AN ANALYSIS OF INNOVATION ECOSYSTEM IN VIETNAMESE ENTERPRISES

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TSMINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY
----------***---------
MASTER THESIS
AN ANALYSIS OF INNOVATION ECOSYSTEM IN
VIETNAMESE ENTERPRISES
Major: International Economics
PHAM XUAN THAI
Ha Noi – 2023

MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY
----------***---------
MASTER THESIS
AN ANALYSIS OF INNOVATION ECOSYSTEM IN
VIETNAMESE ENTERPRISES
Major: International Economics
Code: 8310106
Student: Pham Xuan Thai
Supervisor: Luong Thi Ngoc Oanh (PhD)
Ha Noi – 2023

DECLARATION
I hereby declare that this is my own research work, with the support of my
Instructor - PhD.Luong Thi Ngoc Oanh. The research contents and results in this
topic are honest and have never been published in any previous research work. The
data in the tables for analysis, comments and evaluation are collected by the author
himself from different sources listed in the references.
If any fraud is detected, I would like to take full responsibility before the
Council as well as the results of my thesis.

ACKNOWLEDGEMENT
In embarking on the journey of researching and completing this graduation
thesis, I have relied not only on my own self-study and analysis but also on the
invaluable guidance and sincere suggestions provided by PhD. Luong Thi Ngoc
Oanh. I am deeply grateful for the unwavering support and mentor-ship that
PhD.Oanh has provided throughout the process of this research. Her expertise and
guidance have been instrumental in shaping and refining this article.
Furthermore, I would like to extend my heartfelt appreciation to the lecturers
of the Faculty of International Economics at the Foreign Trade University. Their
knowledge, insights, and critical assessments have played a pivotal role in
enhancing the quality and comprehensiveness of this thesis.
Despite my best efforts, I acknowledge that this thesis may have certain
limitations in terms of research experience, data search, analysis, and evaluation.
However, I am confident that these imperfections can be addressed through your
valuable comments and suggestions. I warmly welcome any feedback that will
contribute to further improving and enriching this article, making it a solid
foundation for future studies in related fields.
Once again, I express my sincere gratitude to Dr. Luong Thi Ngoc Oanh and
the esteemed lecturers for their unwavering support and guidance. Your
contributions have been indispensable, and I am honored to have had the privilege
of working under your tutelage.

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TABLE OF CONTENTS
DECLARATION
ACKNOWLEDGEMENT
TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
LIST OF ABBREVIATIONS
SUMMARY OF DISSERTATION RESEARCH RESULTS
INTRODUCTION.....................................................................................................1
CHAPTER 1: THEORETICAL BASIS FOR AN ANALYSIS OF THE
INNOVATION ECOSYSTEM IN VIETNAMESE ENTERPRISES................10
1.1. Theoretical foundations of innovation.......................................................10
1.1.1. Concept of innovation ..............................................................................10
1.1.2. Characteristics of innovation...................................................................11
1.1.3. The role of innovation in economic development.....................................12
1.2. Theoretical foundations of innovation ecosystem......................................15
1.2.1. Concept of innovation ecosystem .............................................................15
1.2.2. Characteristics of innovation ecosystem..................................................17
1.2.3. Factors affecting innovation ecosystem on Vietnamese enterprises........21
1.3. The world experience in developing innovation ecosystem on enterprises....25
1.3.1. Status of an innovation ecosystem in the world .......................................25
1.3.2. Actual situation and experience of developing innovation ecosystem on
enterprises in some countries around the world ................................................29
CHAPTER 2: ANALYSIS OF THE INNOVATION ECOSYSTEM IN
VIETNAMESE ENTERPRISES...........................................................................33
2.1. Overview of innovation ecosystem in Vietnamese Enterprises ................33
2.2. The situation of developing the innovation ecosystem in Vietnamese
enterprises from 2020 to 2022.............................................................................37
2.2.1. Actual situation of digital technology application in Vietnamese
enterprise from 2020 to 2022 .............................................................................37

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2.2.2. Readiness for the innovation ecosystem in Vietnamese enterprises ........42
2.2.3. Stories about innovation ecosystem in some Vietnamese enterprises......46
2.3. Analysis of the innovation ecosystem in Vietnamese enterprises.............50
2.3.1. Strengths...................................................................................................50
2.3.2. Weaknesses...............................................................................................53
CHAPTER 3: SOLUTIONS TO PROMOTE THE INNOVATION
ECOSYSTEM IN VIETNAMESE ENTERPRISES UNTIL 2030.....................57
3.1. Policies and regulations to develop the innovation ecosystem in
Vietnamese enterprises........................................................................................57
3.2. Recommendations to improve the innovation ecosystem in Vietnamese
enterprises.............................................................................................................58
3.2.1. Strengthening Financial Support for Innovation ecosystem....................58
3.2.2. Enhancing Human Capital and Skills Development................................62
3.2.3. Fostering Collaboration and Knowledge Transfer..................................65
3.2.4. Improving Regulatory Framework and Intellectual Property Rights
Protection ...........................................................................................................69
3.3. Strategies to promote the innovation ecosystem in Vietnamese
enterprises until 2030 ..........................................................................................71
3.3.1. Prioritizing and Sequencing the Recommendations ................................71
3.3.2. Engaging Stakeholders and Building Partnerships .................................73
3.3.3. Establishing Monitoring and Evaluation Mechanisms ............................75
CONCLUSION........................................................................................................79
LIST OF REFERENCES .......................................................................................81

LIST OF TABLES
Table 1.1. Innovation trends that worldwide enterprises mostly use........................27
Table 2.1. Global Innovation Index 2022 rankings ..................................................35
Table 2.2. The Development Stages of the Innovation ecosystem in Vietnamese
enterprises..................................................................................................................40
Table 2.3. Key aspects of digital transformation in business ...................................44
Table 2.4. Summary of Government Policy to promote innovation ecosystem in
enterprises 2022 ........................................................................................................52
LIST OF FIGURES
Figure 1.1. The gap between leading and lagging enterprises..................................26
Figure 2.1. The Innovation Support Organisations in Vietnam sorted by Ownership
and Industry...............................................................................................................33
Figure 2.2. Newly-established enterprises and total registered capital in 2020-2022....38
Figure 2.3. Vietnam digital economy (in USD billion) ............................................42
Figure 2.4. Distribution of enterprises participating in the survey by industry (%) .43
Figure 2.5. The 6 areas that HBIC focuses on developing .......................................47
Figure 2.6. Elements of the business model are affected when the enterprises apply
innovation ecosystem................................................................................................55
Figure 3.1. FPT University by number .....................................................................63
Figure 3.2. Exit status of C-lab projects....................................................................67

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LIST OF ABBREVIATIONS
United Nations Conference on Trade and Development (UNCTAD)
United Nations Development Programme (UNDP).
Artificial Intelligence (AI)
Augmented Reality (AR)
Virtual Reality (VR)
Mixed Leality (MR)
Machine Learning (ML)
Software Development Lifecycle (SDLC)
Global Innovation Index (GII)
World Intellectual Property Organization (WIPO)
Over-the-top (OTT)
Internet of Things (IoT)
Financial Technology (Fintech)
Research and Development (R&D)
Information Technology (IT)
Hoa Binh Innovation Center (HBIC)
Ho Chi Minh City High-Tech Park (SHTP)
Hoa Binh Construction Group – HBC
Joint Stock Company (JSC)
USAID (the United States Agency for International Development)
Intellectual Property Rights (IPR)

