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 22160042@student.isb.edu.vn, Mbus 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 INTRODUCTION 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 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 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 DISCUSSION, CONCLUSION AND LIMITATION 51 5.1 Discussion 51 5.2 Conclusion and Implications 54 5.3 Limitations 55 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 10 Agree Q5 Công ty bạn khơng có bất cứ y định trên 75 MAIN QUESTIONNAIRE Part I Critical variable From your point of view, please select the best answer about the variables For each variable, please select one of the points: Theo quan điểm bạn, chọn câu trả lời biến Mỗi ô/ biến, xin chọn mức độ: 1-Strongly disagree Hoàn toàn không đồng y 5-Strongly agree Hoàn toàn đồng y Green innovation Đổi xanh Green innovation as hardware or software innovation that is related to green products/services, processes, or administrations, including the innovation in technologies that are involved in energy-saving, pollutionprevention, waste recycling, green product designs, or corporate environmental management Đổi xanh như đổi phần cứng phần mềm có liên quan đến sản phẩm / dịch vụ, quy trình quản trị xanh, bao gồm cải tiến công nghệ liên quan đến tiết kiệm lượng, phịng ngừa nhiễm, tái chế chất thải, thiết kế sản phẩm xanh quản ly môi trường công ty Q1 Service innovation Đổi dịch vụ PLEASE TICK/ đánh dấu chéo ô chọn SI Our company has introduced new green services1 to the market Công ty giới thiệu dịch vụ xanh cho thị trường SI Our company has introduced many modifications to the existing services Công ty giới thiệu nhiều điều chỉnh cho dịch vụ có SI Our company constantly seeks find new and green services Green services involves modifications to the existing services by enhance product design, quality, and safety with emphasis on the reduction of the negative impact on the environment Các dịch vụ xanh liên quan đến việc sửa đổi dịch vụ có bằng cách tăng cường thiết kế sản phẩm, chất lượng an toàn với nhấn mạnh vào việc giảm tác động tiêu cực đến môi trường Công ty liên tục tìm kiếm dịch vụ mới, và dịch vụ xanh SI Our company has introduced more green services than our competitors Công ty giới thiệu nhiều dịch vụ xanh so với đối thủ cạnh tranh SI The green services that we have introduced have caused significant changes in the industry Các dịch vụ xanh mà giới thiệu đưa đến thay đổi đáng kể ngành công nghiệp Q2 Admin Process Innovations Cải tiến quản trị PLEASE TICK/ đánh dấu chéo ô chọn API Our company is constantly benchmark our operating systems to world-class standards Chúng liên tục so sanh hệ thống điều hành với tiêu chuẩn đẳng cấp giới API Work practices are constantly updated to enhance efficiency Thực hành việc được cập nhật liên tục để nâng cao hiệu API Our company use technology constantly to enhance the quality of green services Công ty sử dụng công nghệ liên tục để nâng cao chất lượng dịch vụ xanh API Our company invests heavily in the development of new green operating systems2 API Management constantly seeks new ways to improve the administration systems with green attitudes Ban lãnh đạo khơng ngừng tìm kiếm cách thức để cải thiện hệ thống điều hành với quan điểm xanh (chú trọng kinh doanh bền vững và thân thiện môi trường) API Our company empowers employees to take initiatives Công ty trao quyền cho nhân viên thực sáng kiến Green operating systems improve management, which is environmentally friendly Hệ thông điều hành xanh cải thiện quản ly, thân thiện với môi trường API Our competitors use our operating systems as a benchmark Đối thủ cạnh tranh sử dụng hệ điều hành làm điểm chuẩn để so sánh Green entrepreneurship Khởi nghiệp kinh doanh xanh Green entrepreneurship can be viewed as implementation of innovations related to sustainable, which its main objective is implementing them and promoting green economy Khởi nghiệp kinh doanh xanh được xem thực sáng kiến liên quan đến bền vững, mà mục tiêu chính thực chúng thúc đẩy kinh tế xanh Q3 Proactive Risk-taking Chấp nhận rủi ro PLEASE TICK/ đánh dấu chéo ô chọn 5 PRT Our company constantly seeks new opportunities related to our present operations Cơng ty chúng tơi liên tục tìm kiếm hội liên quan đến hoạt động kinh doanh PRT Our company is usually the first to introduce new green services in our industry Công ty thường là người giới thiệu dịch vụ xanh ngành PRT Management accept that certain suggestions in the field of green attitudes may fail when implemented Ban lãnh đạo chấp nhận số gợi y định lĩnh vực thái độ xanh thất bại được thực PRT Our company constantly seeks green investment opportunities to improve our business performance Cơng ty chúng tơi khơng ngừng tìm kiếm hội đầu tư xanh để cải thiện hiệu kinh doanh PRT In this company, the new (green-based approach) venture failure is viewed as learning experience Trong công ty này, thất bại kinh doanh mạo hiểm (tiếp cận dựa xanh) được xem như là kinh nghiệm học tập Q4 Autonomy Quyền tự trị PLEASE TICK/ đánh dấu chéo ô chọn A Our employees are encouraged to take responsibility for their work Nhân viên được khuyến khích chịu trách nhiệm cho cơng việc A Our employees are supposed to get the job done with minimal supervision Nhân viên chúng tơi có nghĩa vụ phải hoàn thành công việc với giám sát tối thiểu A Our employees are