Innovation and the survival of SMEs in emerging economies: evidence from Vietnam

Although some prior studies have demonstrated the positive role of innovation in firm performance by enhancing productivity and adaptability, others indicate that the inherent risks of innovation may adversely affect survival rates, particularly for small and medium-sized enterprises (SMEs). To re-examine these statements, particularly for SMEs in Vietnam, this study investigates the relationship between innovation and firm survival using panel data from 2005 to 2015. In particular, their association is examined using the Cox proportional hazards (Cox PH) model, with robustness assessed via the Weibull PH regression. The observations indicate that innovation is associated with a lower hazard rate. This reaffirms the crucial role of innovation in enhancing SMEs’ survival prospects in Vietnam. In addition, the findings reveal a positive relationship between business networks, owners’ skills and firm survival, suggesting that promoting the association network and improving human capital are essential for ensuring the long-term sustainability of SMEs in emerging economies.