The Impact of Technological Innovation on the Performance of Vietnamese Firms

Document Type : Research Paper

Authors

School of Banking and Finance, National Economics University, Hanoi, Vietnam

Abstract

Technological innovation applied in production processes, product quality, and new product expansion contributes to changing firm performance. Thus, this study was conducted to investigate the impact level of technological innovation on financial performance of Vietnamese firms. Data was collected from 8,960 firms for the period of 2015-2018. Pooled OLS, FEM, and REM were employed for processing data. The results showed that there was not enough evidence to state that technological innovation influences firm performance of small and medium firms but significant impacts were found on the performance of medium and large firms. The findings also illustrated that regional determinants affect technological innovation of firms in emerging countries in general and in Vietnam in particular. The results of this research imply that successful firms are constantly creating and distributing new technological innovation and rapidly applying it to new technologies and products to have a better performance.

Keywords

Main Subjects

References

  1. Abereijo, I. O., Ilori, M. O., Taiwo, K. A., & Adegbite, S. A. (2007). Assessment of the capabilities for innovation by small and medium industries in Nigeria. African Journal of Business Management, 1(8), 209-217.

    Adeyeye, A. D., Jegede, O. O., & Akinwale, Y. O. (2013). The impact of technology innovation and R&D on firms’ performance: An empirical analysis of Nigeria’s service sector. International Journal of Technological Learning, Innovation and Development, 6(4), 374-395.

    1. O. (2020). Technology innovation and financial performance of MSMEs during Covid-19 lockdown in Dammam area of Saudi Arabia: A case of food and beverage sector. International Journal of Technological Learning, Innovation and Development, 12(2), 136-152.

    Akinwale, Y. O., Adepoju, A. O., & Olomu, M. O. (2017). The impact of technological innovation on SME’s profitability in Nigeria. International Journal of Research, Innovation and Commercialisation, 1(1), 74-92.

    Amiolemen, S. O., Adegbite, S. A., Babalola, O. O., & Ojo-Emmanuel, G. (2015). Evaluation of factors influencing technological innovations of small and medium enterprises in Nigerian industrial estates. International Journal of Innovation Science, 7(1), 39-54.

    Ayyagari, M., Demirgüç-Kunt, A., & Maksimovic, V. (2011). Firm innovation in emerging markets: The role of finance, governance, and competition. Journal of Financial and Quantitative Analysis, 46(6), 1545-1580.

    Azarmi, D. (2015). Factors affecting technology innovation and its commercialisation in firm. Canadian Center of Science and Education, 10(7), 36-48.

    Baba, S., Omwenga, J., & Mung’atu, J. (2018). Innovation and performance of small and medium firms in Nigeria. Journal of International Business, Innovation and Strategic Management, 1(7), 21-40.

    Baltagi, B. H. (2005). Econometric analysis of panel data (5th ed.). Wiley and Sons.

    Barringer, B. R., & Jones, F. F. (2004). Achieving rapid growth: Revisiting the managerial capacity problem. Journal of Developmental Entrepreneurship, 9(1), 73-86.

    Bayarçelik, E. B., Taşelb, F., & Apakc, S. (2014). A research on determining innovation factors for SMEs. Procedia-Social and Behavioral Sciences,   (2014), 202-211.  doi:10.1016/j.sbspro.2014.09.032.

    Becheikh, N., Landry, R., & Amara, N. (2006). Lessons from innovation empirical studies in the manufacturing sector: A systematic review of the literature from 1993-2003. Technovation, 26(5-6), 644-664.

    Bosworth, B., & Collins, S. M. (2003). The empirics of growth: An update. Brookings papers on economic activity, 34( ), 113-206.

    Carboni, O. A. (2011). R&D subsidies and private R&D expenditures: Evidence from Italian manufacturing data. International Review of Applied Economics, 25(4), 419-439.

    Cusick, J. J. (2013). Technology innovation methods and processes for business results. Advancing IT and Software Engineering,  1, 1-5.

    Cyert, R. M., & March, J. G. (1992). A behavioral theory of the firm (2nd ed.). Blackwell.

    Feifei, Y., & Li, M. (2007). Research on the sustainable development of technological innovation in small & medium enterprises. Journal of Business Management and Economics, 3(7), 26-27.

    Feldman, M. P., & Kogler, D. F. (2010). Stylized facts in the geography of innovation. Handbook of the Economics of Innovation,   381-410.

    Fombang, M. S., & Adjasi, C. K. (2018). Access to finance and firm innovation. Journal of Financial Economic Policy, 10(1), 73-94.

    Garcia-Quevedo, J., Segarra-Blasco, A., & Teruel, M. (2018). Financial constraints and the failure of innovation projects. Technological Forecasting and Social Change, 127(C)  , 127-140.

    Geroski, P., Machin, S., & Van Reenen, J. (1993). The profitability of innovating firms. The RAND Journal of Economics, 24(2), 198-211.

    Gnyawali, D. R., & Park, B. J. (2009). Co‐opetition and technological innovation in small and medium‐sized enterprises: A multilevel conceptual model. Journal of Small Business Management, 47(3), 308-330.

    Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics (5th ed.). McGraw-Hill/Irwin.

    Hausman, J. A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251-1271.

    Jin, S. H., & Choi, S. O. (2019). The effect of innovation capability on business performance: A focus on IT and business service companies. Sustainability, 11(19), 52-43.

