Green innovation, green entrepreneurship, and vietnamese SME development the role of market turbulence

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business --- Nguyen Tri Thanh Green Innovation, Green Entrepreneurship, and Vietnamese SME Development: The Role of Marke

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Nguyen Tri Thanh

Green Innovation, Green Entrepreneurship, and Vietnamese SME Development: The Role of Market

Turbulence

MASTER OF BUSINESS (HONOURS)

Ho Chi Minh City – Year 2019

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Nguyen Tri Thanh

Green Innovation, Green Entrepreneurship, and Vietnamese SME Development: The Role of Market

Turbulence

MASTER OF BUSINESS (HONOURS)

SUPERVISOR: DR DOAN ANH TUAN

Ho Chi Minh City – Year 2019

Green Innovation, Green Entrepreneurship, and Vietnamese SME Development: The Role of Market

Turbulence

Nguyen Tri Thanh

22160042@student.isb.edu.vn , Mbus 7 International School of Business

Master Thesis

Supervisor: Dr Doan Anh Tuan

tuandoan@isb.edu.vn,

ACKNOWLEGEMENT

I would like to express my sincere gratitude to my supervisor, Dr Doan Anh Tuan, for his ongoing guidance and support with my master’s thesis and throughout my graduate career I would additionally like to thank committee members of International School

Of Business | University Of Economics Ho Chi Minh City for the insight and encouragement they have provided throughout the completion of this thesis I am especially gratefully to Mr Pham Ngoc Hung who is a lawyer and vice chairman of the HCM City Union of Business Associations (HUBA) for support he has provided

me I would like to extend my utmost appreciation to Saigon Bizhub Company, and Leader of District 6’s economic department for support me collect dataset, which making this research possible Lastly I would like to thank my family and friends for the constant encouragement and enduring love they have provided throughout my life.

ABSTRACT

Micro, small and medium enterprises (MSMEs) are significant part of the national economy, which contributed up to 40% of GDP However, in today’s globalized world, the competition in the marketplace is increasing complex Besides, the state attention is more concerned with sustainable environmental Thus, Vietnamese enterprises, especially MSMEs or small medium enterprises (SMEs) that want to stand

up and develop should pay attention to innovation not only consider business opportunities but also benefits of being environmental friendly business The goals of this study are to investigate the impact of green innovation (GI) on SME development (SMED) in the turbulent market conditions with mediation effect of green entrepreneurship (GE) Based on the research results, the study provides useful solutions to help SMEs development and help policy makers adjust appropriate policies The activating of SMEs activities in Ho Chi Minh business City is corresponded to the demographic census of this study A sample of 280 senior managers of SMEs is surveyed for the study The questionnaire tool is used to measure the research variables A five point Likert scale is used to measure the questionnaire

To test the hypotheses, the study use SEM method with the support of Amos software The primary contribution of this study is empirically examining the role of GE in relationship between GI and SMED in market turbulence However, this study use convenience sample of Ho Chi Minh City Thus, limitation of this study is inevitable Cross-region sample and undergraduate will be conducted for the further research

Table of Contents

1 INTRODUCTION 7

2 LITERATURE REVIEW 13

2.1 Definition of SMEs in Vietnam 13

2.2 The effect of Green innovation on Green entrepreneurship 15

2.3 Green entrepreneurship and SME development 16

2.4 The moderating impact of market turbulence 18

3 RESEARCH METHODOLOGY 23

3.1 Research design 23

3.2 Research process 23

3.2.1 Qualitative research 23

3.2.2 Quantitative research 24

3.2.3 Measures of the constructs 26

3.3 Data analysis method 32

3.3.1 Exploratory factor analysis (EFA) 33

3.3.2 Reliability and Validity 33

3.3.3 Structural Equation Modeling 34

3.4 Data collection 35

4 DATA ANALYSIS 38

4.1 Descriptive statistics 38

4.2 Exploratory factor analysis (EFA) 40

4.3 Reliability Master 41

4.4 Confirmatory Factor Analysis (CFA) 43

4.5 Results 46

4.5.1 Structural Equation Modeling (SEM) 46

4.5.2 Structural Equation Modeling (SEM) of Moderator Analysis 49

4.5.3 Hypothesis Overview 50

5 DISCUSSION, CONCLUSION AND LIMITATION 51

5.1 Discussion 51

5.2 Conclusion and Implications 54

5.3 Limitations 55

1 INTRODUCTION

Nowadays, the role of innovation for environmental sustainability is significant growth This is evidenced by relevant issues, which specially focus in importance among decision makers in organizations Numerous studies have stress the increasing primary of sustainability as a criteria of innovation (Adams, Bessant, Jeanrenaud, Overy, & Denyer, 2012; Nidumolu, Prahalad, & Rangaswami, 2009; Varadarajan, 2017) There were many terms consist of eco innovation, eco-friendly innovations, environmental sustainable innovations, sustainable innovation, green innovations, and

so forth In the academic literature and/or the issues obviously have used these terms

to denote to innovations with essential of durable environment sustainability This study uses the term Green Innovation (GI) with the stipulation, which the approaching

of study considers innovations diminish the collision of organizational activities on the natural environment

