Abstract—Investment in technological innovation in Malaysia has been actively developed either through government support or through the firm’s initiative to adopt technological innovation. This study examines government support as a moderator between the influencing factors and technological innovation performance in the manufacturing sector. The present study is conducted in the context of Malaysian manufacturing sector using a sample of 445 innovative companies. The results indicate that five indicators were an essential factor in boosting technological innovation adoption. Such support includes technical consultancy, innovation activities, technical support services, proper training of personnel, implementing of productivity and registration of patents, and financial support including excluded duty on imported machinery or equipment, tax-exemption incentives and innovation grants to the firm. Index Terms—Government support, manufacturing sector, technological innovation, innovation activities. I. INTRODUCTION As broadly recognized, innovation is a fundamental component to achieve better performance in the organization. Economic growth relies on a significant extent on technological innovation. It has been reported that investment in technology in Malaysia depended very much on government support compared to their own firm initiatives [1]. The reluctance to invest in technology due to lack of security, lack of conviction on the benefits to the company, individual characteristics of the owners/managers, financial resource, regulative problems, and expertise [1]-[3]. With the advancement of industrial improvement in Malaysia (from import substitution to export advancement strategies and from low tech to high tech businesses) and the industry's slacking execution at the innovation frontier, the government’s role in revitalizing innovative progression is crucial. Also, the uncertainty over R&D returns discourages firms from investing in R&D. Stimuli in the type of tax and non-tax motivating forces are expected to quicken the pace of innovation by firms. The significance of the role of the government lies not just in giving the right technological advancement policies, but also in giving monetary and other motivating forces to technology advancements. These motivating forces have a significant effect on a firm's investment choices. By making the fundamental monetary motivators (tax and non-tax), the Malaysian government Manuscript received April 17, 2020; revised June 22, 2020. Noni Ngisau is with Universiti Teknologi MARA, Sarawak Branch, Malaysia (e-mail: noni.ngisau@gmail.com). Nurhani Aba Ibrahim is with Faculty of Business Management, Universiti Teknologi MARA, Sarawak Branch, Malaysia (e-mail: nurhani.ai@gmail.com). plays a pivotal role in stimulating innovation by manufacturers. Even though the government has sought after strategies to empower innovation, contemplates empirically study demonstrating the role of government are constrained to support innovation activities [4]. In order to sustain growth, the government role is crucial in stimulating technological innovation advancement. The government will offer the opportunity for technological transformation and sustainable development through the institution of clear standards and policy goals while being flexible in permitting the firms to use numerous suggests that to achieve those goals [5], [6]. Besides, direct support for R&D, tax incentives for investment in property technologies, and alternative technical help initiatives underneath an industrial policy will produce favorable business surroundings. Such support will successively facilitate and sustain innovation and industrial development [7], [8]. As a part of our general understanding of the government's role in practical innovation political beliefs, it is helpful to grasp what innovation is, how innovations occur, and what contributes to thriving innovations. Since the willingness to change, the capability to change, and also the opportunity to change are among the vital elements that are necessary for promoting technological changes, the government policies ought to thus be in place to come up with conditions that support these components [9]. Thus, the purpose of this study is to examine the significance of government support for technological innovation. II. THEORETICAL FRAMEWORK Amongst all the technology innovation adoption theories, the most comprehensive theories used in firm-level are diffusion of innovation (DOI) and technology-organization-environment framework [10]. For more complex new technology adoption, it is essential to combine more than one theoretical model to achieve a better understanding of the technology adoption phenomenon [11]. The selection of the variables in this research model is based on the concept of the determinants of adoption in DOI theory [12] and TOE framework [13]. Innovation characteristics are represented by relative advantage, complexity and compatibility [14]-[16]. Technology competence will be a predictor to technology context as an adoption driver [17]-[19]. Management support and perceived cost and firm characteristics would be a predictor to organization context; meanwhile, environment context will be predicted by external pressure, partnership quality and regulatory pressure. Government support will be a moderator between antecedent variables (innovation characteristics and technology-organization-environment) and technological Technological Innovation Adoption in Manufacturing Sector: The Moderator Role of Government Support Noni Ngisau and Nurhani Aba Ibrahim Journal of Economics, Business and Management, Vol. 8, No. 3, August 2020 200 doi: 10.18178/joebm.2020.8.3.637