    Kaplan, R. S., & Norton, D. P. (1993). Putting the balanced scorecard to work. Harvard Business Review, 71(5), 134-147.

    Kerr, W. R., & Nanda, R. (2014). Financing innovation (NBER Working Paper No. 20676). http://www.nber.org/papers/w20676.pdf. 

    Kim, D. Y., Kumar, V., & Kumar, U. (2012). Relationship between quality management practices and innovation. Journal of Operations Management, 30(4), 295-315.

    Le, H. A. (2019). Access to finance and innovation in small and medium enterprises. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3450916

    Lee, H.-H., Zhou, J., & Hsu, P.-H. (2015). The role of innovation in inventory turnover performance. Decision Support Systems, (5)  , 35-44.

    Liu, C., Gao, X., Ma, W., & Chen, X. (2020). Research on regional differences and influencing factors of green technology innovation efficiency of China’s high-tech industry. Journal of Computational and Applied Mathematics,   (5/2020), 112597. https://doi.org/10.1016/j.cam.2019.112597

    Marshall, A. (1920). Industry and trade (3rd ed.). The Macmillan Company.

    McCann, B. T., & Folta, T. B. (2008). Location matters: Where we have been and where we might go in agglomeration research. Journal of Management, 34(3), 532-565.

    Miller, D., & Toulouse, J. M. (1986). Chief executive personality and corporate strategy and structure in small firms. Management Science, 32(11), 1389-1409.

    Nguyen, T. L. H., Pham, N. T., Dao, V. P. L., Ngo, T. T. T., & Le, T. T. B. (2020). Critical factors affecting the innovation activities of businesses: Evidence from Binh Dinh Province, Vietnam. The Journal of Asian Finance, Economics and Business, 7(7), 425-438. https://doi.org/10.13106/JAFEB.2020.Vol7.No7.425

    Nguyen, V. L., & Dang, N. H. (2017). Factors affecting business performance of state-owned enterprises in Vietnam. Journal of Science & Technology,   (4/2017), 102-107.

    Nham, T., Nguyen, N., Pham, G., & Nguyen, N. (2016). The effects of innovation on firm performance of supporting industries in Hanoi, Vietnam. Journal of Industrial Engineering and Management, 9(2), 413-431.

    Oduro, S. (2019). Impact of innovation types on SMEs’ performance in the Cape Coast Metropolis of Ghana. Journal of Entrepreneurship and Innovation in Emerging Economies, 5(2), 110-127.

    Penrose, E. T. (1959). The theory of the growth of the firm. John Wiley.

    Pham, T. L., & Hoang, V. H. (2019). The relationship between organizational learning capability and business performance: The case of Vietnam firms. Journal of Economics and Development, 21(2), 259-269. https://doi.org/10.1108/JED-10-2019-0041.

    Phan, T. T. A (2019). Does organizational innovation always lead to better performance? A study of firms in Vietnam. Journal of Economics and Development, 21(1), 71-82. https://doi.org/10.1108/JED-06-2019-0006

     

    Prevezer, M. (1997). The dynamics of industrial clustering in biotechnology. Small Business Economics, 9(3), 255-271.

    Quan, M. N., & Nguyen, Q. N. (2014). Factors affecting the decision of the technological innovation in small and medium enterprises in Can Tho city. Journal of Social Science and Humanities,   (2014), 49-53.

    Schumpeter, J. A. (1939). Business cycles. McGraw-Hill.

    Shashi, Centobelli, P., Cerchione, R., & Singh, R. (2019). The impact of leanness and innovativeness on environmental and financial performance: Insights from Indian SMEs. International Journal of Production Economics,   (2019), 111-124.

    Shiu, H. (2006). The application of the value added intellectual coefficient to measure corporate performance: evidence from technological firms. International Journal of Management, 23(2), 356-65.

    Silva, F., & Carreira, C. (2012). Do financial constraints threaten the innovation process? Evidence from Portuguese firms. Economics of Innovation and New Technology, 21(8), 701-736.

    Subrahmanya, M. H. (2009). Nature and strategy of product innovations in SMEs: A case study-based comparative perspective of Japan and India. Innovation, 11(1), 104-113.

    Tajeddini, L. (2011). The effects of innovativeness on effectiveness and efficiency. Education, Business and Society: Contemporary Middle Eastern Issues, 4(1), 6-18.

    Tajpour, M., & Hosseini, E. (2021). Entrepreneurial intention and the performance of digital startups: The mediating role of social media. Journal of Content, Community & Communication,   (7), 2-15. https:// DOI: 10.31620/JCCC.06.21/02.

     . (2014). Impact of technological innovation policies on sustainability of SMEs: The case of Binh Phuoc [unpublished Master’s thesis]. Vietnam National University, Vietnam.

    Wellalage, N. H., & Fernandez, V. (2019). Innovation and SME finance: Evidence from developing countries. International Review of Financial Analysis,  (C), 101370-101382.

    Xu, J., Shang, Y., Yu, W., & Liu, F. (2019). Intellectual capital, technological innovation, and firm performance: Evidence from China’s manufacturing sector. Sustainability, 11(19), 5328-5334.

     

Interdisciplinary Journal of Management Studies (Formerly known as Iranian Journal of Management Studies)
Volume 16, Issue 1
January 2023
Pages 299-321

Files

Share

How to cite

Statistics