Legal Policy Implications for Promoting Innovation Capability and Business Efficiency: A Case Study of Small and Medium Enterprises in Vietnam
Keywords:
Foreign Policy; Nation-building; Domestic Policy; External environment; Fourth Republic.Abstract
Background: Legal policy plays an important role in promoting innovation. It creates a legal framework and favourable environment for research, development, and application of new technologies and contributes to improving the business efficiency of small and medium enterprises.
Objective: The study evaluates critical factors affecting the innovation capability and business efficiency of small and medium enterprises in Vietnam.
Methodology: The author applied a quantitative method, using a descriptive survey as the instrument for data collection and a structured questionnaire as the sample size. The sample size was 500 managers representing 500 small and medium enterprises (SMEs). The study's model was tested using a structural equation model, and results were presented in tables.
Result: Research results show that eight factors affect innovation capability based on a significance level of 1%. The factors are (1) total quality management, (2) organisational learning, (3) government support, (4) collaboration network, (5) ability to absorb knowledge, (6) internal human resources, (7) strategic vision, and (8) technology application. Moreover, innovation capability influences the business efficiency of small and medium enterprises.
Conclusion: The research results contribute particular academic value and are a reference for research on innovation capacity. The study adjusted the scale for innovation capacity, knowledge absorption capacity, cooperation network, organisational learning, and comprehensive quality management following actual data conditions farewell in Vietnam.
Unique Contribution: This study is beneficial in both theory and practice in measuring innovation capacity and related variables impacting innovation capacity on business efficiency.
Key Recommendation: From the above results, the author proposes eight policy recommendations to improve small and medium enterprises' innovation capability and business efficiency in the context of development and integration in Vietnam. To take advantage of this opportunity, it is necessary to synchronously implement the above solutions to remove institutional bottlenecks and promote innovation capability in Vietnamese enterprises.
References
Agyapong, A., & Acquaah, M. (2021). Organizational capabilities, business strategic orientation, and performance in family and non-family businesses in a sub-Saharan African economy. Journal of African Business, 22(3), 411-439. https://doi.org/10.1080/15228916.2021.1907158.
Agyapong, A., Mensah, H. K., & Akomea, S. Y. (2021). Innovation-performance relationship: the moderating role of market dynamism. Small Enterprise Research, 28(3), 350-372. https://doi.org/10.1080/13215906.2021.1967775.
Agyapong, A., Mensah, H. K., & Ayuuni, A. M. (2018). The moderating role of social network on the relationship between innovative capability and performance in the hotel industry. International Journal of Emerging Markets, 13(5), 801-823. https://doi.org/10.1108/IJoEM-11-2016-0293.
Albloushi, B., Alharmoodi, A., Jabeen, F., Mehmood, K., & Farouk, S. (2023). Total quality management practices and corporate sustainable development in manufacturing companies: the mediating role of green innovation. Management Research Review, 46(1), 20-45. https://doi.org/10.1108/MRR-03-2021-0194.
AlSharji, A., Ahmad, S., & Bakar, A. (2018). Understanding social media adoption in SMEs. Journal of Entrepreneurship in Emerging Economies, 10(2), 302-328. https://doi.org/10.1108/JEEE-08-2017-0058.
AlShehail, O. A., Khan, M., & Ajmal, M. (2021). Total quality management and sustainability in the public service sector: The mediating effect of service innovation. Benchmarking-an International Journal, 29(2), 382-410. https://doi.org/10.1108/BIJ-08-2020-0449.
Altinay, L., Madanoglu, M., De Vita, G., Arasli, H., & Ekinci, Y. (2016). The interface between organizational learning capability, entrepreneurial orientation, and SME growth. Journal of Small Business Management, 54(3), 871-891. https://doi.org/10.1111/jsbm.12219.
Anker, T. B. (2021). At the boundary: Post-COVID agenda for business and management research in Europe and beyond. European Management Journal, 39(2), 171-178. https://doi.org/10.1016/j.emj.2021.01.003.
Aregawi, H. T., & Patnaik, B C. M. (2023). Impact of government intervention on manufacturing enterprises innovation level, in Ethiopia. Cogent Economics & Finance, 11(1), 1-19. https://doi.org/10.1080/23322039.2023.2182034.
Arias-Pérez, J., & Cepeda-Cardona, J. (2022). Knowledge management strategies and organizational improvisation: What changed after the emergence of technological turbulence caused by artificial intelligence? Baltic Journal of Management, 17(2), 250-265. https://doi.org/10.1108/BJM-01-2021-0027.
Avenyo, E. K., & Kraemer-Mbula, E. (2021). Innovation and the Performance of Informal Enterprises in Developing Countries: A Gender Perspective. International Journal of Gender and Entrepreneurship, 13(4), 277-301. https://doi.org/10.1108/IJGE-11-2020-0174.
Bagherzadeh, M., Markovic, S., Cheng, J., & Vanhaverbeke, W. (2019). How does outside-in open innovation influence innovation performance? Analyzing the mediating roles of knowledge sharing and innovation strategy. IEEE Transactions on Engineering Management, 67(3), 740-753. https://doi.org/10.1109/TEM.2018.2889538.
