Innovating against the odds? The impact of regulatory challenges on technology commercialization and product innovation performance

This study investigates how regulatory burden influences product innovation performance in emerging markets. Integrating the institutional theory, we propose that regulatory burden undermines firms’ perceived ability to commercialize new technologies, termed technology commercialization potential, which mediates the negative impact on innovation outcomes. We further examine how this relationship is shaped by two contextual factors: intangible resource advantage and environmental hostility. Using a two-wave, multi-informant survey data from 336 Vietnamese SMEs, the results confirm the mediating role of commercialization potential. Moreover, while intangible resource advantage strengthens the commercialization–innovation link, environmental hostility unexpectedly weakens it, indicating that external pressures can overwhelm firms’ commercialization efforts. These findings contribute to regulatory science and innovation research by highlighting commercialization potential as a critical mechanism through which institutions affect innovation. The study offers insights for managers seeking to overcome institutional barriers and for policymakers aiming to create more innovation-friendly regulatory environments.