Technological and Institutional Space, Entrepreneurial Activities and Innovation in Asian Economies

Abstract

The East Asian region has shown increased innovation performance over the past 20 years. At the same time, individual economies within the region have shown divergent performance. This article investigated the relationship between institutional potentials, entrepreneurial activities and innovation in 12 Asian economies in order to address the question of why innovation performance in Asian economies has been dynamic as well as divergent. We empirically examine the question in the following two steps. First, we apply a multiple factor analysis to a range of indicators of multiple institutional domains that are relevant to a technological system, and we show that there can be diversity of institutional space underlying a technological architecture. Second, we investigate how and to what extent technological and institutional dimensions—derived from multiple factor analysis (MFA)—affect innovation performance by using an ordered logit model. We find that there is a diversity of technological and institutional systems available for innovation activities, leading to different innovation systems, and that entrepreneurial activity is essential for a technological and institutional potential to be linked with innovative activity. The positive synergy between innovation, technological and institutional potentials and entrepreneurial activities results in different trajectories for Asian economies to lead to increasing innovation performance. This finding implies that there can be multiple ways for emerging economies to be able to develop innovative capabilities. It also contributes to innovation policy, because it allows policymakers in emerging economies to understand how to build a synergy between institutional spaces and entrepreneurs’ activities for innovation performance.