Two years ago, the natural environment in central Vietnam was severely impacted by the disaster, which involves a Foreign Direct Investment (FDI) company discharging the untreated wastewater into the environment After this disaster, policy makers have numerous activities which increasingly strict regulars punishing environmentally harmful behaviors These policies have encouraged producer to control the impacts of their activities on the natural environment to mitigate negative reputation and addition cost Thus, responding to the incremental of environment pressure, manufacturer use GI that considered important tool to obtain sustainable development Despite the significance and benefits of GI, many case, the contribution

of producer in GI have below expectation (Abdullah, Zailani, Iranmanesh, &

Jayaraman, 2016) Some manufactures are prevented by innovation participation because of the difficulties involved and still locked into the established routines To achieving adoption of GI, these were important factors, which include stakeholder compression, environmental protection act, firm size, and characteristics of manager, staffs and business field (González, 2006; and Etzion, 2007)

Although GI, and GE literatures are plentiful, relatively little research attention has been focused on Vietnam industry The economic, social, community, market conditions of Vietnam are almost different from other areas The composition of customers and their preferences are changing swiftly, thus formed market turbulence Moreover, Vietnam’s industries are mostly involved in SMEs, which play important roles in national market, and contributed over 40% GDP (Hoang, 2016) According to the report by General Statistics office, in 2017, there are nearly 517,900 SMEs operating in the country, up 51.6% compared to 2012, of which SMEs account for 98.1% They have allocated almost in Ho Chi Minh city on which 172,979 SMEs are operating In global market, SMEs contribute to the economic growth and competition (Mesquita & Lazzarini, 2008) SME activities allow SMEs to remain competition, meeting requirements of customers, promoting innovation The important role of SMEs that present in wealth, job production, thus generating consequence and producing a set of services and products However, their limited resources and capabilities in the area of human, financial resources, and research, and marketing, thus they will fall without globalizing their activities In the market turbulent conditions, the globalization of environmental pressures, which made the role of SMEs more eminent However, the question is whether confirming the development of SMEs

form GE approach, which stem form GI in turbulent market conditions? In this thesis, the development of SMEs comprise of incremental employment, performance of finance, and the newborn industries (Mangematin et al., 2003) Confidently, concluding that SMEs development and turbulent market conditions have not received attention in previous studies Based on the massive literature review that has disclosed

a clear gap in evidence on the growth of SMEs from GI, and GE in market turbulence

is confirmed Based on advances that mentioned above, so the activating of SMEs activities in Ho Chi Minh business City is corresponded to the demographic census of this study

At firm level, GI has been research in two specific aspects According to study

of (Caputo, 2014), his study investigated factors related to enable GI, which focus on stakeholder pressures, environmental protection acts, redundant resources expected economic benefits, employees and environmental awareness of managers The other aspect focuses on the outcome of GI Many studies debated on how policies driven GIs influence innovation and firm performance Porter hypothesis (M E Porter & Van der Linde, 1995) provided appropriate conclusion which indicated relationship or mechanism between GI and corporate performance In general, his hypothesis indicates innovation-offset term Thus, the company increasing in resource efficiency leads to higher economic efficiency The impact of corporate GI on firm performance

is undisputed conclusion, some empirical studies indicate the positive effect of corporate GI on business performance (Amores et al 2014; Rennings & Rammer, 2011) In some case this effect was costing in short term but become positive in long term (Horváthová, 2012) However, identifying and classifying GI activities of firm

should consider the significant barriers Beside some companies have inadequate capacities, which reduce their proper understanding of GI’s measure

Previously, the factors influence to implementation of GI of firm, have been examined in some studies (Y Lin, Tseng, Chen, & Chiu, 2011; Tseng, 2013) Therefore, GI can be classified into four main categories, including technological innovation, process innovation, performance of management, and product design Klassen & Whybark (1999) presented an array of Green measures help manufacturer adjust processes in design of product to diminish environmental negative consequences Moreover, well-designed environmental standards can develop an incentive of producer to introduce green products with lower cost and differentiating (Chen, Lai, & Wen, 2006) Thus, GI improve product or processes that reaching sustainability and the bargain of environmental pressures Rennings & Rammer (2011) and Kemp & Pearson (2007) studies indicated that GI can significantly decrease environmental pollution and thus can create sustainable development In Vietnam, compared to other developing countries, environmental pollution has not deal efficiency, cause by serious measures have not adopted, especially in field of making and consumption of green products (Lin et al, 2013) This study presented the original topic deliberated on the theme of GI and green manufacturing

