Determinants of product innovation activity the case of vietnamese SME firms

UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLAND VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS Determinants of Product Innovation Activity: The case of Vietnamese SME Firms BY DANG THUY TRANG MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, May 2015 UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS Determinants of Product Innovation Activity: The case of Vietnamese SME Firms A thesis submitted in partial fulfillment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By DANG THUY TRANG Academic Supervisor: LE CONG TRU PhD HO CHI MINH CITY, May 2015 ABSTRACT This study examine two manors of product innovation including improving existing product and making new product with the scope of Vietnamese SME's firms The aim of this study is to figure out what determinants have significant impact on each type of product innovation and whether correlation between these two manors exists Determinants are categorized into internal and external factors The first group includes age, experience of entrepreneur, firm size, training cost, and R&D cost The second group includes competition level, outsourcing cost, external consultant, networking, knowledge of market/marketing cost, and export orientation Bivariate-probit model is used for attaining research's purposes above The model is applied on 1418 SME's firms which are separated into five sections: textile & shoes, food manufacturing and processing, mechanics and electricity, wood processing and all other sections Five factors are figured out to have significant influence on product innovation activity of firms including firm size, age of entrepreneur, export, competition level and network Marginal effect calculated from bivariate-probit regression are helpful evidence for firms to adjust significant determinant to improve their innovation performance ABBREVIATION R&D Research and Development SMEs Small and Medium Enterprises CIEM Central Institute for Economics Management OECD Organization for Economic Co-operation and Development MIT Ministry of Industry and Trade CONTENTS I INTRODUCTION I.1 Problem statement I.2 Research objectives: I.3 Research questions I.4 Scope of the study I.5 Structure of the study CHAPTER II: LITERATURE REVIEW 10 II.1 Innovation 10 II.1.1Definition of innovation 10 II.1.2 Popular indicators of innovation activity in SMEs: 10 II.1.3 Classification of innovation: 12 II.1.4 Characteristics of innovation activities in developing country 12 II.1.5 Comparison between large enterprises and SMEs based on indicator of product innovation 13 II.2 Product innovation 14 II.2.1 Definition of product innovation 14 II.2.2 Classification of product innovation 14 II.3 Reviews of Related Theories 15 II.4 Reviews of Empirical Studies 17 II.4.1 Determinants of product innovation 17 II.4.2 Empirical review of methodology 30 CHAPTER III: RESEARCH METHODOLOGY AND DATA 36 III.1 Data and sample 36 III.2 Variables and Measurement 36 III.2.1 Dependent variable 36 III.2.2 Independent variables 37 III.3 Analytical approach 41 III.3.1 Empirical model, estimation method 41 CHAPTER IV EMPIRICAL RESULT 45 IV.1 Innovation activity of SMEs in Vietnam 45 IV.2 Data description 46 IV Descriptive statistics 47 IV.4 Regression Results 50 IV.5 Marginal effects: 55 CHAPTER V: CONCLUSION AND RECOMMENDATION 58 V.3 Recommendation 59 V.4 Limitation and Future Research 60 REFERENCE 61 LIST OF TABLES Table 1: The innovativeness indicators for SMEs in different dimentions 11 Table 2: Comparison between large enterprises and SMEs based on indicator of product innovation 13 Table 3: Dependent variables 37 Table 4: Determinants of Product Innovation 40 Table : Innovation Rates in Manufacturing SMEs 45 Table 6: Number of observations with improved and new product 46 Table 7: Four cases of combination between improving existing product and creating new product 46 Table : Descriptive statistics 47 Table : Correlation between some independent variables 49 Table 10 : Summary of results from bivariate - probit regression 50 Table 11: Marginal effect 55 LIST OF FIGURES Figure 1: Conceptual Framework 35 Figure 2: Methodology model 44 I INTRODUCTION I.1 Problem statement International