HOW DO INFRASTRUCTURE CONSTRAINTS AFFECT INNOVATION OUTCOMES IN SELECTED SOUTHEAST ASIAN COUNTRIES?

This study examines the impact of infrastructure constraints on firm innovation in selected Southeast Asian countries using the data from the World Bank Enterprise Surveys during the 2023–2025 period. The logistic regression results show that infrastructure constraints encourage firms to engage in both product and process innovation. Specifically, each additional infrastructure constraint increases the odds of product and process innovation by 14.6% and 19.3%, respectively. Marginal analysis further indicates that the predicted probability of product innovation rises from 12.8% to 20.2% as firms face between one and five infrastructure constraints, while the probability of process innovation increases from 8.2% to 15.3%. Among individual constraints, power outages exert the strongest effect on innovation, followed by insufficient water supply. Transportation obstacles are strongly associated with process innovation, whereas electricity-related constraints are closely linked to product innovation. In contrast, internet connectivity constraints do not significantly affect firm innovation.