According to this matter, this study accesses an emerging phenomenon, which call Green entrepreneurship (GE) The GE approach is an outcome of innovation, which has the potential to solve environmental problem by create new product and technology (York & Venkataraman, 2010) GE considers sustainability is the strategic foundation, which is related with sustainable economy Since the global economic

crisis in 2009, national plans and the report of international meeting obviously utilized the concept of green economy According to UNEP, this report seen green economy or sustainable economy is an economic activities system which aim to develop value of people’s life This system embraces the manufacture, consumption, and allocation of goods and services In the green economy model, a priority focus to environmental issues and sustainable businesses (UNEP, 2011) Thus, a prevention imminent generation against primary environmental risk and natural scarcity is considered essential aspect of GE Uslu, Hancıoğlu, & Demir (2015) presented that GE encouraging manufacturer using re-generable energy resources, recycling of wastes, and more attention to animal and organic farming Kirkwood & Walton (2010) presented that the motivation of eco-preneurs or green entrepreneurs is created sustainable businesses with strong underlying green values It’s made green entrepreneurs are extraordinary in the world of business The original credence of entrepreneur focuses on the primariness of the environmental and social consciousness more than rigorous economic achievement Thus green entrepreneurs are tremendous significance to the economy as job creation is their crucial contribution (Farinelli, Bottini, Akkoyunlu, & Aerni, 2011) Base on his review, Silajdžić, Kurtagić, & Vučijak, (2015) investigated in private sector that green entrepreneur brings positive influences on society and gains desired business’s profitability also Activities of green entrepreneur consequently develop sustainability for industries and enhance the green growth (Sarkar, 2013) The above-mentioned studies indicated the importance rule of

GI and GE in the modern world

Based on the benefit of GI, GE, on development of Vietnam’s SME which mentioned above This thesis aims to offer a comprehensive approach in assessing GI Moreover, the conclusion of this study aims to evaluate the impact of GE on development of SMEs in market turbulence conditions The remainder of this study is established as follows: A discussion of the literatures related to GI, GE, SMEs development, and turbulent market conditions are displayed in Chapter 2 Chapter 3 presents the research methodology, empirical models and variables, and Chapter 4

display result Conclusion is available in Chapter 5

2 LITERATURE REVIEW 2.1 Definition of SMEs in Vietnam

Initially, study focus on literature review of SMEs, which lies on a specific type

of organization with a different set of primaries than the rest organization Base on previous studies, SMEs are a various group in term of size, sector variety and so forth The definition of SME is in-conclusion because every country adopts different criterion, which are employment, sales, total net asset, and investment level for their definition purposes However, the most common basic for definition is the number of employees, which have a threshold form the majority micro-enterprises and startups with nearly no employees to medium sized enterprises with more than 200 employees (Ayyagari, Beck, & Demirguc, 2007)

In Vietnam, SMEs play a role with 98% of all enterprises, 50% of employment, and 40% GDP (Vietnam-briefing, 2017) SME’s definition in Vietnam is depended on the 04/2017/QH14 Law on Support for Small- and Medium- sized Enterprises (SME Law), which has been introduced by the government and took effect from 1st January

2018 Based on definition of SME Law, MSMEs or SMEs are manufacturer and service units that having less than 200 employees, who registered with the state social insurance scheme in a year and satisfying either of the subsequent two criteria These conditions comprise the total capital is no more than VND100 billion, and the entire revenue of the previous year not surpass VND 300 billion At global level, there are many reasons, which make significant literature on GI and GE of SMEs According to OECD (Murphy, 2002), the OECD economic indicated SMEs builds a large group

enterprises In negative aspect, SMEs also contributed to a large share for pollution According to ECEI (2010) presented that SMEs respond for approximately half of total pollution in the EU Each SMEs are variety and distinctiveness, thus their innovation for sustainability is different (Bos-Brouwers, 2010)

On another hand, the inadequate capability of SMEs comprises financial limitation, resource constraints and so forth, which inhibit their proactive innovation process SMEs cannot manage to pay for the investment necessary to compare with larger organization or approve comparable strategy (Abor & Biekpe, 2007) Form this point of view, numerous previous studies that indicated SMEs focus toward environmental and social issues and thus exploit niches that are appropriately suited to their capabilities The interest of each company do not similar, so each company with the different size should follow different strategies of their business Previous studies indicated that SMEs have advantages in that they are characterized by dominant control of owner – managers, so SMEs behavior is often implied in term of the psychological representatives of the owner- manager (Jenkins, 2009) Thus SMEs be able to innovate fundamental and participate effectively in niche markets with GI than larger companies This controversy is based on the distinction of organizational structures and capabilities that SMEs will innovate dissimilarly than larger companies for GI (Aragón et al 2008) This is further supported by numerous literatures presented that SMEs originated on the basis of business sustainability should growth and successful spread GI in niche markets (Klewitz & Hansen, 2014) SMEs are also termed green entrepreneur, sustainable entrepreneurs, ecopreneurs, and are thus also covered by this study definition of SMEs

2.2 The effect of Green innovation on Green entrepreneurship

Based on previous studies indicated that Green product innovation, green process innovation are component GI (Chang, 2011; Chen et al., 2006; H Lin, Zeng,

