Nguồn tri thức nhân tố ảnh hưởng tới đổi mới sáng tạo ở cấp độ doanh nghiệp tại việt nam một nghiên cứu thực nghiệm tt tiếng anh

CHAPTER 1: INTRODUCTION
1.1. Background
There is no doubt about the advantages that innovation can bring to a nation.
OECD (2007) reported strong evidence for a positive relationship between
innovation and national competitiveness. Innovation plays an essential role in
economic growth and is an indispensable factor to contribute to creating more
jobs. More broadly, both past theory and practice suggest that countries will
follow different development trajectories, depending on their ability to identify
and capture technological progress. Applying new technology translates
technological and scientific advances into more productive economic activity. As
such, it is not surprising that many OECD member countries have adopted
national strategies to boost innovation and enhance their economic performance
through increased productivity and growth.
The vital role of innovation is not only affirmed in OECD countries but also
developing countries (OECD, 2012). There is a plethora of reasons why innovation
is important for developing and emerging countries (OECD, 2012). For example,
innovation in agriculture plays an important role in reducing poverty and promoting
economic growth. Other advantages that innovation can bring to those countries are
creating more jobs, improving welfare, access to business opportunities, reaching the
world technological frontier in many industries, and especially having the way to
avoid “middle income traps”.
At firm level, the ability to innovate leads to the wealth generation capacity.
Innovations reduce production cost and improve quality of firms’ goods and services.
Numerous empirical studies suggest that innovation enhances firm performance
because the product of innovation increases firm competitiveness and the process of
innovation transforms a firm’s internal capabilities making it more adaptive to change
(Neely & Hii, 1998). De Jong and Brouwer (1999) confirmed the same idea in their
empirical research with small and medium enterprises (SMEs). Those SMEs work in
an environment of changing consumer preferences, increasing competition and
changing technological requirements, in order to achieve business goals such as profit
and growth, having a continuous flow of successful innovations is crucial for them.

1

They build their competitiveness position by offering high quality products and
services that match their customers’ demand, so they need a permanent flow of
innovations.
In lieu of the lack of research regarding innovation in developing countries,
there is a specific dearth of firm-level innovation studies in those countries (N. N.
Anh, Mai, Nhat, & Chuc, 2011; N. N. Anh, Ngoc, Chuc, & Nhat, 2008; Linh, Nghia,
Dong, & Mai, 2019). Because firms are the dominant economic actors that drive
innovation, and particularly the commercialization of innovations, it is necessary to
have a study on innovation at the firm level. Moreover, with innovation, firms can
develop and create more value for the nation such as creating jobs, improving welfare,
access to business opportunities, reaching the world technological frontier which
could bring social benefits for a country.
Previous studies have shown that some firms are more capable of developing
innovations than others. This research attempts to understand the reason behind that
and aims to fill in the gap in research in firm level innovation generally and
contributes to literature regarding the significance of firm’s innovation determinants
by deeply investigating the relationship between innovation and one of the key
determinants – knowledge sources for innovation at firm level. By doing so, the
author expects to provide empirical evidence for policy makers in Vietnam to foster
innovation at macro level.
1.2. Problem Statement
Innovation has received much attention over the last decades as it is
considered as a source for economic development. Most studies conducted in this
area focus on developed countries even though for (firms on) developing
countries innovation also is of crucial importance in order to grow and become
internationally competitive. However, the difference in stages of development
can be a barrier when applying the outcomes of studies in developed countries
and in developing countries.

Moreover, most of these studies, also those done in Vietnam, are about
understanding innovation process at the macro level. They predominantly focus
on national innovation systems and government innovation policies. As a result,
despite its importance, there is very little knowledge about what drives firm level
2


innovation in countries like Vietnam. Therefore, this research includes firm level
variables in order to analyze the relative importance of different resources that
affect firm level innovation and access the capabilities of a firm to utilize these
resources.
Moreover, it is necessary to understand determinants of innovation in
Vietnam to provide inputs for evidence-based policy makers. Innovation is
important as firms with innovation normally develop very fast and hence create
lots of job opportunity which we could consider as one of the social benefits for
a country.
Previous studies have shown that some firms are more capable of developing
innovations than others. This research attempts to understand the reason behind
that and aims to fill in the gap in research in firm level innovation generally and
contributes to literature regarding the significance of firm’s innovation
determinants by deeply investigating the relationship between innovation and one
of the key determinants – knowledge sources for innovation at firm level. By
doing so, the author expects to provide empirical evidence for policy makers in
Vietnam to foster innovation at macro level. Therefore, the author came up with
the topic: “Knowledge Sources as Determinants of Firm Level Innovation in
Vietnam: An Empirical Study”
1.3. Study Objective
The main objectives of this dissertation are:
• To review the literature on innovation and the determinants of innovation
especially knowledge sources for innovation at firm level.

