SME Innovation in the Malaysian Manufacturing Sector

This paper examines the determinants of innovation amongst small and medium enterprises in the Malaysian manufacturing sector using firm-level data. For small-sized firms, younger firms are more likely to innovate compared to older firms. However, for medium-sized and large-sized firms, older firms are more likely to innovate. The extent of foreign ownership is not an important determinant of innovation. Small-sized firms with more employees are more likely to innovate. Medium-sized firms that produce for domestic market tend to be more innovative. In terms of ownership structure, medium-sized firms that are public limited companies are less likely to innovate. The relationship between technological characteristics of industry and firms' likelihood to innovate appear to be complex. Higher market concentration is associated with higher probability to innovate for medium-sized firms.