Ma, Qi, & Tam, 2014) GI is the development of product or processes about enhance green product design, quality, safety, and sustainable power, and negative environmental effect, reusable material, so forth (Chen et al., 2006) Green product innovation relates to development of green product design, standardization, and reduces the negative collision of the product on the original nature Typically, the used phase and the discard phase of the product which significantly impact on the environment At this point, green product innovation takes the role on bargain of the negative influence of producing, use, and discard on the environment GI also can develop the implementation of environmental management then meet their obligation

of environmental protection The dedication of the firm to the development of green innovation can meet the environmental legislation as well as build up the barriers to another competitors (Dangelico & Pontrandolfo, 2010) Recently, there are significant associations between GI, GE, and green businesses Companies involve on high sustainability of businesses, thus can facilitate the generation of GE GE foster firm to alter their strategies and maneuvers then they can offset the cost of improving environmental impact In general, GI comprise the diminution of destructive environmental effects, development resources productivity, and has been extensively studied (M Porter & Linde, 1995; Wong, 2013)

According to Farinelli et al (2011), GE or ecopreneurship can be defined as implementation of innovations involved to sustainability In this definition, the main

goals of GE are implementing sustainability and promoting green economy Miller (1983) study indicated entrepreneurship at the individual and organization levels is an important concept Obviously, entrepreneurship relates to a creation of fresh business models and different products in established firms In this way, previous studies indicated, which the owner- manager effort constantly develop their economic position and inventive behavior (Croitoru, 2012) Consistently, the way of green entrepreneurs view and assess the potential of resources and opportunities is based on their lenses of environmental commitment (Gibbs, 2008) Thus, a potential definition of entrepreneurship, which is an innovation process which relates utilizing opportunities with enormous exertion and persistence, beside receiving financial, rational, social risks These risks offset by the inspiration of attaining financial benefit, accomplishment, self-satisfaction and autonomy (Hisrich, Peters, & Shepherd, 2002) These arguments lead to the following hypothesis

Hypothesis 1: Green innovation has a significant affectation on Green entrepreneurship

2.3 Green entrepreneurship and SME development

Many previous studies indicated that entrepreneurship positive involve to a strategic decision making of company and administration form (Farinelli et al., 2011; Kraus, Rigtering, Hughes, & Hosman, 2012) Meanwhile, Entrepreneurship also significantly influence on a vigorous capability, evolution incentive, and business implementation (Lee, Lee, & Pennings, 2001) The measurement of innovative behavior comprise of innovativeness, pro- activeness (PA), and risk- taking (RT) which has been popularly employed (Covin & Wales, 2012)

PA relate to the capability of firm that seize new opportunities Proactive organizations help to monitor trends of the market Pro-activeness increases its ability for identifying the imminent demands of current customers, and foresees shifts in need

or rising problem Thus, pro-activeness can start novel venture opportunities and eliminate the operation and products with expire-life cycles (Dess & Lumpkin, 2005)

PA companies prefer to recognizing changes, which should behave on those comprehensions ahead of the business rivals Owner-manager who exercise pro-activeness have their eye on future Thus, they always look for new possibilities for growth and development The next dimension is innovativeness Innovativeness refers

to efforts of companies to creative and looks for new opportunities and fresh solutions Innovation involve creativity and experimentation that result in elimination of exiting solutions and method or new product, services and technological processes (Hong, Song, & Yoo, 2013) Finally, the last dimension that present in this paper is RT According to study of Dess & Lumpkin (2005) presented that RT refers to a inclination of company to take possession of a venture opportunity even though it has natural failure probability in itself Thus, company is unable to understand whether the opportunities will be successful or failure and perform fearlessly without comprehending the result To be successful via entrepreneurship, companies normally have to embark upon risker alternatives This means staying away the processes or products, which have existed in the past Previous researches have indicated that the correlation of elevated risk, pioneering designs and projects (Tan, 2001) According to financial field, companies refer risk- taking will obtain high financial returns Though

high risk should rise the probability of scheme failure, so it is appropriate example for another project (Anderson, Covin, & Slevin, 2009)

Usually, bringing new products successfully to market is essential lifeblood for most businesses However, new product development is also a complex and difficult task, which by generating non-existent and pioneering things in the way of manufacturing fresh outcome As these elements are related as the circumstances of achievement in driven benefit So the absence of support of firms form innovation is a significant obstacle, which can be altered and increased by effort within the company Numerous studies indicated that positive relationship between entrepreneurship and incremental innovation (Bouncken, Plüschke, Pesch, & Kraus, 2016), thus the tendency towards entrepreneurship cause innovation to develop In this point, many studies presented a background for the elements influencing on the development of SMEs

According to Sidik (2012)’s study, which indicated the traits of entrepreneur and performance of SMEs related to the development of an SME Thus, it offers a proposition framework of valuable dimensions that to assess entrepreneurship and SME development With these arguments lead to the following hypothesis:

Hypothesis 2: Green entrepreneurship has a significant affectation on SME development

2.4 The moderating impact of market turbulence

According to study of Tsai & Yang (2013) indicated MT be regarded more to the strategic choices of firms and is one of the most essential environmental factor in market MT is associated to the rate of change in structure of customers and their

preferences in an industry These changes caused by several factors, however the primary cause for these variations is the uncertainty and changeable of exterior dimensions (Theodosiou, Kehagias, & Katsikea, 2012)

In an industry, the rate of change in customer preferences for products and services is reflected by MT (Olson, Slater, & Hult, 2005; Jaworski & Kohli, 1993) So

