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The Impact of Innovation on the Firm Performance and Corporate Social Responsibility of Vietnamese Manufacturing Firms

Nguyen Thi Canh, Nguyen Thanh Liem (), Phung Anh Thu () and Nguyen Vinh Khuong
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Nguyen Thi Canh: Center for Economic and Financial Research, University of Economics and Law, VNU-HCM, Ho Chi Minh City 700000, Vietnam
Nguyen Thanh Liem: Center for Economic and Financial Research, University of Economics and Law, VNU-HCM, Ho Chi Minh City 700000, Vietnam
Phung Anh Thu: Faculty of Finance and Accounting, Nguyen Tat Thanh University, Ho Chi Minh City 700000, Vietnam
Nguyen Vinh Khuong: Faculty of Accounting and Auditing, University of Economics and Law, VNU-HCM, Ho Chi Minh City 700000, Vietnam

Sustainability, 2019, vol. 11, issue 13, 1-1

Abstract: Innovation is a complex process and has been shown to be influential towards different types of stakeholders. From the viewpoint of stakeholder theory, shareholders and creditors are more likely to be concerned about corporate financial performance. However, in the new era an enterprise’s responsibilities have to extend to other stakeholders, including its employees, suppliers and communities. This study aims to extend the literature by examining the individual effects of product and process innovations, and then their interactions with external collaboration, on firm performance and corporate social responsibility (CSR) activities in terms of local contributions for a sample of Vietnamese manufacturing firms during 2011–2013. Research findings suggest that process and product innovations are beneficial to firm performance in terms of market share, but not return on total assets. This implies that investment in innovative activities requires time to make positive changes in profitability, but it may help with winning customer loyalty. We also find evidence suggesting that innovation could make firms more obscure, especially when there are external parties involved. This motivates firms to send signals about their sustainability and goodwill through corporate social responsibility (CSR) activities. With regard to CSR activities, we are the first to provide a breakdown of categories of corporate social contribution towards the local well-being, and elaborate evidence on the effect of innovation on each category, rather than just a composite index of CSR as in some extant studies.

Keywords: process innovation; product innovation; openness; firm performance; corporate social responsibility; manufacturing industry (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2019
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