Which are determinants of firm innovation in vietnam a micro analysis

PoliciesandSustainableEconomicDevelop ment |1 WhichareDeterminantsofFirmInnovationinVi etnam?. AMicroAnalysis LETHINGOCBIC H PostandTelecommunicationInstituteofTechnology-bichltn@ptit.ed

PoliciesandSustainableEconomicDevelop ment |1

WhichareDeterminantsofFirmInnovationinVi

etnam?

AMicroAnalysis

LETHINGOCBIC

H PostandTelecommunicationInstituteofTechnology-bichltn@ptit.edu.vn

VUTRONGPHO NG

PostandTelecommunicationInstituteofTechnology

LETHINGOCDIEP PostandTelecommunicationInstituteofTechnology

Abstract

ThisstudysetsouttoinvestigatefactorsinfluencingVietnamfirms’innovationinvario ussectorsbyusingWorldBank(2015)enterprisesurveyfor9 9 6 firmsacrossthecountry.

W e employsimpleordinaryl e a s t squares(OLS),probitmodel,andmarginaleffecttoest imatetheimpacto f firmcharacteristics,industrycharacteristics,andbusinessclimateo

ndifferentfacetsofinnovation,includingtechnologyandnon-technology.Quantitatively,wefindthatdirectexporters,firmsize,stateownership,emai lusing,andcompetitionincreasetheprobabilityoftechnologyinnovation.Meanwhile,fo reignownershipimpactsnegativelyoninnovationinallaspects,technologyandnon-technologyinnovation.Firmageandbriberyaren o t influentialfactorsininnovationinall cases.Fromt h e findingso f analysis,a f e w policyimplicationsregardingthestudiedfact orsaredrawnforbetter environment forfirminnovation.

Keyword:determinantso f innovation;directexport;foreignownership;technologyi

nnovation;n o n - technologyinnovation

1 Introduction

Vietnam,accordingtoWorldBank,isassessedasadevelopmentsuccessstory Afterthereformslaunchedin1986,Vietnamhasmaderemarkableprogress,tra nsformedfromoneofthepoorestcountriestoalowermiddleincomecountrywit hpercapitaincomeof$1960bytheendof2013.Vietnam’sgrowthratehasbee naround6.4%peryearonaverageforthelastdecade.Besidesthat,Vietnamhas beensuccessfuli n r e d u c i n g p o v e r t y , thepeoplelivingi n povertydecrease

df r o m approximately60%i n 1990stobelow1 0 % recently.However,thee c o n

o m i c growthr e m a i n s moderate,belowitspotentialsandreliesmostlyonph ysicalcapital,naturalresources andcheaplabor.Thepowerofthesesources

isdiminishingandVietnamislikelytofacetheso-calledmiddlei n c o m e trap.Toboostitseconomyanddevelopsustainably,itisti meforVietnamtomakeinnovationbecomethedriveforproductivitygains,especi allywhenthenationisfacingfiercecompetitioninglobalizingmarkets

Thenationhasrecentlyaccomplishedcertainimprovementsininnovativefield, yetitstilllaggedf a r behinddevelopedcountries.AccordingtoGlobalInnovationI

ndex(GII),whichisannuallyco-

publishedbytheWorldIntellectualPropertyOrganisation,US-basedCornellUniversityandFrance

–

basedINSEADbusinessschool,thecountryranked71stand76thoutof141countr iesin2013and2014,respectively.In2015,Vietnamwasamongagroupofcountrie sthatupgradedtheirinnovationperformancerankingcomparedto2014,stoodat 52ndoutof141economiesworldwide,improved1 9 placesfrom2014

TheimprovementinGIIcanbeagoodsignfortheupgradeofinnovationinVietn am;nevertheless,itreflectsonlyapartofthewholepictureforVietnamsituation.I tisundeniablethati n n o v a t i o n inbothprivateandpublicsectorsinVietnami sonlyemergingandstillhasalotofroomf o r improvement.Capabilityofin no va t

i on isweakandthenational innovation sys te misuncoordinatedandfragm ented.I n thebusinesssector,r e s e a r c h anddevelopmenti s n o t awareproperl yandf a c e s resistantobstacles,whilei n thepublicsectori t seemstow o r k ineffi cientlyalthoughreceivingspecificprivileges

