https://orcid.org/0000-0003-3491-0435
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ABSTRACT
While it is well known that efforts have been increasingly paid to improve the business environment in transition economies to support the private sector, it is unclear how these efforts affect firm innovation. Utilising longitudinal data derived from bi-annually repeated surveys of randomly selected small- and medium-sized enterprises (SMEs) in ten provinces in Vietnam over the period of 2007–2015 combined with yearly collected panel data of Provincial Competitiveness Index (PCI), which is used to measure the quality of provincial business environment, this study employs a dynamic random probit estimation to analyse the effects of business environment on the persistence of innovation of the SMEs. It is found that the persistence of moderately complex innovation including both single-dimensional and multidimensional innovation exists in weak business environment, while it disappears in improved business environment. These findings suggest that policies to improve business environment enhance innovation policies and, thus, promote innovation of the SMEs that are inexperienced in carrying out such innovation.
Disclosure statement
No potential conflict of interest was reported by the authors.
Correction Statement
This article has been republished with minor changes. These changes do not impact the academic content of the article.
Notes
1 The PCI scores are ranging from 1 to 100 with higher values indicating better business environment. The PCI rank of all provinces is based on the PCI scores.
2 Regression tables with a full set of independent variables as reported in and will be provided upon request.