Local vs non-local sources of knowledge for the low-tech firms’ product innovation: evidence from the food-processing industry in Thailand
| DOI | https://doi.org/10.1108/JABS-02-2018-0063 |
| Pages | 651-670 |
| Date | 24 April 2020 |
| Published date | 24 April 2020 |
| Author | Phakpoom Tippakoon |
| Subject Matter | International business,Strategy |
Local vs non-local sources of knowledge
for the low-tech firms’product innovation:
evidence from the food-processing
industry in Thailand
Phakpoom Tippakoon
Abstract
Purpose –This study aims to examine the effect on firms’ new product development (NPD) and
significantproduct modification of knowledge interactionwith local and non-local knowledgeactors.
Design/methodology/approach –This study draws insights from the literatureon external knowledge
sources. The negative binomial regression is used to analyse the data of 245 sample food-processing
establishmentsin Thailand.
Findings –Local knowledgeactors play only limited roles in enhancingfood-processing establishments’
product innovations.Only knowledge interaction withlocal universities and public research organisations
helps enhance establishments’ ability to modify their products. For the NPD, significant sources of
knowledgeare non-local industrial actors.
Originality/value –This studyadds new empirical evidence on knowledgesources for innovation of low-
tech firms in less developed countries. It contributes new findings to an on-going debate on the
importance of local vs non-local knowledge sources on firms’ innovativeness. It also contributes some
implicationsfor the Thai Government’s cluster-basedinnovation strategy.
Keywords Product innovation, Knowledge interaction, Food-processing industry
Paper type Research paper
1. Introduction
External knowledge is essential for firms’ competitiveness as markets are highly
competitive, requiring continuous improvement in products and production processes,
which is often beyond the capacity of firms to achieve it by relying only on their internal
knowledge sources (Chesbrough, 2003). Firms that can establish knowledge linkages with
external knowledge actors stand a good chance to innovate (Todtling et al.,2009).
Theoretically, external knowledge may be available in local or non-local sources and each
may have different effectson firms’ innovation (Bathelt et al.,2004).
One research stream proposes that knowledge tends to be locally concentrated and tends
to fade away with distance (Howells, 2002). It is argued that when firms are co-located with
other organisations (e.g. suppliers, buyers, competitors, universities and public research
organisations (PROs), etc.), the sharing of knowledge occurs. Spatial proximity facilitates
face-to-face interactions, reduces the uncertainty in knowledge transfer and enables the
efficient transmission of knowledgewithin the region (Malmberg and Power, 2005).
While local knowledge is important, it may not be sufficient to maintain long-term
innovativeness. Some scholars argue that too much reliance on local knowledge sources
Phakpoom Tippakoon is
based at the College of
Interdisciplinary Studies,
Thammasat University,
Bangkok, Thailand
Received 27 February 2018
Revised 4 January 2019
29 February 2020
Accepted 6 March 2020
The author would like to thank
the College of Interdisciplinary
Studies, Thammasat University
for financial support on data
collection.
DOI 10.1108/JABS-02-2018-0063 VOL. 14 NO. 5 2020, pp. 651-670, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 651
may reduce the innovativeness of firms in the long run, as the novelty and variety of
knowledge available in the locality may eventually vanish. Firms need to establish linkages
with non-local knowledge sources to maintain the inflow of new knowledge into the region
(Bathelt et al., 2004).
Despite many studies examining the spatial scope of firms’ knowledge sources for
innovation, empirical evidenceon whether local or non-local sources are more conducive to
firms’ innovation is still inconclusive. Some scholars claim that benefits from local (or non-
local) knowledge sources depend on the knowledge base characteristics of the industry in
which the firm belongs (Asheim and Coenen, 2005). Firms in the analytic knowledge base
(e.g. science-based) sectors may benefit less from local knowledge, whereas those in the
synthetic knowledge base (e.g. mid- and low-tech) and the symbolic knowledge base (e.g.
cultural-based) sectors may depend on local knowledge for their innovation (Martin and
Moodysson, 2013). However, it is shown otherwise that in the traditional and mature
industrial cluster where technologies are standardised local knowledge may not be useful
for innovative activities (Freel,2003).
The current paper takes this as a point of departure, attempting to examine a spatial
scope of knowledge sources of innovation of firms in the food-processing sector in
Thailand. Previous studies that investigate this issue mainly focus on the high-technology
industry in developed countries. Studies about the local and non-local knowledge
sources that affect the innovativeness of low-tech firms in developing countries are still
rare. The Thai food-processing industry can be an interesting case for investigation. First,
as this industry consists mainly of small firms with low technological capability
(Saigosoom, 2012), they are inclined to rely on external knowledge sources for innovative
activities. Thus, it is relevant to ask whether they benefit from local and non-local
knowledge interactions and what knowledge actors are crucial for their innovation.
Second, the current industrial innovation strategy of Thailand is based on the industrial
cluster approach, emphasising knowledge interactions between firms and knowledge
agents in the region (STI, 2015a). However, to what extent local knowledge actors in the
region are supportive of firms’ innovation is not yet known. Third, there is a substantial
agglomeration of firms and knowledge actors in the Bangkok Metropolitan Region (BMR)
(Tippakoon, 2011). It is, thus interesting to examine whether firms in the BMR benefit from
local knowledge sources in terms of innovation.
This paper contributes to the literature on knowledge sources for innovation by providing
empirical evidence to validate an on-going debate regarding local vs non-local knowledge
linkages in firms’ innovativeness. Additionally, the paper examines whether firms in a
synthetic knowledge base sector (Thai food-processing industry) benefit from localised
knowledge interaction or non-localised knowledge interaction, thus adding empirical
evidence to the existing literature,that is still inconclusive on this issue.
It is important to note that there have been studies about external knowledge sourcing from
actors in different spatial settings, which focus mainly on assessing various aspects of
proximity (e.g. spatial, organisational, social and cognitive proximities) on firms’ innovation
(Huggins and Johnston, 2010;Knoben and Oerlemans, 2006;Messeni Petruzzelli et al.,
2009). The current paper differs from these studies in that it does not focus on various
aspects of proximity in knowledge sourcing. Instead, it looks at the relative importance of
local vs non-local knowledge sources and identifies knowledge actors that are significant
for firms’ product innovation.
This paper is structured as follows. Section 2 discusses the theoreticalbackground. Section
3 provides an overview of the characteristics of the Thai food-processing industry and
policy to promote innovations in this sector. Section 4 discusses the research methodology
and Sections 5 and 6 represent and discuss the results, respectively. Section 7 concludes
the paper.
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