DETERMINANTS OF FIRM-LEVEL INNOVATION PERFORMANCE: NEW EVIDENCES FROM ASEAN MANUFACTURING FIRMS

Based on the stakeholder theory, we posit that firms' innovation, as a strategic choice, is determined by not only firms' resources but also their pressures from different stakeholders and relationship with the government. Using a dataset of 3,444 firms in seven ASEAN countries, we find that firms' innovative outputs are positively influenced by export orientation and fierce competition but restrained by the presence of foreign investment. In addition, while strengthening the relationship with government facilitates, the chance to create some types of innovation, could magnify or dampen the effects of those pressures on firms' innovation. Our findings have useful implications for the firms' managers to accumulate and spend resources to build up a strong capacity for innovation. For the governments in ASEAN region, they should focus on improving the institutional quality and providing incentives for foreign investments that only bring advanced technologies and spillover effects.