The influence of informal and foreign competition on innovation: does size matter?

This study examines whether micro or large firms in emerging economies produce innovation as a response to threats from informal and foreign competitors. This research focuses on firm size because it captures micro and large firms' resource similarity and market commonality with informal and foreign competitors. Specifically, this study theorises how threats from informal and foreign competitors influence emerging economy firms' engagement in innovation activities depending on firm size, such as micro and large firms. Results from the empirical analyses, with survey data of a large sample of firms located across Eastern Europe and Central Asia, provide support to hypotheses.