VIETNAM NATIONAL UNIVERSITY, HANOI UNIVERSITY OF ECONOMICS AND BUSINESS ROOD GRADUATION THESIS TOPIC: Analysis of Factors Affecting Firm Innovation: An Supervisor : To The Nguyen, Assoc. Student : Dao Viet Anh Faculty : Political Economy Class : QH2019 E Kinh te CLC 4 HA NOI, 5/2023 ACKNOWLEDGMENT To complete the topic " Analysis of Factors Affecting Firm Innovation: An Empirical Investigation for Vietnamese Firms", [ would like to express my sincere thanks to the leadership, staff and experts of the Faculty of Political Economy, University of Economics and Business, Vietnam National University, Ha Noi for creating favorable conditions for facilities, information, and guidance during the research process. Also, the completion of this study could not have been possible without Assoc.To The Nguyen my venerable supervisor. I would like to express my sincerest and deepest thanks to the teachers who dedicatedly taught, gave valuable advice, oriented the research paper and provided documents and scientific information for this research.
Finally, thank you my family for your unconditional support. Your kindness and caring endlessly inspired me to be better person. COMMITMENTS I hereby declare that this thesis is an independent research work. The data and results in the topic are honest and completely objective, there is no copying from any previous topics.
Reference information from the study is fully and carefully cited. If not true, I would like to take full responsibility for the content of our research topic. Certified by the supervisor Ha Noi, 12 May 2023 To The N g u y e n , A s s o c. D ao Viet ietAn Anh iii TABLE OF CONTENTS LIST OF ABBREYVIA TIONS.-- LH HH HH HH HH ưệt Vii LIST OF FIGURES 1.
Research objective and qU€SfIOTNS. 26 51 3019910 91 9v vn ng ng nry 4 2. Research object and scope of the Study. Structure Of this Study .- G111 HH HH Hy 4 CHAPTER 1: LITERATURE REVIEW AND ANALYTICAL FRAMEWORK.
Definitions and COTCDS. The evolution, concepts and definitions of InnovatiOI. The attribute, aspects Of InnOVAfIOII. -- -ó << E11 11 11 11 1 nh ng TH nh TH HH 22 ISVi 006i.
Empirical studies and hypotheses .- - -- <6 <1 E919 9 1H 1g ng ng kết 30 1. Empirical studies on InOVAfIOTI. Empirical studies on firm innovation CapDACIẨY. Determinant of firm 1nnOVAfIOI.
External factors nh ae. Internal factors TP .- --- cv TH HH HH HH 50 SUB-CONCLUSION CHAPTER l. - --- G11 ng Hiệp 52 CHAPTER 2: RESEARCH METHODOLOGY. Model 1 — Ordered ÏOT1(.-- -- s6 + + k*xE 919931191 19 vn ng ngư 53 2.
Ordered logit model estImatION:. Model assumptions Sa. Statistical and model 1 test assumpfIOnS. Proposed analytical framework of the model 1.
Model 2 — Poisson T€BT€SS1OTA.- G52 19019911 91 9v ng ng ngư 59 2. POISSON T€BT€SSIOIA. Statistical and model 2 test assumpfIOnS. Potential alternative imOd€Ì.
Logistic regression model estimation. Statistical and model 3 test assumpfIONS. Proposed analytical framework for the model 3. SurVey DODUÌ4fIOT.-- s1 SH HH HH Hh 71 2.
SCOD€ Of SUIVECY 0. General descriptive statistics in research đafa. Descriptive data model 1 — ordered logit reØr€SS1ON. Descriptive data model 2 — Poisson TeBØT€SSIOH.
Descriptive data model 3 — Logit TeðT€SSIOI. -- 5 55 xxx s+£eveese 88 SUB-CONCLUSION CHAPTER 2.- - Án ng HH ngư 91 CHAPTER 3: RESULTS AND DISCUSSION. The current state of innovative activities of enterprises in Vietnam. Financing activities for innovative start-ups in Vietnam.
Science and technology enterprise developmeh(. Research and development activities. Empirical evidence in research data. Model estimation T€SUÏfS,.- «<< x1 E 1E 9v TH ng ngàn 113 3.