economic integration allows more firms to be established and more foreign firms to enter domestics market Under such intensive competition pressure, firms need to continuously innovate their products to attain comparative advantage from other opponents This is due to limited life cycle of individual product and more arising demand of customers M Banbury and Mitchell (1995) proved that the more often firms create new products, the better they perform and the higher their probability of surviving in long term is This is applicable for both small and large firms (Vermeulena, De Jong, & O'shaughnessyc, 2005) Chris Freeman and Soete (1997) - even asserted that ‘not to innovate is to die’ Due to such important role of innovation, a large amount of studies have been done to identify factors having influence on product innovation of small firms (Martinez-Ros,1999; Jong, 2006; Fritz,1989; Vega-Jurado, Gutierrez-Gracia, Fernandezde-Lucio & es-Henriquez, 2008; Hadjimanolis,2000; Freel, 2000) It requires more than expenditure on R&D for attaining improved or new products Factors with considerable influence on innovation activity that should be taken into account include firm size, production technology ( ratio of sales over fix assets), origin of ownership, spending on market insight (Avermaetea, et al., 2004) How much these factors may affect innovation activity is not equal and depends on economic section of firms Thus, a model simulating impacts of aforementioned elements is necessary to be established While there are a range of international researches addressing this topic, number of papers on such matter at Vietnamese scale is quite limited As Vietnam is a developing country, a moderate technical progress may result in huge increase of firm' sale or market share (Hadjimanolis, 2000) Thus, a model applying this matter for Vietnamese scenario is essential to be devised This paper is expected to achieve that target Both Vietnamese enterprises and policy makers can utilize results of this paper First of all, enterprises can refer to this model when they are in need of promoting innovation for their product As the model points out specific elements and the level such elements need controlled This is also a useful guidance for policy makers In detail, being aware of influential elements of each industry allow policy makers to make proper decision to assist innovation of that specific section I.2 Research objectives: The study is expected to figure out determinants with significant impact on product innovation activity of Vietnamese SMEs and influential level of each factors By understanding the interaction between the internal and externals factors having impact on product innovation, enterprise’s leaders may adjust firm’s strategy to adapt to characteristics of environment to gain the highest performance in product innovation activity I.3 Research questions There are two main questions addressed in this study The first one is what indicators have considerable impact on product innovation behavior of firms The second one is to which extent product innovation is influenced by these factors I.4 Scope of the study The study examines Small and Medium enterprises across Vietnam with data extracted from SMEs survey 2011 I.5 Structure of the study This paper includes five chapters The first chapter - Introduction presents the issue and background of the issue addressed in this paper, then discussing research objective Chapter II–Literature review presents the theoretical and empirical foundation of the topic which aims at creating a conceptual framework for the research This part explains the definition of innovation, product innovation, theoretical and empirical theory about determinants of product innovation activity of firms, the methods applied to measure product innovation Chapter III – Research Methodology focuses on the method, data description and the analytical model applied in this paper Chapter IV– Findings and Discussions discuss the regression results and marginal effect of each factor on product innovation probability The final part Chapter V–Conclusion and Recommendations suggest policies for policy makers and for top management of firms when they want to increase the rate of innovating product CHAPTER