A marginal effect approach to analyzing the contingent effects of perceived political instability and informal competition on the relationship between foreign technologies and product innovation

This paper empirically examines how foreign technologies impact firms’ product innovation; specifically, we consider the moderating effects of perceived political instability and informal competition. This study uses the strategy tripod view theory to develop a novel theoretical model to explain how perceived political instability and informal competition impact the relationship between foreign technologies and product innovation. Our empirical model, which is based on survey and national-level data from thousands of firms across several emerging markets, shows that (i) low levels of perceived political instability and increased foreign technologies marginally increase the chances of introducing new products or services. (ii) Low levels of informal competition and high levels of foreign technologies marginally increase product innovation. (iii) High levels of perceived political instability and informal competition marginally reduce the likelihood of product innovation. (iv) The interaction between perceived political instability, informal competition, and foreign technologies marginally increases firms’ product innovation. Other results reveal the significance of firm characteristics, activities, and managerial experiences. Some implications for practice, policy, and theory are discussed.