Browse > Article
http://dx.doi.org/10.13106/jafeb.2021.vol8.no3.0895

The Impact of Innovation Activities on Firm Efficiency: Data Envelopment Analysis  

PHAM, Tien Phat (Faculty of Management and Economics, Tomas Bata University in Zlin)
QUDDUS, Abdul (Faculty of Management and Economics, Tomas Bata University in Zlin)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.3, 2021 , pp. 895-904 More about this Journal
Abstract
This study aims to investigate the impact of innovation on firm efficiency. Panel data of fourteen finance companies and nine technology companies from 2011 to 2019 on the Vietnam Stock Exchange Market is derived from audited financial statements, annual reports, and other crucial reports that are provided by Vietstock; macroeconomic variables are collected from the World Bank Database. A two-stage approach is used. First, use of the Data Envelopment Analysis methodology to measure firm efficiency. Second, use of the Pooled ordinary least squares, the Fixed effects model, and the Random effects model to investigate the impact of innovation on firm efficiency. Furthermore, the Generalized Method of Moments and the Tobit model are used to validate the impact of innovation on firm efficiency, and the t-test is used to confirm the difference in efficiency with and without the impact of innovation between two industries. The results show that there is a significant impact of innovation on efficiency, and innovation plays a more important in increasing the efficiency of the finance industry than the technology industry. Moreover, the relation between age and efficiency is like the U-shaped, and between size and efficiency is like the inverted U-shaped, whereas efficiency is not associated with inflation.
Keywords
Innovation; Firm Efficiency; Finance; Technology;
Citations & Related Records
연도 인용수 순위
  • Reference
1 Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, 2(6), 429-444. https://doi.org/10.1016/0377-2217(78)90138-8   DOI
2 Cheruiyot, K. J. (2017). Determinants of Technical Efficiency in Kenyan Manufacturing Sector. African Development Review, 29(1), 44-55. https://doi.org/10.1111/1467-8268.12237   DOI
3 Chowdhury, H., & Zelenyuk, V. (2016). Performance of hospital services in Ontario: DEA with truncated regression approach. Omega, 63, 111-122. https://doi.org/10.1016/j.omega.2015.10.007   DOI
4 Dobrzanski, P. (2018). Innovation expenditures efficiency in central and eastern European countries. Zbornik Radova Ekonomskog Fakultet Au Rijeci, 36(2), 827-859. https://doi.org/10.18045/zbefri.2018.2.827   DOI
5 Dorfleitner, G., Hornuf, L., Schmitt, M., & Weber, M. (2017). FinTech in Germany. In: FinTech in Germany. Berlin: Springer International Publishing. https://doi.org/10.1007/978-3-319-54666-7   DOI
6 Van Loo, R. (2018). Making innovation more competitive: The case of fintech. UCLA Law Review, 65(1), 232-279. https://ssrn.com/abstract=2966890
7 Wang, C. N., & Nguyen, X. T. (2017). Forecasting and Measuring Productivity in Vietnamese Plastic Industry by Using Grey and DEA. International Research Journal of Advanced Engineering and Science, 2(4), 141-148. https://www.irjaes.com/pdf/V2N4Y17-IRJAES/IRJAES-V2N4P229Y17.pdf
8 Wooldridge, J. M. (2001). Applications of generalized method of moments estimation. Journal of Economic Perspectives, 15(4), 87-100. https://doi.org/10.1257/jep.15.4.87   DOI
9 Zhang, D., Zheng, W., & Ning, L. (2018). Does innovation facilitate firm survival? Evidence from Chinese high-tech firms. Economic Modelling, 75(January), 458-468. https://doi.org/10.1016/j.econmod.2018.07.030   DOI
10 Emrouznejad, A., & Yang, G. (2018). A survey and analysis of the first 40 years of scholarly literature in DEA: 1978-2016. Socio-Economic Planning Sciences, 61, 4-8. https://doi.org/10.1016/j.seps.2017.01.008   DOI
11 Faruq, H. A., & Yi, D. T. (2010). The Determinants of Technical Efficiency of Manufacturing Firms in Ghana. Global Economy Journal, 10(3), 1850205. https://doi.org/10.2202/1524-5861.1646   DOI
12 Flor, M. L., & Oltra, M. J. (2004). Identification of innovating firms through technological innovation indicators: An application to the Spanish ceramic tile industry. Research Policy, 33(2), 323-336. https://doi.org/10.1016/j.respol.2003.09.009   DOI
13 Griliches, Z., & Hausman, J. A. (1986). Errors in variables in panel data. Journal of Econometrics, 31(1), 93-118. https://doi.org/10.1016/0304-4076(86)90058-8   DOI
14 Hashi, I., & Stojcic, N. (2013). The impact of innovation activities on firm performance using a multi-stage model: Evidence from the Community Innovation Survey 4. Research Policy, 42(2), 353-366. https://doi.org/10.1016/j.respol.2012.09.011   DOI
15 Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics. Douglas Reiner, McGraw-Hill/Irwin.
