BUSINESS ENVIRONMENT CONSTRAINTS, INNOVATION, AND FIRM GROWTH: EVIDENCE FROM THAI ENTERPRISES IN THE POST-COVID-19 PANDEMIC PERIOD
DOI:
https://doi.org/10.14456/jburus.2026.10Keywords:
Business Environment Constraints, Innovation, Firm Growth, Structural Equation Modeling, Thai EnterprisesAbstract
This study aims to 1) analyze the influence of business environment constraints (BEC) on innovation among Thai enterprises, 2) analyze the direct and total effects of business environment constraints on firm growth, and 3) examine the mediating role of innovation in the relationship between business environment constraints and firm growth. The study employs secondary data from the most recent World Bank Enterprise Survey of Thailand, covering six industry groups, with a complete sample of 558 firms. Partial Least Squares Structural Equation Modeling (PLS-SEM) was applied, specifying business environment constraints as a formative latent construct composed of six indicators, and significance was tested through bootstrapping.
The results reveal that business environment constraints exert a significant positive influence on innovation
(β = 0.361, p < .001), with rising competitive pressure carrying the highest weight among the six indicators. Business environment constraints also exert a significant direct effect on firm growth (β = 0.099, p = .044) and a total effect of 0.127 (p = .004), with innovation partially mediating approximately 22 percent of the total effect (significant at the .10 level). These results are consistent with the notion of necessity-driven innovation, whereby pressures arising from the business environment push firms to adapt through innovation as a means of survival, rather than simply suppressing firm growth as suggested in traditional literature. Meanwhile, firms in the hotel sector grew significantly faster than those in other sectors (β = 0.248, p < .001), reflecting the uneven sectoral recovery observed in the post-COVID-19 pandemic period.
These findings contribute to the design of policies aimed at reducing unnecessary regulatory burdens, promoting innovation among small and medium-sized enterprises, and targeting economic recovery measures at the sector level.
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