WorldBank(2014),initsanalysisonVietnam’science,technologyandinnovat ion(STI)system,highlightsstrengthsandweaknessesofthecountry.Accordingly ,therearesomeadvantagesforSTIsuchasstrongeconomicperformance,geogr aphicallocation,sizeablelaborforceorcertainachievementinbasiceducation However,likemanyotherdevelopingcountries,therearestillmanyexistingprobl emsdeterringVietnamfromthedevelopmentofSTI.Theresistantweaknessesincl udeinfrastructuredeficiencies,inefficienteducationsystem,limitedaccesstofina nceforenterprises,andinadequateSTIgovernmentarrangementsandpolicyimpl ementation

Tohavefurtherunderstandingaboutthesestrengthsandweaknesses,thisstu dyaimstoinvestigateempiricallyt h e factorsinfluencinginnovativeactivitieso f Vietnamenterprisesf r o m differentaspects,technologicalandnon–

technologicalinnovation.Usingfirm–

leveldataset,thefindingswasintendedtodrawinsightsintothedeterrentsofinn ovationinordertofind possible

suggestionsf o r policies.Thepaperwillp o i n t o u t impactso f e a c h elemento n

i n n o v a t i o n w i t h empiricalevidences,whichwillbepersuasivecluesforfurth erimplicationtohelpgovernmentandotherstakeholdersknowwheretotargetth eireffortsinanattempttoprovidefavorableconditionf o r innovation

Theremainderofthepaperisstructuredasfollows.Section2reviewsliterature oninnovation.Section3describesmethodologyanddatausedinthestudy.Sect ion4presentsthefindings anddiscussionoftheresults,whileSection5givesimpl icationandconclusion

2 Literaturereview

Literaturepresentsdifferentviewsonmeasurementofinnovationandinnovati ondeterminants.I n general,innovationisstillanambiguousconceptwithdi fferentdefinitionandtherearemanycontroversialopinionsonitsdeterminants Schumpeter(1942)shapedthetheoreticalframeworkforinnovation,dividedin

novationintofivetypes: (1)launchofa ne w productor ane w speciesof existingproduct; (2)applicationof ne w methodsinproductionorsalesofaproduct; (3)openingofanewmarket(themarketforwhichabranchoftheindustrywas n

ot yetrepresented); (4)acquiringofne wsourcesofsupplyofrawmaterialorsemi-finishedgoods; (5)newindustrystructuresuchasthecreationordestructionofam o n o p o l y po

sition.Heclaimedthatthereisatrade-offbetweeninnovationandmarketpoweroflargefi r m s I n otherwords,toha vea rapidtechnologyprogress,w e m u s t bew i l l i n g toacceptimperfectlycomp etitivemarketsfo r thereason thatin perfectcompetitivemarket,wherefi rm s produceandsellthesameproducts,thereisnoincentivetoinnovate.Incontrast,in novativeactivityi s morelikelytobefavoredbylargefirmsandhighconcentrationini

mperfectlycompetitivemarkets ToexamineSchumpeter’hypothesis,SymeonidisandGeorge(1996)revi ewedmanyempiricalw o r k s ontherelationshipbetweeninnovation,markets tructureandfirmsizeandsumup:theideathatmarketpowerandlargefirmsstimula teinnovationisfoundinconsistent.Precisely,thispositiver e l a t i o n s h i p ca noccurwhencertainconditionsaremet,suchassunkcostperindividualproject,

e c o n o m i e s ofscaleandscopeintheproductionofinnovationrent

Morerecently,W a n e t al

(2005)employeddataf r o m 71c o m p a n i e s i n Singaporeandstudyi n n o v a t i

o n inmorecomplexandbroadcontext,asaprocessofgeneration,adoptionandi mplementationofnewideasorpractices.Thefindingsshowthepositivelinkagebet weeninnovationandfiveelements,namelydecentralizedstructure,presenceofor ganizationalresources,beliefthati n n o v a t i o n isimportant,willingnesstot akerisksandwillingnesstoexchangeideas