Model | — Statistical and Model teSfS. Summary on results and đISCUSSIOT. Model 2 — Poisson T€ðT€SS1OH. Summary on results and đISCUSSIOI.
Model 3 — Logistic T€ØT€SSIOIN. Summary on results and đISCUSSIOH.- 55555 ++<££++e++eex+sesx2 141 SUB-CONCLUSION CHAPTER 3. cecseecescesecseecsecseeesesneesseessesseeeaeens 144 CHAPTER 4: CONCLUSION AND POLICY IMPLICA TIONS. The opportunities for innovation and digitalization in Vietnam.-- 5 + 1191191 TH HH nước 147 4.- c1 111 vn TH TH TH TH TH TH TH Hà 155 4.
Limitation and further reS€arCH.- - - s6 + 11190119101 930 91 9 ng ng ngư 155 SUB-CONCLUSION CHAPTER 4.- - Q1 HH ng ni 156 REEFERENCES. HH HH HH TH TH TH TH TH nàn 157 APPENDIX. Án HH TH TH TH HH TH HH HT 163 vi LIST OF ABBREVIATIONS Association of Southeast Asian Nations ASEAN Comprehensive and Progressive Agreement for Trans-Pacific CPTPP Partnership EU-Vietnam Free Trade Agreement EVE bà RCEP Regional Comprehensive Economic Partnership (RCEP) Research and R&D development SMEs Small and Medium Enterprises (SMEs) GRIS Government research institutions LMIS Labor Market Information System vii LIST OF TABLES Table 1.1 Summarize the innovation concept development in the historical perspective and FEPLESENtALIVES.-- G1 TT TH TH TH HH TH HH 7 Table 1.2 Innovation and invention concepts in scientific literature .3 Overview of innovation definitions .4 Typology of innovation in the OECD methodology .5 Typology of innovation in the OECD methodology .6: Example of multitype classification of firm innovation types.1 Variables and descriptive data analysis model 1 .2 Variables and descriptive data analysis model 2 .3 Variables and descriptive data analysis model 3 .1 Some intermediary organizations supporting innovation start-ups .2 Ordered logit result 10.3 Brant Test of Parallel Regression Assumption.4 Poisson regression T€SUÏ.5 Goodness-of fit for poison regression model.- óc + 1111111 E1 nh HH ng 134 Table 3.7 Model evaluation results .8 Goodness-of-fit measures for Zero-Inflated Poisson (ZIP), Negative Binomial, and 9)ì150x01390:8:i19i1) 010777.9 Logistic regression result .1: Multi-sectoral nature of innovation makes coordination essential. 151 viii LIST OF FIGURES Figure 2.1 Ordered regression models with the parallel line assumption.2 Number of samples in research data by reg1On.3 Percentage of samples in research data by reg1on.4 Number of enterprises by region and types of enterprises .5 Number of enterprises by region and S1Z€ .6 Number of enterprises by province and innovation status .7 Number of enterprises by sector and innovation sfafus.8 Number of average employees by reg1ON.-- - «+ +-sc+scsseeese 78 Figure 2.9 Number of average employees by types of enterprises .10 Percentage of labor qualifications by reg1on.11 Average asset by types of €nf€TDTIS€S.-- 5-5 ss + ssserssrses 81 Figure 3.1 Number of investment deals and total amount invested in Vietnamese StATTUPS 01157 .2 The top industries in Vietnam by investment capital in 2020.3 Number of science and technology enterprises in some typical DTOVITIC€S//CIẨ€S.
0 1 TH HH th 103 Figure 3.4 Average enterprises’ net profit and number of firms applied technology by 1321001001727 .5 Average enterprises’ net profit by province .6 Average net revenue by region and number of innovation firms.7 Average ROE and ROA by T€gB1OII.8 Average net profit and net revenue by firm innovation and sector.9 Average net profit by region and firm innovation sfafus.10 Average net revenue by region and firm innovation status.11 Model 1 estimation phraSe. --- 5 1 E11 kg re 114 ix Figure 3.12 Model 2 estimation phrasSe.13 Number of COUnfITE.1 Digitalization of general business functions in enterprises in Vietnam 146 INTRODUCTION The term “Industry 4.0)” is presently a widely discussed topic in the realm of business and organizations. Originally presented at the Hannover Fair in 2011, this notion has garnered significant attention not only in Germany but also globally, particularly in this current technological era. Specifically, the world is currently in the early stages of the 21“ century, a time marked by the emergence of a knowledge economy that culminates in the creative economy.
