Assessing Innovation Capability, Innovation types, and Its Impact on Innovation Performance in FDI Enterprises: Configurational Recipes for Laos

This study explores the relationship between innovation capability, different types of innovation (marketing, product/service, process, and organizational), and innovation performance in 157 Foreign Direct Investment (FDI) enterprises in Laos, selected through random sampling. Using Structural Equation Modeling (SEM) and Fuzzy-Set Qualitative Comparative Analysis (FSQCA), the study finds that innovation capability, particularly in process and organizational innovation, plays a key role in driving high innovation performance. SEM analysis reveals that innovation capability positively influences all types of innovation, which in turn significantly impacts innovation performance. FSQCA identifies two configurational solutions for achieving high innovation performance: the first involves product/service and process innovation, without marketing and organizational factors; the second includes marketing, product/service, and process innovations. Both solutions are sufficient for high performance, with marketing and product/service innovations emerging as core drivers, while process and organizational innovations are considered peripheral. However, the study is limited by its focus on FDI enterprises within Laos, potentially constraining the generalizability of the findings. The findings emphasize the importance of a holistic innovation strategy, integrating key innovation activities, to enhance competitiveness in the global market.