The causes and consequences of technological innovation: A study of small and medium enterprises in Vietnam

Abstract

Innovation has been long considered as a paradigm of achieving economic growth and sustaining nations’ wealth. In which, technological innovation, including both product and process innovation, plays a crucial part, especially in the knowledge economy. Collecting data from the non-state manufacturing SMEs survey in 2011 and 2013, this study conduct an empirical research to find the causes and consequences of technological innovation at firm level. The analysis of causes to technological innovation is divided into three areas: firm characteristics, internal innovation factors and external innovation factors. Except for firm age which is negatively associated to innovation occurrence, others factors are positively correlated, including firm size, employees with degree, innovation expenditure, R&D investment, spillover pressure from suppliers and customers, industry network and competition level. Concerning the influence of innovation on firm performance, the empirical result shows evidence for a positive impact while suggesting a new approach to resolve the simultaneous causality between these two concepts.