SUMMARY OF DISSERTATION RESEARCH RESULTS
Thesis title: An analysis of innovation ecosystem in Vietnamese enterprises
Student: Pham Xuan Thai
Student code: 821123
Class: MIE4A
Instructor: PhD. Luong Thi Ngoc Oanh
Working unit: Faculty of International Economics - Foreign Trade University
Keywords: innovation ecosystem, Vietnam, enterprises
Summary content:
1. Thesis title: An analysis of innovation ecosystem in Vietnamese enterprises
2. Research area: (Q55) Technological Innovation, (O32) Management of
Technological Innovation and R&D, (P42) Productive Enterprises
3. Research purpose of the thesis: Analyze the theoretical basis of innovation
ecosystem in general and innovation ecosystem in Vietnamese enterprises in
particular; Analysis and assessment of achievements and limitations of
innovation ecosystem in Vietnamese enterprises in the period 2020-2022;
Present lessons learned and propose some solutions for innovation ecosystem
in Vietnamese enterprises.
4. Research methods used in the thesis: Qualitative analysis
5. Main contents and author contributions:
 Main contents: In addition to the introduction and conclusion, this thesis
includes 3 main contents distributed in 3 chapters. Chapter 1 has the task of stating
and clarifying the theoretical basis of innovation and innovation ecosystem in
Vietnamese enterprises. In Chapter 2, the author uses qualitative methods to analyze
and evaluate an innovation ecosystem in Vietnamese enterprise. Chapter 3, the
author points out the recent policies and regulations to develop the innovation
ecosystem in Vietnamese enterprises . Besides that, the author also proposes

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recommendations and solutions to improve the innovation ecosystem in Vietnamese
enterprises.
 Author contribution: Within this thesis, as I delved into the exploration and
analysis of the innovation ecosystem in Vietnamese enterprises, the author has
proposed policy implications aimed at fostering the adoption of digital
transformation technologies. These implications serve to address the professional
requirements and streamline the managerial processes within companies, thereby
facilitating the development of a robust innovation ecosystem in Vietnamese
enterprises. Based on that, the author has drawn inspiration from the lessons learned
in other case studies across the globe, where the focus on quantity has often
outpaced considerations of quality. By observing and understanding these global
experiences, we can navigate potential pitfalls and avoid the pitfalls of prioritizing
sheer numbers over sustainable and impact innovation.

INTRODUCTION
1. Rationale of the research
In today rapidly changing global economy, innovation has become a key
driver of sustainable economic growth and competitiveness. The ability of
enterprises to innovate and adapt to new technological advancements and market
dynamics is crucial for their long-term success. Within this context, the concept of
an innovation ecosystem has emerged as a powerful framework for understanding
and fostering innovation at various levels.
This thesis aims to provide a comprehensive analysis of the innovation
ecosystem in Vietnamese enterprises. Vietnam, as a dynamic and emerging economy
in Southeast Asia, has witnessed a remarkable transformation over the past decades.
The country has recognized the importance of innovation in driving economic
development and has taken significant steps to nurture its innovation ecosystem.
However, a deeper understanding of the current state, challenges, and opportunities
within the Vietnamese innovation ecosystem is essential for formulating effective
strategies and policies to further enhance innovation capabilities.
The scope of this study is focused on the period from 2020 to 2022, allowing
for an examination of recent developments and trends within the innovation
landscape of Vietnamese enterprises. By employing a qualitative research approach,
this thesis will delve into the multifaceted aspects of the innovation ecosystem,
exploring the interplay of various actors, resources, and contextual factors that
shape the innovation dynamics.
The objectives of this research are threefold. Firstly, to provide an overview of
the innovation ecosystem in Vietnamese enterprises, including a definition of the
ecosystem, identification of key players, and an assessment of the challenges and
opportunities faced. Secondly, to analyze the current state of the innovation
ecosystem, examining the innovation performance of Vietnamese enterprises during
the specified time frame and assessing the existing innovation policies and
initiatives. Lastly, to offer evidence-based recommendations and policies for

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improving the innovation ecosystem in Vietnamese enterprises, with a focus on
their practical application until 2030.
The significance of this study lies in its potential to inform policymakers,
business leaders, and other stakeholders about the key factors influencing innovation
in Vietnamese enterprises. By identifying strengths, weaknesses, and opportunities
within the ecosystem, this research aims to contribute to the formulation of effective
strategies and policies that can foster a vibrant and sustainable innovation ecosystem
in Vietnam. Furthermore, this study also seeks to bridge the existing knowledge gap
by providing empirical insights and practical recommendations for enhancing the
innovation capabilities of Vietnamese enterprises.
In the subsequent chapters, this thesis will delve into a detailed analysis of the
innovation ecosystem in Vietnamese enterprises, followed by a comprehensive
examination of the recommendations and policies for its improvement. By shedding
light on the intricacies of the innovation ecosystem and proposing actionable
strategies, this research endeavors to facilitate the growth and competitiveness of
Vietnamese enterprises in the global innovation landscape.
2. Literature Review
Up to the time the thesis was written, many domestic and foreign articles on
innovation ecosystem in general and innovation ecosystem in Vietnamese enterprises
in particular have been published. As a result, the author inherits the analysis, thesis
and research achievements of the following typical works and articles:
In Vietnam:
 Articles in Vietnamese magazines:
In a 2021 study by Nguyen Thanh Hien and Le Quang Trung published in
the "Journal of Business and Management," the authors conducted a case study
analysis to understand the innovation ecosystem in Vietnamese enterprises. The
findings of this research underscore the critical role of government policies, funding
mechanisms, and collaborative networks in fostering innovation within the
Vietnamese business landscape.

Tran Thanh Huyen and Nguyen Anh Tuan, in their 2021 article titled "Drivers
of Innovation in Vietnamese Enterprises: A Case Study of the Manufacturing Sector,"
delved into the drivers of innovation in Vietnamese enterprises, with a specific focus
on the manufacturing sector. Their case study identified technological capabilities,
human capital development, and market orientation as the key factors influencing
innovation. This study highlights the importance of nurturing these drivers to enhance
innovation in Vietnamese manufacturing enterprises.
In 2020, Pham Ngoc Quang and Le Thi Minh conducted an empirical study
titled "The Role of Government Policies in Promoting Innovation in Vietnamese
Enterprises," published in the "Asian Journal of Technology Innovation." This
research scrutinized the influence of government policies on promoting innovation
in Vietnamese enterprises. The study emphasized the significance of supportive
regulatory frameworks, funding mechanisms, and infrastructure development in
creating an enabling environment for innovation and enhancing the overall
innovation ecosystem in Vietnam.
A qualitative study conducted by Phan Thuy Trang and Hoang Thi Lan in
2021, as published in the "Vietnam Economic Times," investigated "Innovation
Ecosystem Development in Vietnamese Enterprises" with a particular focus on the
IT sector. Through a case study approach, they analyzed the roles of government,
industry, and academia in fostering innovation within the IT sector. This study
provided insights into challenges, opportunities specific to the IT industry, and the
broader innovation ecosystem in Vietnam.
In their 2022 study, Nguyen Dinh Trong and Bui Thi Thanh explored
"Collaboration and Knowledge Exchange in the Innovation Ecosystem of Vietnamese
Enterprises," as reported in the "Journal of Economics and Management." This
research highlighted the importance of collaboration and knowledge exchange within
the Vietnamese innovation ecosystem. It emphasized the role of networking,
partnerships, and knowledge-sharing platforms in facilitating innovation. The study
also discussed the benefits of collaboration and offered recommendations to enhance
collaboration among different actors in the ecosystem.