AlmeidaandF e r n a n d e s (2007)studiedthecorelationbetweenopennessa ndtechnologicali n n o v a t i o n

byemployingfirm-leveldataindevelopingcountries.Theyconsideredtechnologicali n n o v a t i

o n in termsofwhetherfi r m s introducenewtechnologythatsubstantiallyim pr ove s theproductionof its mainproductinthe last threeyearstothe surveyedtime Theresults showed thatfi r m s involving ininternationaltrade,exportandimport,aremorelikelytoadoptnewtechnology

ownedfirmstendtoinvolvedininnovativeactivitymorethanminorityforeign– ownedfirmsordomesticfirms

Defininginnovationasactivitiesrelatedtoimprovementofproductionand/

orprocess,Lee(2004)examineedlinkageo f i n n o v a t i o n w i t h characteristics

o f firmsandi n d u s t r y i n Malaysianmanufacturingsector.Thefindingssuggest edthatfi r m sizei s positivelyrelatedtoi n n o v a t i o n becauselargefirmshave morechancetoaccesstosubstantialresourcesandhavegreatercapacitytoi n n o

v a t e Furthermore,ownershipstructurealsoimpactsinnovativeactivityduetoitsd eterminationo n financeresourcethroughequitymarket.Accordingly,solepropri etorshipfirmsarelessinnovativethanprivatelimitedandpubliclimitedfirms Unli keRitaAlmeidaandAnaMargariaFe rn a n de s (2007),thisstudyfoundthelessin novativetendencyinfirms exporting,explainedbytheoverwhelmingpresence offirmswithnoexportsindata

ForVietnam,therearealsostudiesoninnovation,buttheyarestilllimitedinqua ntityanddetailedanalysis.Forinstance,Nguyenetal

(2013)giveadiagnosticoverallreviewonnationalinnovationsystems,analyzi ngstrengthsandweaknessesoftheinstitutions,policiesandlinkagesthatchar acterizethecountry’snationalinnovationsystems.Whenitcomestoempiricalr esearch,therearef e w papersgivinginsightson in no va ti ve activitiesofVietn amenterpriseso n thewholeanddeterminantso f i n n o v a t i o n i n particular.T herefore,thispaperw i l l takei n i t i a t i v e s i n givingempiricalevidencesforth ecaseofVietnamfirms,whichislikelytoimplymeaningfuladvicesforgovernm entandenterprisestoactandchangesituationpositively

Inordertoanalyzeinnovationinvariousfacets,wetakeaclearandbroadview ofWorldBank(2004)asthemainreferencefortheunderstandingofinnovation.T hisstudysuggeststhati n n o v a t i o n shouldcovernotonly“technologyinnov ation”whichisdefinedasthediffusionofnewproductsandservices,butalson o

n –

technologicalf o r m s o fi n n o v a t i o n Thelatterc a n betheintroductionofnew managementormarketingtechniques,theadoptionofnewsupplyorlogisticarr angements,o r improvedapproachestointernalo r externalc o m m u n i c a t i

o n andpositions.Accordingly,thisstudywillexaminevariousaspectsofinnovat ion,namely(1)whetherfirmshaven e w o r significantlyimprovedproductso r s ervices;

(2)whetherfi r m s haven e w o r significanti m p r o v e d methodofmanufactur ingor offeringservicesand(3)whetherfirms haveneworganizationalstructure ormanagementpractice

RegardinginnovationatmosphereindevelopingcountrieslikeVietnam,afor ementionedstudypointedo u t thatfi r m s aredeterredf r o m innovationbyweak nessofthreei m p o r t a n t elements,i n c l u d i n g levelsofeducationalattainme nt,thebusinessenvironmentandinfrastructure.Differentphasesofindustrializ ationrequiredifferenteducationalneeds,frombasicliteracytotertiaryeducation andtheseeconomiesfailinmatchingeducationandlabordemand.Thequalityofbu sinessenvironmentcanbemeasuredbygovernance

conditions,valuesandculturalspecificitieswhichcancauseobstaclesf o r busine sso p e r a t i o n i n thesecountries.Finally,thei s s u e o f infrastructureindevelopi ngworldrelatestothetroublesintelephoneinfrastructure,transportinfrastructu reand

otherprimarycomponentss u c h assanitation,watero r electricity.Thesec o m

m o n deterrents,nevertheless,seemtobeneglectedinpreviousstudies,probab lyduetothefactthattheyarenotproblemsforoperationofenterprisesinthosecou ntries