• To analyze the current situation of innovation of manufacturing firms in
Vietnam
• To identify the knowledge sources that manufacturing firms in Vietnam
use for innovating and test the relationship between those knowledge sources and
innovation outcome.
• To propose several solutions for manufacturing firms as well as policy
makers in order to foster innovation in Vietnam based on empirical evidence.
1.4. Study process
1.5. Scope of Study

- Subjects of the research: knowledge sources affecting product innovation
at manufacturing firms in Vietnam, including: (1) internal sources, (2) external
sources (3) regional sources.
- Content: Role of each sources affecting product innovation at
manufacturing firms in Vietnam
- Venue: Manufacturing firms located in four Vietnamese regions, which are
the Red River Delta, North Central area and Central coastal, South East and the
Mekong River Delta
- Timing: Secondary data collected by the World Bank in 2015-2017
1.6. Contribution of Study
This research analyses the impact of different knowledge sources of product
innovation in Vietnam using firm-level data. Hence, it can help to answer the
question that whether all kinds of knowledge sources have significant
relationship with innovation or only specific one. Firms in Vietnam could base
on that and decide who and where they should take knowledge from if they intend
to do innovation.
Secondly, this study could also be a good evidence for policy makers to
understand the determinants of innovation especially the impact of knowledge
sources for innovation. Innovation related knowledges are public foods and firms
could benefit from the diffusion these knowledges.

Moreover, while most firms in Vietnam are small and medium size, they
could lack of resources for conducting innovation. To understand what could
hinder innovation at firm level means we could provide grounds for new
industrial policies and create social benefits for firms which pursuing innovation
activities.
1.7. Limitation of Study
1.8. Organization of the Dissertation

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CHAPTER 2: LITERATURE REVIEW
This chapter provides an overview of numerous of studies on innovation in
Vietnam and the world. The author would like to review the research in order to
find the gap in literature related to innovation field.


2.1. Research on Innovation in the world
2.1.1. Ground theory research
The groundwork of modern term “innovation” starts from 1930s, Joseph
Schumpeter – a famous economist mentioned that innovation should be
distinguished invention, innovation means “development” and “new
combinations” (Schumpeter, 1934b). He announced the idea of so-called “new
combinations” which refer to “the introduction of a new product or a new quality
of a product, a new method of production, a new market, a new source of supply
of raw materials or half-manufactured goods” (p.66).
Later there are many followers in this field such as Drucker (1985);
Eveleens (2010).
2.1.2. Determinant of innovation research

There are evidence in literature proved that innovation might be affected by
both internal and external factors namely Avermaete et al. (2004); Hussen and
Çokgezen (2019); Lim (2017).
Research on innovation could also be categorized in term of sources for
innovation, especially innovation idea. Some researchers believed that
innovation could only generated by the firms themselves or they follow
resources-based view (RBV). However, there are also other line of the literature
believed in knowledge-based view (KBV) when they study innovation.
Table 2.1: List of main innovation research categorized by theory
Follow resources-based view
(RBV)
Research Barney (1991); Bates and
Flynn (1995); Tarafdar and
Gordon (2007); Terziovski
(2010); Bakar and Ahmad
(2010)

Knowledge-based view
(KBV)
Cohen & Levinthal (1990);
Grant (1996b); Nonaka and
Takeuchi (1995); Nonaka
and Peltokorpi (2006); Lu et
al. (2008); Quintane et al
(2011); De Castro et al.
(2011); Isaksson et al. (2016)
Source: Collected by the author

