Corporate investment efficiency in response to national innovation: the moderating role of state ownership

Abstract:
Purpose
This study examines the impact of the national innovation system (NIS) on corporate investment efficiency in Vietnam, an emerging socialist country where innovation is central to the national development plan.

Design/methodology/approach
The study employs a sample of Vietnamese listed firms on the Ho Chi Minh Stock Exchange and Hanoi Stock Exchange from 2012 to 2022. The research models are estimated by fixed-effect estimators, while two-stage least-squares with instrumental variables and entropy balancing methods are used to address the endogeneity issues in the research design.

Findings
We find that firms’ investment efficiency increases with the advancement of the NIS, and this impact is attributed to the input measures of national innovation. This finding is robust to different model specifications and endogeneity tests. Additional analysis shows that the private sector improves investment efficiency to a greater extent than state-owned firms.

Research limitations/implications
The findings from this research imply a successful approach to corporate development executed by the government and encourage the continuation of the current plan with strategic modifications to further promote Vietnamese firms’ corporate investment efficiency and nurture the growth of the private sector, the engine of the Vietnam economy.

Originality/value
This is the first study to examine the impact of the NIS on corporate investment efficiency, particularly in Vietnam. Secondly, this study delves into a unique structure of the Vietnamese economy through the state ownership lens and points out the heterogeneous impact of NIS on investment efficiency between firms in the private and public sectors.