Does Innovation Matter? Evidence from Enterprise Survey of ASEAN Countries

Muhammad Fuad (Department of Management, Faculty of Economics and Business, State University of Malang)
Shresta Purnamasari (Bachelor of Management Study Program, Faculty of Economics and Business, Soegijaranata Catholic University, Semarang)
Muhammad Sofian Maksar (Digital Business, Faculty of Islamic Economics and Business, Muhammadiyah University of Kendari)

Management Analysis Journal
Vol 12 No 3 (2023): Management Analysis Journal

This study embarks on an investigation to unearth evidence that innovation may, in certain contexts, fail to foster enterprise development. Innovation has been identified as a key driver of firms’ growth. However, to have successful innovation requires some minimum capabilities and resources. Based on this notion, we tried to find evidence that innovation may fail to help enterprises develop. The study use the World Bank's enterprise survey. The survey collected samples from ASEAN firms. Respondents were chosen by using stratified random sampling technique based on the type of business for all small, medium and large non-agricultural companies in all geographical areas. We used instrumental variable regression to avoid simultaneous causality. The findings show that while innovation has a considerable impact on the growth of non-SMEs, it has little or no impact on SMEs. This confirms our prediction that innovation dampen firms’ development, particularly those with limited abilities to innovate successfully. The research emphasizing the importance of tailored approaches to accommodate the diverse landscape of businesses, particularly in the dynamic ASEAN market.