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2.1.3. Product innovation research
Studies on product innovation seems to be the most popular in literature as
it started very early and various of them available on academic sources (Bakar &
Ahmad, 2010; Barasa, Knoben, Vermeulen, Kimuyu, & Kinyanjui, 2017;
Chakrabarti, 1974; Cooper & Kleinschmidt, 1986).
2.2. Research on Innovation in Vietnam
Studies on innovation in Vietnam starts from early 2000s, however, most of
the studies is about innovation in agriculture field (Chairatana & Sinh, 2003;
Martin, Castella, Anh, Eguienta, & Hieu, 2004; Spielman & Kelemework, 2009;
Van Linh, 2001). The reason behinds it might be because Vietnam had just
opened its economy and agriculture still played the main role.
Recent years, innovation is getting much attention in macro level and other
fields as well. Some examples are: N. N. Anh et al. (2011); R.-J. Lin et al. (2013);
N. N. Thang, Quang, and Son (2013); P. T. T. Anh (2014); Tuan et al. (2016);
Voeten (2016); Vân et al. (2018); D. K. Nguyen, Phong, and Hui (2019); Son,
Cung, Thang, and Phong (2019)
CHAPTER 3: THEORY FRAMEWORK
3.1. Definition of Innovation
3.2. Types of Innovation
Radical innovation
Incremental innovation
Product innovation
Process Innovation
Marketing innovation
Organizational innovation
3.3. Determinants of Innovation
3.3.1. Following Resources Based view theory
3.3.2. Following Knowledge based view theory
3.3.3. Conclusion
Although the RBV struggles that a firm’s inner resources are necessary in

nourishing competitive advantage. Giving a brief review of the relevant
6


academic literature we can see an expanding trend on resource application
research that recommend value can solitary be obtained from resources by
using them in a cleverer mode than the rivals (Barasa et al., 2017). Hence,
knowing what information available from outside and learning from that seems
to be a major influence on firm innovative outcome.
This is also in line with KBV that the role of knowledge becomes more and
more essential. Knowledge is believed to be a at most important resource of firms
that could influence firm accomplishment (Argote et al., 2000, Oerlemans and
Knoben, 2010, Agarwal and Shah, 2014). Current studies also concentrate on the
effect of knowledge at nation level and highlight that firms could lessen poverty
by leading to the knowledge based-economy (Cooke, 2001, Godin, 2006, Lehrer,
2018). In addition, in Vietnam, right from the 90s of the twentieth century, the
Communist Party of Vietnam determined: "The revolution of modern science and
technology is taking place strongly, attracting all different countries". Most
recently, the Party has determined to associate industrialization and
modernization with the development of the knowledge-based economy:
"Promote industrialization and modernization with the development of the
knowledge-based economy and environmental protection." (Document of the
11th National Congress of the Communist Party of Vietnam), in which the Party
affirms, scientific and technological development is really a fundamental driver
of the process of rapid and sustainable development. Thus, it can be seen from
the beginning, our Party attaches great importance to creating motivation for the
formation and development of the knowledge economy.
The development of the knowledge-based economy in Vietnam is a major
strategic change: transforming the economy from resource-based to primarily
based on human knowledge and creative capacity. With available resources,

using new knowledge and new technologies to make more, better and more
efficient. Natural resources are restricted, the capacity to create of human being
is limitless.
Therefore, the author would also want to test the relationship between
knowledge sources and innovation in the context of Vietnam to see if it is in line
with previous studies.

3.4. Knowledge sources
A number of authors have emphasized the vital role of knowledge in
building and sustaining innovation (Schulze and Hoegl, 2008, Quintane et al.,
2011, Leonard-Barton, 1995). In addition, innovation is defined as a knowledgebased commodity. Hence, firms need to have knowledge to innovate and thus to
profit from innovation (Lundvall, 1992, Lundvall, 1988). Therefore, this study
also focuses on the impact of knowledge on innovation. In doing so, it uses three
different sources of knowledge: internal knowledge sources, collaborative
knowledge sources and regional knowledge sources.
3.4.1. Internal Knowledge Sources
3.4.2. Collaborative Knowledge Sources
3.4.3. Regional Knowledge Sources
3.5. Hypotheses
As explained above, different sources of knowledge can have a different
effect on firm-level innovation. Following this line of thought, the author
hypothesizes that in a transition country like Vietnam, with a weak innovation
system, knowledge even plays a more vital role compared to advanced
economies. Below, the author develop hypotheses that link the different
knowledge sources to innovation.
3.5.1. Internal knowledge sources
Hypothesis 1a: The stronger a firm’s internal R&D, the higher the likelihood
that that firm produces a product innovation.
Hypothesis 1b: The longer time the top manager of a firm working in this
sector, the higher the likelihood that that firm produces a product innovation.

3.5.2. Collaborative knowledge sources
Hypothesis 2a: The stronger a firm’s collaborative knowledge gained from
inside the supply chain, the higher the likelihood that that firm produces product
innovation.
Hypothesis 2b: The stronger a firms’ collaborative knowledge gained from
outside the supply chain, the higher the likelihood that that firm produces a
product innovation.