Camps, J., Oltra, V., Aldás-Manzano, J., Buenaventura-Vera, G., & Torres-Carballo, F. (2016). Individual performance in turbulent environments: The role of organizational learning capability and employee flexibility. Human Resource Management, 55(3), 363-383. https://doi.org/10.1002/hrm.21741.
Choi, M. C., & Lee, C. Y. (2020). The peter pan syndrome for small and medium-sized enterprises: Evidence from korean manufacturing firms. Managerial and Decision Economics, 41(3), 426-445. https://doi.org/10.1002/mde.3111.
Coad, A., Segarra, A., & Teruel, M. (2016). Innovation and firm growth: Does firm age play a role?. Research Policy, 45(2), 387-400. doi:10.1016/j.respol.2015.10.015.
Cravo, T. A., & Piza, C. (2019). The impact of business-support services on firm performance: A meta-analysis. Small Business Economics, 53(3), 753-770. https://doi.org/10.1007/s11187-018-0065-x.
Donate, M. J., & Sánchez de Pablo, J. D. (2015). The role of knowledge-oriented leadership in knowledge management practices and innovation. Journal of Business Research, 68(2), 360-370. https://doi.org/10.1016/j.jbusres.2014.06.022.
El Chaarani, H., Vrontis, P. D., El Nemar, S., & El Abiad, Z. (2022). The impact of strategic competitive innovation on the financial performance of SMEs during COVID-19 pandemic period. Competitiveness Review: An International Business Journal, 32(3), 282-301. https://doi.org/10.1108/CR-02-2021-0024.
Ghasemzadeh, E., Bagherzadeh, M., Kelarijaniand, M. S., & Jamkhaneh, E. B. (2022). Designing an Organizational Innovation Model with an Emphasis on the Approach of Lean Human Resource Management: The Case of Selected Municipalities of Mazandaran Province. Fuzzy Information and Engineering, 14(4), 468-487. https://doi.org/10.1080/16168658.2022.2154103.
Haerani, S., Sumardi, H., Hartini, W., Putra, A. H. P. K., & Putra, A. H. P. K. (2020). Structural model of developing human resources performance: Empirical study of Indonesia states owned enterprises. The Journal of Asian Finance, Economics and Business, 7(3), 211-221. https://doi.org/10.13106/jafeb.2020.vol7.no3.211.
Hair, J., Anderson, R., Tatham, R., Black, W. (2018). Multivariate data analysis. US: Prentice-Hall: Upper Saddle River, NJ, USA.
Imran, M., Salisu, I., Aslam, H. D., Iqbal, J., & Hameed, I. (2019). Resource and information access for sme sustainability in the era of IR 4.0: The mediating and moderating roles of innovation capability and management commitment. Processes, 7(4), 1-25. https://doi.org/10.3390/pr7040211.
Jasimuddin, S. M., & Naqshbandi, M. M. (2019). Knowledge infrastructure capability, absorptive capacity and inbound open innovation: evidence from SMEs in France. Production Planning & Control, 30(10-12), 893-906. https://doi.org/10.1080/09537287.2019.1582097.
Jin, J., & Li, M. (2023). Innovate with whom? The bridging effect of organizational learning capability for knowledge-intensive SMEs. Asian Journal of Technology Innovation, 31(3), 657-683. https://doi.org/10.1080/19761597.2022.2148702.
Johnston, A., & Huggins, R. (2018). Partner selection and university-industry linkages: Assessing small firms' initial perceptions of the credibility of their partners. Technovation, 78, 15-26. https://doi.org/10.1016/j.technovation.2018.02.005.
Jun, W., Nasir, M. H., Yousaf, Z., Khattak, A., Yasir, M., Javed, A., & Shirazi, S. H. (2021). Innovation performance in digital economy: Does digital platform capability, improvisation capability and organizational readiness really matter? European Journal of Innovation Management, 25(5), 1309-1327. https://doi.org/10.1108/EJIM-10-2020-0422.
Kapetaniou, C., & Lee, S. H. (2019). Geographical proximity and open innovation of SMEs in Cyprus. Small Business Economics, 52(1), 261-276. https://doi.org/10.1007/s11187-018-0023-7.
Kaur, M., Singh, K., & Singh, D. (2019). Synergetic success factors of total quality management (TQM) and supply chain management (SCM). International Journal of Quality & Reliability Management, 36(6), 842-863. https://doi.org/10.1108/IJQRM-11-2017-0228.
Kebede, A. G., & Fikire, A. H. (2023). Exploring factors affecting product innovation practice among micro and small scale enterprises: the case study of Debre Berhan Town, Ethiopia. Cogent Business & Management, 10(2), 1-19. https://doi.org/10.1080/23311975.2023.2246746.
Kurniawati, E., & Idris, H., & Osman, S. (2021). Digital transformation of MSMEs in Indonesia during the pandemic. Entrepreneurship & Sustainability Issues, 9(2), 316-331. https://doi.org/10.9770/jesi.2021.9.2(21).