Inanattempttodealwithshortcomingsi n previousstudiesanddepictprecisely thec a s e ofVietnam,thisstudywillcapture notonlyimpactof conventionale lementsonfirm andindustry characteristics,butalsoinnovation–climate-factorswhicharehighlylikelytobeobstaclesforfirmi n n o v a t i v e activities inthreementionedaspects.Ourstudytakesonvariousproblemsofthisissueand hencerepresentsa r e a l valueadditioni n thisareo f literatureasw e l l asi m p l

y valuablesuggestionstorelatedactors

3 Methodologyanddata

3.1 Empiricalstrategy

ThisstudyusesquantitativestatisticaltechniquestoexaminetheWorld

BankEnterpriseSurvey(2015)forVietnamusingtheStatasoftware.Theempiric alestimationemploysprobitmodelwithm a r g i n a l effectinordertoanalyset hefactorsthatmayinfluenceengagementoffirmstoinnovativeactivity,withthea ssumptiononthenormaldistributionoferrorterms

Thedependentvariableforinnovation

isbinary,equalto1iffirmsinnovateand0otherwise.Asmentionedinsection2,inn ovationisconsideredinthreeperspectivesinthreerespectivemodels:n e w or significantlyimprovedproductorservice(model1),neworsignificantlyimprove dmethodo f manufacturingproductorofferingservices(model2)andneworsign ificantlyimprovedorganizationalstructures

ormanagementpractices(model3).Precisely,inmodel1fortheaspectofi n n o v a

t i o n inproduct/

services,dependentvariableforinnovationisequalto1iffirmshaveneworsignific antlyimprovedproductorserviceinlastthreeyearsandequalto0otherwise.Simi larly,inmodel2whichconsidersinnovationasimprovementinmethodorproces s,dependentvariableisequalto1iffirmshaveneworsignificantlyimprovedmethod ofmanufacturingorofferingofservicesi n lastthreeyears.Finally,whenexaminin

gi n n o v a t i o n i n termso f changesi n organizationo r managementinmodel3, dependentvalueforfirms havingneworsignificantlyimprovedorganizationa lstructuresormanagementpracticesisequalto1and0otherwise

Explanatoryvariablesaredividedintothreegroups,firm characteristics,indus tryfeaturesandbusinessclimateofcountry,equivalenttothreeestimationstepsf

oreachmeasurementoftechnologicalandnon-technologicalinnovation.Thepropensityofinnovationinthreeaspectsisexpl ainedbyindependentvariablesindicatingfirmcharacteristicsinthefirststep,s upplementaryi n d u s t r y featuresinthesecondandbusinessclimateinthethird

Followingfindingsfrompreviouspapersontherelationofopennessandinnovat iveactivity,thisstudyconsidersthedifferenceintheinnovationpatternbetweenfir msengagingindirectexportandthecounterparts

thatarefirmssellingdomesticallyorexportingindirectly.Variableforopennessis equalto1iffirmexportsdirectlyand0ifnot.Theresultswillcheckoncommonex pectationthat

firmsexportingdirectlyaremorelikelytobeengagedininnovativeactivitycompa ringwithfirmssellingproductsdomestically

Firmage,presentingbythenumberofyearfirmsoperatedupto2015,isdeemedt obeanelementa ff e c t i n g innovationsincetheoperatingtimemayinfluencefi rmsinmanywayssuchascompetenceo f employees,managerialskillsofmanag ersorrelationwithgovernmentofficials.Firmsexistinglongermayhavebetterc onditionsforinnovation,butitcouldbeanotherwayaroundifnewentrantstendtobe morecreativetopenetratemarket