16 Gunday, G., Ulusoy, G., Kilic, K., & Alpkan, L. (2008). Modeling innovation: Determinants of innovativeness and the impact of innovation on firm performance. 2008 4th IEEE International Conference on Management of Innovation and Technology, 766-771. https://doi.org/10.1109/ICMIT.2008.4654462   DOI
17 Gunday, G., Ulusoy, G., Kilic, K., & Alpkan, L. (2011). Effects of innovation types on firm performance. International Journal of Production Economics, 133(2), 662-676. https://doi.org/10.1016/j.ijpe.2011.05.014   DOI
18 Hall, L. A., & Bagchi-Sen, S. (2002). A study of R&D, innovation, and business performance in the Canadian biotechnology industry. Technovation, 22(4), 231-244. https://doi.org/10.1016/S0166-4972(01)00016-5   DOI
19 Hansen, L. P. (1982). Large Sample Properties of Generalized Method of Moments Estimators. Econometrica, 50(4), 1029-1054.   DOI
20 Kapelko, M., & Lansink, A. O. (2015). Technical efficiency and its determinants in the Spanish construction sector pre- and post-financial crisis. International Journal of Strategic Property Management, 19(1), 96-109. https://doi.org/10.3846/1648715X.2014.973924   DOI
21 Kittikunchotiwut, P. (2020). The Roles of Organizational Learning Capability and Firm Innovation in the Relationship between Entrepreneurial Orientation and Firm Performance. Journal of Asian Finance, Economics and Business, 7(10), 651-661. https://doi.org/10.13106/jafeb.2020.vol7.no10.651   DOI
22 Lien, N. T. K., Doan, T.-T. T., & Bui, T. N. (2020). Fintech and Banking: Evidence from Vietnam. Journal of Asian Finance, Economics and Business, 7(9), 419-426. https://doi.org/10.13106/jafeb.2020.vol7.no9.419   DOI
23 Alvarez, R., & Crespi, G. (2003). Determinants of Technical Efficiency in Small Firms. Small Business Economics, 20(3), 233-244. https://doi.org/10.1023/A:1022804419183   DOI
24 Amornkitvikai, Y., & Harvie, C. (2010). Identifying and measuring technical inefficiency factors: evidence from unbalanced panel data for Thai listed manufacturing enterprises. Department of Economics, University of Wollongong, Working Paper 05-10, 2010, 1-35. https://ro.uow.edu.au/commwkpapers/222
25 Kleinknecht, A., Van Montfort, K., & Brouwer, E. (2002). The Non-Trivial Choice between Innovation Indicators. Economics of Innovation and New Technology, 11(2), 109-121. https://doi.org/10.1080/10438590210899   DOI
26 Kocak, A., Carsrud, A., & Oflazoglu, S. (2017). Market, entrepreneurial, and technology orientations: impact on innovation and firm performance. Management Decision, 55(2), 248-270. https://doi.org/10.1108/MD-04-2015-0146   DOI
27 Kumar, A., Anand, N., & Batra, V. (2020). Trends in Indian Private Sector Bank Efficiency: Non-Stochastic Frontier DEA Window Analysis Approach. Journal of Asian Finance, Economics and Business, 7(10), 729-740. https://doi.org/10.13106/jafeb.2020.vol7.n10.729   DOI
