, and Uruguay exhibit extreme insti-
tutional fragmentation, making commercial intermediation patterns
particularly pronounced. Understanding these dynamics provides in-
sights applicable to similarly-structured contexts across Latin Ameri-
ca and other developing regions.
Previous research on Latin American innovation systems has focu-
sed primarily on institutional weaknesses and policy gaps (Arocena
& Sutz, 2000; Dutrénit & Arza, 2010), with limited attention to how
commercial relationships operate as innovation intermediaries when
formal institutions remain underdeveloped. Social network analysis
provides tools to examine these patterns quantitatively, revealing
structural properties and hierarchical relationships that traditional
innovation surveys cannot capture.
is research contributes to JOTMI’s sustained examination of inno-
vation system architectures in Latin American emerging economies
(Geldes & Castillo-Vergara, 2025; Ribeiro et al., 2022; Tamayo-Ga-
larza et al., 2025), advancing understanding of how commercial rela-
tionships function as coordination mechanisms when formal institu-
tional frameworks remain underdeveloped.
J. Technol. Manag. Innov. 2025. Volume 20, Issue 4
71
ISSN: 0718-2724 - Journal of Technology Management & Innovation - www.jotmi.org
is journal and its contents are licensed under a Creative Commons Attribution-ShareAlike 4.0 International License (CC BY-SA 4.0)
is investigation documents the structural characteristics of
Paraguay’s business innovation system during the 2018-2020 period,
providing a baseline for understanding how commercial intermedia-
tion operated before recent regional transformations. Using biparti-
te network analysis of comprehensive survey data, we examine: (1)
What are the hierarchical structures of linkages within innovation
systems? (2) What functional specializations emerge across dierent
innovation objectives? (3) How can these ndings inform innovation
policy design in small emerging economies with similar structural
characteristics?
2Literature Review
2.1 Innovation Systems eory: Neo-Schumpeterian Foundations
e neo-Schumpeterian tradition of innovation systems analysis,
originating from Freeman (1987) and Lundvall (1992), challenges
linear models by emphasizing systemic interactions between rms,
institutions and organizations. is approach recognizes innovation
as coordinated learning across organizational boundaries (Lundvall,
1992). Ahrweiler and Keane (2013) extend this perspective by pro-
posing that innovation networks emerge from cognitive and social
interactions, providing conceptual framework for understanding
commercial actors as knowledge intermediaries. ECLAC (2022, p.13)
emphasizes that addressing major national challenges requires ‘coor-
dination between various stakeholders (government, academia, the
private sector and civil society)’ and the establishment of ‘new ins-
titutional arrangements’ for capacity-building in policy formulation
and management. is mission-oriented approach prioritizes applied
research that mobilizes productive, technical and knowledge capaci-
ties to resolve specic challenges rather than relying solely on market-
driven innovation models.
2.2 Innovation Linkages and Network Intermediation
Innovation linkages represent relational connections enabling
knowledge ows between system actors. Howells (2006) denes these
as intermediation processes facilitating knowledge creation, combi-
nation and exchange between organizations with dierent capabili-
ties. In contexts where formal intermediary organizations (techno-
logy transfer oces, innovation agencies) remain weak, commercial
relationships between rms and customers/suppliers may assume
intermediation functions. is ‘commercial intermediation’ diers
from formal brokerage by embedding knowledge exchange within
transactional relationships, creating hybrid structures combining
economic exchange with knowledge transfer (ECLAC, 2022). Del
Carpio and Miralles (2021) demonstrate in Peruvian manufacturing
that absorptive capacity mediates relationships between collaboration
networks and technological innovation, with dierentiated eects
from connections with customers, suppliers, competitors, and re-
search institutes. is conceptualization recognizes innovation emer-
ges from systemic interaction rather than isolated actors.
Empirical evidence reveals dierentiated impacts by linkage type.
Un et al. (2010) demonstrate in USA and Japan that collaborations
with universities and foreign rms generate stronger product in-
novation impacts than domestic rm partnerships, with absorptive
capacity moderating these eects. Giuliani (2007) provides critical
Latin American evidence: linkages with knowledge institutions (uni-
versities, R&D centers) show greater impact on radical innovation,
while customer-supplier linkages drive incremental innovation in
Chilean, Argentine and Brazilian clusters. is functional dieren-
tiation suggests commercial-dominant systems may be structurally
oriented toward incremental rather than radical innovation.
2.3 National Innovation Systems in Developing Contexts
e National Innovation Systems (NIS) concept emerged in the late
1980s, redening innovation as interactive processes among public
and private actors (Edquist, 1997; Freeman, 1987; Lundvall, 1992;
Nelson & Rosenberg, 1993). Stuck et al. (2016) argue regional inno-
vation systems research lacks theoretically precise and quantitatively
measurable statements about inter-organizational structures, justi-
fying social network analysis application.
In developing countries, particularly Latin America, specic challen-
ges hinder adequate system functioning. Arocena and Sutz (2000)
identify weak linkages between main actors, predominant incremental
innovations, lack of coordinated policies, low R&D investment, and
orientation toward foreign technology absorption. Goñi and Maloney
(2014) demonstrate developing economies face decreasing returns on
R&D investment due to absent critical complements: specialized hu-
man capital, research infrastructure, and sophisticated private sectors.
eir ndings reveal that for poor countries, exclusive R&D spending
focus is insucient without complementary eorts in organizing natio-
nal innovation systems and strengthening actor interactions.
2.4 Empirical Evidence from Latin American Innovation Systems
Recent regional studies document systematic patterns distinguishing
Latin American systems from developed country models. Escorcia
et al. (2022) nd in Colombia that rms depend primarily on inter-
nal and open-access sources for innovation, while scientic sources
show negative eects on product innovation. is pattern indicates
that even when rms access university knowledge, it fails to translate
into innovation outcomes, revealing systematic barriers in university-
industry knowledge transfer. In Ecuador, Rojas et al. (2025) found
that rms cooperate primarily in information search (71%), techni-
cal assistance (47%), product testing (41%), and training (40%), with
minimal R&D collaboration. Cevallos et al. (2024) demonstrate that
cooperation in R&D, engineering, and technical assistance—but not
in information search, product testing, or training—signicantly
enhances technological capabilities. ese ndings reveal that rms
with higher capabilities engage in more complex activities, though
low-complexity cooperation predominates, reecting the regional
tendency toward incremental over radical innovation.
Pasciaroni and Barbero (2020) identify in Argentina signicant per-
formance gaps favoring linked rms, particularly those with com-
plex linkages, but these gaps are explained primarily by internal rm
characteristics (innovation activities, external information sources)
rather than direct linkage eects. Only in process innovation do com-
plex linkages show positive impact, particularly for SMEs, suggesting
linkage benets are mediated by absorptive capacity.
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