| Summary: | The aim of the study is to explore whether logistics performance affects firms' innovation decisions. Using Turkey Regional Enterprise Survey conducted between August 2015 and June 2016, we measure logistics performance by transportation costs. We consider several aspects of innovation including process innovation, product innovation, organizational innovation and investments in Research Development. We also analyze whether the impact of transportation costs on innovation activities varies across industries or regions. Our findings indicate that the impact of transportation costs on RD activities is highest for firms in the construction sector, whereas for innovation outputs, the impact is greatest for the wholesale retail sector. Moreover, our results also reveal three regions where transportation costs matter the most for innovation are Ankara, Bursa-Bilecik-Eskisehir and finally Diyarbakir-Sanliurfa.
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