Microsoft Word 00 a loinoidau(moi thang12 2016)(tienganh) docx 50 Tang Due Au A PRIMARY RESEARCH ON OPEN INNOVATION ACTIVITIES OF SMEs IN VIETNAM Tang Due Au University of Foreign Language Studies, Th[.]
Trang 150 Tang Due Au
A PRIMARY RESEARCH ON OPEN INNOVATION ACTIVITIES OF SMEs
IN VIETNAM
Tang Due Au
University of Foreign Language Studies, The University of Danang; tdau@ufl.udn.vn
Abstract - Open Innovation (OI) is a new term in the literature of
business administration Although OI studies have been widely
done in developed or newly industrialized countries, not many are
observed in developing economies like Vietnam An analysis of
quantitative data collected from a survey of 50 enterprises, in both
manufacturing and service sectors in Vietnam in this study presents
an overview of the adoption of OI activities in the Vietnamese
context It is observed that over thirty years of Doi Moi adoption,
more and more enterprises in Vietnam conduct OI activities along
with its accelerative process of integration into the global economy
Venturing seems a dominant practice while foreign-invested firms
are more likely to have more OI activities than the domestic ones
Implications from the analysis can help business partners in setting
their strategic direction for more competitive capability in the new
business context
Key words - Closed Innovation; developing country; Open
Innovation; SME; Vietnam
1 Introduction
In the context of the knowledge-based economy,
cooperation and integration have been prioritized trends
The cooperation among business actors becomes
significantly essential because of the global economic
crisis One of the reasons is that the connectivity is
considered the driver or framework for innovation (Dutta
& Lanvin, 2013) Also, the engagement into global
economy allows firms to get access to foreign exchange
flow where their interest rates are lower than ones in their
domestic markets (Ghosh & Chandrasekhar, 2009)
Partnerships among stakeholders and among nations can
help developing countries to limit their drawbacks
Developing countries can get access to technical
infrastructure and financial aids to support their
development stages, ranging from economic to
educational development
Enterprises are motivated to reform their current
business models to adapt into the business changes
One century ago, most of innovative ideas were
brought about by innovative individuals, imitators and
Research and Development (R&D) departments of
large-scale companies (Chesbrough, 2003) In the
present, however, innovative ideas come from different
sources, including customers, suppliers, governments,
competitors and academic institutes An innovative
business model with few boundaries and more linkages
is of urgent need Chesbrough (2003) introduced a new
term of business model “Open Innovation” that
satisfies the rising global demands for outbound
connectivity SMEs have played an important role in
the national sustainable development The world’
enterprises are dominated by the SME sector and
Vietnamese ones are not exceptive According to the
Business Results of Vietnamese Enterprises in 2014
(General Statistics Office, 2016), about 98% of
enterprises in Vietnam are micro, small and medium
enterprises In particular, the number of enterprises having less than 10 laborers accounted for 67.5% of total enterprises, the enterprises having from 10 to 49 laborers made up nearly 25% of total enterprises and about 5.5 % of total enterprises were the enterprises with from 50 to 199 laborers However, OI literatures that focus on SMEs have been under-researched (Vrande et al., 2009; Lee et al., 2010) OI studies in developing countries are under-researched (Lee et al., 2010) Therefore, it is worth considering OI research in various industries and countries in order to “determine the frequency and importance of various practices and context factors” (Huizingh, 2011, p.07) This study aims to fill these research gaps by exploring the OI activities in SMEs’ context in a developing country – Vietnam Regardless of the dominance of SMEs, by number, in the business sector, SMEs face some key obstacles, such as lack of financial and human resources Research results try to identify the important potentials of OI activities in helping low technology-based enterprises to decrease their insufficient resources by combining between internal and external resources (Vrande et al., 2009)
