DEPOCEN Working Paper Series
Anh Ngoc Nguyen, Ngoc Q. Pham, Chuc Dinh Nguyen, Nhat Duc Nguyen, 2008. "Innovation and Export of Vietnam's SME Sector."
Published as:
Anh Ngoc Nguyen, Ngoc Q. Pham, Chuc Dinh Nguyen, Nhat Duc Nguyen, 2008. Innovation and Export of Vietnam's SME Sector., The European Journal of Development Research, Volume 20, Issue 2 June 2008, pages 262 - 280
Innovation has long been considered an important factor for creating and maintaining the competitiveness of nations and firms. Common knowledge stands that innovation is the cause of the increase of exports. However, contradicting empirical evidences are reported in the literature on the causality between innovation and export. In this paper we examine whether innovation performed by small and medium enterprises (SMEs) enhances their exporting likelihood in the context of a developing country of Vietnam. Using an uniquely rich Vietnamese SMEs database, we find that innovation as measured directly by 'new products', 'new production process' and 'improvement of existing products' are important determinants of exports by Vietnamese SMEs. We add to the current literature by examining modification of existing products as an innovation activity. We also find evidence of endogeneity of innovation that may lead to biased estimate of innovation in previous studies, which failed to take this problem into account.
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