Innovation, trade barriers and exports: evidence from manufacturing firms in ASEAN countries
Journal of Asia Business Studies
ISSN: 1558-7894
Article publication date: 14 March 2022
Issue publication date: 17 January 2023
Abstract
Purpose
This study aims to integrate both internal and external factors to examine the effect of innovation and perceived trade barriers on firms’ export activity. In particular, the authors expand the scope of innovation into both technological (product and process) and non-technological (marketing and management) innovation. Furthermore, the authors examine the potential joint effect of perceived customs and trade barriers on firms.
Design/methodology/approach
The authors empirically test the hypotheses by using firm-level data from the World Bank Enterprise Survey during the most recent year available for each ASEAN country, together with both firm- and country-level controls from various data sources. Specifically, the final sample for analysis includes 3,602 firms from Cambodia (100), Indonesia (1157), Laos (99), Malaysia (445), the Philippines (719), Thailand (572) and Vietnam (510).
Findings
First, the results show that firm-specific innovation capabilities (including non-technological of managerial innovation) do matter for explaining export propensity. Furthermore, in contexts in which location-bound advantages are prevalent, the effects of innovation may disappear and further deteriorate performance in the post-entry stage. Second, the findings support the notion regarding the prevalence of country- over firm-specific advantages for the international expansion of companies from ASEAN countries. More specifically, this study holds that innovation does not matter for export intensity and that factors related to the location’s institutions appear to be more important.
Originality/value
First, it acknowledges and examines the effect of not only technological innovation, but also non-technological innovation on export intention. Second, the paper measures the institutional effect at the firm level, rather than as a country-specific factor, to better understand the combined effect of internal and external variables on firms’ export strategy. Furthermore, it performs a cross-country analysis while controlling for other confounding firm and macro factors. Third, the authors test the model on both pre-entry (export propensity) and post-entry (export intensity) stages. Finally, the study responds to calls for research that examines the international competitive advantages of firms from ASEAN countries.
Keywords
Acknowledgements
The authors would like to thank two anonymous reviewers for their insightful comments. Funding: This research was funded by the National University of Malaysia, under grant DCP-2017-017.
Citation
Ayob, A.H., Freixanet, J. and Shahiri, H. (2023), "Innovation, trade barriers and exports: evidence from manufacturing firms in ASEAN countries", Journal of Asia Business Studies, Vol. 17 No. 1, pp. 203-223. https://doi.org/10.1108/JABS-05-2021-0185
Publisher
:Emerald Publishing Limited
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