Dynamic entrepreneurship, planned innovation, and firm profitability: evidence from a Southeast Asian country

Research output: Contribution to journalArticlepeer-review

Authors

  • Tra Pham
  • Kien Nguyen
  • Hieu Nguyen
  • Liem Nguyen
  • Vinh Vo

External organisations

  • RMIT University
  • CERGE-EI
  • Vietnam National University
  • University of Economics
  • Monash University

Abstract

This study applies the theory of planned behaviors to evaluate economic outcomes resulting from planned innovation and dynamic entrepreneurship of Vietnamese firms. The analysis uses data on Vietnamese small and medium manufacturing firms from surveys conducted by United Nations University World Institute for Development Economics Research (UNU-WIDER) during 2005–2015. Employing various estimation techniques including normal standard one-side regressions (fixed effect models, panel robust model, and Pds-lasso) and two-side structural two-stage models (extended regression model, treatment effect model, and IV-Lasso), we analyze the impacts of innovation activities on firm profitability in connection to the role of dynamic entrepreneurship and planned innovation. We measure planned innovation by the interaction between intention to innovate and firm innovation activities. The study shows that planned innovation is associated with higher profitability for firms. This holds true for all three innovation activities including introduction of a new product, introduction of a new production process and improvements to existing products/processes. In light of the theory of planned behaviors, entrepreneurial intentions embedded in planned innovation can underlie a comprehensive plan and action that drives the innovation process. The findings suggest that for small and medium enterprises (SMEs) to thrive, willingness to pursue innovation by the firm owners is key to success as the intention to innovate will enable firms to gain a planning advantage. This advantage leads to a better resource allocation within the firms, shaping more effective strategies to implement a planned innovation. Overall, the study provides an important implication for the introduction of support schemes that promote innovation for SMEs in Vietnam. Any support schemes, introduced either by the public or private sector to target SMEs, should be engaged with the group of dynamic entrepreneurs who have intentions to innovate to warrant a higher chance of success.

Bibliographic note

Funding Information: This work was supported by the National Foundation for Science and Technology Development.This research is funded by the Vietnam National Foundation for Science and Technology Development (NAFOSTED) [502.01?2016.21]. Kien Son Nguyen and Vo Xuan Vinh did not receive funding from the grant (NAFOSTED). Funding Information: This research is funded by the Vietnam National Foundation for Science and Technology Development (NAFOSTED) [ 502.01–2016.21 ]. Kien Son Nguyen and Vo Xuan Vinh did not receive funding from the grant (NAFOSTED). Publisher Copyright: © 2021

Details

Original languageEnglish
Article numbere07599
Number of pages9
JournalHeliyon
Volume7
Issue number7
Early online date17 Jul 2021
Publication statusPublished - Jul 2021
Externally publishedYes

Keywords

  • Theory of planned behaviors, Planned innovation, Dynamic entrepreneurship, Small and medium enterprises, Firm financial performance