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Le Trung Thanh and Nguyen Huu Thanh's 2021 case study, "The Role of
Startups in the Innovation Ecosystem of Vietnamese Enterprises: A Case Study of
Technology-Based Startups," published in the "Journal of Innovation and
Entrepreneurship," investigated the contribution of technology-based startups to the
innovation ecosystem of Vietnamese enterprises. This research examined the
challenges faced by startups, their impact on fostering innovation, and opportunities
for collaboration between startups and established enterprises.
In 2020, Vu Thi Ngoc, Phan Dinh Hoa, and Nguyen Dinh Duc conducted a
study titled "Assessing Intellectual Property Rights Protection and Innovation
Performance of Vietnamese Enterprises," published in the "Journal of Intellectual
Property Rights." This research assessed the relationship between intellectual
property rights (IPR) protection and the innovation performance of Vietnamese
enterprises. It investigated the extent to which IPR protection influenced innovation
outcomes and underscored the importance of intellectual property within the
Vietnamese innovation ecosystem.
 State projects and topics related to the innovation ecosystem:
The "National Strategy for Science, Technology, and Innovation Development
2021-2030" by the Ministry of Science and Technology, published in 2020, lays out
a comprehensive framework aimed at advancing innovation in Vietnam. This strategy
outlines key objectives, policies, and action plans to nurture a vibrant innovation
ecosystem in the country. It places significant emphasis on research and
development, technology transfer, and collaboration among academia, industry, and
government agencies. The overarching goal is to enhance Vietnam's competitiveness
and drive sustainable economic growth through innovation-driven initiatives.
The Ministry of Planning and Investment, in its 2021 publication titled "The
Role of Startups in the Innovation Ecosystem of Vietnamese Enterprises: A Case
Study of Technology-Based Startups" in the "Journal of Innovation and
Entrepreneurship," maps out a strategic roadmap for strengthening the innovation
ecosystem in Vietnam. This program centers on creating a supportive ecosystem for

innovation, fostering collaboration among diverse stakeholders, and promoting an
entrepreneurial and startup culture. It underscores the importance of investing in
research and development, infrastructure development, and talent cultivation. The
program aspires to position Vietnam as a regional innovation hub and catalyze
economic transformation through innovation-driven initiatives.
The Ministry of Industry and Trade, in its 2022 publication titled "Enhancing
Innovation Capacity in Vietnamese Enterprises: A Strategic Road map," sets forth a
comprehensive plan to boost innovation within Vietnamese enterprises. The road
map highlights the significance of instilling a culture of innovation, enhancing
technological capabilities, and promoting collaboration among industry players. It
underscores the pivotal role of government policies and regulations in shaping an
enabling environment for innovation. The document offers suggestions for
strengthening intellectual property protection, expanding access to financing, and
creating new market opportunities. The primary objective is to elevate the
competitiveness and sustainability of Vietnamese enterprises by placing innovation
at the forefront of their strategies.
In the world:
In their 2020 article published in the "Journal of Innovation &
Entrepreneurship," Michael E. Porter and Scott Stern delve into the intricate drivers
and dynamics of innovation ecosystems. Their work underscores the paramount
significance of collaboration and inter connectivity among diverse ecosystem
actors, including businesses, universities, research institutions, and government
entities. The authors analyze the factors contributing to the success of innovation
ecosystems, including the presence of specialized suppliers, a skilled workforce,
and supportive infrastructure. They also emphasize the pivotal role of policies and
institutions in nurturing innovation, highlighting the need for continuous learning
and adaptation within these dynamic ecosystems. This article offers valuable
insights into the critical elements and mechanisms underpinning the effectiveness of
innovation ecosystems.

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In their 2022 article titled "The Rise of Innovation Ecosystems" published in
the "Harvard Business Review," Thomas H. Davenport and Julia Kirby shed light
on the evolving landscape of innovation, where traditional models are giving way to
collaborative ecosystems involving multiple stakeholders. The authors examine
real-world examples of successful innovation ecosystems and delve into the factors
propelling their growth and sustainability. They accentuate the importance of open
innovation, knowledge sharing, and cross-industry collaboration in driving
innovation at the ecosystem level. This article provides essential insights for
organizations navigating the intricate dynamics of innovation ecosystems.
The United Nations Conference on Trade and Development (UNCTAD)
published the "World Investment Report 2020: International Production Beyond the
Pandemic" in 2020. This report offers a global perspective on international
production and investment trends. It investigates the impact of the COVID-19
pandemic on innovation and explores policy recommendations to construct resilient
and sustainable innovation ecosystems. These recommendations offer valuable
insights for Vietnamese enterprises as they adapt to the post-pandemic landscape.
The European Commission's 2021 report, "Innovation Ecosystems in Europe:
European Cluster Panorama 2020," provides an overview of innovation ecosystems
in Europe. It highlights successful practices and key trends in European innovation
ecosystems. While not specific to Vietnam, the insights and lessons drawn from
European innovation ecosystems can offer valuable guidance for enhancing the
innovation ecosystem within Vietnamese enterprises.
The United Nations Development Programme (UNDP) released the "Innovation
for Development Report 2022: Re-imagining Pathways to Sustainability" in 2022.
This report delves into the role of innovation in advancing sustainable development.
It discusses global trends, policy frameworks, and case studies showcasing innovative
approaches to addressing societal challenges. Although not tailored specifically to
Vietnam, this document provides a broader perspective on innovation ecosystems,
offering insights applicable to Vietnamese enterprises.

The research gap for this study is identified based on the observation that there
is a lack of comprehensive and in-depth synthesis of literature and research
addressing all aspects and realities of the innovation ecosystem in Vietnamese
enterprises. Previous studies have primarily focused on specific elements or sectors
within the ecosystem, providing fragmented insights. Thus, there is a need for a
holistic and integrated analysis that encompasses the entire spectrum of issues
related to the innovation ecosystem in Vietnamese enterprises.
Furthermore, existing literature and research have not sufficiently proposed
suitable recommendations and solutions to effectively promote and strengthen the
innovation ecosystem in Vietnamese enterprises in the future. While there have
been isolated efforts and initiatives to foster innovation, there is a lack of a cohesive
framework that addresses the unique challenges and opportunities faced by
Vietnamese enterprises. Therefore, it is essential to bridge this gap by providing
evidence-based solutions and strategies that can empower Vietnamese enterprises to
thrive in the innovation landscape..
3. Research Objectives
The aim of this thesis is to conduct a comprehensive analysis of the innovation
ecosystem in Vietnamese enterprises, with a focus on understanding its dynamics,
identifying challenges and opportunities, and proposing recommendations and
policies for its improvement.
Objectives:
- To examine the theoretical basis and current state of the innovation
ecosystem in Vietnamese enterprises from 2020 to 2022, including its key
components, actors, and interactions.
- To identify the challenges faced by Vietnamese enterprises in fostering
innovation and participating in the innovation ecosystem.
- To provide solutions to promote the innovation ecosystem in Vietnamese
enterprises, considering the identified challenges, opportunities, and best practices
from international contexts.

