Knowledge Creation, Innovation and Financial Performance of Firms: Evidence from Vietnam

Abstract

Drawing on the knowledge-based perspective and Nonaka’s theory of knowledge creation, this study proposes a model linking firms’ knowledge creation, innovation, and financial performance. The model is tested in a sample of 529 Vietnamese firms. The results show that firms’ knowledge creation has significant impacts on three out of four types of innovation, including product innovation, organizational innovation, and marketing innovation.  Product innovation is also found to contribute significantly to the firm’s financial performance. The results improve our understanding of innovation at the firm level under institutional uncertainty and resource-deficiency and provide some important implications for managers and policy makers.