Working Paper
Innovation efforts in developing countries

The case of Vietnamese small and medium-sized enterprises

The identification of potential innovation efforts plays an important role in evaluating the innovation process. The innovation efforts of firms in developing countries might be different to those of Western enterprises.

This paper evaluates innovation processes in developing countries, especially the relationship between innovation efforts and outcomes. Instead of capturing only investment in research and development as in Western firms, the innovation efforts of firms in developing countries include investments in in-house research and development, technology acquisition, and other informal innovation activities.

This research develops a mechanism to capture all innovation efforts based on firms’ characteristics, market features, and business environment. A predicted value of innovation investment is created which is intended to capture observed and latent innovation efforts.

The results show that predicted innovation investment triggers innovation outcomes (jointly, product and process innovation outcomes) in the context of Vietnamese small and medium-sized enterprises.