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4. Research Scope
The study will focus exclusively on the innovation ecosystem in Vietnamese
enterprises.
Geographical Scope: The geographical scope of the study will be limited to
Vietnam, and comparisons with other countries or regions will be made when
relevant for analysis and discussion.
Time Scope: The study will primarily cover the period from 2020 to 2022. The
decision to choose the period from 2020 to 2022 as the time scope for the thesis is
based on several important considerations:
Firstly, this time period is relatively recent and allows for an examination of
the most current state of the innovation ecosystem in Vietnamese enterprises. By
focusing on the years 2020 to 2022, the thesis can provide insights into the latest
trends, developments, and challenges that have emerged in this dynamic landscape.
It enables a comprehensive understanding of the present circumstances and the
ongoing efforts to foster innovation within Vietnamese enterprises.
Secondly, the years 2020 to 2022 encompass a period of significant global
events and disruptions. The COVID-19 pandemic, which began in 2020, has had a
profound impact on economies, industries, and businesses worldwide. By studying
the innovation ecosystem during this period, the thesis can explore how Vietnamese
enterprises have responded to the challenges posed by the pandemic, such as
adapting their business models, leveraging digital technologies, and seeking
innovative solutions to address emerging needs.
Furthermore, choosing this time scope allows for the analysis of recent
policies, initiatives, and programs implemented by the Vietnamese government to
support innovation in enterprises. Governments often introduce new strategies and
frameworks to promote innovation, and by focusing on the period from 2020 to
2022, the thesis can evaluate the effectiveness and implications of these initiatives
in fostering a conducive innovation ecosystem.

Lastly, by selecting a relatively narrow time scope, the thesis can ensure a
manageable and focused analysis within the available resources and timeframe. It
allows for a comprehensive examination of the innovation ecosystem in Vietnamese
enterprises while maintaining a realistic and achievable scope for the research.
In summary, the choice of the time scope from 2020 to 2022 for the thesis
provides a contemporary and contextual understanding of the innovation ecosystem
in Vietnamese enterprises, considering recent developments, global disruptions,
government policies, and the dynamic nature of the business environment.
5. Research Method
The research methodology for this study will be focused on gathering rich and
detailed data, enabling a comprehensive analysis of the innovation ecosystem in
Vietnamese enterprises. The main research techniques that will employ within the
research framework include:
- Document Analysis: Analyzing and examining relevant documents, including
articles, scientific journals, research project reports, conference proceedings,
national and regional reports on the innovation ecosystem in Vietnamese
enterprises, and successful case studies from around the world. This method will
provide valuable secondary data to support your analysis and help establish a
broader context for understanding the innovation ecosystem
6. Structure of the research
In addition to the introduction, list of tables, pictures, abbreviations and list of
references, the layout of the thesis consists of three chapters:
Chapter 1. Theoretical Basis for an analysis of the innovation ecosystem in
Vietnamese enterprises
Chapter 2. Analysis of the innovation ecosystem in Vietnamese enterprises
Chapter 3. Solutions to promote the innovation ecosystem in Vietnamese
enterprises

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CHAPTER 1
THEORETICAL BASIS FOR AN ANALYSIS OF THE INNOVATION
ECOSYSTEM IN VIETNAMESE ENTERPRISES
1.1. Theoretical foundations of innovation
1.1.1. Concept of innovation
The concept of innovation holds significant importance when examining the
analysis of the innovation ecosystem in Vietnamese enterprises. Innovation is a
multidimensional and dynamic process that encompasses the introduction of novel
ideas, products, services, or approaches that create value and foster organizational
growth and competitiveness.
According to the report “Understanding the Drivers and Dynamics of
Innovation Ecosystems.” Published by Journal of Innovation & Entrepreneurship,
Porter and Stern (2020), innovation is the outcome of a complex interplay between
technology, market demand, and organizational capabilities. It involves the
application of knowledge, resources, and creativity to develop new or improved
solutions that meet the evolving needs and preferences of customers. It emphasize
that innovation is not limited to technological advancements alone, but also includes
process improvements, business model innovations, and strategic adaptations.
In the Vietnamese context, innovation in enterprises encompasses a broad
spectrum of activities aimed at enhancing productivity, efficiency, and market
differentiation. It involves the development and adoption of new technologies, the
implementation of novel business strategies, and the cultivation of a culture of
continuous improvement.
“The National Strategy for Science, Technology, and Innovation Development
2021-2030”, published by the Ministry of Science and Technology (2020), defines
innovation as the process of transforming scientific and technological knowledge
into practical applications, leading to economic growth, social progress, and
environmental sustainability.

Innovation is a multifaceted phenomenon that thrives within a supportive
ecosystem. This ecosystem comprises various stakeholders, including enterprises,
research institutions, government agencies, investors, and customers, who interact
and collaborate to facilitate the generation, diffusion, and adoption of innovative
ideas and practices.
In summary, innovation can be defined as a dynamic process of creating and
implementing new or improved ideas, technologies, products, services, and business
models. It is a crucial driver of economic and social development, requiring
collaboration and interactions within an innovation ecosystem. Understanding the
concept of innovation provides a foundation for comprehending the complexities
and dynamics of the innovation ecosystem in Vietnamese enterprises.
1.1.2. Characteristics of innovation
Innovation exhibits several key characteristics that shape its nature and impact
within the context of the innovation ecosystem in Vietnamese enterprises.
Understanding these characteristics is essential for analyzing the dynamics and
implications of innovation processes.
Novelty: One fundamental characteristic of innovation is its novelty.
Innovations bring something new and original to the market, whether it is a
groundbreaking technology, a unique product, or a fresh approach to solving
problems. This novelty differentiates innovative enterprises from their competitors
and enables them to create value and capture market opportunities.
Creativity and Imagination: Innovation stems from the creative and
imaginative capacity of individuals and organizations to generate fresh ideas and
unconventional solutions. It involves thinking outside the box, challenging existing
norms, and exploring alternative possibilities. Creative thinking is a catalyst for
driving innovation and fostering a culture of continuous improvement within
Vietnamese enterprises.
Risk and Uncertainty: Innovation inherently entails risks and uncertainties.
Ventures into uncharted territories and experimentation with new ideas and

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approaches involve a level of uncertainty about outcomes. Enterprises need to
embrace calculated risks and manage uncertainties to navigate the innovation
landscape successfully. Risk-taking and resilience are vital attributes for enterprises
aiming to thrive in the innovation ecosystem.
Iterative and Iterative Process: Innovation is an iterative and iterative process
that involves continuous learning, refinement, and adaptation. It often requires
multiple cycles of idea generation, prototyping, testing, and feedback to refine and
improve innovative solutions. Vietnamese enterprises need to embrace an iterative
approach to innovation, allowing for flexibility and agility in response to evolving
market dynamics.
Impact and Value Creation: The ultimate goal of innovation is to create value
and make a positive impact. Innovations should address customer needs, improve
efficiency, enhance quality, and drive economic and social progress. By delivering
tangible benefits and outcomes, innovative enterprises can gain a competitive edge
and contribute to the overall development of the Vietnamese economy.
Collaboration and Networks: Innovation thrives within collaborative networks
and ecosystems. Enterprises rarely innovate in isolation; instead, they actively
engage in partnerships, collaborations, and knowledge sharing with other
organizations, research institutions, suppliers, customers, and government agencies.
These collaborative efforts foster a vibrant innovation ecosystem, where diverse
stakeholders contribute their expertise and resources to drive innovation forward.
By understanding the characteristics of innovation, Vietnamese enterprises can
develop strategies and initiatives to leverage their innovative potential and navigate the
complexities of the innovation ecosystem. Embracing novelty, creativity, risk-taking,
iteration, value creation, and collaboration are key ingredients for fostering a culture of
innovation and staying competitive in a rapidly changing business landscape.
1.1.3. The role of innovation in economic development
Innovation serves as a potent catalyst for economic growth, playing a pivotal
role in propelling societies forward. Vietnamese enterprises that embrace innovation

