Young innovative companies: Are they high performers in transition economies? Evidence for Vietnam

We study the economic value of both embodied technological change and Research and Development (R&D) investment as proxies for the inputs of innovative activities conducted by Vietnamese firms. Our main focus is on the profitability of young innovative companies (YICs), private innovative companies (PICs), and small and young companies (SYCs). In particular, we test whether YICs could prove successful in fostering economic development through their technological change activities. Results show that (a) although YICs are more R&D intensive and innovative than PICs and SYCs, in general they do not produce equivalent performance; however those specific YICs focusing on technological change potentially outperform their counterparts, and (b) PICs are more capable than the other types of firms in translating their innovative effort to higher profitability.