28 Lev, B. (2000). Intangibles: Management, measurement, and reporting. Washington, DC: Brookings Institution Press.
29 Lien Minh, D., Sadeghi-Niaraki, A., Huy, H. D., Min, K., & Moon, H. (2018). Deep Learning Approach for Short-Term Stock Trends Prediction Based on Two-Stream Gated Recurrent Unit Network. IEEE Access, 6, 55392-55404. https://doi.org/10.1109/ACCESS.2018.2868970   DOI
30 Mahajan, V., Nauriyal, D. K., & Singh, S. P. (2018). Efficiency and Its Determinants: Panel Data Evidence from the Indian Pharmaceutical Industry. Margin: The Journal of Applied Economic Research, 12(1), 19-40. https://doi.org/10.1177/0973801017738416   DOI
31 Nguyen, V. C., & Nguyen, T. N. L. (2020). Financial Security of Vietnamese Businesses and Its Influencing Factors. Journal of Asian Finance, Economics and Business, 7(2), 75-87. https://doi.org/10.13106/jafeb.2020.vol7.no2.75   DOI
32 Arunkumar, O. N., & Ramanan, T. R. (2017). Operational efficiency and its determinants of Indian food and beverages industries: a DEA approach. International Journal of Services and Operations Management, 27(1), 1-18. https://doi.org/10.1504/IJSOM.2017.083332   DOI
33 Arellano, M. (1993). On the testing of correlated effects with panel data. Journal of Econometrics, 59(1-2), 87-97. https://doi.org/10.1016/0304-4076(93)90040-C   DOI
34 Arellano, M., & Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), 277-297. https://doi.org/10.2307/2297968   DOI
35 Artz, K. W., Norman, P. M., Hatfield, D. E., & Cardinal, L. B. (2010). A Longitudinal Study of the Impact of R&D, Patents, and Product Innovation on Firm Performance. Journal of Product Innovation Management, 27(5), 725-740. https://doi.org/10.1111/j.1540-5885.2010.00747.x   DOI
36 Borenstein, M., Hedges, L. V., Higgins, J. P. T., & Rothstein, H. R. (2010). A basic introduction to fixed-effect and random-effects models for meta-analysis. Research Synthesis Methods, 1(2), 97-111. https://doi.org/10.1002/jrsm.12   DOI
37 Bremmera, J., Lansink, A. G. J. M. O., & Huirne, R. B. M. (2008). The impact of innovation, firm growth and perceptions on technical and scale efficiency. Agricultural Economics Review, 9(2), 65-85.
38 Buchak, G., Matvos, G., Piskorski, T., & Seru, A. (2018). Fintech, regulatory arbitrage, and the rise of shadow banks. Journal of Financial Economics, 130(3), 453-483. https://doi.org/10.1016/j.jfineco.2018.03.011   DOI
39 O'brien, R. M. (2007). A Caution Regarding Rules of Thumb for Variance Inflation Factors. Quality & Quantity, 41(5), 673-690. https://doi.org/10.1007/s11135-006-9018-6   DOI
40 Chancellor, W., Abbott, M., & Carson, C. (2015). Factors Promoting Innovation and Efficiency in the Construction Industry: A Comparative Study of New Zealand and Australia. Construction Economics and Building, 15(2), 63-80. https://doi.org/10.5130/AJCEB.v15i2.4386   DOI
41 Parast, M. M. (2011). The effect of Six Sigma projects on innovation and firm performance. International Journal of Project Management, 29(1), 45-55. https://doi.org/10.1016/j.ijproman.2010.01.006   DOI
42 Phung, D. N., & Mishra, A. V. (2016). Ownership Structure and Firm Performance: Evidence from Vietnamese Listed Firms. Australian Economic Papers, 55(1), 63-98. https://doi.org/10.1111/1467-8454.12056   DOI
43 Rajapathirana, R. P. J., & Hui, Y. (2018). Relationship between innovation capability, innovation type, and firm performance. Journal of Innovation & Knowledge, 3(1), 44-55. https://doi.org/10.1016/j.jik.2017.06.002   DOI
44 Ramanathan, R., Ramanathan, U., & Bentley, Y. (2018). The debate on flexibility of environmental regulations, innovation capabilities and financial performance - A novel use of DEA. Omega, 75, 131-138. https://doi.org/10.1016/j.omega.2017.02.006   DOI
45 Rosli, M. M., & Sidek, S. (2013). The Impact of Innovation on the Performance of Small and Medium Manufacturing Enterprises: Evidence from Malaysia. Journal of Innovation Management in Small & Medium Enterprise, November, 1-16. https://doi.org/10.5171/2013.885666   DOI
46 Salmeron Gomez, R., Rodriguez Sanchez, A., Garcia, C. G., & Garcia Perez, J. (2020). The VIF and MSE in Raise Regression. Mathematics, 8(4), 605. https://doi.org/10.3390/math8040605   DOI
47 Thu, N. K., Trien, L. V., Anh, D. T. T., & Nhon, H. T. (2013). Determinants of Dividend Payments of Non-financial Listed Companies in Ho Chi Minh Stock Exchange. VNU Journal of Economics and Business, 29(5), 16-33. https://js.vnu.edu.vn/EAB/article/view/417