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14(4)2024

The impact of access to finance and business environment on firm innovation in Vietnam: Moderating role of working experience of top manager


Author - Affiliation:
Thu Thi Hong Nguyen - University of Economics Ho Chi Minh City, Ho Chi Minh City , Vietnam
Minh Hue Nguyen - University of Economics Ho Chi Minh City, Ho Chi Minh City
Bich Ngoc Do - University of Economics Ho Chi Minh City, Ho Chi Minh City , Vietnam
Minh Thi Hong Le - University of Economics Ho Chi Minh City, Ho Chi Minh City , Vietnam
Corresponding author: Minh Thi Hong Le - minhlth@ueh.edu.vn
Submitted: 12-12-2023
Accepted: 07-02-2024
Published: 19-03-2024

Abstract
Innovation enables organizations to swiftly adapt to market dynamics, technological advancements, and the competitive environment, hence augmenting their competitive edge. Innovation endeavors provide challenges due to their substantial financial requirements, business environment, and the need for proficient management. This research examines the role of the business environment and access to finance in influencing firm innovation effectiveness, encompassing organisational innovation and product innovation, both individually and as a simultaneous combination of both innovation activities. The business environment comprises four factors such as business licensing and permits, corruption, customs and trade regulations, and an inadequately educated workforce. Additionally, this study explores the moderating role of manager working experience in accessing finance and firm innovation. The research used a large dataset of firm-level data (996 observations) from 2006 to 2016 in the World Bank Enterprise Survey specifically extracted for the Vietnamese market. The research methodology employs multinomial probit models to analyze datasets with layers of distinct financial access levels, including minor, moderate, significant, and severe obstacles, combined with alternate testing of four business environment factors. The research results highlight limitations in financial access at different levels, leading to a reduction in both organisational and product innovation. Customs emerge as the most significant barrier in the business environment for all levels of financial access, followed by licensing and permits, corruption, and the labor workforce as obstacles at varying degrees of financial access. Managerial working experience has mitigated obstacles to financial access for both organisational and product innovation. The study outcomes contribute to both theory and management implications.

JEL codes
G15; G18; H32; O15; O32

Keywords
access to finance; business environment; firm innovation; managerial working experience; World Bank enterprise survey

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Cite this paper as:

Nguyen, T. T. H., Nguyen, M. H., Do, B. N., & Le, M. T. H. (2024). The impact of access to finance and business environment on firm innovation in Vietnam: Moderating role of working experience of top manager. Ho Chi Minh City Open University Journal of Science – Economics and Business Administration, 14(4), 55-74. doi:10.46223/HCMCOUJS.econ.en.14.4.3126.2024


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DOI: https://doi.org/10.46223/HCMCOUJS.econ.en.14.4.3126.2024
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