This paper examines the role of "business innovation" and "business ethics"
- two seemingly unrelated principles - in underpinning the disparities in economic
prosperity across 107 countries over the period from 2003 to 2006. Unlike Porter,
Ketels, and Delgado's (2007) statistical approach, which relies on partial correlations,
this paper uses a multiple regression analysis within a general macro/microeconomic
framework to examine business innovation strategies and ethics, while controlling for
human capital, geography, and socio-cultural demographics. Additionally, this paper
borrows from Wu (2005) to assess the interaction between business innovation strategies
and business ethics. Econometric results indicate that business innovation and
business ethics are both positively correlated with and needed to sustain economic
prosperity. Additional results show that microeconomic variables have the primacy
over macroeconomic ones. Relevant policy implications are discussed.
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