II: LITERATURE REVIEW II.1 Innovation II.1.1Definition of innovation According to Hyvarinen (1990), innovation activities involve both internal and external activities of firms with the target of creating new products, enhancing existing products, process, governance or marketing Most of innovation activities originate from research and development (R&D) Some may be acquired by firms via other sources such as licensing, seminars, consultants, customers, providers Technologies can be applied in various ways in each firms When technology is aware at a broader sense rather than relating to products only, innovation activities will play a key role in development of SMEs (OECD, 1982) II.1.2 Popular indicators of innovation activity in SMEs: There are three popular proxies usually used to indicate levels of innovation: input, output and impact These indicators could be analyzed in general or particular meaning and measured by quantity or quality The measurement units used most frequently are number and rate Among various inputs of producing, time, capital and labor are the common factors used to measure effectiveness of innovation Because these factors can be collected more easily and exactly than others belong to output or impact, the input method is preferred than the other two methods The second indicator- output involves in analyzing straight outcome of innovation, creation, expertise, proficiency and absorption of technique The typical proxy of output is patent as its data can be found in most country’s statistic system However, patent is not the most significant in all companies and all industries Some innovations may not be registered for patents Besides, patent refers to invention rather than innovation Output method sometimes utilized number of license as indicator The last and the latest among three methods is impact indicators This method relates to innovation in larger aspect and refer to qualitative outcomes rather than quantity Impact is comparison between cause and effect of innovation and the variation of sales, capital, productivity, development, etc of firm 10 V.3 Recommendation Besides providing evidence for firms to improve their innovation performance, this study result also suggests some policies that government or competent authority can apply to enhance general innovation performance of SME firms Some policies are as follows: Firstly, Ministry of Industry and Trade (MIT) may facilitate firms to increase its network by supporting establishment and operation of Associations in specific industry These association will connect producers, suppliers of the same industry with one another Such organizations also allow firms to share information of new technique or experience and know how to improve their products Once connected, firms may have chance to cooperate with each other in co-investing in capital intensive technique to produce advanced product Besides, MIT can support organizing more convention, fair, workshop, etc….Those event will provide firms more opportunity to meet, discuss and share with each other method to innovate their products International trade has been proved to create more chance for firms to innovate their product Vietnam Trade Promotion Agency has actively proceeded many activities to bring more export opportunity to Vietnamese firms They has organized a range of trade fairs at various provinces to promote local producer to export their own products Agency of this organization abroad also timely update demand of foreign market for domestic producer as well as connect international buyers to Vietnamese sellers Such activities should be continued and even extended so that more local products can approach foreign consumers Firm size has been certified to positively affect product innovation activity of firms Large firms have better condition in applying modern producing method to manufacture advanced product Most SME firms find obstacle in mobilizing capital Thus Center Bank should issue policies to enable SME firms even at distinct areas to have 59 chance to borrow capital More efficient law on micro finance should be applied so that SME firms can approach capital from these sources easily and effectively Maintaining a competitive market is another method