Does Innovation Enhance the Export Propensity of Vietnamese Firms?

Although innovation has been acknowledged as an essential driver of export growth, the empirical results on the linkage between innovation and export propensity are mixed. Using a dataset on innovation at the micro level, we are among the first to examine the effect of different innovation types, namely product, process, marketing, and organizational innovation, on the export likelihood of enterprises in the context of a developing country—Vietnam. The result reveals a positive relationship between export propensity and all innovation measures, which is supported by instrumental variable (IV) estimations and simultaneous equation systems. Further analysis on such relationship is also conducted across firm’s types of ownership and technology level for more detailed and thorough understandings. The paper confirms the importance of innovation in improving Vietnam’s exports, carrying significant implications for policymakers in developing countries.