MT is the core foundation of environmental turbulence The rate of variation in market and/or the rate of changes in the technology, which is indicated by the environmental turbulence in an industry (Kim & Atuahene-Gima, 2010) In this study, MT distinguishes between market and technology- stem from turbulence The reasons are considered that dissimilar foundation of turbulence should affect altered opportunities and hazards for companies (Danneels & Sethi, 2011) Another reason related to managerial practices, which a sheet conceptualization of environmental turbulence considered essential comprehensions (Buganza, Dell'Era, & Verganti, 2009) To make

a profit, companies create competitive advantages by creation of value for customers

In this case, a clear understanding about their customer, which company should first have by checking and scrutinizing the industry environment (Grant, 2016)

Numerous previous studies presented that there are several theoretical perspectives of market turbulence These theories indicated that MT could adjust the influence of company innovativeness on implementation At the intense change of market environment, companies that change to sufficiently reply to environmental changes will be success Thus, companies act on creativity to unceasingly adjust their products, services and processes to meet on changes of customer demands (Cui, Griffith, & Cavusgil, 2005) Innovative companies featured to build initiative plans to

arrest fresh product of market niches and to meet unpredictable demands of customer (Lumpkin & Dess, 2001) In particular situations, at the intensities MT condition, the innovation of companies can be of significant value in satisfying their customer’s rapid change needs and wants (Santos & González, 2007) Thus, as Rhee (2010) suggests that to successfully addresses alterations in the market properly and continue involve

in that ecosystem, so a firm’s innovation can be a strategic instrument Once encountered with a high level of MT, the firms effort to do more initiative deeds and perform well implementation of their pioneering strategies (Hult, Hurley, & Knight, 2004) Generally, firms, which value as of above average innovativeness can gain extra advantage from the customer’s unpredictable demands, invent fresh ways for the customer’s difficult issues, and reconfigure their assets support them prosperous deal with market changes This reasonable ratiocination indicated that when MT is rare, the firm innovativeness effect positively to business performance (Tsai & Yang, 2013)

Some previous studies indicated the existence of the association between entrepreneurship, the SME’s performance, and environmental turbulence Thus, the reviewing and analyzing of this relationship is essential According to Lumpkin, Cogliser, & Schneider (2009), based on entrepreneurship that company conscious the changes in the market preference Thus, the executive groups attend on the alteration

in the industry and on the customer’s needs Based on organization of MT and appropriate drivers, that the decision makers significantly effort to cognitive the gap between market precedencies and comparatively homogeneous resources Firms have soaring entrepreneurship could rapidly meet the changes of customer preferences The study of Devezer, Sprott, Spangenberg, & Czellar (2014) indicated that diverse levels

of revenue or increased cognizance of coming generations determine these preferences Especially for SMEs, that the performance may have been negative influence in the environmental turbulence

During intense this condition, firms should dedicate additional sources and should approve new plans that are related as elements of destitute performance hazard (Li, Guo, Liu, & Li, 2008) The uncertain of estimation customer needs are cause, which the intense environmental turbulence has significantly influenced on the entrepreneurial companies In a changeable environment, firms favor correspondent activities rather than considering superior entrepreneurial situation Study of Iyer (2011) indicated that by analyzing the customer preferences, one of the consideration

of companies were marginal improvements In summary, study of Wales, Gupta, & Mousa (2013) indicated that the positive association between the entrepreneurship and performance of SMEs may not be expectation

Drawing from previous mentions, confidently to confirm that these are limit studies on the influence of GI and GE in MT conditions on development of SMEs Despite the rich literatures on each variable however almost authors found irrelevant studies, which deliberated on the MT conditions as a moderator in the correlation of variables for development of SMEs Thus, these arguments lead to the following hypothesis:

Hypothesis 3: Market turbulence adequately moderates the relationship between Green innovation and SME development

Figure 1 shows the conceptual framework of this study To test the three hypotheses, model has been constructed

GI

Market turbulence

SMEs Development

GE

H1

H3

H2

3 RESEARCH METHODOLOGY

This chapter presents and elaborates on the data and methods used for the empirical analysis of this study First, a description of the research design and process will be presented followed by measure of the constructs and an operationalization of the survey dataset Subsequently, the methods used to assess the data will be elaborated

3.1 Research design

In order to create a research design, author considered the kind of model and measured will be suitable to the subject of the study The focus of this research was examining the three factors affecting performance of SME that includes EI, EG Besides, this study also was testing market turbulence conditions, which moderate relationship between GI and GE An operation model was presented in Figure 1 This study used primary data, which collected almost from SMEs in Ho Chi Minh City Thus, a questionnaire survey design was used as the data collecting method

After finishing the preliminary questionnaire, the author conducted the focus group with 10 owner- managers of SMEs, which comprised a manager of Logistic, 2 owner- managers of Law firms, 3 managers of retailer, 2 owners of IT firms, 2 owners

of food field startup These owner- managers had an interest in sustainable business, indeed some of them have tried out and some have achievements This was the reason that they were selected in this study Beside the focus group instrument, author also conducted the in-depth interview with an expert Mr Pham Ngoc Hung who is a lawyer and vice chairman of the HCM City Union of Business Associations (HUBA)