Anotherelementisfirmsizewhichisaddedtoseethedifferentpatternininnova tionofsmall,mediumandlargefirms Thosehavinglessthan20employeesarecl assifiedassmallfirmswhilemediumfirmsarethosehavingfrom20to99employee sandfirmswith100employeesormoreareseenaslargeones.Thenumberofworke rscanreflecthumanresourceoffirmsandpotentiallycausespecificpatternsi n org anizationo r managementoffi r m s S m a l l andlargefi r m s m a y haven o diffe renceintechnologicalinnovativeactivities,

butthedifferenceinnumberofemployeesrequiresdifferentimprovementinnon– technologicalinnovation

Additionally,threemodelsconsiderforeignownershipoffirmssincephysicalcap italfromoverseainvestorsismorelikelytocausecertainadvantagesintechnology andavailabilityofphysicalcapital,c o m p a r e d todomesticfirms.Moreprecise, theformertendstohavefinancialsourceandup–to–

datetechnologyfromoutsideborder,whichisfavorableforinnovativeperforman ceincomparisonw i t h thelater.Inthesurvey,firms reportedthepercentageof capitalownedbyforeignprivates,organizationsorcompaniesandconcretev alueswillbeusedtoshowthedifferenceinpropensityofi n n o v a t i o n foreac hpercentincreaseofforeigncapital

Inaddition,governmentownershipisalsoconsideredinthemodelfortherea

sonthatstate-o w n e d csonthatstate-ompaniesinVietnammayhavemsonthatstate-oreprivilegesinfinancesonthatstate-orlegalprsonthatstate-oc eduresthanprivateo n e s Likeforeignownership,firmswereaskedthepercenta geofcapitalownedbystateorganizationandc o n c r e t e valueso f stateo w n e d c

a p i t a l areemployedtoseethed i s c r e p a n c y i n i n n o v a t i o n probabilityinc ompanywithonepercentchangeofgovernment-ownedphysicalcapital

Thefinalelementforfirmcharacteristicsshouldbetakenintoaccountistherole ofinternettoi n n o v a t i o n of

firms.Normally,firmsemployinginternetinoperationismorelikely to beactiveandi n n o v a t i v e thann o n

-users.T o seetheeffectofinterneto n i n n o v a t i v e activity,themodelw i l l c o m

p a r e theinnovativepatternoffirmsusing emailandfirms not.Similarly,i nternetusersareexpectedtobe engagedininnovativeactivitymorethannon– users.Thevariableforemailusingisrepresentedbydummyvariable,equal1iffirms useemailand0otherwise.Thecoefficientisexpectedtobepositive,implyingadvant agesofinternettoinnovativeactivity

Inthesecondstep,independentvariableso f industrycharacteristicsi s added tothemodeltogetherwithfirmcharacteristics,presentingbydummyvariablesfo rgroupofindustriesinwhichfi r m s areoperatingsincedifferentindustrieshav edifferentfeaturesintechnologyandinnovation.F o r example,low–

technologysectorssuchasfoodortextilesislesslikelytoinnovatethanhigh–

technologyonessuchasmachinerybecausethelaterhasmoresophisticatedp roductsandneedsc o n t i n u o u s improvementtocompeteinthemarket.Neve rtheless,oppositetendencycanbetruethatthelow–

technologyindustriesaremorelikelytoinnovatesincetheirunsophisticatedprodu ctssuchasflavoroffoodsordesignoftextileproductsmaybeeasiertoimprove.Thea nswerforthedifferenceo f i n d u s t r i e s w i l l beinvestigatedamong3 groupso f sectors,namelylow-

technologysectors,medium-technologysectorsandserviceswhichareclassifiedbasedonR&Dintensitiesof OECDDirectorateforScience,TechnologyandIndustry(2011).Accordingly,lowt echnologysectorincludefi r m s operating in theindustrieso f food,textilesan dgarments,wood andfurniture.Meidum–

technologysectorincludesfirmsofmachineryandchemicals,metal,andsomeofwoo dandfurniture.S e r v i c e sectorsaretheremainingindustries,includingservi cesinconstruction,sales,hospitality,transport,etc

