Abstract
Despite its firms’ regional leadership, South Africa faces extreme unemployment and inequality. This study examines the innovation divide between ‘established’ and ‘emerging’ firms, analyzing a national dataset across industries to assess disparities in R&D, product innovation, and process innovation. Findings reveal that innovation activities, critical for growth, are dominated by older, larger, and market-concentrated firms, limiting access for smaller, younger firms. This skewed innovation landscape exacerbates inequality, as emerging firms struggle to leverage innovation for employment creation and inclusive growth. The study identifies systemic barriers that constrain innovation’s developmental impact and proposes mechanisms to democratize its benefits. By mapping key structural challenges, we highlight policy interventions to bridge this divide, ensuring broader participation in innovation-driven economic transformation. These insights contribute to a deeper understanding of innovation dynamics in developing economies and offer actionable strategies for equitable, sustainable growth.