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 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
, Mbus 7 International School of Business
Master Thesis

Supervisor: Dr. Doan Anh Tuan
,


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.

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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

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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

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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, &

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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

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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

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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

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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.

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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.

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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
international, which contributed between 96% and 99% of the total number of

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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.

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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

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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).

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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 proactiveness 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

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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

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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

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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

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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.

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GI

H1

H2

GE

SMEs
Development

H3

Market
turbulence

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

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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.

3.2 Research process
The research includes two phases, a pilot study and a main survey. The pilot
study was carried out by qualitative method and a main survey by quantitative method.

3.2.1 Qualitative research
Based on relevant previous studies, this study proposed three hypotheses,
which were presented in Chapter 2. Then, the model was modified and selected the
preliminary scale for questionnaire of the study.

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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,

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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 ownermanager 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

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