Unravelling the triad of national innovation capability, firm innovation and firm export performance: the case of an emerging country

Abstract

This paper examines the interconnected relationships among national innovation capability, firm innovation, and firm export performance in emerging countries. Utilizing datasets over the 2011–2018 period on Vietnam, a representative emerging economy with significant improvements in economic growth over the last couple of decades, the study contributes to the literature as the pioneering research linking national innovation capability to firm export performance by highlighting the role of firm innovation as an intermediary factor. We find that innovation capability at both macro and micro level significantly enhances firm export performance, with innovation providing firms with a competitive edge in international markets. Interestingly, while national innovation capability generally promotes firm innovation, it may initially crowd out private innovation until a threshold is reached, after which it complements and further drives firm innovation. Robustness checks, including those using alternative variable definitions and addressing the endogeneity problem using a two-stage least squares regression approach, confirm the reliability of the results. These findings provide valuable insights for policymakers and business practitioners on developing policies aiming at promoting firm innovation and enhancing export performance through supportive national innovation systems.