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Innovation and exports in Vietnam's SME sector

Author

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  • Anh Ngoc Nguyen
  • Ngoc Quang Pham
  • Chuc Dinh Nguyen
  • Nhat Duc Nguyen

Abstract

Innovation has long been considered an important factor for creating and maintaining the competitiveness of nations and firms. Common knowledge holds that innovation causes an increase in exports. However, contradicting empirical evidence is reported in the literature on the links between innovation and export. In this paper we examine whether innovation by small and medium enterprises (SMEs) enhances their likelihood of exporting in the context of the developing country of Vietnam. Using a uniquely rich Vietnamese SMEs database, we find that innovation as measured directly by 'new products', 'new production process' and 'improvement of existing products' are important determinants of exports by Vietnamese SMEs. We add to the current literature by examining the modification of existing products as an innovation activity. We also find evidence of endogeneity of innovation that may lead to biased estimate of innovation in previous studies, which failed to take this problem into account. L'innovation a longtemps ete consideree comme un element important dans la creation et le maintien de la competitivite des pays et des entreprises. Il est souvent convenu que l'innovation est a la base de l'augmentation des exportations. Cependant, il existe des resultats empiriques contradictoires sur la causalite entre l'innovation et l'exportation dans la litterature. Dans cet article, nous etudions si l'innovation menee par de petites et moyennes entreprises (PME) augmente leur probabilite d'exportation dans le contexte d'un pays en voie de developpement, le Vietnam. A partir d'une base de donnees fournie sur les PMEs vietnamiennes, nous constatons que l'innovation en 'nouveaux produits', 'nouveaux processus de production' et 'amelioration des produits existants' est un facteur important pour les exportations des PMEs vietnamiennes. Nous contribuons a la litterature actuelle en etudiant la modification des produits existants comme activite d'innovation. Nous trouvons egalement une preuve de l'endogeneite de l'innovation qui a pu mener a une evaluation de l'innovation biaisee dans les etudes precedentes, qui n'ont pas tenu compte de ce probleme.

Suggested Citation

  • Anh Ngoc Nguyen & Ngoc Quang Pham & Chuc Dinh Nguyen & Nhat Duc Nguyen, 2008. "Innovation and exports in Vietnam's SME sector," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(2), pages 262-280.
  • Handle: RePEc:taf:eurjdr:v:20:y:2008:i:2:p:262-280
    DOI: 10.1080/09578810802060801
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    Citations

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    Cited by:

    1. Hala El-Said & Mahmoud Al-Said & Chahir Zaki, 2015. "Trade and Access to Finance of SMEs: is There a Nexus?," Working Papers 903, Economic Research Forum, revised Apr 2015.
    2. Voeten, Jaap & Haan, Job de & Groot, Gerard de, 2009. "Is that Innovation? Assessing Examples of Revitalized Economic Dynamics among Clusters of Small Producers in Northern Vietnam," MERIT Working Papers 055, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Vi Dung Ngo & Frank Janssen & Marine Falize, 2016. "An incentive-based model of international entrepreneurship in emerging and transition economies," Journal of International Entrepreneurship, Springer, vol. 14(1), pages 52-74, March.
    4. Stefano Denicolai & Birgit Hagen & Alessia Pisoni, 2015. "Be international or be innovative? Be both? The role of the entrepreneurial profile," Journal of International Entrepreneurship, Springer, vol. 13(4), pages 390-417, December.
    5. Enrique López-Bazo & Elisabet Motellón, 2013. "“Firm exports, innovation, … and regions”," AQR Working Papers 201305, University of Barcelona, Regional Quantitative Analysis Group, revised May 2013.
    6. Trinh, Long Q., 2016. "Dynamics of Innovation and Internationalization among Small and Medium-Sized Enterprises in Viet Nam," ADBI Working Papers 580, Asian Development Bank Institute.
    7. Doan, Quang Hung & Vu, Hoang Nam, 2016. "Networks of Enterprises and Innovations: Evidence from SMEs in Vietnam," MPRA Paper 70591, University Library of Munich, Germany.
    8. Dahai Fu & Yanrui Wu & Yihong Tang, 2012. "Does Innovation Matter for Chinese High-Tech Exports? A Firm-Level Analysis," Frontiers of Economics in China, Higher Education Press, vol. 7(2), pages 218-245, June.
    9. Majidah Hassan Author_Email: NIL & Grace McCarthy, 2011. "Influential Organisational Capabilities For Smes’ Export Performance: An Exploratory Study," Annual Summit on Business and Entrepreneurial Studies (ASBES 2011) Proceeding 2011-045-168, Conference Master Resources.
    10. Mai T.P. Vu & Flora Bellone & Marion Dovis, 2017. "Productivity and Wage Premiums: Evidence from Vietnamese Ordinary and Processing Exporters," GREDEG Working Papers 2017-36, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    11. Catherine Y. Co & Thu Kim Nguyen & Tung Nhu Nguyen & Que Nguyet Tran, 2017. "The missing middle: Growing and strengthening Viet Nam’s micro, small, and medium-sized enterprises," WIDER Working Paper Series 072, World Institute for Development Economic Research (UNU-WIDER).
    12. Vu, Van Huong, 2012. "Higher productivity in Exporters: self-selection, learning by exporting or both? Evidence from Vietnamese manufacturing SMEs," MPRA Paper 40708, University Library of Munich, Germany.
    13. Vu, Hoang Nam & Doan, Quang Hung, 2015. "Innovation and Performance of Enterprises: The Case of SMEs in Vietnam," MPRA Paper 70589, University Library of Munich, Germany.

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