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8


3.5.3. Regional knowledge sources
Hypothesis 3a: The stronger the knowledge base of the region a firm is
located in the higher the likelihood that that firm produces a product innovation
Hypothesis 3b: The higher the population of the region a firm is located in
the higher the likelihood that that firm produces a product innovation
3.6. Research model
Figure 3.1: Research model with all the variables
Internal Knowledge sources
- Internal R& D
- Managerial Experience

Collaborative Knowledge Sources
- Knowledge from inside the supply chain
(from customers, competitors, suppliers)
- Knowledge from outside the supply chain
(Universities, Research institutes)

Innovation outcome
- Product innovation

Regional Knowledge Sources
- Knowledge benefit from the position of the
firm even when firms do not enter in any
collaboration

Source: The author composed and designed
CHAPTER 4: METHODOLOGY AND DATA COLLECTION
4.1. Research context
Although Vietnam has grown astonishingly in the past three decades, the
transition to a flourishing and modern economy has only just begun. Vietnam has
per capita income still accounting for only a little part of the global average, the
country is attempting to maintain its fast-growing path and follow the direction
of other successful East Asian economies to join the ranks of high-middle income
countries for the past half-decade. Even though Vietnam has every potential to
9

achieve this goal, victory is not by itself. The population is aging rapidly, which
moderate labor productivity. Moreover, slow investment growth is weighing on
Vietnam's medium-term growth potential. How to cope with the resistance of
domestic structures? According to the political report of the 10th Central
Committee of the Party at the 11th National Congress of the Party, Vietnam needs
to steer the external environment changing, where global trade structures are
shifting, breakthrough technology, rapid innovation, and Climate change is
shaping opportunities and creating new risks for the country.
Whether Vietnam can continue to maintain previous growth or not, this is
extremely important. Although growth is not the goal that the government are
aiming for, growth is a necessary condition for the wider development. It is the

basis needed for creating jobs, alleviating poverty and mobilizing resources to
invest in health, education and other social goals. Vietnam have some advantages
that we should not forget which are a geographic location, an open economy, a
young and largely labor force in rural areas, and a high level of domestic savings.
Therefore, the country has conditions for high and sustainable growth.
Nonetheless, in order to take advantage of these fundamentals, the government
needs to regularly focus on policy and institutional reforms targeted at creating
increased productivity, effective investment in human capital and physical
capital, sustainable and efficient use of natural resources.
Recently, the big trends are global transforming forces, shaping the future
world by profound influence on businesses, society, economy, culture and human
life. Hence, Vietnam should be able to identify success, analyze and has action
to face those major trends to build a long-term dynamic development strategy
that contributes to successful economic development due to the fact that Vietnam
is likely to be the country most affected by major global trends.
Vietnam is one of the most open countries in the world, with trade to GDP
ratio reaching nearly 200% and FDI inflow accounting for about 7% of GDP
in 2018 (GSO, 2019). Regarding geopolitical position and trade structure,
Vietnam may be more vulnerable to climate change and US-China trade
tensions. Therefore, The Central Theoretical Council (2019) suggest four
major global trends that Vietnam needs to consider in the next two decades
10


which are population movement, disruptive technology, the rise of China and
climate change.
We could see the vital role of innovation especially breakthrough technology
which could be defined as emerging technologies that cause a change in costs or
access to products or services, or quickly change the way we collect information,
produce or interact operative (Lientz and Rea, 2016) . Vietnam are currently in the

midst of the 4th industrial revolution, characterized by rapid technological diffusion,
multi-technology convergence, and emergence of global platforms. Breakthrough
technology is often based on technology and digital products, but they can go beyond
the connection and potential of the internet. This includes modern production
methods such as robotics, artificial intelligence, and the internet of things. They also
include advances in nanotechnology and biotechnology - and new production lines
such as batteries, drones, solar panels, self-driving cars, and exotic materials (Lientz
and Rea, 2016).
The vast opportunities will be associated with innovation and technological
breakthroughs that contribute to expanding access to global markets, creating
new goods and services, transforming production processes, changing business
models, and make a significant impact on development.
The economic and social transformation that innovation and especially
breakthrough technology could bring is that they could accelerate development
of a country. If a country cannot compete in the future global economy, they will
be left behind. Hence, to take advantage of the potential of new business models,
ways of providing services, and shifting the source of competitiveness, Vietnam
need to have a multi-sector and multi-pronged approach to increase opportunities
especially foster innovation and technology for the country.
Assessing innovation policy in Vietnam
Even though the Government has had several preferential policies, typically
the National Technological Innovation Fund established under the Decision
1342/QD-TTg dated 5/5 8/2013 has the function of preferential loans, loan interest
support, capital support for enterprises transferring technology research and
innovation. However, the sponsorship of such policies and funds for technology
innovation is still limited. Research results of Luong Minh Huan and Nguyen Thi

