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The Determinants of Innovation in the Malaysian Manufacturing Sector: An Econometric Analysis at the Firm Level

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  • Lee, Cassey

Abstract

Econometric analysis of firm-level data from the recent National Survey of Innovation indicates large firms are more likely to innovate compared to small firms. Ownership structure is also found to be an important determinant of innovation - private limited and public limited firms are twice more likely to innovate compared to soleproprietorship firms. A surprising finding is the negative correlation between the propensity to innovate and the share of exports in sales. There is also no evidence that innovation is related to the extent or foreign vs. local ownership of firms. The findings on the influence of industry-level characteristics are mixed. While the influence of industry's technology level is inconclusive, the propensity to innovate is positively correlated with market concentration.

Suggested Citation

  • Lee, Cassey, 2004. "The Determinants of Innovation in the Malaysian Manufacturing Sector: An Econometric Analysis at the Firm Level," Centre on Regulation and Competition (CRC) Working papers 30670, University of Manchester, Institute for Development Policy and Management (IDPM).
    • Handle: RePEc:ags:idpmcr:30670
    DOI: 10.22004/ag.econ.30670
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    References listed on IDEAS

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    1. John Baldwin & Petr Hanel & David Sabourin, 2002. "Determinants of Innovative Activity in Canadian Manufacturing Firms," Palgrave Macmillan Books, in: Alfred Kleinknecht & Pierre Mohnen (ed.), Innovation and Firm Performance, chapter 5, pages 86-111, Palgrave Macmillan.
    2. Alfred Kleinknecht & Pierre Mohnen (ed.), 2002. "Innovation and Firm Performance," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59588-0.
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    Cited by:

    1. Cassey Lee & Lee Chew ging, 2007. "SME Innovation in the Malaysian Manufacturing Sector," Economics Bulletin, AccessEcon, vol. 12(30), pages 1-12.
    2. Lo, Chu-Ping & Yang, Chih-Hai, 2020. "Business Services,Trade,and Research Intensity," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 61(1), pages 38-59, June.
    3. Misraku Molla Ayalew & Zhang Xianzhi & Yidersal Dagnaw Dinberu & Demis Hailegebreal Hailu, 2020. "The Determinants of Firm’s Innovation in Africa," Journal of Industry, Competition and Trade, Springer, vol. 20(3), pages 527-567, September.
    4. Kun-Ming Chen & Shu-Fei Yang, 2013. "Impact of Outward Foreign Direct Investment on Domestic R&D Activity: Evidence from Taiwan's Multinational Enterprises in Low-wage Countries," Asian Economic Journal, East Asian Economic Association, vol. 27(1), pages 17-38, March.
    5. Yong Sook Lu, 2013. "Book Review: Malaysian Economy: Unfolding Growth and Social Change, by Rajah Rasiah (ed.), Shah Alam: Oxford University Press, 2012, 296 pp," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 5(1), pages 121-124, April.
    6. Fagerberg, Jan & Srholec, Martin & Verspagen, Bart, 2010. "Innovation and Economic Development," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 833-872, Elsevier.
    7. repec:ebl:ecbull:v:12:y:2007:i:30:p:1-12 is not listed on IDEAS
    8. Guych Nuryyev & Yu-Ping Wang & Jennet Achyldurdyyeva & Bih-Shiaw Jaw & Yi-Shien Yeh & Hsien-Tang Lin & Li-Fan Wu, 2020. "Blockchain Technology Adoption Behavior and Sustainability of the Business in Tourism and Hospitality SMEs: An Empirical Study," Sustainability, MDPI, vol. 12(3), pages 1-21, February.
    9. Ali Murad Syed & Zahid Riaz & Abdul Waheed, 2016. "Innovation, Firm Performance And Riskiness: Evidence From The Leading Worldwide Innovative Firms," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(07), pages 1-19, October.
    10. Cassey Lee, 2007. "Competition Policy in Malaysia," Chapters, in: Paul Cook & Raul Fabella & Cassey Lee (ed.), Competitive Advantage and Competition Policy in Developing Countries, chapter 10, Edward Elgar Publishing.
    11. Adeel Ali & Faizan Iftikhar & Muhammad Sabihuddin Butt, 2016. "Is Innovation in Pakistan Driven by Specialisation or Diversity?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 705-714.
    12. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2009. "Innovative Firms or Innovative Owners? Determinants of Innovation in Micro, Small, and Medium Enterprises," IZA Discussion Papers 3962, Institute of Labor Economics (IZA).
    13. Chih-Hai Yang & Chia-Hui Huang, 2018. "Agglomeration, ownership, and R&D activity: firm-level evidence from China’s electronics industry," Empirical Economics, Springer, vol. 54(4), pages 1673-1696, June.
    14. Bunea Ovidiu-Iulian, 2019. "Repositioning sales as an influence on innovation and a source of sustainable competitive advantage," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 13(1), pages 492-504, May.
    15. Cassey Lee & Dionisius Narjoko, 2015. "Escaping the Middle-Income Trap in Southeast Asia: Micro Evidence on Innovation, Productivity, and Globalization," Asian Economic Policy Review, Japan Center for Economic Research, vol. 10(1), pages 124-147, January.
    16. Rahmouni, Mohieddine & Ayadi, Mohamed & YIldIzoglu, Murat, 2010. "Characteristics of innovating firms in Tunisia: The essential role of external knowledge sources," Structural Change and Economic Dynamics, Elsevier, vol. 21(3), pages 181-196, August.
    17. Eric Ramstetter, 2009. "Firm- and Plant-level Analysis of Multinationals in Southeast Asia: the Perils of Pooling Industries and Balancing Panels," Global COE Hi-Stat Discussion Paper Series gd09-106, Institute of Economic Research, Hitotsubashi University.
    18. Chih-Hai Yang, 2018. "Exports and innovation: the role of heterogeneity in exports," Empirical Economics, Springer, vol. 55(3), pages 1065-1087, November.
    19. Ho Yeon Kim & Toshitaka Gokan, 2011. "Theories on FDI and the Behavior of MNEs in East Asia," Chapters, in: Masahisa Fujita & Ikuo Kuroiwa & Satoru Kumagai (ed.), The Economics of East Asian Integration, chapter 5, Edward Elgar Publishing.
    20. Shiang, Lim Ee & Lee, Cassey, 2022. "Global Engagement and Innovation Activities: The Case of Malaysian Manufacturing Firms," ADBI Working Papers 1334, Asian Development Bank Institute.

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