The influence of innovation on firm risk: the moderating role of social networks

Bui Quang Tuyen (), Mai Thanh Lan (), Ta Huy Hung () and Do Vu Phuong Anh ()
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Bui Quang Tuyen: University of Economics and Business, Vietnam National University
Mai Thanh Lan: ThuongMai University
Ta Huy Hung: Vietnam National University
Do Vu Phuong Anh: University of Economics and Business, Vietnam National University

Risk Management, 2025, vol. 27, issue 1, No 6, 21 pages

Abstract: Abstract This research investigates how innovation and social networks influence risk taking in Vietnamese small and medium-sized private manufacturing enterprises. The findings reveal that firms that embrace innovation tend to take fewer risks than those that do not. Moreover, businesses with expansive social networks tend to engage in less risky behavior. Notably, while product innovation has no significant influence on firm risk, technological innovations and modifications to existing products are linked to lower levels of risk. The influence of social networks on the relationship between innovation and risk taking depends on both the type of innovation and the characteristics of the network. These findings hold steady across various risk metrics and address potential concerns about the endogeneity of innovation. Significantly, the research shows that innovators do not resort to bribery to manage risk but instead reduce risk by improving labor productivity, increasing profitability, formalizing business operations, and securing government support. This emphasizes the importance of fostering innovation and strengthening social capital to minimize corporate risk taking.

Keywords: Innovation; Social networks; Firm risk; Vietnam (search for similar items in EconPapers)
JEL-codes: D22 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41283-024-00158-0

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