Thuy Duong (2016) show that enterprises rarely access capital from the state budget
to implement technology improvement activities, despite the chapter’s government
funds and funds for this issue. In addition, the government development fund for

enterprises require that local authorities must have reciprocal capital while the
locality has no reciprocal capital, so there is no fund. This makes the policy seems
not to be useful as it should be.
4.2. Methodology approach
Descriptive approach aims to examine and screen variables in the original
research model. While econometric approach can verify the logic and rules of
observations in the study, helping verify the hypotheses mentioned above.
To measure the dependent variable, the author uses a dummy variable that
takes the value of “1” if a firm has introduced any new or significantly improved
innovative product and “0” if otherwise. Hence, a binary logistic regression
model is chosen for analysing the data.
4.2.1. Logistic regression
4.2.2. Innovation research used logit regression
4.3. Data collection
The data used in this study is from two main sources: (1) The World Bank
Enterprise Survey (ES) conducted between November 2014 and April 2016 and
(2) the Innovation Capabilities Survey (ICS) conducted from October 2016 to
February 2017. The ES is an ongoing project covering over 155,000 firms in 148
countries, collecting data based on firms’ experiences and enterprises’ perception
of the business environment and investment climate. This firm-level survey
comprises non-agricultural formal, private-sector firms. The ICS in this study is
a follow-up and complementary to the ES. Respondents are randomly selected
from the ES sample. For Vietnam, 300 manufacturing firms have been included
in the sample. The ICS focuses on innovative activities and innovative
capabilities of manufacturing firms. The standardized questionnaires have been
translated into local languages and back translated into English to check its
accuracy.
The World Bank uses stratified random sampling as the sampling
methodology, which means that all population units are grouped within

11

12


homogeneous groups and simple random samples are selected within each group.
This method helps to obtain unbiased estimates from different subdivisions of the
population with some known level of precision as well as obtain unbiased
estimates for the whole population. In most cases, stratified sampling is more
precise and may produce a smaller bound on the error of estimation than using a
simple sampling method. The strata for the surveys are firm size, business sector
and geographic region within a country.
The data for this study is merged from the most recent version of the ES and
the ICS conducted in Vietnam. Unsurprisingly, the data contain missing
observations, hence our analyses will use fewer observations than the full sample.
The data is analyzed by using logit and tobit models. Logit models will be
applied when the dependent variable is binary (process innovation present
yes/no) whereas tobit models will be utilized for censored dependent variables
(percentage of sales from new products).
4.4. Variables
Table 4.1: Variable measurement
Questio Reference
Variable
Measurement
Source
n No
(Avermaet
e et al.,
2004);
Innovation

(Baumann
and
Kritikos,
2016)
Firm introduced any new
H3a,
Product
product or service: "1" Yes
ICS
H3b,
innovation
"0" No
H3c
Internal
(Díaz et al.,
Knowledge
2016)
sources
Manager
Top manager’s number of
ES
B7
experience
working experience year in
13

Internal R&D

this sector
Dummy variable: "1" Yes "0"

No

ICS

B01
(Caloghiro
u et al.,
2004)

Collaborative
knowledge
sources
Innovation developed with
competitors, customers, and
supplier: "1" if b1b is Yes, 2
Inside the supply
if b1b and b1c or b1j is Yes
chain
and “3” if all b1b, b1c and
b1j are Yes, "0" none of the
three is “Yes”
Information or ideas from
Competitors
competitors: "1" Yes "0" No
Information or ideas from
Suppliers
suppliers: "1" Yes "0" No
Information or ideas from
Customers
customers’ feedback: "1" Yes

"0" No
Information or ideas from
Outside the
universities and research
supply chain
institutes: "1" Yes "0" No
Regional
Knowledge
sources
% of firms conducting
internal R&D within a region
Regional R&D
using mean of the internal
(log)
R&D over the 4 regions in
Vietnam
City with population of less
Firm location
than 50.000 equal “1”
City with population from
14

ICS

ICS

B1b

ICS

B1c

ICS

B1j

ICS

B1e
(Barasa et
al., 2017)

ICS

ES

B1

A3


50.000 to less than 250.000
equal “2”
City with population from
250.000 to less than 1 million
equal “3”
City with population over 1
million equal "4"
Control variables
Age

