The Impact of Financial Accessibility on Technology Innovation of Vietnamese Enterprises

Duong Thi Hanh ,Zerong Xu

doi:10.7176/jesd/12-4-08

Abstract

This paper uses the World Bank 2015 enterprise survey data set, using probit regression and multinomial logit regression to study the relationship between financial accessibility and technology innovation strategy and technological innovation results of Vietnamese enterprises. This article explores the impact of financial accessibility on firms' ability to innovate successfully (including product innovation, process innovation, product and process innovation). Then, determine the impact of financial accessibility on innovation strategies (including internal technology development, external technology development through purchasing or collaborative research with outside institutions or company). Analysis of the data set shows that the difference the difference of Vietnamese enterprises is that they mainly innovate technology through internal research (39.9%), instead of technology from outside; process innovation rather than product innovation. We have found that firms with an overdraft or line of credit to be more innovative. We continue to show that relatively large-scale loans and informal loans does not limit firm’s innovation but, in turn, promotes innovation, especially through internal development. Bank loans support process innovation, while loans from family and friends actively support product innovation. Overall, the results of this article show that external finance plays an important role in enhancing the innovation capacities of Vietnamese firms. Keywords: Vietnamese enterprises, internal development, technology innovation, financial accessibility DOI: 10.7176/JESD/12-4-08 Publication date: February 28 th 2021

Highlights

With the development of globalization and the emergence of industrial revolution 4.0, technological innovation is a very urgent issue for a country and a firm
By 2005, the OECD introduced the definition of innovation in the Oslo Handbook 2005, which includes four types of innovation: (1) product innovation is the introduction of a new product or significant improvement to its properties or intended use
The general picture of the current technology innovation situation of Vietnamese enterprises shows that Vietnamese enterprises are still quite limited in technological innovation, the number of enterprises implementing the innovation is relatively low

Summary

Introduction

With the development of globalization and the emergence of industrial revolution 4.0, technological innovation is a very urgent issue for a country and a firm. This article uses data from the World Bank survey of 996 Vietnamese enterprises in 2015, applying probit and multinomial logit methods to explore the impact of finance accessibility on innovation capacity of Vietnamese enterprises, learn about these factors that affect product innovation and process innovation, decide whether to innovate from internal research, external purchase or cooperation research and propose appropriate recommendations.

Results

Conclusion