Innovative strategies and corporate profitability: the positive resources dependence from political network

Abstract

This research investigates the join effects of political network and innovation strategies on corporate profitability. By using the qualified survey sample of over 2600 firms, located in around 10 provinces of Vietnam, during the 10 year from 2005 to 2015 of UN-WIDER, the results reveal that the political network, estimated from number of political connection and the time of interaction, has significantly mitigated the innovative activities' inefficiency toward firm's performance that it can positively foster the innovative capacity, then encourage more profit margin. However, the study figured out that innovative activities by itself, in the small-medium enterprise, is not good for corporate performance even three different aspects of new products, improvement, or new technology. Indeed, this issue is also the same for political connection as increasing more number of political contacts or time of interaction, the firm's value will be more detrimental.