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Innovation and exports in Vietnam's SME sector

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

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.

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Article provided by Taylor and Francis Journals in its journal The European Journal of Development Research.

Volume (Year): 20 (2008)
Issue (Month): 2 ()
Pages: 262-280

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Handle: RePEc:taf:eurjdr:v:20:y:2008:i:2:p:262-280
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