competent authority can apply to ensure enhance innovation activities of firms A monopoly market where firms are not freely to enter will discourage existing firms from innovating their product Once a purely competitive market are maintained monopoly or government support are removed, firms will be stimulated to create better product to gain more market share In sum up, this study proposes some policies that should be applied or continued to promote innovation among SME firms Such policies will not only enhance firm's performance but their consequences will increase government budget, increase wealth fare of the whole society V.4 Limitation and Future Research Due to limitation of data, the research doesn't include some determinants that theoretically have influence of product innovation such as customer demand, origin of firm ownership, technical capital In further research, a survey with sufficient data should be proceed to take into account above determinants Dependant variables are measured by binary variable which take two value of or To deeply analyze innovation activity, these variable should be measure by scale which separate innovation into different levels In such case, order probit model will be applied 60 REFERENCE Abernathy, W J (1982) Competitive decline in U S innovation : the management factor Research management, 25(5), 34-41 Acs, Z J., & Audretsch, D B (1988) Innovation in Large and Small Firms: An Empirical Analysis American Economic Review, 678-690 Arrow, K J (1962) Economic Welfare and the Allocation of Resources for Invention The Rate and Direction of Inventive Activity: Economic and Social Factors, 609626 Avermaetea, T., Viaenea, J., J Morganb, E., Pittsc, E., Crawfordb, N., & Mahonc.Denise (2004) Determinants of product and process innovation in small food manufacturing firms Trends in Food Science & Technology, 15(10), 474–483 doi:http://dx.doi.org/10.1016/j.tifs.2004.04.005 Baardseth, P., Dalen, G A., & Tandberg, A (1999) Innovation/technology transfer to food SMEs Trends in food science & technology, 10, 234-238 Baldwin, J R., & Diverty, B (1995) Advanced Technology Use in Canadian Manufacturing Establishments Statistics Canada Working Paper Baldwin, J R., & Sabourin, D (2000) Innovative activity in Canadian food processing establishments: the importance of engineering practices International Journal of Technology Management, 511-527 Becker, S O., & Egger, P (2013) Endogenous product versus process innovation and process innovation and Empirical Economics, 329-354 Bhattacharya, M., & Bloch, H (2004) Determinants of innovation Small Business Economics, 155-162 Blundell, R W., Griffith, R., & Van Reenen, J (1995) Dynamic count data models of technological innovation The Economic Journal, 333-344 61 Bonanno, G., & B., H (2008) Intensity of competition and the choice between product and process innovation International Journal of Industrial Organization, 495510 Bougrain, F., & Haudeville, B (2002) Innovation, collaboration and SMEs internal research capacities Research Policy, 735–747 Brouwer, E (1997) Into Innovation: Determinants and Indicators Utrecht: Drukkerij Elinkwijk Businessdictionary.com (2014, 18) Retrieved from Businessdictionary.com: http://www.businessdictionary.com/definition/product-innovation.html Caves, R E (1982) Multinational enterprise and economic analysis Cambridge: Cambridge University Press, Chandra, M., G Zarb, F., & P Neelankavil, J (n.d.) Product development and innovation for developing countries: Potential and challenges Journal of Management Development, 27(10), 1017 - 1025 doi:10.1108/02621710810916277 Clark, K B., & Fujimoto, T (1991) Product Development Performance Massachusett: Harvard Business Press Cohen, W M., & Levinthal, D A (1999) Innovation and learning: The two faces of R&D Economic Journal, 569-596 Cooper, R., & Kleinschmidt, E (1995) Benchmarking the firm’s critical success factors in new product development Journal of Product Innovation Management, 374 – 391 Crepon, B., Duguet, E., & Mairesse, J (1998) Research, Innovation, and Productivity: An Econometric Analysis at the Firm Level Economics of Innovation and New Technology, 115-158 62 Damanpour, F (1991) Organizational Innovation: A Meta-Analysis Of Effects Of Determinants and