Linked versus Non-linked Firms in Innovation: The Effects of Economies of Network in Agglomeration in East Asia

This paper proposes a new mechanism linking innovation and network in developingeconomies to detect explicit production and information linkages and investigatesthe testable implications of these linkages using survey data gathered from manufacturing firmsin East Asia. We found that firms with more information linkages tend to innovate more,have a higher probability of introducing new goods, introducing new goods to new marketsusing new technologies, and finding new partners located in remote areas. We also foundthat firms that dispatched engineers to customers achieved more innovations than firms thatdid not. These findings support the hypothesis that production linkages and face‐to‐facecommunication encourage product and process innovation.