Informal competition and firm level innovation in South Asia: The moderating role of innovation time off and R&D intensity

Informal Competition and Innovation in Southeast Asian Countries: Examining the Moderating Influence of Gender

“…There are conflicting theoretical arguments on the relationship between informal rivalry and innovation. While some found that rivalry from informal businesses reduces formal firms' motivation to innovate (Abbas et al, 2022;McGahan, 2012), others suggest that competition from the informal sector has a positive influence on innovation (Miocevic, Arslanagic-Kalajdzic, & Kadic-Maglajlic, 2022;Pérez et al, 2019). Some theoretical arguments suggest that the innovative activities of formal firms are disrupted by informal activities.…”

“…For example, regarding human capital, informal businesses provide employment prospects for low-skilled workers and skew the accumulation of skills, resulting in a scarcity of skilled workers, which is important for innovation. As a result, this worsens the innovation performance of formal firms (Abbas et al, 2022;McGahan, 2012).…”

“…Consequently, a company's product has more rivals if informality is prevalent in the marketplace. This ultimately disincentivizes formal firms' innovation efforts (Abbas et al, 2022;Mendi & Costamagna, 2017).…”

“…There have been varied results from empirical research on firms' innovation performance in the presence of informal rivals. While some studies show the positive impact of informal competition on innovation (Dwibedy, 2022;McCann & Bahl, 2017;Miocevic et al, 2022;Pérez et al, 2019;Qi, Zou, Xie, & Zeng, 2020), others present the opposite results (Abbas et al, 2022). It is also important to note that research on the role of information competition in innovation mainly focuses on the context of developing and emerging economies.…”

“…Nevertheless, formal firms are increasingly concerned about the threat posed by informal enterprises, which may disrupt their innovation strategies (Abbas, Adapa, Sheridan, & Azeem, 2022;Pérez et al, 2019). In fact, in developing nations, the informal sector is a major challenge because of inadequate institutional frameworks.…”