Integration into global value chains and firm innovation: does local business environment matter?

Vu Nam (), Tram Bao Hoang, Duong Tung Bui and Quan Hong Nguyen
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Tram Bao Hoang: Foreign Trade University
Duong Tung Bui: Foreign Trade University
Quan Hong Nguyen: Foreign Trade University

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2024, vol. 51, issue 4, No 1, 725-791

Abstract: Abstract While the learning-by-doing hypothesis suggests the firms that have integrated into global value chains (GVCs) have better performance, it is not clear how this relationship changes in different business environments. Utilizing data of GVC integration and innovation from five rounds of surveys of small- and medium-sized enterprises and data for the quality of the local business environment, this study shows that integration into GVCs does not help these firms to introduce new products. Nonetheless, it raises the likelihood that these firms improve their existing products and production process. This positive relationship is enhanced by the improved-quality local business environment. Further analysis suggests that efforts should be spent on improving crucial aspects of the local business environment, which are legal issues, business support, labor training, and transparency of the local governments, to effectively strengthen this relationship.

Keywords: Innovation; Business environment; Global value chains; Vietnam (search for similar items in EconPapers)
JEL-codes: D02 F6 O3 P2 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s40812-024-00297-1

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