This study aims to investigate whether internationally recognized quality certification and human capital affect process innovation in the Association of Southeast Asian Nations (ASEAN). Most prior research examines large economies such as China or European countries, while a few studies have been done in the ASEAN context. Moreover, this study also investigates the moderating role of informal competition in the international quality certification – process innovation and human capital – process innovation relationships.
The analysis is performed using data from the Enterprise Surveys conducted by the World Bank with over 4,400 observations in manufacturing industry sectors in ASEAN countries. The empirical investigation uses multilevel mixed-effects logit regression as well as the propensity score matching technique to partly account for the selection bias problem.
The results reveal that internationally recognized quality certification and human capital are positively associated with process innovation. Specifically, internationally recognized quality certification increases the predicted probability of process innovation by approximately 4.2% points, while employee training significantly boosts this probability by approximately 7.5% points, holding all other variables constant. Furthermore, informal competition positively moderates both the international quality certification – process innovation and human capital – process innovation relationships.
This study provides a comprehensive picture of the moderating mechanism of how informal competition moderates the international quality certification – process innovation nexus based on informality cost and bounded rationality perspectives, which has not been investigated in previous studies. Therefore, this paper contributes as probably the first attempt to investigate the moderating effect of informal competition on the international quality certification – process innovation relationship in the ASEAN context. Moreover, to the best of the authors’ knowledge, there has been no empirical research that investigated the moderating impact of informal competition on the human capital and process innovation relationship. Hence, this study fills this research gap based on bounded rationality theory mechanism.
