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<p>Innovation capabilities are vital in enhancing product development, processes, market strategies, and organizational structures, particularly when bolstered by a firm’s absorptive capacity. This study examines the effects of research and development (R&amp;D) spillovers from foreign firms by considering firm-specific absorptive capacity to foster innovation. Using data from the Indonesian manufacturing sector for 2017–2018, a panel fixed-effects logistic regression was applied to assess the relationship between R&amp;D spillovers and firm innovation. Additional analysis through quartile-based regression models and marginal effect estimations examines the influence of absorptive capacity under varying spillover levels. Robustness checks, including random-effects probit models, validate the findings. The results show that R&amp;D spillovers alone do not significantly drive innovation; however, when paired with higher absorptive capacity, they yield positive impacts on innovation across products, processes, marketing, and organizations. Larger firms tend to prioritize product innovation, whereas exporters engage more in broader innovation efforts. Firms struggling with internal innovation often turn to imports as alternatives. Strengthening absorptive capacity can help local firms bridge innovation gaps with foreign competitors. These findings underscore the necessity for policies aimed at human capital development, promoting export strategies, foreign direct investment facilitation, firm growth, and reduced dependence on imports to maximize the benefits of R&amp;D spillovers.</p>

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Bridge the Knowledge: Disentangling R&D Spillover Effect to the Innovation

  • 期刊论文

  • 发表日期：

    2025年4月30日

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  • Mohammad Zeqi Yasin,
  • Miguel Angel Esquivias

摘要

Innovation capabilities are vital in enhancing product development, processes, market strategies, and organizational structures, particularly when bolstered by a firm’s absorptive capacity. This study examines the effects of research and development (R&D) spillovers from foreign firms by considering firm-specific absorptive capacity to foster innovation. Using data from the Indonesian manufacturing sector for 2017–2018, a panel fixed-effects logistic regression was applied to assess the relationship between R&D spillovers and firm innovation. Additional analysis through quartile-based regression models and marginal effect estimations examines the influence of absorptive capacity under varying spillover levels. Robustness checks, including random-effects probit models, validate the findings. The results show that R&D spillovers alone do not significantly drive innovation; however, when paired with higher absorptive capacity, they yield positive impacts on innovation across products, processes, marketing, and organizations. Larger firms tend to prioritize product innovation, whereas exporters engage more in broader innovation efforts. Firms struggling with internal innovation often turn to imports as alternatives. Strengthening absorptive capacity can help local firms bridge innovation gaps with foreign competitors. These findings underscore the necessity for policies aimed at human capital development, promoting export strategies, foreign direct investment facilitation, firm growth, and reduced dependence on imports to maximize the benefits of R&D spillovers.