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Investing in knowledge and innovation is recognised as a key driver of economic growth in any country. This paper contributes to the thin literature on innovation determinants in developing economies by empirically examining the impact of macro-level obstacles to business on small and medium-sized enterprises’ innovations in three Arab countries, namely, Egypt, Morocco, and Tunisia. While R&amp;D emerged as the main factor that impacts positively and significantly the likelihood that firms innovate and succeed in producing a diverse set of product and process innovations, different combinations of other factors proved to affect innovation in each of the three countries.

Macro barriers to business and innovation in developing economies: evidence from Egyptian, Moroccan, and Tunisian SMEs