VNU - UNIVERSITY OF ECONOMICS AND BUSINESS FACULTY OF BUSINESS AND ADMINISTRATION THE EFFECTS OF INNOVATION ON FIRM PERFORMANCE CASE STUDY OF T-TECH CORPORATION Supervisor’s name: Dr. Tuan Nham Phong Student’s name: Nhan Nguyen Thi Student ID: 10050320 Intake: QH2010-E-QTKD Program: International standard Hanoi — May 2014 ACKNOWLEDGEMENTS It is said that no success becomes true without the support and help from other people. To implement and complete the study "The effect of innovation on firm performance, case study of T-Tech Corporation" I have received a lot of support from my teachers, family and friends. Therefore, I wish to express my sincere gratitude to them.
First of all, I would like to give special thanks to my supervisor - Dr. Nham Phong Tuan, lecturer of Faculty of Business Administration, University of Economics and Business, VNU, has dedicated to guide and provide valuable documentation for me. In spite of busy work, Dr. Nham had spent much time reading and given me useful recommendation.
Maybe I cannot finish this report well without him. I would like to send my gratefulness to the Board of Directors of T-Tech Corporation, they has facilitated for me the opportunity to learn, to approach necessary information and data for research, especially 129 employees participating in the questionnaire and 3 senior managers accepting to interview have contributed significantly to this report. Finally, I wish to show much thankfulness because of the help of the Faculty of Business Administration, University of Economics, VNU, and also I want to give deep gratitude to other teachers, family and friends who have encouraged me to complete this study. Student Nguyen Thi Nhan ii TABLE OF CONTENTS GENIONNTUEDGENIENN TH ssa necnieLnLeociieiceoekiiiiihidnndungiGI.2140015001618đ63156 10 66557 i LIST OF TABLUEES.
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26 ấu nề: LN 0T COST CRT, BIBEHENI.cesekgDchesddicghddisguisitegiE00742064001400453002g5E 28 RS | 29 CHAPTER 3: CURRENT SITUATION ABOUT INNOVATION AND ITS EFFECT ON FIRM PERFORMANCE IN T-TECH CORPORATION. Current situation about innovation in T-Tech Corporation. 30 LoL, CWEafigariinndil Dn AL en arnt crnanattnscis sities enapibiinians 30 3. 2ó c1 HH nọ HH Hàn ty 35 3.
«se sneqerwnsnsanannanincnanyveonessse hearse 36 3. The effects four types of innovation on firm performance.- 37 lui «6 THIU NI DEE PEtPOTATOES tuatgtulirrstrattutvooittdaoitidtustognsongrriinangiastoogtrrtastrrtosrmgntnB 37 „2-5. PEER DEFEDTTTNHCO xe eeedreriebieirvstoeetrgprnrayrirnsipvgegpuetrtnex6ftinvlrgfesgfossnasd 40 3. The effects of innovation on firm performance in T-Tech Corporation.41 CHAPTER 4: CONCLUSIONS AND RECOMMENDA TIONS.
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Mean of four types innovation from the point of T-Tech employees’ VL GW wren exer coyg gi th ng DNSSpDESDSSGESEDIEEESSEHIGREHS.0S23 Šgo cụt SH939995350094850048035 8090085308 52320-ĐXESLEENMGsÏsoS4 8052. R&D expense/profit in T-Tech CorporatiOn. Product innovative perforTnanCe.-- -- --- + + + + sx+eextxsersrsrscere 40 Table 3. Financial performance of T-Tech Corporation.
Production performance of T-Tech Corporation .----- ----- 41 LIST OF FIGURES Figure 1.1: The conceptual framework of innovation and firm performance. The detail model of relationship between innovation and firm fểETfIOWNDTIDEnsneradrnnisesetenerrsonerureonrnsnnssnpnnnnrnirldSRdESSS0NG0358i0n9iftzìtS000E1008/00008000 19 Figure 2. Organizational Chart of T-Tech Corporation. ------«<ss«s<xs+ 24 Figure 2.
The percentage of manager and employee in the sample of T-Tech CUP PURP ATI ncacsirennaeesncaawsnnsstciesst9 cnt n50000000100170000001G1NTGHDI HGS tie TNA aS ABA 28 Figure 2. The proportion of T-Tech‘s employees in the sample in number of year 4094013000091. The education degree level of T-Tech’s employees in the sample. Organizational chart of R&D department in T—Tech Corporation.
Product innovative performance and sales over the period 2009-2013 in Agen TN HH Ìiofheensrseseersoerreriorotrtrriooeregigtarrt0000980901080nrxirgassppdtaessssasssiikull 42 Figure 3. Product innovative performance and profit over the period 2009-2013 in TT DE ceeeesesenisnihirbodnndidtntseoanuithuoLti01in6adiid6essesesmeoerrrsetrrrormmroeeermnpEiniigpi 43 Figure 3. Average hours to complete a product and volume over the period 2009- Pe SoG NTf<uuoestueteriueeueennursnanrtierhtevstrnlgG04067060001300000908000x0uustngoxitppnkvnvori 44 Figure 3. Average days to complete a manufacturing process and volume over the period 2009-2013 in T-Tech Corporation.
R&D expense and profit from 2009 to 2013. cicssinissnssensnsansrnrssasevvsnvace 46 vi ABSTRACT Innovation, including product, process, marketing, and organizational innovation, is considered as one of essential component for any enterprise to survive and grow. These innovation activities create value and competitive advantages for successful organizations; therefore, understanding the organization’s overall innovation is the first and foremost to understand the role of innovation on firm performance. The objective of this research is to analyzing current innovation situation following four types in T-Tech Corporation, a manufacturing firm in the North of Vietnam, and then the researcher explores their effects on firm performance (production, market, and financial performance).
