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Does planned innovation promote financial access? Evidence from Vietnamese SMEs

Author

Listed:
  • Thi Thu Tra Pham

    (RMIT University Vietnam)

  • Thai Vu Hong Nguyen

    (RMIT University Vietnam)

  • Son Kien Nguyen

    (University of Birmingham)

  • Hieu Thi Hoang Nguyen

    (CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences)

Abstract

The study examines the feedback effect of innovation outcomes on access to finance, as an extension to the existing literature which suggests financial access drives firms to innovate. The study applies the theory of planned behaviors integrated with the signaling theory to evaluate financial access of Vietnamese firms in connection to their innovation with a particular focus on planned innovation activities—innovation activities that started out with an entrepreneurial intention to innovate. Applying the multilevel mixed-effects logistic (MELOGIT) regression for panel and the two-stage probit model within the conditional mixed process (CMP) to the data on Vietnamese small and medium firms, for the period 2005–2015, the study shows that firms with innovation outcomes appear to have better access to finance. More interestingly, the effect is stronger for planned innovation. These findings assert the signaling role of planned innovation to potential lenders on a comprehensive resource commitment guiding the innovation activity to success. The study offers interdisciplinary arguments from both financial risk perspective and theory of planned behavior integrated with the signaling view.

Suggested Citation

  • Thi Thu Tra Pham & Thai Vu Hong Nguyen & Son Kien Nguyen & Hieu Thi Hoang Nguyen, 2023. "Does planned innovation promote financial access? Evidence from Vietnamese SMEs," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(2), pages 281-307, June.
    • Handle: RePEc:spr:eurasi:v:13:y:2023:i:2:d:10.1007_s40821-023-00238-3
    DOI: 10.1007/s40821-023-00238-3
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    More about this item

    Keywords

    Financial access; Firm innovation; Signaling theory; Theory of planned behaviors;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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