The Impact of Financial Accessibility on Technology Innovation of Vietnamese Enterprises

Abstract

This paper uses the World Bank 2015 enterprise survey data set, using probit regression and multinomial logit regression to study the relationship between financial accessibility and technology innovation strategy and technological innovation results of Vietnamese enterprises. This article explores the impact of financial accessibility on firms' ability to innovate successfully (including product innovation, process innovation, product and process innovation). Then, determine the impact of financial accessibility on innovation strategies (including internal technology development, external technology development through purchasing or collaborative research with outside institutions or company). Analysis of the data set shows that the difference the difference of Vietnamese enterprises is that they mainly innovate technology through internal research (39.9%), instead of technology from outside; process innovation rather than product innovation. We have found that firms with an overdraft or line of credit to be more innovative. We continue to show that relatively large-scale loans and informal loans does not limit firm’s innovation but, in turn, promotes innovation, especially through internal development. Bank loans support process innovation, while loans from family and friends actively support product innovation. Overall, the results of this article show that external finance plays an important role in enhancing the innovation capacities of Vietnamese firms.

Keywords: Vietnamese enterprises, internal development, technology innovation, financial accessibility

DOI: 10.7176/JESD/12-4-08

Publication date: February 28^th 2021