He has significant experiences in supporting SMEs, and has deep knowledge in market

of Vietnam The focus group and the in-depth interview helped to obtain the appropriate items in the context of Vietnam business It also helped to ensure the content and meaning of words used in the initial measurement scales will be suitable and understandable Then, author was able to modified appropriately

Although most of the measured of the constructs were mentioned in the previous literatures, this pilot study is necessary to make appropriate and easy to understand in the context of studying During the interview and focus group, some significant feedbacks were received and suggested from the participants to make the improvement for the official questionnaire (See Appendix A) After finishing pilot study, these adjustment lead to the following final questionnaire, which were, reviewed carefully the measurement of each construct (See Appendix B)

3.2.2 Quantitative research

After the qualitative research, the questionnaire was appropriate suitable and understandable Thus, the main survey was conducted by using convenience sample,

which almost collected District 6 of Ho Chi Minh City Besides, the online survey also was considered at the potential instrument The process of the quantitative research was following these paces:

Firstly, the questionnaire was composed for the research The questionnaire was designed in English, and then it was translated into Vietnamese for delivering to respondents

Secondly, the definition of sample size was provided Based on enormous previous studies, the method of estimate the sample designed the size of the sample In general, the sample size was equal or more than 100, and was minimum 5 observations for each scale (Hair, 2010) The model in this study comprised of 4 factors with 25 scales so that the minimum sample size was: 25*5= 125 observations

For standard multiple regression analysis, the required sample was recommended should be n>50+8m (where m=number of independent variables) There were 2 independent variables, which are the component of the second order structure (GI) in this research Thus, the minimum sample required to run multiple regression in this study is n>50+8*2=66 observations

Therefore, this study used the sample size at 216 observations This sample size was appropriate for EFA and CFA After that, sampling was conducted based on convenience sampling

The questionnaire was issued to the participants via both direct and indirect method In the direct method, participants of this research, which is the owner- manager of SMEs in District 6 of Ho Chi Minh City will be received questionnaire and required to fulfill the questionnaire on the guide of author In the indirect method, the

questionnaire was deployed via Internet by Google docs By this way, the survey link was sent to participants via Gmail and Facebook The participants could answer the survey by clicking on the link and keying their answer and submitting the link to the researcher Data collection was conducted during a month Expectation of receivable questionnaire was about 280 questionnaires, which comprise 230 questionnaires of direct method, and 50 questionnaires of indirect method

After that, the author received the questionnaire and green to ensure for suitable results In this stage, the author will collect answers, and filter the error questionnaires Then, the usable data of this study should appropriate 216 observations It is suitable with the requirement of minimum sample size: 125 observations

3.2.3 Measures of the constructs

In the following part, the operationalization of the survey dataset for the statistical analysis was discussed First, the independent variables were discussed, followed by the dependent variables and subsequently the moderator variables

A Independent variables

To measure GI in the individual SMEs the independent variables “Service Innovation”, “Administrative Innovation”, and “Process Innovation” were constructed per type of GI Additionally, the combined independent variable “ Green Innovation” was created

Green Innovation

The independent variables “Service Innovation”, “Admin Process Innovation” measure the presence of two particular forms of GI within the SMEs According to

studies of (Ndubisi & Iftikhar 2012), the variable GI with 15 items were used in previous studies Every dimension involves “Service Innovation”, “Administrative Innovation”, and “Process Innovation”, which were assessed by five items

The independent variable “Green Innovation” measures GI in a company in general In finding what important factors are that contribute to development of SMEs emphasis is on the intermediary of GE The relevant items in these variables used ranging from 1 (strongly agree) to 5 (strongly disagree) with five-point Likert scale

At preceding mention and pilot study, the items of “Service Innovation” consisted of five questions that adopted to (Ndubisi & Iftikhar 2012)

SI 1 Our organization has introduced many new

green services to the market

SI 2 Our organization has introduced many

modifications to the existing services

SI 3 Our organization constantly seeks find new

and green services

SI 4 Our organization has introduced more green

services than our competitors

SI 5 The green services that we have introduced

have caused significant changes in the industry

Based on pilot study, the combination of “Administrative Innovation” and

“Process Innovation” was conducted Thus “Admin Process Innovation” was the

consequential variable which measured by seven questions that adopted from (Ndubisi

& Iftikhar 2012) Plausible reason was based on the study of Chang (2011), which only used Green Process and Green Product to measure GI

Admin Process Innovation

(API)

Content

operating systems to world-class standards API 2 Work practices are constantly updated to

enhance efficiency

API 3 We use technology constantly to enhance

the quality of green services

API 4 Our organization invests heavily in the

development of new green operating systems

API 5 We are constantly training our employees

in emerging industry technologies

improve the administration systems with green attitudes

take initiatives

Base on pilot study, “SME development” increase was measured by six questions that adopted from Ebrahimi & Mirbargkar (2017)

SMED 3 The profits from the sales are good

SMED 4 Formation of industries exclusively for the

production of goods and new green

products

SMED 5 Creation of new freight transport systems

compatible with green products

SMED 6 This organization invested in order to

increase the expertise for the production of green products

C Mediator variables

“Proactive Risk taking” and “Autonomy” used to measure GE in the individual firms