The survey of this study conducted on 124 employees in T-Tech Corporation, and the questionnaire is used to interview some senior managers. The obtained data from the questionnaires are analyzed through Excel Microsoft Office software. A theoretical framework is empirically tested the relationships amid innovations, innovative performance, and firm performance through an integrated innovation-performance analysis. The result demonstrated there are positive effects of product, process, marketing, and organizational innovations on firm performance in T-Tech Corporation.
Finally, the recommendations would be provided to help firm to improve the context of innovation within organization; moreover, this study is also give the implications for both academics and practitioners which are important for long term development of T-Tech Corporation. INTRODUCTION Statement Problem Nowadays, one of the major challenges that the world economy faces is the decline in labor productivity growth, which has a negative impact on economic growth period before the global financial crisis for 2008 (OECD). Efforts of countries in the world to deal with these issues are superficial and temporary; therefore it would not solve the situation thoroughly. Although Vietnam has been implementing industrialization and its economic growth is quite high since the Doi Moi 1986.
A slowdown of economic growth in recent years is also due to the decline labor productivity growth. Besides, Vietnam considers economic restructuring as the best solution for the development. Although economic restructuring is inevitable, that's the temporary solution. In the long term, Vietnam needs to create new resources to ensure sustainable growth.
In addition, Vietnam is also facing serious challenges such as climate change, environmental protection, resource conservation. In order to solve these problems; Vietnam needs to set focus on the root problem, especially innovation. In the economy, a large sector contributed to the economic development is the enterprises. In the years since the Doi Moi 1986, a large number of both Vietnamese enterprise and FDI enterprises in Vietnam invested more and more.
These play an important role for economic growth and employment. One of the most important ways through which businesses can contribute to productivity and economic growth is their ability to innovation. A comprehensive review, innovation always is essential for the survival of particular businesses and organizations in general. Innovation, continuous improvement and change are the three main pillars of global competitiveness.
In fact, innovation still occurs in Vietnamese enterprises, there are assistance programs and organizations to promote innovation. On the other hand, performances brought from innovation were not effectively in comparison with its potential. Therefore, creating powerful efforts and more professional factors to enhance innovation is strongly urgent. Among these efforts, study or research is one essential method to establish knowledge about innovation in a systematic way, which guides the decisions of managers and governments practically and professionally.
In recent years, there are plenty of researches about innovation on companies deeply, but in Vietnam, it is very little. There is less innovation research on particular business to test the effects of innovation on firm performance. This topic will focus on researching impacts of innovation to firm performance, case study of T-Tech Corporation. The topic will have important implications in both theoretical and practical; as a consequence, researchers will have more evidence of the relationship between innovation and firm performance under academic theory aspect, while T-Tech Corporation will generate more ideas to develop strategies and decision making.
Research’s Objectives and Tasks General objective: To investigate the impact of innovation to firm performance of the enterprise in Hanoi: a case study of T-Tech Corporation. Specific objectives and tasks: - Overview rationale of innovation and its impact to firm performance. - Analyze Situation of innovation in T-Tech Corporation. - Provide implication for key stakeholders based on situation analysis.
Research’s Scope - Scope of content: the impact of innovation on T-Tech Corporation performance. - Scope of space: T-Tech Corporation, both in headquarters and factory in Hanoi and three branches in Vietnam. - Scope of time: 5 years in the development of T-Tech Corporation (from 2009 to 2013) Methodology Topic uses both qualitative method and quantitative method. Methods of data collection consist of both primary and secondary data.
Secondary data will serve for the presentation of the innovation current situation in T-Tech Corporation. Primary data is the questionnaire, in-depth interviews at that company in the sample. Structure of Thesis The thesis is divided into 4 chapters: Chapter 1: Theoretical foundation Chapter 2: Research context and methodology Chapter 3: Current situation about innovation and its effect on firm performance in T-Tech Corporation Chapter 4: Conclusion and recommendations. CHAPTER 1: THEORETICAL BACKGROUNDS 1.
Innovation One of the problems in managing innovation is variation in what people understand by the term, often confusing it with invention. In its broadest sense the term comes from the Latin — innovare — meaning ‘to make something new’. Department of Trade and Industry assumes that innovation is a process of turning opportunity into new ideas and of putting these into widely used practice. ‘Innovation is the successful exploitation of new ideas’ Innovation literature claims that innovation is one of the key factors for firm success and survival (Jimenez and Sanz-Valle, 2011; Bell, 2005; Cho and Pucik, 2005; Gopalaksihnan and Damanpour, 1997; Damanpour, 1996; Fiol, 1996; Wolfe, 1994) and sustainable competitive advantage (Standing and Kiniti, 2011; Bartel and Garud, 2009; Johannessen, 2008; Mumford and Licuanan, 2004).
Despite the plurality of definitions for innovation in the literature, there is no global consensus on the exact definition of the term (Amara and Landry, 2005). Innovation was first described by the German economist and political scientist Schumpeter who defined it as “the driving force for development”. Five manifestations of innovation were proposed in his definition (Vyas, 2009): 1. Creation of new products or qualitative improvements in existing products 2.
Use of a new industrial process 3. New market openings 4. Development of new raw-material sources or other new inputs 5. New forms of industrial organizations Chris Freeman (1982) claimed that industrial innovation includes the technical, design, manufacturing, management and commercial activities involved in the marketing of a new (or improved) product or the first commercial use of a new (or improved) process or equipment Innovation does not necessarily imply the commercialization of only a major advance in the technological state of the art (a radical innovation) but it includes also the utilization of even small-scale changes in technological knowhow (an improvement or incremental innovation) (Roy Rothwell and Paul Gardiner, 1985).
Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced — Peter Drucker (1985). ‘Companies achieve competitive advantage through acts of innovation.