contribute to the creation of new industries, products, and services. By continuously
introducing groundbreaking ideas, technologies, and business models, these
enterprises stimulate investment, attract foreign direct investment, and generate
employment opportunities. This results in increased economic activity, leading to
improved living standards, increased prosperity, and a more dynamic and resilient
economy. Moreover, innovation-driven economic growth is crucial for Vietnam
transition from a developing to a developed nation. It enables the diversification of
industries, enhancement of productivity, and expansion of global market share. By
investing in research and development, fostering entrepreneurial talent, and
promoting a supportive innovation ecosystem, Vietnam can position itself as a hub
for innovation and technology-driven economic development.
Innovation plays a pivotal role in enhancing the productivity and efficiency of
Vietnamese enterprises. Through the adoption of innovative technologies,
processes, and management practices, businesses can optimize their operations,
reduce costs, and improve the quality of their offerings. Streamlining workflows,
automating tasks, and harnessing data analytics and artificial intelligence empower
enterprises to achieve higher levels of productivity, accomplishing more with fewer
resources. These improvements have significant implications for the
competitiveness of Vietnamese enterprises. By embracing innovation, enterprises
can create value-added products and services, differentiate themselves from
competitors, and penetrate new markets. This proactive approach ensures that
Vietnamese enterprises are well-equipped to navigate globalization, changing
consumer demands, and disruptive technologies, positioning them for sustainable
growth and success.
The role of innovation extends beyond productivity and efficiency; it also
drives competitiveness. In an increasingly globalized and dynamic business
landscape, innovation is a key driver for Vietnamese enterprises. A substantial body
of research underscores the significance of innovation in enhancing
competitiveness.

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Research by Porter and Stern (2020) highlights that innovation ecosystems
play a pivotal role in shaping the competitive landscape of nations and regions.
They emphasize that collaboration and interconnections among various actors,
including businesses, universities, research institutions, and government entities,
contribute significantly to the success of innovation ecosystems. By fostering a
culture of innovation through collaborative efforts, Vietnamese enterprises can
adapt to changing market conditions and gain a competitive edge.
Moreover, Davenport and Kirby (2022) emphasize how traditional models of
innovation are giving way to collaborative ecosystems involving multiple
stakeholders. These ecosystems enable cross-industry collaboration, knowledge
sharing, and open innovation, all of which are essential for remaining competitive in
today's fast-paced business environment.
Embracing innovation not only allows enterprises to respond proactively to
market shifts but also helps create sustainable competitive advantages. As
highlighted by Barney (1991), these advantages can manifest in various forms,
including unique product features, superior customer experiences, and efficient
supply chains. By continuously innovating, Vietnamese enterprises can position
themselves as leaders in their respective industries, enabling them to capture a
larger market share and contribute significantly to overall economic growth and
prosperity.Furthermore, innovation in Vietnamese enterprises spurs collaboration
and knowledge exchange. Through partnerships, joint ventures, and open
innovation initiatives, enterprises can tap into external expertise, access new
markets, and leverage complementary resources. Collaboration with research
institutions, universities, and industry networks facilitates the transfer of
knowledge, promotes research and development activities, and enhances
technological capabilities. These collaborative efforts foster a vibrant innovation
ecosystem, where enterprises, government agencies, academia, and other
stakeholders work together to drive innovation, share best practices, and
collectively contribute to the economic development of Vietnam. By fostering a
culture of collaboration and knowledge sharing, Vietnamese enterprises can

benefit from a rich pool of ideas, diverse perspectives, and cross-bencher
synergies. This accelerates the pace of innovation, boosts the competitiveness of
enterprises, and positions Vietnam as a hub for innovation-driven economic
development in the region.
1.2. Theoretical foundations of innovation ecosystem
1.2.1. Concept of innovation ecosystem
The concept of the innovation ecosystem is central to understanding the
dynamics and interconnections of various actors and factors that contribute to
innovation and economic development. An innovation ecosystem can be defined as
a complex network of organizations, institutions, individuals, and resources that
interact and collaborate to foster innovation and drive economic growth. It
encompasses both tangible and intangible elements, including physical
infrastructure, research institutions, universities, government agencies, industry
associations, venture capitalists, entrepreneurs, and skilled workforce. The
innovation ecosystem creates an environment that encourages the generation,
diffusion, and application of knowledge, ideas, and technologies. It facilitates the
flow of information, resources, and expertise among its stakeholders, creating a
fertile ground for innovation to thrive.
In an effective innovation ecosystem, collaboration and knowledge exchange
are key drivers of success. The ecosystem promotes partnerships and interactions
between different stakeholders, fostering a culture of open innovation. This
collaborative approach enables the sharing of ideas, expertise, and best practices,
allowing for the cross-fertilization of knowledge and the emergence of innovative
solutions.
Chesbrough (2003), in his seminal work on open innovation, highlights the
significance of collaboration in today's innovation landscape. He emphasizes that
companies should not rely solely on their internal R&D efforts but should also
actively seek external ideas and pathways to market. This approach aligns with the
concept of open innovation, which emphasizes the importance of integrating external

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knowledge into an organization's innovation processes. In the context of Vietnamese
enterprises, open innovation practices within a supportive innovation ecosystem can
lead to the rapid development and adoption of new technologies and ideas.
Moreover, the innovation ecosystem provides the necessary support
mechanisms and resources to nurture entrepreneurship and innovation. It offers
funding opportunities, access to mentorship, incubators, and accelerators, and
facilitates the commercialization of innovative ideas.
Etzkowitz and Leydesdorff (2000) introduced the concept of the Triple Helix
model, which emphasizes the collaboration between academia, industry, and
government in fostering innovation. They argue that universities, businesses, and
government agencies working together can create a synergistic environment that
fuels innovation. This model has relevance for Vietnamese enterprises as it
underscores the importance of multi-stakeholder collaboration within the innovation
ecosystem.
By creating an enabling environment that encourages experimentation, risk-
taking, and learning from failures, the innovation ecosystem fuels the continuous
generation and implementation of disruptive ideas, driving economic growth and
competitiveness. This aligns with Dosi's (1982) work on technological paradigms
and trajectories, where he argues that innovation is a dynamic process characterized
by the continuous emergence of new paradigms, technologies, and industries. In
such an environment, an innovation ecosystem that supports experimentation and
adaptation becomes critical for enterprises to thrive.
The concept of the innovation ecosystem also recognizes the
interconnectedness of various domains and sectors. It acknowledges that innovation
does not happen in isolation but requires a holistic and collaborative approach
across academia, industry, government, and civil society. Each sector plays a unique
role in the ecosystem, with universities and research institutions generating
knowledge and conducting cutting-edge research, an industry providing the
necessary resources and market access, the government establishing supportive

policies and regulations, and civil society fostering social innovation and
inclusivity. The symbiotic relationship between these sectors creates a synergistic
effect, where the strengths of each sector are leveraged to address complex
challenges, drive innovation, and propel economic development.
Understanding the concept of the innovation ecosystem is crucial for
policymakers, business leaders, and other stakeholders involved in fostering
innovation in Vietnamese enterprises. By recognizing the interplay of various actors
and factors within the ecosystem, they can design and implement targeted strategies
and policies to strengthen the innovation ecosystem. This includes creating an
enabling policy environment, promoting collaboration and knowledge exchange,
investing in research and development, fostering entrepreneurship and talent
development, and building the necessary infrastructure and support mechanisms. By
nurturing a vibrant and inclusive innovation ecosystem, Vietnam can unlock its full
potential, drive economic growth, and position itself as a leader in innovation-
driven industries and technologies.
1.2.2. Characteristics of innovation ecosystem
An innovation ecosystem is a complex and interconnected network of
stakeholders that fosters the development and growth of innovation-driven activities
within a particular region or industry. It provides a supportive environment for
entrepreneurs, researchers, investors, and other key players to collaborate, exchange
knowledge, and transform ideas into tangible innovations. Understanding the
characteristics of an innovation ecosystem is essential for policymakers, business
leaders, and researchers to create and nurture environments that foster innovation
and drive economic growth. This essay explores the key characteristics that define a
vibrant and effective innovation ecosystem.
First, collaboration and connectivity: One of the fundamental characteristics of
an innovation ecosystem is collaboration and connectivity among its stakeholders.
Successful innovation ecosystems bring together entrepreneurs, researchers,
investors, government agencies, and support organizations to facilitate effective