Size

Number of years since
ES
B5
establishment
Number of permanent, full
ES
L1
time employees
Source: The author composed and designed
CHAPTER 5: RESEARCH RESULTS

5.1. General description of the ES and ICS sample
5.1.1. Distribution of firms by sector and region
5.1.2 Descriptive statistics
5.1.3. Innovation
5.1.3.1. Product innovation
5.1.3.2. Innovation activities
5.1.3.3. Sources of information for innovation
5.1.3.4. Barriers to innovation
5.2. Descriptive statistics of the sample merged from ES and ICS
5.3. Knowledge Sources and Product Innovation
A binary logistic regression model is used for the hypotheses. Model 1 is a
baseline model, in which the author included only control variables to evaluate the
independent variables explanatory value. The author added internal knowledge
sources in Model 2. Model 3 tests the effect of collaborative knowledge sources.
Model 4 includes the regional knowledge sources. Model 5 assesses the effects of all
independent variables simultaneously. Given that the AIC/BIC indicate that model 5
15

has the best model fit, the results is mainly interpreted based on this model. Table 5.1
and 5.2 report all the results of the models. In order to check for multicollinearity, it
is required to calculate VIFs. The mean of VIF is 1.26, which is well below 10 as are
all individual VIFs. As such, multicollinearity is not an issue in this study’s data.
Our results show that the control variables (firm age and size) have no
significant association with firms’ likelihood to innovate. With regard to the
direct effect of internal knowledge sources on innovation, this study finds that
internal R&D is positively and statistically significant correlated with firm
innovation. Hypothesis 1a is supported: a firm’s likelihood to innovate increases
when there is an increase in internal R&D. On the other hand, for hypothesis 1b
the result is positive, but not significant. Therefore, the study could not say if
managerial experience of firms in Vietnam has any relationship with innovation.
With regard to the relationship between collaborative knowledge sources
and product innovation the results confirm that a firm’s collaborative knowledge
gained from inside the supply chain (customers, suppliers, competitors) is
positively related to with product innovation of that firm. On the other hand, it
shows no significant relationship between collaboration with universities or
research institutes and innovation. Khanna and Palepu (2005) mention that in
developed economies, firms can rely on a variety of institutions to minimize
market failure, while firms in emerging markets are, for example, confronted
with institutional voids, i.e. weak linkages between firms and universities and/or
research institutes. As such, hypothesis 2a is strongly supported, while there is
no support for hypothesis 2b.
Table 5.1: Logistic Regression Results of each individual knowledge
source models

Age (log)
Size (log)
Manager

Model 2
DV= Product
Innovation == 1
B
SE P>|z|
-0.05 0.23 0.83
-0.11 0.17 0.49
0.02 0.02 0.42

Model 3
DV= Product
Innovation == 1
B
SE P>|z|
-0.00 0.31 0.99
-0.11 0.16 0.50

16

Model 4
DV= Product
Innovation == 1
B
SE P>|z|
0.04 0.24 0.86
-0.02 0.14 0.91


experience

Internal R&D
Inside supply
chain knowledge
Outside supply
chain knowledge
Regional R&D
Firm Location
Constant

2.06***

-0.64

Observations
Prob> Chi2
Pseudo R-Square
AIC
BIC

0.24

0.75

284.00
0.00
0.09
344.77
355.72

0.00

0.40

1.04***

0.30 0.00

0.22

0.21 0.30

0.32 0.00
1.71***
284.00
0.00
0.26
281.04
291.98

0.01
0.13

0.02
0.09

0.64
0.13

-1.21

1.09

0.27

284.00
0.00
0.00
377.82
388.77

For regional knowledge sources the study finds no significant relationship
between regional R&D, product innovation. Hence, the author could not accept
hypothesis 3a. However, the location of firms is significant positively correlated
with product innovation. Firms in a city with larger populations are likely to
produce more product innovation than their counterparts in less crowded cities.
That might be explained by the fact that in big cities more facilities and
infrastructure are available for firms to utilize. Moreover, in densely populated
cities, firms might be able to find more suitable personnel who bring new
knowledge (Glaeser and Mare, 2001). As such, hypothesis 3b is accepted.
Table 5.2: Logistic Regression Results of the all independent variables
simultaneously model

Age (log)
Size (log)

