The impact of R&D expenditure on firm performance in emerging markets: evidence from the Vietnamese listed companies

ABSTRACT

The impact of research and development (R&D) investment on firm performance is interesting, but it is not easy to conduct this topic in emerging markets due to the data unavailability. We investigate this topic in the context of Vietnam, a fast-growing developing country with impressive progress in economic and social development by employing a unique panel data set of 343 listed companies during the period 2010–2018. We estimate the panel data with two different techniques, including the fixed effect model and the two-stage least squares (2SLS) model. We find that investment in R&D has positive impacts on revenues, profits, return on assets (ROA) and return on equity (ROE). In addition, regression results suggest that firms with high R&D outperform those with low R&D in terms of profit, revenue and ROA. To the best of our knowledge, this is the first paper examining the impacts of R&D on firm performance in Vietnam. We propose that Vietnamese firms should invest more on R&D activities, such as the production of fundamental research and applied research to have better performance and enhance their competitiveness in the future.

KEYWORDS:

• R&D expenditure
• firm performance
• listed companies
• emerging economy
• Vietnam

Acknowledgments

The authors kindly thank for the financial supporting by the Vietnam Ministry of Education and Training [under the grant number KX-84/B2019-MBS.04].

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 This information comes from https://www.eastspring.com/hk/insights/vietnam-one-of-asia-s-best-proxies-to-emerging-market-growth.

Additional information

Funding

The financial funding was done by the Vietnam Ministry of Education and Training [grant number KX-84/B2019-MBS.04].

Notes on contributors

Le Thanh Tung

Le Thanh Tung is an associate professor and a vice dean at the Faculty of Economics and Public Management, Ho Chi Minh City Open University, Vietnam. Le Thanh Tung is also the head of the Policy and Applied Economics Research Group. His research interests are socio-economic policy analysis, public policy assessment, managerial economics and solutions for social issues. He has published several papers in international scientific journals such as Applied Economics Letters, Asia Pacific Journal of Social Work and Development and Post-Communist Economies.

Quan Minh Quoc Binh

Quan Minh Quoc Binh is a lecturer at Faculty of Economics and Public Management, Ho Chi Minh City Open University, Vietnam. His research interests are international economics, technology and innovation. His recent publications are in Emerging Markets Finance and Trade, Investment Management and Financial Innovations and Journal of Risk and Financial Management.