2 Theoretical Background
2.1 What is Open Innovation?
The term “Open Innovation” is described as an innovation model in which both internal and external sources including technology and knowledge are involved in the process of creating and commercializing new products, services or processes (Chesbrough, 2003) OI has two main dimensions including inbound and outbound Open dimension Inbound OI refers to the transfer and use of external ideas and technologies into the firm, whereas outbound
OI refers to the transfer of internal sources to external firms (Chesbrough & Crowther, 2006) In summary, OI model aims to build up an innovative business environment in which all business stakeholders have been given as many as opportunities to develop their initiatives OI is different from Closed Innovation in many principles, ranging from human resource, mode
of production to profit-making ways (Table 1) One of the most important characteristics that distinguish OI from Closed Innovation is that the OI encourages firms
to search for appropriate outside partners and take advantage of strengths available in surrounding businesses rather than relying on inside sources Innovation processes are done internally in Closed Innovation model; however, OI encourages enterprises
to engage with external partners to do most parts or stages of innovation process
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Table 1 Contrasting principles of Closed Innovation
and Open Innovation
Closed Innovation Open Innovation
The smart people in our
field work for us;
To get profit from
R&D, you have to discover
it, develop it, ship it by your
own;
If you discover it
ourselves, we will get it to
market first;
The company that gets
an innovation to market first
will win;
If we create the most
and the best ideas in the
industry, we will win;
We should control our
innovation process, so that
our competitors don’t profit
from our ideas
Not all smart people work for us We need to work with people inside and outside our company;
External R&D can create significant value;
internal R&D is needed to claim some portion of that vale;
We don’t have to originate the research to profit from it;
Building a better business model is better than getting to market first;
If we make the best use
of internal and external ideas, we will win;
We should profit from the others’ use of our innovation project, and we should buy others’ other intellectual properties whenever it advances our own business model
Source: Chesbrough, H (2003)
2.2 Open Innovation in SMEs
Most OI studies in SMEs are investigated in European
Countries or The USA (Vrande, et al., 2009) Lee et al.,
(2010) has so far attempted to empirically study OI in
South Korea Their investigation showed the current
conditions of innovation activities among Korean SMEs
and emphasized the role played by networking as one of
important factors to facilitate the innovation capabilities
(Lee et al., 2010) Because of the financial and
technological constraint, OI can help SMEs to capture
advanced technology and financial resources form
international market
3 Research Questions and Method
3.1 Research Questions
The objective of the research is to provide an
overview of OI application in the context of Vietnam
Two main research questions are addressed in this study:
a What kinds of OI activities that SMEs in Vietnam
have conducted?
b How different the application of OI activities in
SMEs is?
3.2 Research Methodology
For the purpose of this research, we choose SMEs in
manufacturing and services sectors in Ho Chi Minh
(HCM) City for our sample Manufacturing and service
industries are appropriate for this investigation because
of the wide use of knowledge-intensive technologies for
production processes (OECD, 2005) HCM City is
favorable location for the research because of the two following reasons: (1) the city hosts the most SMEs in the country, about 34 % in 2014 according to the size of capital resources (General Statistics Office, 2016); (2) one of two national science parks, Saigon Hi-tech Park,
is in Ho Chi Minh City Saigon Hi-Tech Park also launches Research Laboratories with financial support from various sources Therefore, HCM City provides an appropriate setting for examining the research questions
A structured questionnaire was issued for collecting the data in this survey To construct the survey instrument, existing scales from previous studies were extracted and adapted OI variable is measured with eight items which derived from Vrande et al., (2009) These items are (1) venturing; (2) outward intellectual property (IP); (3) employee involvement; (4) customer involvement; (5) external networking; (6) external participation; (7) outsourcing R&D; (8) inward licensing
of IP A seven-point Likert-type scale is used to measure these items The respondents are asked to rate each item, ranging from 1 (the lowest) to 7 (the highest)
Questionnaire survey is used to collect data Questionnaires, in both English and Vietnamese, were emailed and mailed to a total of 150 high-ranking staff in SMEs A gift and a summary of research results are promised to send out after the research completes in order
to increase the response rate Three weeks following the survey delivery, reminder letters were sent out to non-respondents A total of 55 surveys were completed and returned Five questionnaires were ignored because they were from large-sized enterprises
4 Data Analysis
4.1 Sample Description
Table 2 presents the characteristics of the research sample In terms of ownership, 50 percent of participated enterprises are private ones State and foreign invested enterprise account for 24 and 26 percent, respectively Enterprises with 50 – 299 laborers account for up to 80 percent Manufacturing and services enterprises account for 44 and 56 percent, respectively Accountants account for about 45 percent of all participants, followed by 24 percent of project managers Management board and secretary make up the same percent of around 5 percent when engineering and sale executives contribute to the remaining 5 percent In terms of experience, respondents claimed that they had experience in their firms over 5 years and 3 to 5 years account for the same percent (34 percent) Respondents with experience from 6 months to
1 year and from 1 year to 3 years share the same percent (8 percent) Given the tenures as well as the working experience of respondents, the research data is reliable
4.2 Results and Discussion
Table 3 shows the average score of eight OI practices
