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Business environment and innovation persistence: the case of small- and medium-sized enterprises in Vietnam

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  • Vu Hoang Nam
  • Hoang Bao Tram

Abstract

While it is well known that efforts have been increasingly paid to improve the business environment in transition economies to support the private sector, it is unclear how these efforts affect firm innovation. Utilising longitudinal data derived from bi-annually repeated surveys of randomly selected small- and medium-sized enterprises (SMEs) in ten provinces in Vietnam over the period of 2007–2015 combined with yearly collected panel data of Provincial Competitiveness Index (PCI), which is used to measure the quality of provincial business environment, this study employs a dynamic random probit estimation to analyse the effects of business environment on the persistence of innovation of the SMEs. It is found that the persistence of moderately complex innovation including both single-dimensional and multidimensional innovation exists in weak business environment, while it disappears in improved business environment. These findings suggest that policies to improve business environment enhance innovation policies and, thus, promote innovation of the SMEs that are inexperienced in carrying out such innovation.

Suggested Citation

  • Vu Hoang Nam & Hoang Bao Tram, 2021. "Business environment and innovation persistence: the case of small- and medium-sized enterprises in Vietnam," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 30(3), pages 239-261, April.
    • Handle: RePEc:taf:ecinnt:v:30:y:2021:i:3:p:239-261
    DOI: 10.1080/10438599.2019.1689597
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    Cited by:

    1. Nam Hoang Vu & Tuan Anh Bui & Tram Bao Hoang & Hanh My Pham, 2022. "Information technology adoption and integration into global value chains: Evidence from small‐ and medium‐sized enterprises in Vietnam," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(2), pages 259-286, March.
    2. Rituparna Kaushik & Sourabh Bikas Paul, 2022. "Do Competition Improve Persistence in Innovation Effort? Sectoral Patterns and Evidence from India," Journal of Industry, Competition and Trade, Springer, vol. 22(2), pages 259-296, June.
    3. Ho Dan Doan, Tam & Thai Thuong Le, Quan & Nguyen, Quyen Le Hoang Thuy To & Nguyen, Phong Thanh & Thi Ngoc Dang, The, 2022. "Integrating of PLS-SEM and the Importance Performance Matrix Analysis to Exploring the Role of Provincial Competitiveness Index to Growth," MPRA Paper 116830, University Library of Munich, Germany, revised Jul 2022.
    4. Hung Quang Doan & Francesca Masciarelli & Andrea Prencipe & Nam Hoang Vu, 2023. "Social capital and firm performance in transition economies," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(4), pages 751-780, December.

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