Moreover,whenconsideringindustrycharacteristics,this studyintendsto investigatetheroleofm a r k e t competitioninboostinginnovationoffirmswit hthehypothesisthatfirmswillhavemoreincentivestoinnovatewhentheyhavet ocompetewithothers.Duetothelackofdataformeasuringthedegreeofcompetiti on,thisstudyemploysavailableinformationfromsurveyinwhichfirmswerea s k e

d whethertheycompeteagainstunregisteredorinformalfirms.Thevariablevalu eis1for“yes”a n s w e r s a n d 0 f o r “ n o ” Thepositivevalue ofestimatorimpliesadvantageousrole ofcompetitiontoi n n o v a t i o n

Inthethirdstep,tofind outtheimpactofbusinessclimateoninnovation,vari ablerelatingtogovernanceisaddedtothemodel.Infact,weakgorvernmenterna nce,especiallybeaucraticalsystemandlegalregulations,causesmanyobstacle sforVietnamenterprises.Corruptioncanbeusedasameasurementforthiswea knessduetothefactthatwhengorvernmenternanceisinefficient,firmsaremorel ikelytobeforcedtopaybribetogetthingsdone.Inthesurvey,firmswereaskedtoev aluatesubjectivelyhowmuchobstaclescausedbycorruptiontheyhave,usingscal esfrom0to4,equivalentrespectivelyton o obstacle,m i n o r obstacle,moderate obstacle,majoro b s t a c l e andverysevereobstacle.Inordertocomparethediffe renceininnovationoffirms facingobstaclesinbriberyandfi r m s without,dum myvariableforcorruptionwillbeusedinthemodel,equalsto1iffirmshaveanyobst aclefromminortoveryseverescalesandequalsto0iffirmsreportedwithoutobst acle.Itisexpectedthatfirmreportedhavingobstaclewithcorruptionislikelytoha velessinnovativeactivity,i e , thevariableforcorruptionisanticipatedtobenega tiveandsignificantstatistically

Inconclusion,theequationusedinempiricalstudyforfirmiinsectorjisdep

ictedas:Step1:

Innov ij =X ij ’ β+ε ij

Innovijisdummyvariabletomeasureinnovationoffirms inthreeaspects,equ ivalenttothreemodels:neworsignificantlyimprovedproductorservices(model1 );neworsignificantlyimprovedmethodo f manufacturingo r o ff e r i n g services (model2);n e w o r significantlyi m p r o v e d organizationalstructureormanage mentpractices(model3)

I

’

X’i sthevectoro f independentvariablesr e p r e s e n t i n g fi r m characteristics ,i n c l u d i n g export,f o r e i g n factor,gorvernmenternmentfactor,firmage,fir msizeandtheuseofemail

εijistheerrortermwhichisassumedtobedistributednormallywithmeanzeroa ndconstantvariance

Step2:

Innov ij =X ij ’ β+I ’ +ε ij

jisthevectorofvariablesaboutindustrycharacteristics,namelyindustrydum myvariableanddummyvariableforcompetition

Step3:

Innov ij =X ij ’ β+I ’

j c

I’

cisvectorofelementsaboutinnovationclimateofthecountry,includingcorrupti on

3.2 Data

ThestudyusesthedataofVietnamin theWorldBank’ EnterpriseSurvey ( 2015) TheWorld B a n k ’ s EnterpriseSurveys(ES)hascollecteddatafromk eymanufacturingandservice sectorsineveryregionoftheworldformanyy ears.TheSurveysusestandardizedsurveyinstrumentsandau n i f o r m sampl ingmethodologytominimizemeasurementerrorandtoyielddatathatarec o m

p a r a b l e acrosstheworld’seconomies.Thequestionnairewasdividedinto twoparts:thefirst o n e comprisingof7sectionscoversfirmcharacteristicsonth

e business andtheinvestmentclimatesuchassalesand supplies,infrastructure

businessgovernmentr e l a t i o n s , investmentclimateconstraints;theseco ndwith3sectionsdealswithfactsandfiguresrelatedtofinance, laborandprodu ctivity.Additionally,informationaboutcapacitysuchasuseofproductioncapacit yandhoursofoperationwassurveyedinmanufacturingenterprises

