Financing Choices for Technological Upgrading: Evidence from Interviews with Thai Firms
Issued Date
2022-04-01
Resource Type
ISSN
23395095
eISSN
23395206
DOI
Scopus ID
2-s2.0-85138995856
Journal Title
Journal of Southeast Asian Economies
Volume
39
Issue
1
Start Page
68
End Page
82
Rights Holder(s)
SCOPUS
Bibliographic Citation
Journal of Southeast Asian Economies Vol.39 No.1 (2022) , 68-82
Suggested Citation
Ishido H., Liang L., Sakunasingha B. Financing Choices for Technological Upgrading: Evidence from Interviews with Thai Firms. Journal of Southeast Asian Economies Vol.39 No.1 (2022) , 68-82. 82. doi:10.1355/ae39-1d Retrieved from: https://repository.li.mahidol.ac.th/handle/20.500.14594/84530
Title
Financing Choices for Technological Upgrading: Evidence from Interviews with Thai Firms
Author(s)
Author's Affiliation
Other Contributor(s)
Abstract
This research investigates the significance of technological innovation for Thailand's industrial development through equity participation in the form of foreign direct investment (FDI). The pecking order theory suggests that to finance technological upgrading, firms tend to prioritize internal funding, and use debt and equity financing as the last resort. In the context of incessant technological change, however, equity financing might be a better choice. This research highlights some aspects of how that is the case by analysing firm-level performance data from Thailand and then conducting in-depth interviews with top executives from several companies located in the Eastern Economic Corridor (EEC). We find that the conventional pecking order theory does not hold when it comes to external financing decisions. The interview insights reveal that, while a majority of companies prioritize internal financing, capturing technology (as intangible assets) via equity as well as non-equity linkages with foreign firms is also observed. Given that technological upgrading can result from FDI inflows by foreign firms, a truly “joint” nature of equity and non-equity forms of investment projects would serve as a win-win option for Thai and foreign firms, especially under the “Thailand 4.0” policy framework.