Firm innovation strategies and integration into the global value chains: how does the local business environment matter?

Le Thi Ngoc Bich1, Hoang Bao Tram2,, Doan Quang Hung2, Fillipo Marchesani3, Bui Quang Tuan4
1 Academy of Finance, Hanoi, Vietnam
2 Foreign Trade University, Hanoi, Vietnam
3 Università degli Studi G. d'Annunzio Chieti e Pescara, Chieti, Italy
4 Vietnam Institute of Economics, Hanoi, Vietnam

Main Article Content


This study aims to reveal how different innovation strategies affect firms’ modes of integration into the global value chains (GVCs). Utilizing the self-selection hypothesis and applying the panel data analysis of 27,664 observations of firms, which were collected in Vietnam from 2012 to 2018, we find that innovation strategies affect the probability and modes of integration into the GVCs. While the firms that prioritize both product innovation and research and development are more likely to export, those that focus on process improvement tend to sell more to foreign invested buyers. These relationships are influenced by the quality of the local business environment. The improved quality of the local business environment enhances the positive effects of these innovation strategies on firms’ integration into the GVCs. This enhancement effect is particularly important for small- and medium-sized firms. These findings suggest that to support firms in Vietnam to integrate into the GVCs, the quality of the local business environment should be improved to complement firms’ innovation policies.

Article Details


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