Model 5
DV= Product Innovation ==
1
B
SE

P>|z|
-0.09
0.25
0.73
-0.13
0.19
0.50
17

Manager experience
0.03
0.02
0.20
Internal R&D
1.46***
0.21
0.00
Inside supply chain
1.09***
0.34
0.00
knowledge
Outside supply chain
0.39
0.94
0.03
knowledge
Regional R&D
-0.03
0.03

0.26
Firm Location
0.27*
0.15
0.07
Constant
-2.63***
0.32
0.00
Observations
284.00
Prob> Chi2
0.00
Pseudo R-Square
0.31
AIC
261.56
BIC
272.51
As mentioned in our theoretical background several studies from the open
innovation literature, suggest that specific sources of knowledge might be more
relevant than others and that over-search of external knowledge might be
detrimental to innovation (Laursen and Salter, 2006, Bayona-Saez et al., 2017,
Hung and Chou, 2013). To probe the existence of such effects in our setting, the
author performed two additional explorative analyses. Specifically, the author
checked the impact of the knowledge sources separately and tested for an inverted
U-shape effect. The results of these analyses are reported in Table 5.15. With
regard to the former, this study found that only knowledge from customers is
positively and significantly associated with product innovation. This is in line
with the study of Doloreux and Lord-Tarte (2013), which emphasizes that the

tastes of customers are paramount and customer ideas are a highly important
source of information for product development. With regard to the latter, the
results in Table 5.3, which are plotted in Figure 5.1, demonstrate an inverted Ushape relationship between knowledge from inside the supply chain and product
innovation. Moreover, the author tested whether the point estimate for the highest
value of knowledge use differs significantly from the second highest score and
find a significant different (p=0.003). This indicates that the downward sloping
18


part of the inverted U-shape is statistically significant and that this study truly
finds negative relationship of high levels of usage of knowledge from the supply
chain. That means searching for knowledge from collaboration is important, but
too much openness might have a negative impact on product innovation. The
author finds this correlation highly surprising given the low-tech environment
that she studies and the limited number of different knowledge sources that this
study distinguishes. The author will get back to the implications of this finding
in the discussion section below.

Table 5.3: Robustness tests

Age (log)
Size (log)
Manager
experience
Internal R&D
Inside supply
chain
3.68*** 1.09
knowledge
Inside supply

chain
0.27
knowledge0.86***
squared
Knowledge
from
competitors
Knowledge
from suppliers
Knowledge
from customers

0.00

0.00

Model 7
DV= Product
Innovation == 1
B
SE P>|z|
-0.13 0.24 0.58
-0.15 0.18 0.41

Model 8
DV= Product
Innovation == 1
B
SE P>|z|
-0.09 0.24 0.72

-0.19 0.17 0.24

0.02

0.02

0.02

0.31

1.45*** 0.10

0.00

3.88*** 1.25

0.30
0.90***

0.03

0.40

1.30*** 0.03

0.00

0.00

0.00

0.57

0.44

0.20

0.34 0.00
2.34***
284.00
0.00

Constant

0.45

0.57

0.42

-0.05 0.04 0.22
0.27** 0.14 0.05
0.57 0.00
3.08***
284.00
0.00

Observations
Prob> Chi2
Pseudo R0.34

0.39
Square
AIC
253.19
233.71
BIC
264.14
244.65
All reported standard errors are robust clustered standard errors
at the regional level
* p<0.10, ** p<0.05, *** p<0.01

