How do financial constraints and market competition affect innovations: Evidence from Vietnam

This study delves into the effects of market competition and financial constraints on innovation within a transitional market. We implemented the Two Stage Least Squares regression to analyze a sample comprising 492 listed firms in Vietnam from 2008 to 2020. Our findings unveil an inverse U-shaped r...

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Bibliographic Details
Published in:Journal of open innovation 2024-09, Vol.10 (3), p.100321, Article 100321
Main Authors: Duong, Khoa Dang, Dang, Han Gia, Tran, Trang Ngoc Doan, Pham, Ha
Format: Article
Language:English
Subjects:
Financial constraints
Innovation
Market competition
Nonlinearity
Vietnam
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Summary:This study delves into the effects of market competition and financial constraints on innovation within a transitional market. We implemented the Two Stage Least Squares regression to analyze a sample comprising 492 listed firms in Vietnam from 2008 to 2020. Our findings unveil an inverse U-shaped relationship between market competition and R&D intensity. Secondly, our study highlights the significant negative impact of financial constraints on R&D intensity. Thirdly, our research demonstrates the robustness of the nonlinearity of competition within small and medium-sized enterprises (SMEs). Our findings are consistent with agency theory, real options theory, and existing literature. Finally, our study offers practical implications for managers and policymakers aiming to foster innovation in developing countries, particularly amidst the digital transformation era.
ISSN:2199-8531
2199-8531
DOI:10.1016/j.joitmc.2024.100321