The Roles of ICTs in Product Innovation in Southeast Asia

ICTs are now essential to achieve innovation, since they can contribute to all aspects of the innovation process. This study attempts to examine (1) the relationship between ICT use and product innovation among firms in Lao PDR, Thailand and Vietnam and (2) the cause-effect relationship among different uses of ICTs. In this paper, the uses of ICTs are categorized according to their functionalities: (1) ICT used for obtaining external information on new technologies; (2) ICT used for sharing internal knowledge on products and production; and (3) ICT used for sharing internal knowledge on the market and consumers. The empirical study applied structural equation modeling to the questionnaire survey data conducted in the above three economies in early 2016. The number of valid responses was 349, consisting of 111 for Lao PDR (32%), 111 for Thailand (32%) and 127 for Vietnam (36%). Five hypotheses were constructed based on previous literature and field surveys by the authors. The estimation results show that the three uses of ICTs enhance product innovation directly or indirectly, namely (1) has the largest direct effect, whereas (2) and (3) promote innovation indirectly and to a lesser degree. Regarding causality, (2) and (3) enhance (1). Firms with higher capacity for sharing and developing information inside the firm can promote ICT use for obtaining external information, implying that firms with higher internal capacity for ICT use can connect with MNCs which own information on new technologies. This is the opposite of results gained from the authors' previous research.