Does innovation lead to firm growth through endogenous marketing expenditure for SMEs in Ho Chi Minh City (Vietnam)?

Abstract

This paper investigates how Vietnamese SMEs' innovation relates to its performance through impacts of endogenous covariates, such as marketing expenditure. The paper employed extended regression models. Data used is based on the Vietnam General Statistics Office Survey conducted in 2017 with 645 SMEs at Ho Chi Minh City. Very interesting findings show that positive changes in the innovation of SMEs cause an increase in sales growth and labour cost growth, but it is contributed by marketing expenditure rate as endogeneity. The companies, which are old, limited liability and private enterprises, invest more in marketing expenditure toward increasing sales growth. This is a message to SMEs in Vietnam to think of innovation programmes based on marketing activity contribution, by doing that the SME could obtain competitive advantages toward achievements.