Innovation and Firm Performance in an Emerging Market: The case of SMEs in Ho Chi Minh City (VietNam)
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The paper utilizes a sample of 7,647 SMEs derived from the GSO 2022 survey. The regression model is employed to assess four innovative elements: product/service, organization, manufacturing process, and research and development approach. Among the four components, production innovation does not significantly affect business performance. This can be elucidated by the fact that micro-enterprises constitute 78% of businesses, making production innovation insignificant to their operations. Product, organizational, and R&D innovations significantly impact firm performance. Additionally, the study revealed that the age of company leaders influences organizational effectiveness. As the age of the firm owner increases, business performance enhances. This can enhance the experiential component for business owners who acquire greater business acumen. Likewise, firm leaders possessing advanced educational qualifications enhance the performance of SMEs. Large enterprises typically enhance their performance. Generally, despite SMEs prioritizing R&D innovation, they are constrained by insufficient financial capital and the limitations of small enterprises, which restricts the innovation activities of SMEs.
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