Product innovation and ICT use in firms of four ASEAN economies

Abstract

In order to achieve successful innovation, firms have to elevate their capability for innovation. ICT becomes one of essential tools of business management. The aim of this papers to examine the causal relationship between ICT use and innovation capability. Based on survey data from four ASEAN economies of Indonesia, the Philippines, Thailand, and Vietnam, this study examines what kind of ICT use such as SCM, CAD/CAM, SNS and so on, has been introduced by firms, and how it enhances internal innovation capability and contributes to achieve innovation. In so doing, to make the concept of internal innovation capability more tractable for empirical analysis, AHP (Analytical Hierarchy Process) was employed to construct an index of internal innovation capability. By using instrumental variable probit estimation (or two Stage Least Square: 2SLS), the following results are obtained: (1) ICT significantly influences to enhance internal innovation capability; and (2) internal innovation capability promotes innovation.