Unlocking innovation: Governance and firm-level innovation in selected Asian countries

Aloysius Gunadi Brata; Pristanto Silalahi; Ronny Prabowo; Billie Ariyanta Hartono

doi:10.18559/ebr.2026.2.2622

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Unlocking innovation: Governance and firm-level innovation in selected Asian countries

Economics and Business Review

Volume 12 (2026): Issue 2 (June 2026)

By: Aloysius Gunadi Brata , Pristanto Silalahi , Ronny Prabowo and Billie Ariyanta Hartono

Open Access

|Jun 2026

Abstract

This study examines the association between governance and firm-level innovation in Indonesia and Philippines, offering insights for escaping the Middle-Income Trap (MIT). Using the 2023 World Bank Enterprise Surveys (WBES), we estimate cross-sectional logit models with stratified analyses by sector and firm size. Our findings reveal that while burdensome tax administration and informal payments are negatively associated with innovation in Indonesia, these payments paradoxically show a positive association in the Philippines, reflecting firms’ strategic adaptation to weak formal institutions. Across both countries, worker training emerges as the most consistent innovation driver, regardless of sector or firm size. By providing the first 2023 WBES-based comparison of how formal and informal governance obstacles shape firm-level innovation in two ASEAN economies, this study identifies critical pathways for governance reform and innovation-led growth.

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Articles in this issue

DOI: https://doi.org/10.18559/ebr.2026.2.2622 | Journal eISSN: 2450-0097 | Journal ISSN: 2392-1641

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Language: English

Page range: 71 - 96

Submitted on: Nov 21, 2025

Accepted on: May 23, 2026

Published on: Jun 30, 2026

Published by: Poznań University of Economics and Business Press

In partnership with: Paradigm Publishing Services

Keywords:

innovation,

governance,

middle-income trap

Related subjects:

Business and economics,

Political economics,

Political economics, other,

Business and economics,

Mathematics and statistics for economists,

Econometrics,

Business and economics,

Finance

© 2026 Aloysius Gunadi Brata, Pristanto Silalahi, Ronny Prabowo, Billie Ariyanta Hartono, published by Poznań University of Economics and Business Press
This work is licensed under the Creative Commons Attribution 4.0 License.

Volume 12 (2026): Issue 2 (June 2026)