Table1

Variablesandsummarystatisticdescription

Variable Obs Mean Std.Dev Min Max

Source:owncalculationfromWorldBankEnterpriseSurveysforVietnam;2015

The2015dataisthemostup–to–

datecollectionwhichhadtheparticipationof996enterprisesf r o m variousindustr iesinVietnam.ThesurveywasimplementedbetweenNovember2014andApril20 16withm o r e improvedquestionnairesthanonesu s e d i n 2009and2011.The numberofo b s e r v a t i o n s ofsomevariablesusedinthisstudymaybelessthan thetotalsampleduetothelackofdataofsomeenterprises(Table1)

Thenumbersoffirmsbykeybackgroundcharacteristicsaregeneratedforquali tativeanalysisinattempttodrawinsightsintotheinteractionbetweendifferentch aracteristics(Table2).Table2showsthatamongfirmsreportedoninnovationinth reeaspects,thereare304firmschangedtheiri n products/

services(equivalenttoapproximately30.8%oftotalfirms),319firmsimprovedme thodo f manufacturingorofferingservices(equalto32.3%)and306firmsinnov atedinorganizationalstructuresormanagementpractices(equalto30.9%) Eachaspectofinnovationisclassifiedbydifferentcharacteristics.Fordirecte xport,numberofn o n –

exportersoverwhelmsthecounterpartsthatareexporters.Amongstexportingfir ms,around4 0 % arei n n o v a t i v e f o r eachi n n o v a t i o n aspects,whilei n n o

v a t i v e fi r m s i n non–

exportgroupaccountsforonlyabout28%.Thispreliminarydescriptivefindingma yimplypositiverelationshipbetweendirectexportandprobabilityofinnovation Table2doesnotshowanysignificantdifferenceindistributionoffirmsamongsiz egroups,small,medium,and largefirms

Theanalysisoffirmsbyforeignownershipandstateownershiprevealsthatth eproportionsoff o r e i g n firmsandstatefirmsoverpassthatofdomesticandpriv ateones.Inaddition,amongstudiedf o r e i g n

c o m p a n i e s , thepercentageofinnovativefirmsislessthanthatoffirmswithou tinnovation,c o m p r i s i n g of about26%.Meanwhile,theproportionofi n n o v a t i

v e firmsfluctuatesi n differentaspectsofstate–

ownedcompanies,accountingforaround59%intechnology–

innovationandabout40%intworemainingfacets

PoliciesandSustainableEconomicDevelo

internettoinnovationbycomparingdifferenceini n n o v a t i o n patternbetwee nemail–usersandnon–

users.ThedatashowsthatemailhasbecomeapopulartooloffirmsinVietnam,with over90%offirmshavingemailfortheiroperation.However,thereisnoclearrelation betweeninnovationandemailusecanbeseeninsimpledescriptiveanalysis.Thislin kwillbeanalyzedinempiricalstudylateron

Table2

Numbersoffirmsbybackgroundcharacteristics

Variable

Directexporters

0

21 9

54 6

23 5

54 9

23 3

1

1

3

72 Firmsize

7

8

10 5

28 5

10 2

2

11 0

22 7

11 6

23 7

10 5

5

5

3

99 Foreignownership

9

27 8

60 2

29 6

61 7

28 3

Governmentowner

ship

8

28 2

64 6

30 5

66 2

29 1

Emailuse

6

29 2

61 5

30 4

62 6

29 5 Sector

3

10 7

24 0

12 1

25 6

10 6 Medium–

technology

22 6

13 1

22 9

12 9

23 6

12 2

5

1

3

78 Competition

3

12 8

38 3

12 9

37 9

13 4

6

16 0

27 3

17 4

28 8

16 0 Corruption

6

11 0

25 9

11 0

26 1

10 9

8

19 4

41 1

20 9

42 4

19 7

4

30 4

67 0

31 9

68 5

30 6

Source:owncalculationfromWorldBankEnterpriseSurveysforVietnam;2015