Moderators Academy of Management Journal, 555-590 Diederen, P., van Meijl, H., & Wolters, A (2000) Eureka! Innovatieprocessen en innovatiebeleid in de land- en tuinbouw Den Haag Dosi, G., Freeman, C., Nelson, R., Silverberg, G., & Soete, L (1988) Technical Change and Economic Theory Pisa: Sant'Anna School of Advanced Studies Drucker, P (2002) The discipline of innovation Harvard Business Review, 95-100 Fontes, M., & Coombs, R (1996) New technology-based firm formation in a less advanced country: a learning process International Journal of Entrepreneurial Behaviour & Research, 82 - 101 Food and Agriculture Organization of the United Nations (2014, April 4) http://faostat.fao.org/site/342/default.aspx Retrieved April 4, 2014, from http://faostat.fao.org: http://faostat.fao.org/site/342/default.aspx Freel, M (2000) External linkages and product innovation in small manufacturing firms Entrepreneurship & Regional Development, 12(3), 245-266 Fritz, W (1989) Determinants of Product Innovation Activities European Journal of Marketing, 23(10), 32 - 43 doi:10.1108/EUM0000000000593 Galende, J., & Fuente, J M (2003) Internal factors determining a firm’s innovative behaviour Research Policy, 715–736 Grunert, K G., Hartvig Larsen, H L., Madsen, T K., & Baadsgaard (1996) Market orientation in food and agriculture Boston: Kluwer Academic Hadjimanolis, A (2000, 7) An investigation of innovation antecedents in small firms in the context of a small developing country R&D Management, 30(3), 235-246 doi:10.1111/1467-9310.00174 63 Harrison, R., & Hart, M (1987) Innovation and market development: the experience of small firms in a peripheral economy OMEGA International Journal of Management Science, 445-454 Higón, D A., & Driffield, N (2011) Exporting and innovation performance: Analysis of the annual Small Business Survey in the UK International Small Business Journal, 4-24 Huiban, J P., & Bouhsina, Z (1998) Innovation and the quality of labour factor: An empirical investigation in the French food industry Small Business Economics, 389-400 Hyvarinen, L (1990) Innovativeness and its Indicators in Small- and Medium-sized Industrial Enterprises International Small Business Journal, 64-79 Itami, H., & Roehl, T (1991) Mobilizing invisible assets Massachusetts: Harvard University Press Jensen, M., & Meckling, W (1976) Theory of the Firm: Managerial Behavior,Agency Costs and Ownership Structure Journal of Financial Economics, 305-360 Jensen, M., & Meckling, W (1979) Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure New York: Springer Netherlands Jones, E., & D., P (1996) Universities and enterprise development on the periphery of Europe Academy of Entrepreneurship Journal, 21-43 Jong, J P (2006) Determinants of Product Innovation in Small Firms: A Comparison Across Industry International Small Business Journal, 24(6), 587-609 Kamien, M I., & Schwartz, N L (1975) Market Structure and Innovation: A Survey Journal of Economic Literature, 1-37 64 Kamien, M I., & Schwartz, N L (1982) Market Structure and Innovation Cambridge: Cambridge University Press Kamp, M E., & May, E (1981) Kleine und mittlere Unternehmen im Forschungs-und Entwicklungsprozeß ZfB, 347-368 Kendall, J (2012) Local financial development and growth Journal of Banking and Finance 36, 1548-1562 Kim, Y., Kwangsun, S., & Jinjoo, L (1993) Determinants of technological innovation in the small firms of Korea R&D Management, 23(3), 215-226 King, N., & West, M A (1990) Experiences of Innovation at Work Journal of Managerial Psychology, 6-10 Kleysen, R F., & Street, C T (2001) Toward a multi‐dimensional measure of individual innovative behavior Journal of Intellectual Capital, 284 - 296 Kraft, K (1990) Are product and Process Innovations Independent of Each Other? Applied Economics, 22(8), 1029-1038 Landau, D (1983) Government expenditure and economic growth : a cross country study Southern Economic Journal., 783-793 Lipparini, A (1994) The glue and the pieces: Entrepreneurship and innovation in smallfirm networks Journal of Business Venturing, 9(2), 125–140 Lybaert, N (1998) The information use in a SME: its importance and some elements of influence Small Business Economics, 171–191 M Banbury, C., & Mitchell, W (1995) The effect of introducing important incremental innovations on market share and business survival Strategic Management Journal, 161-182 65 M Kabir Hassana, B S.