encouraged to prioritize their work Nhân viên chúng tơi được khuyến khích ưu tiên cơng việc Q5 SMEs development Sự phát tiển SMEs PLEASE TICK/ đánh dấu chéo ô chọn 5 SMED Revenue growth is desirable, considering green products Tăng trưởng doanh thu là mong muốn, xem xét sản phẩm xanh SMED Green products have reduced production costs Sản phẩm xanh giảm chi phí sản xuất SMED The profits from the sales are good Lợi nhuận từ việc bán hàng là tốt SMED Formation of industries exclusively for the production of goods and new green products Hình thành ngành cơng nghiệp dành riêng cho sản xuất hàng hóa và sản phẩm xanh SMED Creation of new freight transport systems compatible with green products Tạo hệ thống vận chuyển hàng hóa tương thích với sản phẩm xanh SMED This organization invested in order to increase the expertise for the production of green products Tổ chức này đầu tư để nâng cao chuyên môn cho việc sản xuất sản phẩm xanh Market turbulence Thị trường bất ổn PLEASE TICK/ đánh dấu chéo ô chọn Q6 MT Consumer preferences change unpredictably in the market Các sở thích người tiêu dùng thay đổi không lường trước được thị trường Q7 MT Competition in our product market is relentless Cạnh tranh thị trường sản phẩm là không ngừng Q8 MT Technology in our industry changes rapidly Công nghệ ngành thay đổi nhanh chóng Part II Characteristic respondents and company Phần I Đặt điểm người tham gia và doanh nghiệp Q9 Gender of the respondent Giới tính người khảo sát Male Female Nam Nữ Q10 Age of the respondent Tuổi người khảo sát Below 25 years Dưới 25 tuổi 45 – 55 years 45-55 tuổi 25-35 years 35 – 45 years 25-35 tuổi 35-45 tuổi above 55 years Trên 55 tuổi Q11 Education qualification of respondent Trình độ học vấn người khảo sát Primary education Secondary education University education Giáo dục tiểu học Giáo dục trung học Đại học Postgraduate education Sau đại học Q12 What is sector of your company/organization? Công ty/Tổ chức hoạt động lĩnh vực nào? Agriculture and fishing Manufacture Service Nông nghiệp và đánh bắt Sản xuất Dịch vụ Constructions Other, specify Xây dựng Bộ phận khác, nêu rõ Q13 What is your title in the company/organization? Vị trí bạn Cơng ty/Tổ chức? Entrepreneur Manager Senior Manager Chủ doanh nghiệp Quản ly Quản ly lâu năm CEO Other, specify Giám đốc điều hành Vị trí khác, nêu rõ Q14 How many years have you been in your company/organization? Bạn làm Công ty/Tổ chức được bao lâu? Less than years 2-5 years 5-10 years Dưới năm 2-5 năm 5-10 năm Less than 10 billion 10-50 billions 50-100 billions Dưới 10 tỷ 10-50 tỷ 50-100 tỷ 100-300 billions More than 300 billions 100-300 tỷ Trên 300 tỷ More than 10 years Trên 10 năm Q15 Firm annual revenue/VND Doanh thu Q16 Firm size Quy mô Less than 10 people 10-49 people 50-100 people Dưới 10 người 10 đến 49 người 50 đến 100 người 101-200 people More than 200 people 101 đến 200 người Trên 200 người Any comments you wish to make: Xin cho nhận xét nào bạn muốn Thank you very much! Chân thành cảm ơn 80 Appendix C: Reliability Statistic SI Reliability Statistics Cronbach's Alpha N of Items 886 Item-Total Statistics Scale Mean if Scale Variance if Corrected Item- Cronbach's Alpha Item Deleted Item Deleted Total Correlation if Item Deleted SI1 13.269 13.974 794 845 SI2 13.236 15.251 764 854 SI3 13.023 15.595 672 874 SI4 13.269 15.304 721 863 SI5 13.185 15.826 679 872 API Reliability Statistics Cronbach's Alpha N of Items 918 Item-Total Statistics Scale Mean if Scale Variance if Corrected Item- Cronbach's Alpha Item Deleted Item Deleted Total Correlation if Item Deleted API6 19.958 30.682 734 907 API7 20.000 31.935 684 911 API1 20.222 31.253 710 909 API2 20.139 30.920 793 901 API3 20.134 30.954 763 903 API4 20.231 30.346 788 901 API5 20.176 30.788 752 905 PRT Reliability Statistics Cronbach's Alpha N of Items 857 Item-Total Statistics Scale Mean if Scale Variance if Corrected Item- Cronbach's Alpha Item Deleted Item Deleted Total Correlation if Item Deleted PRT3 13.037 13.180 667 829 PRT5 12.986 12.804 639 837 84 PRT2 13.306 13.088 703 821 PRT1 13.370 12.578 704 820 PRT4 13.153 12.837 657 832 Autonomy Reliability Statistics Cronbach's Alpha N of Items 859 Item-Total Statistics Scale Mean if Scale Variance if Corrected Item- Cronbach's Alpha Item Deleted Item Deleted Total Correlation if Item Deleted A1 7.106 3.947 712 824 A2 7.190 3.987 750 787 A3 7.056 4.090 740 797 SMED Reliability Statistics Cronbach's Alpha N of Items 893 Item-Total Statistics Scale Mean if Scale Variance if Corrected Item- Cronbach's Alpha Item Deleted Item Deleted Total Correlation if Item Deleted SMED6 17.190 20.461 655 883 SMED1 17.074 19.929 683 879 SMED2 17.222 19.216 761 866 SMED3 17.014 20.153 709 874 SMED4 17.069 19.516 750 868 SMED5 17.000 20.056 718 873 Appendix D: EFA Factor1 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Approx Chi-Square df Sig .945 1716.795 66 000 Factor2 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Approx Chi-Square df Sig .888 858.631 28 000 Factor3 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity 907 Approx Chi-Square 1219.055 df 36 Sig .000 84 Factor4 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity 731 Approx Chi-Square 332.788 df Sig .000 88 Appendix E: CFA ...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. .. 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. .. 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