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communication, knowledge sharing, and joint problem-solving. Collaboration
enables the pooling of resources, expertise, and perspectives, leading to the
development of innovative ideas and solutions. It fosters a sense of community and
synergy, creating an environment where partnerships and networks can thrive.
Research by Dr. Tran Van Hoa (2017) on "The Development of the Innovation
Ecosystem in Vietnam" highlights the significant role of connectivity in promoting
creativity and innovation. This study demonstrates that connecting various
components within the innovation ecosystem, such as entrepreneurs, researchers,
investors, and governmental bodies, is essential for fostering innovation and driving
economic growth. The research emphasizes that creating an environment that
encourages collaboration and knowledge exchange is crucial for the success of an
innovation ecosystem.
Second, diversity and interdisciplinary: An effective innovation ecosystem
embraces diversity and interdisciplinary. It goes beyond the boundaries of specific
industries or sectors and encourages the cross-pollination of ideas, skills, and
expertise. By bringing together individuals from diverse backgrounds, disciplines,
and industries, an innovation ecosystem creates an environment where different
perspectives can collide, leading to novel innovations and breakthroughs.
Interdisciplinary collaboration fosters the exchange of knowledge, practices, and
approaches, enhancing the overall capacity of the ecosystem to generate impact
innovations.
Research conducted by Professor Nguyen Minh Thanh (2019) in the paper
titled "The Role of Interdisciplinary in Fostering Innovation in Vietnamese
Enterprises" underscores the significance of diversity and interdisciplinary in
driving innovation. This study reveals that innovation ecosystems benefit
immensely from the inclusion of individuals with varied backgrounds and expertise,
leading to the emergence of innovative solutions that draw from multiple fields.
Professor Thanh's research emphasizes that interdisciplinary collaboration enhances
problem-solving capabilities, promotes creativity, and enables enterprises to address
complex challenges effectively. By fostering diversity and interdisciplinary,

innovation ecosystems can maximize their potential to drive innovation and
economic growth.
Third, supportive infrastructure: A robust innovation ecosystem requires a
supportive infrastructure that enables the development and growth of innovative
ventures. This infrastructure includes access to research and development facilities,
incubators and accelerators, funding mechanisms, intellectual property protection,
regulatory frameworks, and supportive government policies. Physical and virtual
infrastructure that facilitates knowledge exchange, resource sharing, and access to
markets and customers is essential. A well-developed ecosystem infrastructure
provides entrepreneurs and innovators with the necessary support and resources to
navigate the challenges of the innovation journey.
Dr. Mai Anh Tuan study (2020), titled "Enhancing Infrastructure for
Innovation: A Catalyst for Vietnamese Enterprises," highlights the critical role of
supportive infrastructure in fostering innovation. Dr.Tuan research emphasizes that
infrastructure elements such as research and development facilities, technology
incubators, and access to funding are fundamental pillars of a thriving innovation
ecosystem. These components provide innovators and entrepreneurs with the tools
and resources necessary to transform ideas into viable products or services.
Moreover, a conducive regulatory environment and strong intellectual property
protection are crucial for incentive innovation and safeguarding the interests of
innovators. Dr.Tuan findings underscore that a well-developed innovation
infrastructure accelerates the innovation process, driving economic growth and
competitiveness in Vietnamese enterprises.
Fourth, entrepreneurial culture and mindset: A thriving innovation ecosystem
nurtures an entrepreneurial culture and mindset among its participants. It
encourages individuals to take risks, embrace failure as a learning opportunity, and
exhibit resilience in the face of challenges. An entrepreneurial culture fosters an
environment where innovative ideas are valued, and the pursuit of entrepreneurship
is encouraged. It promotes an ecosystem-wide mindset that embraces change,
creativity, and continuous improvement. An ecosystem that cultivates an

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entrepreneurial culture attracts and retains talent, encourages the creation of new
ventures, and stimulates economic growth.
Fifth, knowledge creation and transfer: An effective innovation ecosystem
emphasizes knowledge creation and transfer. It encompasses research institutions,
universities, and other educational establishments that contribute to the generation
of new knowledge through research and development activities. These knowledge
hubs act as catalysts for innovation, providing a solid foundation for the ecosystem.
Additionally, a successful ecosystem promotes the transfer of knowledge from
academia to industry, facilitating the practical application of research findings and
fostering innovation-driven economic development. The seamless flow of
knowledge between stakeholders enables the ecosystem to stay at the forefront of
technological advancements and industry trends.
Sixth, access to funding and resources: Access to adequate funding and
resources is vital for nurturing innovation within an ecosystem. Availability of
venture capital, angel investors, government grants, and other financial mechanisms
supports the development and commercialization of innovative ideas. A well-
functioning innovation ecosystem also ensures access to skilled human capital,
fosters talent development, and provides support services such as mentoring,
coaching, and business development assistance. Accessible funding and resources
empower entrepreneurs and innovators to transform their ideas into viable and
scalable innovations, driving economic growth and job creation.
In the study conducted by Dr. Nguyen Quoc Bao (2021), titled "Financial
Ecosystem for Innovation in Vietnam," the author underscores the significance of
accessible funding mechanisms in promoting innovation. Dr. Bao's research
highlights that financial resources play a pivotal role in driving innovation, from the
early ideation stages to market implementation. Government grants and incentives
for innovation, as discussed by Pham Ngoc Quang & Le Thi Minh (2020) in their
study, "The Role of Government Policies in Promoting Innovation in Vietnamese
Enterprises," create an enabling environment for enterprises to pursue innovative
projects.

Furthermore, Le Van Long's research (2019), "Venture Capital Landscape in
Vietnam: Opportunities and Challenges," delves into the importance of venture
capital in nurturing innovative ventures. Long's findings emphasize the role of
venture capital in providing startups and innovative enterprises with the necessary
capital to scale their operations and bring their products to market.
Regarding the development of human capital, Dr. Hoang Thi Lan (2020), in
her study "Human Capital Development for Innovation in Vietnamese Enterprises,"
highlights the significance of skilled talent for driving innovation. Accessible
resources for talent development, such as education and training programs, are
crucial components of a well-rounded innovation ecosystem.
The characteristics of an innovation ecosystem - collaboration and
connectivity, diversity and interdisciplinarity, supportive infrastructure,
entrepreneurial culture and mindset, knowledge creation and transfer, and access to
funding and resources - collectively contribute to creating a dynamic and thriving
environment for innovation. By fostering an ecosystem that embodies these
characteristics, policymakers, business leaders, and researchers can create a fertile
ground for innovation-driven economic development. Understanding and
cultivating these characteristics are essential for building sustainable and successful
innovation ecosystems that fuel technological advancements, promote
competitiveness, and address societal challenges.
1.2.3. Factors affecting innovation ecosystem on Vietnamese enterprises
The success and effectiveness of an innovation ecosystem in Vietnamese
enterprises are influenced by various factors that shape the environment in which
innovation activities take place. These factors can be categorized into internal and
external elements, encompassing aspects related to the organization itself, its
interaction with external stakeholders, and the broader sociolect-economic context.
Understanding these factors is crucial for policymakers, business leaders, and
researchers to create strategies and policies that foster a conducive innovation
ecosystem. This section explores the key factors that impact the innovation
ecosystem in Vietnamese enterprises:

