Innovation in Linked and Non-linked Firms: Effects of Variety of Linkages in East Asia

This paper proposes a new mechanism linking innovation and network in developing economies to detect explicit production and information linkages and investigates the testable implications of these linkages using survey data gathered from manufacturing firms in Indonesia, Thailand, the Philippines, and Vietnam. In-house R&D activities, internal resources, and linkages with local firms and foreign firms play a role in reducing the costs of product and process innovation and search costs for finding new suppliers and customers. We found that firms with more varieties of information linkages achieve more types of innovations. Complementarities between internal and external sources of knowledge are also found.