Maric, M., Subotic, M., Dudic, B., Melovic, B., Brankovic, N., & Milisavljevic, S. (2020). Evaluating relations between originality, efficiency, conformism and entrepreneurial potential of students in a fast changing business environment. Sustainability, 13(4), 1-14. https://doi.org/10.3390/su13041593.
Martins, A. (2022). Dynamic capabilities and SME performance in the COVID-19 era: The moderating effect of digitalization. Asia-Pacific Journal of Business Administration, 15(2), 188-202. https://doi.org/10.1108/APJBA-08-2021-0370.
Migdadi, M. M. (2019). Organizational learning capability, innovation and organizational performance. European Journal of Innovation Management, 24(1), 151-172. https://doi.org/10.1108/EJIM-11-2018-0246.
Nasim, K. (2018). Role of internal and external organisational factors in TQM implementation. International Journal of Quality & Reliability Management, 35(5), 1014-1033. https://doi.org/10.1108/IJQRM-10-2016-0180.
Nasution, M. R. (2021). Entrepreneurial orientation, knowledge management, dynamic capabilities towards e-commerce adoption of SMEs in Indonesia. Journal of Science and Technology Policy Management, 12(2), 256-282. https://doi.org/10.1108/JSTPM-03-2020-0060.
Natalicchio, A., Messeni Petruzzelli, A., & Garavelli, A. C. (2017). The impact of partners’ technological diversification in joint patenting: A study on firm-PRO collaborations. Management Decision, 55(6), 1248-1264. https://doi.org/10.1108/MD-03-2016-0178.
Njiraini, P., Gachanja, P., & Omolo, J. (2018). Factors influencing micro and small enterprise’s decision to innovate in Kenya. Journal of Global Entrepreneurship Research, 8(1), 1-9. https://doi.org/10.1186/s40497-018-0132-4.
Park, Y. E. (2019). Data empowered insights for sustainability of Korean MNEs. The Journal of Asian Finance, Economics, and Business, 6(3), 173-183. https://doi.org/10.13106/jafeb.2019.vol6.no3.173.
Parkaand, C., & McQuaid, R. (2023). Enterprise policies and R&D support for high-tech SMEs: a multi-perspective approach. Policy Studies, 44(1), 1-22. https://doi.org/10.1080/01442872.2023.2268530.
Paudel, S. (2019). Entrepreneurial leadership and business performance: Effect of organizational innovation and environmental dynamism. South Asian Journal of Business Studies, 8(3), 348-369. https://doi.org/10.1108/SAJBS-11-2018-0136.
Petruzzelli, A. M., & Murgia, G. (2023). A multilevel analysis of the technological impact of university-SME joint innovations. Journal of Small Business Management, 61(4), 1896-1928. https://doi.org/10.1080/00472778.2021.1874003.
Rodríguez-Gulías, M. J., Fernández-López, S., Rodeiro-Pazos, D., Corsi, C., & Prencipe, A. (2018). The role of knowledge spillovers on the university spin-offs innovation. Science & Public Policy, 45(6), 875-883. https://doi.org/10.1093/scipol/scy018.
Sari, D., Kusuma, B. A., Sihotang, J., & Febrianti, T. (2023). The role of entrepreneurial marketing & innovation capability in the performance of SMEs during covid-19 pandemic: Evidence of MSMEs in West Java. Cogent Business & Management, 10(1), 1-11. https://doi.org/10.1080/23311975.2023.2194091.
Shetty, J. P., & Panda, R. (2022). Cloud adoption in Indian SMEs – an empirical analysis. Benchmarking: An International Journal, 30(4), 1345-1366. https://doi.org/10.1108/BIJ-08-2021-0468.
Sivathanu, B., & Pillai, R. (2020). An empirical study on entrepreneurial bricolage behavior for sustainable enterprise performance of startups: Evidence from an emerging economy. Journal of Entrepreneurship in Emerging Economies, 12(1), 34-57. https://doi.org/10.1108/JEEE-01-2019-0009.
Tian, H., Dogbe, C. S. K., Pomegbe, W. W. K., Sarsah, S. A., & Otoo, C. O. A. (2021). Organizational learning ambidexterity and openness, as determinants of SMEs' innovation performance. European Journal of Innovation Management, 24(2), 414-438. https://doi.org/10.1108/EJIM-05-2019-0140.
Tsuruta, D. (2020). SME policies as a barrier to growth of SMEs. Small Business Economics, 54(4), 1067-1106. https://doi.org/10.1007/s11187-018-0119-0.
Xiaoa, A., Qina, Y., Xuaand, Z., & Skare, M. (2023). Emerging research trends of total quality management in the COVID-19 pandemic: a dynamic evolution analysis. Economic Research-Ekonomska Istraživanja, 36(2), 1-29. https://doi.org/10.1080/1331677X.2022.2140305.
Zhang, C., Moreira, M. R. A., & Sousa, P. S. A. (2021). A bibliometric view on the use of total quality management in services. Total Quality Management & Business Excellence, 32(13-14), 1466-1493. https://doi.org/10.1080/14783363.2020.1732811.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Tran Thi Bich Nga
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