Green entrepreneurship

The mediator variable with thirteen items used in the previous studies (Ndubisi

& Iftikhar 2012) will be assessed GE has been offered by authors to include five items

of “Risk taking”, and “Pro-activeness”, and three items of “Autonomy” dimensions After pilot study, there were numerous feedbacks, which influenced to decision of selecting dimensions Thus, there were 2 dimensions, which comprised “Proactive Risk Taking” and “Autonomy” The relevant items in these variables used ranging from 1 (strongly agree) to 5 (strongly disagree) with five-point Likert scale

“Proactive Risk Taking” was measured by five questions from (Ndubisi & Iftikhar 2012) The combination also was based on the studies of Lee (2001) and Kraus (2011), which asked pilot respondent before considering appropriate scale used

Proactive Risk Taking

PRT 1 We constantly seek new opportunities

related to our present operations

PRT 2 We are usually the first to introduce new

green services in the industry

PRT 3 Management accepts that certain suggestions

in the field of green attitudes may fail when implemented

PRT 4 We are constantly seeking green investment

opportunities to improve our business performance

PRT 5 In this organization, the new (green-based

approach) venture failure is viewed as learning experience

The items of “Autonomy” consisted of three questions that adopted to (Ndubisi

& Iftikhar 2012)

responsibility for their work

A 2 Employees are supposed to get the job done

with minimal supervision

A 3 Employees are encouraged to prioritize their

work

in the market

relentless

MT 3 Technology in our industry changes rapidly

3.3 Data analysis method

The SPSS (Statistical Package for Social Science) software version 23.0 was used in this study for analyzing collected data Besides, in order to statistic the sample, compare the results The reliability and validity of measurement scales was assessed

by using both comprise Cronbach’s alpha coefficient and exploratory factor analysis (EFA) In EFA, the KMO indicator and Barlett’s test was used After that, CFA used

to measure validity master of the model, and then AMOS tested the relationship between independent variables and dependent variables, which as proposed hypotheses

3.3.1 Exploratory factor analysis (EFA)

Norris and Lecavalier (2010) presented that EFA is based upon a testable model and can be analyzed in terms of its fit to the hypothesized population model; it indices can be generated to help with model interpretation On the one hand, EFA method is used to identify which of a large set of items go together as a group, or are answered most similarly by respondents (Leech et al., 2005)

This study used EFA to test following requirements:

- To ascertain factor analysis will be sufficient, thus KMO value will be from 0.5 to 1 (Hoang & Chu, 2005)

- Factor loading for rotated factors with loading should be higher 0.5 that are generally considered necessary for practical significance If sample size is about 100, factor loading should be higher 0.55 (Hair et al., 2007)

- Percent of variance will be accepted if it is higher than 50% (Nguyen & Nguyen, 2007)

- Eigen value for extracted factors must be higher 1, which is a common criterion for a factor to be useful (Leech et al., 2005)

3.3.2 Reliability and Validity

To measure reliability of concept, a Cronbach’s alpha was used It is necessary

to decrease the measurement error while the rule drawn that the higher the value of Cronbach’s alpha, the higher the degree of inter-correlation among items in the scale (Hair, Money, Samouel & Page, 2007; Hair, 2006)

According to study of Leech et al (2005), the acceptable value of Cronbach’s

especially if there are only a handful of items in the scale When the Cronbach’s alpha greater than 0.90, it probably means that the items are repetitious or there are more items in the scale than are really necessary for a reliable measure of the concept In table 1, six different measures are denoted The values of Cronbach’s alpha related to the construct reliability of the model that all values are above the threshold of 0.8

According to Henseler, Hubona and Ray (2016), that indicated the global or local assessment refers to the goodness of model fit Thus, the standardized root mean square residual (SRMR) can test for PLS path modeling The recommended threshold for SRMR is 0.08 and it answer the question ‘how substantial the discrepancy between the model-implied and the empirical correlation matrix is” (Henseler et al., 2016)

Beside of estimating the value of the Cronbach’s alpha, SRMR and CR, this is also important to consider the Corrected Item – Total Correlation Study of Leech et al (2005) indicated that if this correlation is equal 0.40 or above, the item is probably correlated with most of the other items and make a good component of this summated rating scale If the item – total correlation is negative or less than 0.30, to consider the item for wording problems and conceptual fit by modifying or deleting such items is necessary One important which also was used to the validity of the measurement models is discriminant validity

3.3.3 Structural Equation Modeling

Cause for a quantitative research, linear relationship between the stated hypotheses and the dissimilar variables tested by a structural equation modeling (SEM) (PN Thuy, 2010) The analysis was supported through the use of the computer software, which include IBM SPSS Statistics (Version 23) and Amos (Version 24)

SEM was chosen to test the relationship the effect of independent variables on multiple dependent variables statistically Within academic literature, PN Thuy (2010) indicated that scholars distinguish between covariance and variance based SEM The multi-group testing modeling technique was conducted for the estimation of moderator

