Abstract:
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This study investigates the behavior of Thai industries’ R&D and innovation
activities using the institutional framework in analyses. The theoretical models based
on microeconomic foundations, with incorporated institutional attributes, are
developed for the analyses of firms’ strategic decisions on technological investment.
The empirical study, using firm-level data from Thailand R&D and Innovation
activities surveyed the industrial sector of 2009, examines four main hypotheses
according to theoretical models; including the variables of socioeconomic, business
environment and institutional factors to significantly explain firms’ decisions on
whether to carry out R&D or innovation activities, expenditures, allocation efforts and
mode of carrying out such activities.
The results show that most of the firms’ characteristic and business
environment variables; including industry group, ownership status, number of
employees, experiences in business, total sales and categories of sales, are
significantly related to the probabilities of carrying out R&D or innovation activities.
Firms from service industries tend to carry out R&D and innovation less than those
from manufacturing industries. Locally-owned firms tend to carry out R&D and
innovation more than foreign majority owned firms. Firms having other technological
activities are also highly tentative in carrying out such activities.
The expenditures for R&D can be explained significantly by total sales,
number of R&D staffs, external cooperation with business partners and with
universities or public research institutes. For innovations, the expenditures are
significantly related to total sales and export portion, experiences, and results of
former activities in recent years. We notice that explanatory variables have more
effect on innovation expenditure than on the R&D expenditure; the reason may be
that innovation activities are considered in the nearest stage of commercialization, so
that firms have more chances to get returns from investment quicker and tend to
invest more.
The effort allocation decisions of firms’ R&D and innovation activities are
different. Firms tend to carry out R&D in products more than only processes, or carry
out both. The factors significantly related to firms’ decision to carry out only process
or both product and process are industry group, information from parent companies
and associate companies and from business partners, and intense cooperation with
other institutes. For innovation activities, firms tend to carry out both product and
process except for some industry groups that tend to carry out more on product only.
The reason may be that they have to plan and develop their production or service
processes to be ready when the product developments are finished.
For both R&D and innovation activities, most firms choose to carry them out
by themselves (in-house mode). Some factors that make firms decide to contract out
or carry out by both themselves and contract out, for R&D, are being foreign firms,
total sales, having intense cooperation with universities or public research institutes,
information within the company and from universities or public research institutes.
And for innovation activities, the factors are cooperation with business partners and
universities or public research institutes, frequent engagement with universities or
public research institutes, information from business partners and lack of fund
limitations.
From the evidence, policy implications propose that government should plan
and support firms in carrying out R&D and innovation activities by providing
appropriate information for industries, facilitating networking or cooperation both
between public research institutes or universities, and among private firms in
developing the R&D projects, providing proper funding mechanisms for technology
development, and supporting other technological activities which help lead to the
firms’ decision on R&D. Further studies are recommended to research more on
institutional issues, including the magnitude of their influences, to help handle the
problems of R&D institutionalization, and to use panel data which are proper for
analyses of dynamic models.
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