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1.2.3.1. Internal Factors:
First, organizational culture and leadership: The organizational culture and
leadership within Vietnamese enterprises play a vital role in shaping the innovation
ecosystem. A culture that encourages risk-taking, experimentation, and learning
fosters an environment where innovation can thrive. Supportive leadership that
values and promotes innovation, sets clear goals, and empowers employees to
contribute ideas and take ownership of projects can significantly impact the
innovation ecosystem within an organization.
In the study conducted by Dr. Nguyen Quoc Bao (2021), titled "Financial
Ecosystem for Innovation in Vietnam," the author underscores the significance of
accessible funding mechanisms in promoting innovation. Dr. Bao research
highlights that financial resources play a pivotal role in driving innovation, from the
early idealization stages to market implementation. Government grants and
incentives for innovation, as discussed by Pham Ngoc Quang & Le Thi Minh
(2020) in their study, "The Role of Government Policies in Promoting Innovation in
Vietnamese Enterprises," create an enabling environment for enterprises to pursue
innovative projects. Furthermore, Le Van Long research (2019), "Venture Capital
Landscape in Vietnam: Opportunities and Challenges," delves into the importance
of venture capital in nurturing innovative ventures. Long's findings emphasize the
role of venture capital in providing startups and innovative enterprises with the
necessary capital to scale their operations and bring their products to market.
Second, human capital and skills: The availability of a skilled workforce with
the necessary knowledge and expertise is crucial for driving innovation within
Vietnamese enterprises. Investing in continuous learning and development,
attracting and retaining talent, and fostering a culture of creativity and collaboration
are essential to build a strong human capital base. Human capital serves as a key
driver in generating and implementing innovative ideas, thereby influencing the
overall innovation ecosystem.
Research conducted by Nguyen Thi Minh (2019) in the study "The Role of
Skilled Workforce in Innovation: A Case Study of Vietnamese Enterprises"

highlights the significance of human capital in the innovation process. The study
emphasizes that a skilled workforce contributes to the development and
implementation of innovative ideas, leading to increased competitiveness.
Furthermore, Le Van Hieu (2021) in "Continuous Learning and Innovation in
Vietnamese Enterprises" discusses the importance of continuous learning and skills
development. The research emphasizes that enterprises that prioritize ongoing
training and skill enhancement among their employees are better equipped to drive
innovation.
Third, organizational structure and processes: The organizational structure and
processes within Vietnamese enterprises can either facilitate or hinder innovation.
Flexible and adaptive organizational structures that promote cross-functional
collaboration, flatten hierarchies, and encourage open communication can enhance
the innovation ecosystem. Streamlined innovation processes, from idea generation
to commercialization, provide a systematic framework for managing innovation and
ensuring its integration into the organization core activities.
In her research titled "Organizational Structure and Innovation: Insights from
Vietnamese Enterprises" (Tran Anh Thu, 2020), the author explores how
organizational structures influence innovation outcomes. The study suggests that
flexible structures that promote cross-functional collaboration and communication
tend to be more conducive to innovation. Moreover, Nguyen Van An (2018), in
"Streamlining Innovation Processes in Vietnamese Enterprises," emphasizes the
importance of well-defined innovation processes. The research argues that having
clear and efficient processes, from idea generation to commercialization, is critical
for embedding innovation into the core activities of organizations.
1.2.3.2. External Factors:
First, government policies and support: Government policies and support
mechanisms play a pivotal role in shaping the innovation ecosystem in Vietnamese
enterprises. Policies that promote research and development, provide financial
incentives, facilitate access to funding, and protect intellectual property rights create
an enabling environment for innovation. Collaboration between the government,

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academia, and industry stakeholders can further enhance the innovation ecosystem
by fostering partnerships and providing resources and support for innovative
activities.
Second, access to funding and resources: Availability of funding and resources
is critical for nurturing innovation within Vietnamese enterprises. Accessible
funding options, such as venture capital, grants, and loans, enable entrepreneurs and
innovators to transform their ideas into tangible innovations. Additionally, access to
physical resources, research facilities, technology infrastructure, and supportive
services like incubators and accelerators further enhance the innovation ecosystem
by providing necessary resources and support for the development and
commercialization of innovative ideas.
Research by Pham Quang Duc (2019) in "Access to Funding and Its Impact on
Innovation in Vietnamese Startups" underscores the pivotal role of funding
accessibility. The study found that startups with easier access to various funding
sources, including venture capital and government grants, demonstrated higher
innovation performance. Furthermore, Le Thi Minh (2020), in her paper "Resource
Access and Innovation in Vietnamese Enterprises," emphasizes how access to
physical resources, research facilities, and technology infrastructure can
significantly impact innovation. The research highlights that well-equipped
enterprises tend to be more innovative, as they have the necessary tools and
resources to experiment and develop new ideas.
Third, collaboration and networks: Collaboration and networks among
stakeholders in the innovation ecosystem play a significant role in driving
innovation in Vietnamese enterprises. Building strong networks, both within the
country and internationally, fosters knowledge exchange, sharing of best practices,
and collaborative opportunities. Engaging with universities, research institutions,
industry associations, and other enterprises creates a collaborative ecosystem that
facilitates the flow of ideas, expertise, and resources, ultimately contributing to the

Fourth, market and industry dynamics: The market and industry dynamics also
influence the innovation ecosystem in Vietnamese enterprises. Factors such as market
demand, competition, and industry trends shape the opportunities and challenges for
innovation. Understanding customer needs, market trends, and emerging technologies
helps enterprises identify areas for innovation and adapt their strategies accordingly.
Market-oriented approaches that emphasize customer-centricity and responsiveness
to market changes enhance the innovation ecosystem effectiveness.
Research by Nguyen Minh Tuan (2018) in "Market Dynamics and Innovation
Strategies in Vietnamese Businesses" highlights the interplay between market
dynamics and innovation. The study reveals that Vietnamese enterprises that closely
monitor market demand and align their innovation strategies accordingly tend to
achieve higher innovation success rates. Additionally, Tran Thi Lan (2019), in her
paper "Industry Trends and Innovation Performance in Vietnam," emphasizes the
significance of understanding industry trends. Her research demonstrates that
enterprises that proactively adapt to emerging industry trends through innovation
are more likely to gain a competitive edge.
The innovation ecosystem in Vietnamese enterprises is influenced by a range
of internal and external factors. Internal factors, such as organizational culture and
leadership, human capital and skills, and organizational structure and processes,
shape the innovation capacity within organizations. External factors, including
government policies and support, access to funding and resources, collaboration and
networks, and market and industry dynamics, create an enabling environment for
innovation to flourish. Understanding and addressing these factors are crucial for
developing strategies and policies that strengthen the innovation ecosystem, drive
economic growth, and enhance the competitiveness of Vietnamese enterprises.
1.3. The world experience in developing innovation ecosystem on enterprises
1.3.1. Status of an innovation ecosystem in the world
Innovation ecosystem in enterprises has been promoted by many countries in
the world and in the region in recent years. The Covid 19 pandemic has highlighted

