Informal competition and firm-level innovation: New evidence from an emerging context

Purpose: This study is conducted to investigate the impact of informal competition on firms’ innovation performance in the context of an emerging country and Vietnam as the case study. Design/methodology/approach: To achieve this goal, we collected data from more than 1000 firms located in Vietnam through the World Bank surveys in 2015. This study employs binary logit regression for processing and analysing data and hypotheses. Findings: Our findings reveal that informal competition positively affects the innovation of products and processes for firms in Vietnam, enhancing the level of innovative performance in these firms. Research limitations/implications: The research provides recommendations for the government and firms in Vietnam to enhance their innovation capacity. Our suggestions highlight the importance of offering firms in Vietnam better opportunities to innovate their products and processes, enabling them to compete more effectively with their informal rivals. Despite attempts to explore the relationship between informal competition and innovation of firms in Vietnam, the study still has several limitations which further research would be able to find the directions to tackle. Firstly, this research utilises a cross-sectional dataset. Secondly, the suspected curvilinear relationship can also be conducted in future studies with richer data sets. Originality/value: Our study contributes to the theoretical understanding of the connection between informal competition and firm-level innovation capabilities in Vietnam. By adopting our suggestions, firms in Vietnam can improve their innovation capacity, leading to long-term economic growth.