in three different types of enterprises It is observed that venturing is the dominant innovation activity Customer involvement and external networking are significantly higher than average level, whereas outward IP, inward IP and outsourcing R&D are underrated Table 2 also
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in innovation practices We can see each type of
enterprises conducts OI activities at different levels The
survey shows one difference between Vietnamese and
foreign enterprises Overall, foreign invested enterprises
conduct more innovation activities than private and state
ones do Foreign enterprises care much about R&D and
technology exchange activities in which Vietnamese do
not evaluate highly The data also indicates differences
among state and private enterprise In the one hand, state
enterprises conduct more venturing, external networking,
external participation and outsourcing R&D than private
ones do; on the other hand, the remaining innovation
practices conducted by state enterprises achieve less score
than ones conducted by private ones
Table 2 Characteristics of the sample
Characteristics Number of enterprises Percentage (%)
Ownership
Private enterprises 25 50 State enterprises 12 24 Foreign invested
Size
50 – 299 (Medium) 40 80
Industry classification
Total for each characteristic
Table 3 OI application in Vietnam’s SME
Total
Foreign invested enterprise
Private Enterprise
State Enterprise
Total Mean Std Deviation
Technology exploitation
Technology exploration
Table 3 presents that more foreign invested enterprises
focus on conducting OI activities than domestic ones do
Only in terms of venturing activity, foreign invested
enterprises stand behind state enterprise, 5.04 and 5.7
respectively Excluding external networking and
outsourcing R&D, private enterprises conduct more
remaining OI activities than state ones In addition,
foreign invested and private enterprises conduct more
customer investigations more than state ones One of the
possible explanations is that state enterprises are
prioritized to get access to customer database of local or
national authorities This viewpoint is supported by the
data in Table 3 where state firms have greater possibility
of finance, human capital and other support services (5.7
versus 4.8 in private ones).According to a study of private
SMEs in Vietnam, the access to flows of finance or
modern production technology are positively and directly
related to success of such kind of enterprise (Nguyen,
2013) A survey investigating the satisfaction of 2,500 enterprises by Vietnam Chamber of Commerce and Industry in 2014 found that two most problematic issues relating tax procedure are information change on tax registration (32%) and tax return (28%) Among 32% of participated enterprises offering “lobbying expense”, 33% are private, 19% are state and 41% are foreign invested enterprises
Among eight OI activities, venturing achieves the highest level with the mean of 5.18 Venturing level of private enterprises is only 4.83 because the private SMEs’ ability to get access to financial support and real estate opportunity is not as strong as their counterparts Customer involvement and external networking occupy the second and third places, 4.94 and 4.82 respectively Employee involvement and external participation have attracted the attention of enterprises R&D activities are
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viewpoint is provided by the fact that R&D intensity (3.16)
seems low in SMEs R&D expenditure is more
underestimated in private and state enterprises than foreign
invested ones Obviously, R&D expenditure enables firm
to have a better capacity to innovate new products, new
services and new processes Also, a study conducted in
Vietnam demonstrated that industry profitability is
positively related to the involvement of firms into R&D
activity (Tran & Santarelli, 2013) However there are some
possible barriers with which SMEs are confronted Firstly,
SMEs are normally at disadvantage position with regard to
access to finance in developing countries Large firms are
more likely to undertake R&D activities as compared to
small firms because of their better access to finance (Cohen
and Levin, 1989) Secondly, a survey conducted by Tran
&Santarelli (2013) showed that factors motivating firms
to get involved in R&D cannot force them to invest more
in R&D
OI practices with regards to IP, both inward and
outward seem weak The table shows that inward and
outward IP are very weak in state enterprise One of the
reasons may be the lack of relationship between
enterprises and educational institutes or research
universities It is obvious that university is one of the best
places to create scientific inventions; however, the
university – industry link seems insufficient An OI forum
is launched in Vietnam with the support of the Finnish
Embassy in Vietnam in order to help Vietnamese
companies build partnership relations with each other and
with universities and foreign partners to create new
products for the market
5 Conclusion
In this paper, an OI investigation has been conducted
trying to provide a snapshot of the current status of OI
activities from SMEs’ perspectives
This paper could serve as a starting point to presenting
the essential roles played by OI activities in SME context
in a developing economy The adoption of OI activities
varies on such aspects as size, ownership and industry
SMEs in Vietnam have adopted various OI activities This
study has some limitations - some of which, however,
offer opportunities for future research The enterprises
participating in this survey operate their business in one
city Thus, the findings might be province-specific More
studies of OI in other provinces are thus welcome A large
OI study in different areas in Vietnam needs to be further
investigated to get a more complete picture about OI
activities The research results have low statistical power because of the small sample size A larger sample size will
be better to become a representative group for a broader business community However, the paper is portrayed as a reference for future OI literature in Vietnam The findings reveal that there are still some negative aspects that need to
be addressed and dealt with in order to strengthen the successful application of OI The role of the government and research institutes should not be left alone There should be efforts and appropriate strategies from the government in strengthening the university – enterprise linkage
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(The Board of Editors received the paper on 04/12/2016, its review was completed on 15/12/2016)