Determinant of firms' technological innovation activities and the impact of the economic crisis on manufacturing firms in Thailand

Abstract

In this paper, the authors identify key determinants of firms' technological innovation activities, grouped into firm-specific conditions, demand conditions, country-specific conditions, and supporting conditions, which are influenced by the intermediate environment and the greater environment. An illustrative diagram of the relationship between these determinants and firm's innovation activities is proposed. They apply this conceptual framework to examine the impact of economic crisis on firm's technological innovation in Thailand during 1997-1999, and hypothesize that the economic crisis in Thailand had a positive impact on firms' understanding of the need for technological innovation. Interviews with fifty-seven manufacturing firms in automobile, electronics, food processing and engineering industries found that all the key determinants are identified were crucial for firms' technological innovation, and were affected by the economic crisis. While the crisis raised awareness of firms to response to change through innovation, only some can start their innovation activities due to the weaknesses of innovation system such as lack of capital, capable human resources, availability of technological infrastructure, technical consulting services, and good management and manufacturing practices.