Do firms require an efficient innovation system to develop innovative technological capabilities? Empirical evidence from Singapore, Malaysia and Thailand

Technological change in firms in late-industrial i sing countries is very much a process of acquiring and improving technological capabilities. The paper reviews some literatures on technological capabilities, technological learning and systems of innovation to prepare the ground for the investigation of the following questions: Do firms with high technological capabilities, in terms of the Original Equipment Manufacturer (OEM) to Own Brand Manufacturing (OBM) framework, also have high innovation and linkage capabilities? And does the quality of the national and regional innovation system positively influence these capabilities? In order to answer these questions, the paper compares groups of firms with different capabilities in Bangkok (Thailand), Penang (Malaysia) and Singapore. Finding evidence in favour of both questions, we argue that the quality of the innovation system is highly important for learning and innovation, even though figures for Penang suggest that firms can do better than the quality of their respective National Innovation System (NIS) would predict. Nevertheless, the influence of the innovation system is clearly stronger than the level of technological capabilities - at least in the classification used in our study. Hence, we additionally assert that more subtle classification methods for the assessment of technological capabilities should be used in future research.