-S (2011) Financial development and economic growth: New evidence from panel data The Quarterly Review of economics and Finance, 88104 Mansfield, E (1981) Composition of R and D Expenditures: Relationship to Size of Firm, Concentration, and Innovative Output The Review of Economics and Statistics, 63(4), 610-615 MARTINEZ-ROS, E (1999) Explaining the decisions to carry out product and process innovations: The spanish case The Journal of High Technology Management Research, 10(2), 223–242 doi:http://dx.doi.org/10.1016/S1047-8310(99)00016-4 Mascitelli, R (2000) From Experience: Harnessing Tacit Knowledge to Achieve Breakthrough Innovation Journal of Product Innovation Management, 179-193 Meeus, M., Oerlemans, L., & Hage, J (1999) Sectoral patterns of interactive learning, an empirical exploration using an extended resource based model The Netherland: Eindhoven center for innovation studys Meyer-Krahmer, F (1984) Recent results in measuring innovation output Research Policy, 175–182 Micheal, P (1986) Competition in global industry Boston: Harvard Business School Press Nelson, R., & Winter, S (1982) An Evolutionary Theory of Economic Change Massachusetts: Harvard University Press OECD (1982) Innovation in Small and Medium Firms Paris: OECD Oerlemans, L., Meeus, M., & Boekema (1998) Do Networks Matter for Innovation? The usefulness of the economic network approach in analysing innovation Tijdschrift voor economische en sociale geografie, 298-309 66 Pavitt K., R T (1987) The Size Distribution of Innovating Firms in the UK: 1945-1983 The Journal of Industrial Economics, 297-316 Rogers, E M., & Floyd, S F (1971) Communication of Innovations: A Cross-Cultural Approach New York: The Free Press Romijn, H., & Albaladejo, M (2002) Determinants of innovation capability in small electronics and software firms in southeast England Research Policy, 1053–1067 Rothwell, R., & Dodgson, M (191) External linkages and innovation in smal l and medium-sized enterprises R& D M anagement, 125-137 Scherer, F (1992) Schumpeter and Plausible Capitalism, Journal of Economic Literature Journal of Economic Literature, 1416-1433 Scholz, L (1988) From the nnovation survey to the innovation flow matrix A new approach to measure technical progess and impact on growth and employment The group of national experts on science and technology indicator Paris Schumpeter, J (1942) Capitalism, Socialism and Democracy New York: Harper & Row Stewart, K B., & Mitchell, P (2003) What separates the winners from the losers in new food product development? Trends in Food Science and Technology, 58-64 Symeonidis, G (1996) Innovation, firm size, market structure: Schumpeterian Hypotheses and some new themes Paris: London School of Economics Tidd, J., & Bessant, J (2009) Managing Innovation: Integrating technological, market and organizational change Chichester,: John Wiley Twiss, B (1992) Managing Technological Innovation London: Pitman Publishing Urban, G L., & Hauser, J R (1980) Design and Marketing of New Products Cambridge: Prentice-Hall 67 Vega-Jurado, J., Gutierrez-Gracia, A., Fernandez-de-Lucio, I., & es-Henr´ıquez, L M (2008) The effect of external and internal factors on firms'product innovation Research Policy, 616-632 Vermeulena, P A., De Jongb, J P., & O'shaughnessyc, K (2005) Identifying key determinants for new product introductions and firm performance in small service firms The Service Industries Journal, 25(5), 625-640 Walsh, V (1984) Invention and innovation in the chemical industry: Demand-pull or discovery-push? Research Policy, 211-234 Wernerfelt, B (1984) A resource-based view of the firm Strategic Management Journal, 171-184 Wernerfelt, B (1984) A Resource-Based View of the Firm Strategic Management Journal, 171-180 White, M., Braczyk, H., Ghobadian, A., & Niebuhr, J (1988) Small Firms' Innovation: Why Regions Differ London: Policy Studies Institute Whitley, R (2000) The Institutional Structuring of Innovation Strategies: Business Systems, Firm Types and Patterns of Technical Change in Different Market Economies Organization Studies, 855-886 Williamson, O (1989) Chapter Transaction cost economics Handbook of Industrial Organization, 135–182 Wong, S K.