Writer: Nguyen Hoang Nam – No.14
Source: International Journal of Economics and Financial Issues, 2017, 7(3), 226-232 – ISSN: 2146-4138, available at http: www.econjournals.com
The article is a research of the relationship between innovation and firm productivity in SMEs in Vietnam. This research focuses on the impact of firm size, firm location and manufacturing sector on the relationship between innovation and SMEs’ productivity.
The article used the data from SME survey in Vietnam from 2007 to 2009. The survey was conducted with 2500 enterprises in 10 provinces in Vietnam including big cities like Hanoi, HCM city and other small provinces like Hai Phong, Quang Nam, Nghe An, etc.
The author used the methodology based on Cobb and Douglas production function:
Y=F (K, L, M) = AKαLβMγ
Where:
Y: Total outputs in a given year
L: labor input
K: capital input
M: total material inputs
A: total factor productivity (TFP)
From the methodology, they run the data in 4 different models to test the relation between: Technology Innovation, firm size, firm location, manufacturing sector and firm productivity.
After doing data analysis, the results showed the 4 main points. Firstly, the innovative firms will have productivity 2.9% higher than non-innovative firms. Secondly, there is no significant difference in the impact of innovation on productivity between the firms who have more than and less than 10 employees. Thirdly, the impact of innovation on firm’s productivity in Hanoi and HCM city is 7.0% lower than other cities. Finally, there is no significant difference between the impact of innovation on productivity of high-tech industry (chemicals, transportation equipment) and low-tech industry (food and beverages, tobacco, textiles, etc.).
In conclusion, the author said that, for enhancing the growth, SMEs in Vietnam have to reconsider their current practices in investments, determining the needs, development strategies and gaps for more balanced innovation activities. Moreover, beside the added value for the firm, the innovation in the firm has to benefit their customers and also other firms. That will help for the national economic growth in general.
Writer: Nguyen Hoang Nam – No.14
Source: International Journal of Economics and Financial Issues, 2017, 7(3), 226-232 – ISSN: 2146-4138, available at http: www.econjournals.com
