Informality-oriented innovation network in Vietnam’s Agribusiness sector: An analysis from innovation system perspective

In developing countries, innovation networks are an increasingly important strategic means for small and medium enterprises (SMEs) to access and adopt information from different knowledge domains. Understanding the dynamics of innovation networks, both from the SME and innovation system level perspective, has become increasingly important. This paper aims to contribute to the understanding of such networks by analyzing innovation networks in the context of profound contextual changes and rapid development of input producing SMEs in the agribusiness sector in Vietnam. In the paper we characterize the innovation network in the Vietnam’s agribusiness sector and discuss how to support the development of such networks. Drawing on a case study approach we identify structural and functional dynamics inside the innovation networks and investigate how networks are providing resources to innovation process of SMEs. We find that input producing SMEs use strategizing innovation, mainly in the product, marketing and market areas, to cope with newly enforced policies and regulations that relates to Vietnam’s entrance in WTO in November 2006 and subsequent increased competition in the sub-sector. In the present situation the formal actors fail to accomplish the envisioned role lead-organizations. In the lack of formal coordination innovation networks supporting SMEs’ activities operates mainly at the intermediary level and the operational functions are mainly based on informal network mechanisms. At the net-level, the innovation network is structured with five groups of actors focusing on production, market and marketing, know-how, funding, and resource supply, respectively. The network is governed through ‘selection and trust’ principles and ‘tacit mechanisms’. Building core network competences and enhancing net-level coordination and interactive learning are critical for the further development of the network.