This epoch is characterized by a dominant reliance on scientific thinking, where science and technology serve as the primary productive forces of society. Within underdeveloped and developing nations, there is a growing imperative to foster innovation, not only at the national level but also among firms and even each individual to follow the 2030 Sustainable Development Goals (SDGs). In context of the economic and geopolitical uncertainties, coupled with the adverse effects of the COVID-19 pandemic in recent years, have spurred both formal and informal innovation, which appears to be flourishing on a global scale. This trend is viewed as a positive sign of the global political will to promote innovation and related policies to address the challenges posed by epochal uncertainties.
As Dutta et al. (2019) notes, innovation and innovation policies were once solely the domain of high-income economies. However, nowadays, both developed and developing nations, including those rich in natural resources, have prioritized innovation as a means to enhance economic recovery and social development, particularly in light of the COVID-19 pandemic. Besides, in theory, there is a large number of research showing that the driving force behind long-term and sustainable economic growth is innovation (Fu & Shi, 2022; Romer, 1994).
Stopford and Baden-Fuller (1994) has indicated that innovation is the way to maintain competitive advantage and business prosperity. Therefore, having innovation is having the presence of creativity and human thinking which is called the root of sustainable economic and social progress (Collins & Fahy, 2011). Conversely, a firm that lacks innovation and still operates according to the "industry method" will lose its competitive advantage (Charitou & Markides, 2003). In the 18th century, famous economist - Adam Smith (1776) also noticed several characteristics of innovation, and subsequent generations of specialists have pointed out that innovation is a significant engine of economic activity (Szabo & Herman, 2012).
Recognizing the importance of innovation, in Vietnam, government gives a pressing need to prioritize innovation activities as a means to bolster economic development after Covid-19 pandemic, and thereby support the country's policy of restructuring and renovating its growth model towards greater stability and sustainability. In recent decades, technological innovation and technology absorption have been key drivers of economic growth, and Vietnam has experienced a rapid development in science and technology, which has played a critical role in enhancing labor productivity and increasing production efficiency. Science, technology, and innovation have made significant and comprehensive contributions to socio-economic development in the country. In details, the contribution of total factor productivity (TFP) to growth has increased from 33.6% in the period of 2011-2015 to 45.2% in the period of 2016-2020, reaching 39.0% in the 10-year period of 2011-2020, surpassing the target by 35% (GSO, 2016, 2021).
The share of high-tech exports in the total value of goods has risen from 19% in 2010 to approximately 50% in 2020 (Hoang, 2021). In addition, recent research conducted by the Ministry of Science and Technology shows that technological innovation and technology absorption have been the primary drivers of growth in Vietnam from 2001 to 2019. Investment in technology application and innovation per worker in Vietnam has increased by nearly 250% during this period as a platform to enhance output growth per worker. The statistics clearly demonstrate the significant potential and opportunities that innovation presents for developing countries such as Vietnam.
Alongside the gradual improvement in the business, investment, and institutional environments, Vietnam's innovative start-up ecosystem has made significant strides in recent years. On the part of the state mechanism, Vietnam has made considerable efforts to facilitate innovation through various reforms and policy resolutions such as Resolution No. 52-NQ/TW1, Resolution No. As a result, Vietnam is among the 19 economies that have exceeded expectations in terms of innovation relative to their level of development (Jewell, 2021).
According to the World Bank's report, Vietnam still has a lot of room for enhancing innovation and digitization in enterprises when the majority of domestic enterprises in Vietnam are small and medium enterprises, accounting for 98% of the total number of enterprises and make up half of the workforce. Innovation activities have not met expectations, there are still many limitations due to lack of scale, technology, sophistication in business and law. While the ultimate outcome from the innovation acts from firms and government remains to be seen in the long-term, there are important lessons to be learnt by analyzing the determinants of Vietnam’s firm innovation.