-S (2014) Impacts of environmental turbulence on entrepreneurial orientation and new product success European Journal of Innovation Management, 17(2), 229-249 Yoshihara, K -i (1976) Limiting behavior of U-statistics for stationary, absolutely regular processes Zeitschrift für Wahrscheinlichkeitstheorie und Verwandte Gebiete , 237-252 68 APPENDIX REGRESSION RESULT OF BIVARIATE PROBIT MODEL Seemingly unrelated bivariate probit Number of obs Wald chi2(28) Prob > chi2 Log likelihood = -1188.2523 Coef Std Err z P>|z| = = = 1418 101.56 0.0000 [95% Conf Interval] Improve Size Outsource Export Age Training Marketingc~t Techconsul~t Competitio~l RDcost Network Food Texttile Machenic Wood _cons 0025921 -.0101437 3653418 -.0066609 5.80e-06 -.0006101 4292693 0529834 1.13e-07 0039952 -.191632 4510734 3829974 4538843 -.3142293 0010238 0063588 1357312 0033541 7.12e-06 0007287 3732695 0322503 3.40e-07 001194 0932415 1370317 0974162 1227238 1903068 2.53 -1.60 2.69 -1.99 0.81 -0.84 1.15 1.64 0.33 3.35 -2.06 3.29 3.93 3.70 -1.65 0.011 0.111 0.007 0.047 0.415 0.403 0.250 0.100 0.739 0.001 0.040 0.001 0.000 0.000 0.099 0005854 -.0226067 0993136 -.0132348 -8.15e-06 -.0020383 -.3023254 -.0102261 -5.54e-07 0016549 -.374382 1824961 1920652 21335 -.6872238 0045988 0023193 63137 -.000087 0000197 0008182 1.160864 1161929 7.80e-07 0063355 -.0088819 7196507 5739296 6944186 0587653 Newproduct Size Outsource Export Age Training Marketingc~t Techconsul~t Competitio~l RDcost Network Food Texttile Machenic Wood _cons 0021085 -.0093644 1051068 002415 -1.32e-06 -.0017611 2129067 -.0161634 -6.11e-07 0001495 -.1338128 -.3531656 0143226 -.4310093 -1.639435 0014503 0121036 2095069 0055191 4.98e-06 0021363 5285567 0538858 1.54e-06 0009453 1520214 2639243 154726 2576404 3097723 1.45 -0.77 0.50 0.44 -0.26 -0.82 0.40 -0.30 -0.40 0.16 -0.88 -1.34 0.09 -1.67 -5.29 0.146 0.439 0.616 0.662 0.791 0.410 0.687 0.764 0.692 0.874 0.379 0.181 0.926 0.094 0.000 -.000734 -.033087 -.3055193 -.0084022 -.0000111 -.0059481 -.8230454 -.1217777 -3.63e-06 -.0017032 -.4317693 -.8704476 -.2889348 -.9359753 -2.246577 004951 0143582 5157329 0132322 8.44e-06 0024259 1.248859 0894509 2.41e-06 0020023 1641437 1641165 3175801 0739567 -1.032292 /athrho 1518747 0735957 2.06 0.039 0076297 2961196 rho 1507176 0719239 0076296 2877575 Likelihood-ratio test of rho=0: chi2(1) = 4.30469 Prob > chi2 = 0.0380 69 MARGINAL EFFECTS IN CASE: FIRM HAS IMPROVED PRODUCT AND NO NEW PRODUCT Marginal effects after biprobit y = Pr(Improve=1,Newproduct=0) (predict, p10) = 39900699 variable Size Outsou~e Export* Age Training Market~t Techco~t* Compet~l RDcost Network Food* Texttile* Machenic* Wood* dy/dx Std Err .0008585 -.0033023 1311145 -.0026094 2.23e-06 -.0001369 1453818 0205997 7.37e-08 0014829 -.064518 1886171 1437164 1925768 00039 00243 0521 00127 00000 00029 14123 0122 00000 00045 03422 0526 03736 0473 z 2.23 -1.36 2.52 -2.06 0.84 -0.47 1.03 1.69 0.50 3.31 -1.89 3.59 3.85 4.07 P>|z| [ 0.026 0.173 0.012 0.040 0.403 0.637 0.303 0.091 0.619 0.001 0.059 0.000 0.000 0.000 000104 001613 -.008056 001451 028995 233234 -.005095 -.000124 -3.0e-06 7.5e-06 -.000706 000432 -.131421 422185 -.003315 044515 -2.2e-07 3.6e-07 000605 002361 -.131579 002543 085517 291717 070486 216947 099878 285276 95% C.I ] X 21.8484 5.17509 083921 43.5987 1168.05 8.67489 008463 2.60273 6508.46 34.4154 212976 071932 169252 093794 MARGINAL EFFECTS IN CASE: FIRM HAS NEW PRODUCT AND NO IMPROVED PRODUCT Marginal effects after biprobit y = Pr(Improve=0,Newproduct=1) (predict, p01) = 02109573 variable Size Outsou~e Export* Age Training Market~t Techco~t* Compet~l RDcost Network Food* Texttile* Machenic* Wood* dy/dx 0000495 -.0002454 -.0026452 0002372 -1.70e-07 -.0000705 0002724 -.0017455 -3.05e-08 -.000068 -.0027338 -.0167055 -.0064373 -.0185567 Std Err .00007 00057 00882 00026 00000 0001 02456 00255 00000 00005 0068 00539 006 00504 z 0.71 -0.43 -0.30 0.91 -0.64 -0.71 0.01 -0.68 -0.43 -1.37 -0.40 -3.10 -1.07 -3.68 P>|z| [ 95% C.I ] 0.475 0.667 0.764 0.364 0.522 0.478 0.991 0.494 0.669 0.171 0.688 0.002 0.283 0.000 -.000086 000185 -.001364 000873 -.019941 01465 -.000275 00075 -6.9e-07 3.5e-07 -.000265 000124 -.047861 048406 -.006748 003257 -1.7e-07 1.1e-07 -.000165 000029 -.016067 0106 -.027276 -.006135 -.018201 005326 -.028431 -.008683 X 21.8484 5.17509 083921 43.5987 1168.05 8.67489 008463 2.60273 6508.46 34.4154 212976 071932 169252 093794 70 MARGINAL EFFECTS IN CASE: FIRM HAS NEITHER NEW PRODUCT NOR IMPROVED PRODUCT Marginal effects after biprobit y = Pr(Improve=0,Newproduct=0) (predict, p00) = 55407808 variable Size Outsou~e Export* Age Training Market~t Techco~t* Compet~l RDcost Network Food* Texttile* Machenic* Wood* dy/dx Std Err -.0010652 0042201 -.1421976 0023727 -2.10e-06 0003095 -.1701818 -.0190155 -1.38e-08 -.0014975 0768248 -.1617316 -.1451314 -.1609722 00039 00246 05193 00129 00000 00029 13884 01242 00000 00045 03498 05258 03745 04725 z -2.72 1.71 -2.74 1.84 -0.79 1.06 -1.23 -1.53 -0.09 -3.33 2.20 -3.08 -3.87 -3.41 P>|z| [ 0.007 0.087 0.006 0.066 0.431 0.290 0.220 0.126 0.925 0.001 0.028 0.002 0.000 0.001 -.001833 -.000607 -.243978 -.000158 -7.3e-06 -.000263 -.442303 -.043362 -3.0e-07 -.002379 008272 -.26478 -.218542 -.253584 95% C.I ] -.000297 009048 -.040417 004904 3.1e-06 000882 10194 005331 2.7e-07 -.000616 145378 -.058683 -.071721 -.06836 X 21.8484 5.17509 083921 43.5987 1168.05 8.67489 008463 2.60273 6508.46 34.4154 212976 071932 169252 093794 MARGINAL EFFECTS IN CASE: FIRM HAS BOTH NEW PRODUCT AND IMPROVED PRODUCT Marginal effects after biprobit y = Pr(Improve=1,Newproduct=1) (predict, p11) = 02581919 variable Size Outsou~e Export* Age Training Market~t Techco~t* Compet~l RDcost Network Food* Texttile* Machenic* Wood* dy/dx 0001572 -.0006725 0137282 -5.45e-07 4.09e-08 -.0001021 0245276 0001612 -2.93e-08 0000826 -.009573 -.0101799 0078523 -.0130479 Std Err .00008 00064 01563 0003 00000 00011 05017 00287 00000 00005 0067 01039 00992 00926 z 1.99 -1.05 0.88 -0.00 0.14 -0.92 0.49 0.06 -0.37 1.50 -1.43 -0.98 0.79 -1.41 P>|z| [ 95% C.I 0.047 0.293 0.380 0.999 0.888 0.360 0.625 0.955 0.712 0.132 0.153 0.327 0.429 0.159 2.1e-06 -.001926 -.016908 -.000579 -5.3e-07 -.000321 -.073811 -.005473 -1.9e-07 -.000025 -.022712 -.030552 -.011587 -.031204 ] 000312 000581 044365 000578 6.1e-07 000116 122867 005796 1.3e-07 00019 003566 010192 027291 005108 X 21.8484 5.17509 083921 43.5987 1168.05 8.67489 008463 2.60273 6508.46 34.4154 212976 071932 169252 093794 (*) dy/dx is for discrete change of dummy variable from to 71 CORRELATION Newproduct Improve Size Outsource Export Age Techstaff Managerial staff MP staff Training Marketing cost Techconsultant Competition level RDcost Network Owner New product 1.0000 0.0579 0.0423 -0.0200 0.0238 0.0064 0.0216 0.0563 0.0427 -0.0046 -0.0077 0.0141 -0.0093 -0.0112 0.0091 0.1348 Improve 1.0000 0.1212 -0.0514 0.1105 -0.0806 0.1132 0.1210 Size 1.0000 0.0030 0.4052 -0.0586 0.6009 0.6455 0.1309 0.0436 0.0259 0.0297 0.0357 0.6969 0.0971 0.3656 0.0030 0.0107 0.0939 0.1348 0.0172 0.1017 -0.3121 Managerial MP staff staff -0.0598 Training Outsource Export Age 1.0000 -0.0310 0.2875 1.0000 -0.0699 0.3494 -0.0884 0.0343 0.0390 0.1532 -0.0039 -0.0255 0.3551 0.1261 0.1969 -0.0002 -0.0882 0.0141 0.0199 0.0065 -0.0025 -0.0105 -0.0248 -0.0008 0.2658 -0.0045 0.0328 0.0935 0.0039 -0.0356 -0.3552 1.0000 0.0286 0.0068 0.0247 0.0370 Marketing cost Techconsultant Techstaff 1.0000 0.5931 0.9030 0.1129 0.2041 0.0196 -0.0559 0.0202 0.0802 -0.0692 Competition level Managerial staff 1.0000 MP staff 0.8814 1.0000 Training 0.1960 0.1708 1.0000 Marketing cost 0.2125 0.2331 0.0783 1.0000 Techconsultant 0.0105 0.0171 -0.0042 0.0035 1.0000 Competition level -0.0317 -0.0497 0.0199 0.0062 0.0042 1.0000 RDcost 0.0251 0.0252 0.0101 0.0086 -0.0061 -0.0199 72 Network 0.1040 0.1025 0.0134 0.0570 -0.0096 -0.0336 Owner -0.2226 -0.1345 0.1133 0.1348 0.5604 RDcost Network Owner RDcost 1.0000 Network 0.0075 1.0000 Owner -0.4485 1.0000 73 ... Determinants of Product Innovation Activity: The case of Vietnamese SME Firms A thesis submitted in partial fulfillment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS... examine two manors of product innovation including improving existing product and making new product with the scope of Vietnamese SME' s firms The aim of this study is to figure out what determinants. .. enterprises and SMEs based on indicator of product innovation 13 II.2 Product innovation 14 II.2.1 Definition of product innovation 14 II.2.2 Classification of product innovation