3.4 Data collection

Factually, all SMEs that fulfill the two definition of criteria are suitable to participate in this study, thus an online survey was chosen as data collection method to possibly reach a high number of participants in a cost- saving manner Furthermore, data in quantitative research is normally created from responses to Through the ongoing globalization and the development of the Internet, the essential Recently, the field of survey research became more popular in scientific research and the innovation

in technology also revolutionized the way in which scholars conducted survey Email surveys and web-based surveys were firstly possible in the 1980s and 1990s (Evans & Mathur, 2005) At the beginning of the 21st century, scholars expected that the majority of surveys would be conducted online in the near future (Schonlau, Ronald & Elliott, 2002) Furthermore, online surveys are seen as more interesting, important and enjoyable than classic surveys (Edmonson, 1997) However, online surveys also possess both advantages and disadvantages for scholars and their research

Through the ongoing globalization and the development of the Internet, the essential for online survey is generally better but there are still differences between more industrialized countries and less developed countries (Evans & Mathur, 2005)

around the globe That is possible with a high amount of flexibility and speed, less time-consuming than face-to-face interviews, and at low cost (Evans & Mathur, 2005) Another relevant advantage of online surveys is the great diversity for questions With online survey scholar are capable to choose between dichotomous questions, scales, or multiple-choice questions, for example (Evans & Mathur, 2005)

However, some disadvantages exhibit in online surveys, in comparison to other techniques An essential problem for author is to prevent the identification as junk mail

or spam (Evans & Mathur, 2005) Another challenge is to create a representative sample through the use of online surveys The creation of a large sample through the Internet and the globalization is relatively easy in comparison to reach a representative sample According to Evan (2005), indicated the essential problem, which users of email were not truly representative of the general population However, in the near future, the differences between the online and offline population would be insignificant

Furthermore, face-to-face surveys are in comparison more personal than online surveys The missing human contact can limit the ability to get in-depth answer Therefore, it is really important to give clear answering instructions for the respondents that they are able to finish the entire questionnaire (Evans & Mathur, 2005)

Another possible disadvantage are privacy and comparison issues of respondents Because the level of security in standard email survey is not on a high level and further respondents often concern which their answer is treated confidentially and commercially

In this study, the collected data was used once and participants were ensured that the data were collected anonymously Based on above mention, the online survey was designed by using the web-based tool Google Form, which is one of the famous tools for online survey Afterwards the link to reach the survey was put online and executives from SMEs were invited to participate by email and on social media platforms like Facebook Data information of participants was based on Saigon Bizhub Company, which support SMEs to share experiences and connecting business Besides, offline survey also conducted in District 6 of Ho Chi Minh city by the enthusiastic support of the local officers During a time period of 45 days, a total of

280 respondents participated in the online and face-to-face survey, while 260 of those finalized the questionnaire, which means a response rate of 92.28% Additionally, 44 out of the 260 complete responses have to be deleted for the adjusted dataset Among others, companies with non-engagement response were deleted

4 DATA ANALYSIS

This chapter reported the result of the research Firstly, the collection and descriptive of data was presented Then, reliability and validity of the scale measurement were tested by Cronbach’s Alpha and EFA Finally, SEM was used to assessment the hypothesis and concept model

4.1 Descriptive statistics

The outcome of respondents presented in Table 1, which included 95 female (occupied 44 percent) and 121 male (56 percent) In terms of age, almost respondent aged range from 25 to 35 (41.2 percent), the youngest and oldest respondents, who under 25 and over 55 made up about 7.9 percent (17 respondents) and 6 percent (13 respondents) respectively Those were lower than respondents of two groups aged 35

to 45 and 45 to 55 were 70 respondents (32.4 percent) and 27 respondents (12.5 percent)

Regarding to education of respondent, 131 (60.6 percent) respondents had university education Then, the highest education of this research was 35 respondents (16.2 percent) There were 6 respondents (2.8 percent) and 44 respondents (20.4 percent) had finished their primary and secondary education, respectively The outcome of survey also indicated that majority of SME were business in service field with 139 respondent (64.4 percent) The rest with 77 respondents (35.6 percent) had business in manufacturer

Small 84 38.9

Table 1: Sample Characteristics

After that, normal distribution of the collection data was investigated, thus Skewness and Kurtosis test was used The result indicated that there were no items above absolute of two It mean that the normality assumption for all variables

4.2 Exploratory factor analysis (EFA)

Initially, EFA was conducted with aim to estimate the measurement scales The EFA help to define which set of items load together as a group or are answered similarly by respondents (Leech et al., 2005) Aim to support the CFE in AMOS; EFA process of this study was conducted through the Maximum Likelihood Estimation with Promax rotation method In the EFA, the KMO indicator and Bartlett’ test were conducted As the conceptual model which there were 4 latent factors: Green Innovation, Green Entrepreneurship, SMEs Development, and Market Turbulence GI and GE both were second order factor, which comprised with SI, API for GI, and PRT,

A for GE Based on this reason, EFA of this study was conducted separately with each factor The results on GI, and GE both presented that two factors are capable of explaining variance EFA was conducted in for four times to examine the structure or relationship between variables before run the CFA to testing model fit (Appendix D)