0.50

0.49

0.31

-0.05 0.04 0.18
0.17 0.11 0.15
0.59 0.00
2.80***
284.00
0.00
0.41
225.61
236.55

Figure 5.1: Product innovation and using knowledge sources
from the supply chain

1.00

Predicted probability of product
innovation

Model 6
DV= Product
Innovation == 1
B
SE P>|z|
-0.05 0.30 0.86
-0.14 0.17 0.39

Outside supply
chain
knowledge
Regional R&D
Firm Location

0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00

0.30

0.50

0.56

0

1

2

3

# of inside the supply chain knowledge sources used

0.34

0.31

3.88*** 1.22

0.00

-0.34

19

Source: The research results

20


CHAPTER 6: CONCLUSION AND RECOMMENDATION
6.1. Conclusion
The results of the study confirm the vital role of internal R&D in
Vietnamese manufacturing firms for product innovation. It also reveals that a
firms’ collaborative knowledge gained from inside the supply chain is
positively correlated with the likelihood that firms produce product
innovation. Hence, the need to create a network with customers, suppliers and
competitors to enhance product innovation is highly relevant to firms in
developing countries.
This study found no significant relationship between collaborative
knowledge gained from outside the supply chain and product innovation. This
is not uncommon in developing countries, as firms hardly engage in
collaborative activities with knowledge institutes (London, 2011). This may
be due to a lack of capabilities to negotiate, learn and share information with
each other (London, 2011). Furthermore, Bauer (2011) finds that the
collaboration between firms and knowledge institutes in Vietnam is not always
effective. In addition, it is reported by OECD and The World Bank (2014) that
the physical infrastructure in universities and state research institutes in
Vietnam remains undeveloped. Another issue is that the Vietnamese
educational system is still unrelated to market needs and of low quality.
Together, this makes it extremely challenging to engage in collaborative
activities or to reap the benefits of such activities.
6.2. Recommendation
6.2.1. Policy recommendation
The government should have policies to support businesses in innovation
activities as following:
+ Firstly, the government should focus on solving financial problems for

firms. There should be sources to fund innovation for firms. The source of
funding can be expanded in many different forms, not only from the owner's
equity. Firms need to grasp information on financial support policies of the
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Government, investors as well as credit institutions to mobilize capital. The
Government should have a policy of granting a limit from the state budget to buy
high technology, need more capital and transfer it to firms in the form of
incentives such as loan interest support in accordance with current financial
conditions. A note when implementing programs to support capital for firms
regarding technological innovation is transparency, clarity in support, ensuring
businesses can capture information about support programs. At the same time,
processes and records should be as simplified as possible, not discouraging
businesses in accessing state capital.
+ Secondly, there should be some policies to strengthen links between
businesses and partners, especially universities in training human resources and
cooperating technology innovation. Businesses need to be aware of the need to
associate and coordinate with partners in product development. The role of
research institutions and research universities need to be emphasized because this
is a high concentration of scientific content. Firms should actively seek, contact
these partners for agreement and cooperation; At the same time, building a good
and long-term cooperative relationship between businesses and organizations.
The coordination between the actors in the innovation system including
universities and businesses play an important role, so it is necessary to have
policies to promote cooperation between universities and firms together.
Government levels play an intermediary role in connecting universities and
businesses by regularly organizing technology fairs, conferences and seminars
with the participation of universities and businesses to serve more effectively the
demand for technology supply and demand.
+ Thirdly, the government should continue to promote programs and

policies to support firms in technology innovation. They need to strengthen the
dissemination of information on mechanisms and policies to support firms, raise
awareness of firms about the need to innovate to improve firm capacity in a
competitive environment and importation society.
In addition, firms usually face difficulties in accessing capital, partly
because the procedures are too complicated and other parts are lack of
information, so it is necessary to simplify procedures for firms to access to capital
22


and create conditions to provide adequate information on preferential policies,
support from the state through: television, newspapers, communication channels,
forums, seminars, seminars on capital support for businesses as well as
procedures to be able to access capital quickly. The authorities need to build an
equal "playground" based on clear, strict and transparent regulations. Creating a
transparent, disciplined public system, removing unnecessary procedures,
causing problems for businesses. Thus, innovation activities can take place
smoothly and effectively.

causal effects of different knowledge sources on innovation output. Another
possible topic could be to analyze the impact of knowledge sources on state
owned firms and compare these findings with private firms. Finally, the author
also encourages large-scale studies to provide more detail on the nature of
innovation, the various types of knowledge sources and increase the number of
observations to be able to test with various subsets of populations (regions, age
or size).

6.2.2. Recommendation for firms
From a practical perspective, it is useful to remind managers that investing
in internal R&D might help them to increase the level of innovation in their firms.

Moreover, collaborating with partners is also useful, but managers should be
aware that only collaborating within the supply chain seems to bring fruitful
results. In addition, firms should increase their interaction with customers and
put their efforts on the development of customized solutions to develop new
products.
Furthermore, firms could consider relocating to a region with higher
numbers of other firms, as it is likely that they could increase their product
innovation activities as a result. The reason behinds maybe because innovation is
a knowledge-based activity for which external knowledge is valuable. It has been
said that openness springs a firm access to external actors and sources that
provide a firm with new knowledge (Laursen and Salter, 2006). This suggests
that openness is only relevant if there is knowledge available to which a firm can
open up. Roper, Vahter and Love (2013) have already studied whether spillovers
of openness have a positive effect on innovative performance. Located in a region
with various firms could enhance innovation spillers and the firms can take
advantages from that.
6.3. Limitations of the research
Several limitations to the study suggest avenues for future research. One of
the possible future research topics is to analyze the effect of knowledge sources
over a longer period. Future research could also use panel data to examine the
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