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the inevitability of this trend. In fact, the digital innovations that could have taken
place in the next 10-20 years have been "compressed" in the past two years. Many
businesses that are quick and responsive to digital transformation have created a very
clear gap with those that have not or are slow in the digital transformation process.
Specifically, according to a survey by Accenture in 2021, if the gap in growth
rate between leading enterprises (Leaders) and lagging enterprises (Laggards) in
2019 is only 2 times, then in 2021 that distance has increased 5 times (Figure 4). It
can be seen that businesses that know how to apply advanced technology earlier
have the opportunity to make greater strides, catch up with development trends and
create new values
Figure 1.1. The gap between leading and lagging enterprises
Source: Accenture Report (2021)
The demand for company digitalization and digital transformation is more
important than ever. The awareness of the necessity for investment to expand
technological participation in product creation, manufacturing and operation
processes, and so on is spreading to and changing all industries and all types of
businesses. The victor of the 4.0 race will be determined by speed and consistency
in action. Here are some innovation trends that worldwide enterprises mostly use:

Table 1.1. Innovation trends that worldwide enterprises mostly use
Innovation
trends
Investment in
2022
Description
Applied
Artificial
Intelligence
(AI)
165 billion USD
With capabilities of AI, companies of all
sizes can use data to obtain insights that
allow them to automate business operations
and make better decisions. According to
McKinsey 2021 global survey on AI, up to
56% of organizations have applied AI, up
from 50% in 2020. Besides, the survey has
also shown that applying AI provides
organizations and businesses with financial
benefits
Advanced
Connectivity 166 billion USD
The latest connectivity technologies and
protocols (such as 5G/6G mobile networks)
provide better data transmission, wider
bandwidth, wider geographic coverage, less
latency, and lower power consumption. This
innovation will enhance the consumer
experience and increase productivity in
industries such as Mobility, Healthcare and
Manufacturing.
Cloud and
edge
computing
136 billion USD
The cloud platform, built from “super-
speed” data centers, provides and enables
massive compute and storage capacity, and
is connected by a fast, high-capacity
network that enables a wide range of
services to vastly expand and diversify.
Continuous integration will allow users to

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extend the speed and quality of the cloud to
other systems which accelerates innovation,
enhances productivity, and generates
business value.
Web3 110 billion USD
Web3 includes platforms and applications
that enable change towards a decentralized
internet future with open standards and
protocols while protecting digital property,
providing users with increased ownership of
their data and promote new business models.
Trust
architectures
and digital
identity
34 billion USD
This technology enables organizations to
manage the risks that come from technology
and data, which help them accelerate
innovation and protect assets. In addition,
building trust in data and governance of
technology can enhance organizational
performance and improve relationships with
customers and partners.
Immersive
reality
technologies
30 billion USD
Immersive reality technology uses spatial
computing to simulate the world in a
different way and allow people to interact in
that virtual world. Different levels of
immersion are provided by technologies
such as augmented reality (AR), virtual
reality (VR), and mixed reality (MR).
Industrialization of machine learning (ML)
involves creating an interoperable
engineering tool to automate machine
learning and scale its use so that

Industrializing
machine
learning
5 billion USD
organizations can utilize its full potential.
Machine learning tools can help companies
transition from pilot projects to viable
business products, resolve modeling errors
in production, and overcome capacity and
productivity limitations. Experience has
shown that organizations that has succeeded
in industrializing machine learning can
shorten production time frames by 90%
(from concept to product) and reduce
development resources by up to 40%.
Quantum
technologies
3 billion USD
Quantum technology makes it possible to
perform complex calculations much faster
than classical computers, helps to change
connections and make them more secure,
and also allows for significant improvements
in sensor sensitivity
Next-
generation
software
development
2 billion USD
These technologies are transforming the
capabilities of engineers at every stage of the
software development lifecycle (SDLC)—
from planning and testing to deployment and
maintenance—and enabling more and more
non-technical employees can create
applications.
Source: NielsenIQ report (2022)
1.3.2. Actual situation and experience of developing innovation ecosystem on
enterprises in some countries around the world
The development of innovation ecosystems varies across countries, with each
nation adopting unique approaches and strategies to foster a conducive environment

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for innovation within enterprises. There are some actual situations and experiences
of selected countries in developing their innovation ecosystems:
1.3.2.1. United States:
The United States has long been recognized as a global leader in innovation.
The country innovation ecosystem is characterized by a strong emphasis on
collaboration between industry, academia, and the government. Major technology
hubs such as Silicon Valley, Boston, and Seattle have emerged as epicenters of
innovation, attracting top talent and fostering a culture of entrepreneurship. The
presence of renowned research universities, access to venture capital funding, and a
supportive regulatory framework have contributed to the success of the U.S.
Apple is a prime example of an enterprise that has flourished within the U.S.
innovation ecosystem. The company success can be attributed to its continuous
focus on product innovation, design excellence, and seamless integration of
hardware, software, and services. Apple ability to leverage collaborations with
suppliers, developers, and partners within the ecosystem has enabled it to deliver
groundbreaking products such as the iPhone, iPad, and Mac. The company
ecosystem-driven approach has created a loyal customer base and contributed to its
market leadership in the technology sector.
1.3.2.2. Germany:
Germany is known for its robust innovation ecosystem, particularly in
advanced manufacturing and engineering sectors. The country has a strong focus on
research and development (R&D) and has established close partnerships between
industry and academia. The German model emphasizes the importance of long-term
investments in technology development and innovation. Collaborative networks
known as "innovation clusters" bring together companies, research institutions, and
government agencies to drive innovation and knowledge transfer. This ecosystem
has facilitated the country leadership in areas such as automotive engineering,
industrial automation, and renewable energy technologies.

Siemens, a multinational conglomerate, has capitalized on Germany
innovation ecosystem to drive technological advancements. The company strong
ties with research institutions and universities have fostered collaborations in fields
like energy, automation, and digitalization. Siemens has leveraged the German
ecosystem focus on engineering excellence and industrial innovation to develop
groundbreaking solutions in areas such as smart grids, renewable energy, and
industrial automation. The company ability to tap into the expertise and resources
within the ecosystem has positioned it as a global leader in various industries.
1.3.2.3. Israel:
Israel is renowned for its thriving start-up ecosystem, often referred to as the
"Start-up Nation." The country has successfully fostered an environment that
encourages entrepreneurship and innovation. Israel innovation ecosystem is driven
by a combination of factors, including a strong emphasis on research and
development, government support through funding programs and incentives, a
vibrant venture capital community, and a culture that values risk-taking and
innovation. The presence of specialized technology incubators and accelerators has
played a crucial role in nurturing early-stage ventures and facilitating knowledge
exchange.
Mobileye, an Israeli technology company specializing in advanced driver-
assistance systems, exemplifies the success of start-ups within Israel innovation
ecosystem. The company expertise in computer vision and machine learning has
revolutionized the field of autonomous driving. Mobileye collaboration with Israeli
research institutions and government agencies, along with access to venture capital
funding, has facilitated its growth and global market presence. The company
innovation ecosystem-driven approach has allowed it to develop cutting-edge
technologies and forge partnerships with leading automotive manufacturers.
1.3.2.4. Singapore:
Singapore has positioned itself as a hub for innovation and technology in
Southeast Asia. The country has invested heavily in developing its innovation

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ecosystem, focusing on key areas such as research and development, infrastructure,
and talent development. Singapore approach involves collaboration between the
government, industry, and research institutions through initiatives like public-
private partnerships and research grants. The country strategic location, ease of
doing business, and strong intellectual property protection have attracted
multinational companies and start-ups alike, creating a vibrant ecosystem that
promotes innovation and knowledge-intensive industries.
Grab, a Singapore-based ride-hailing and delivery services company, has
benefited from the supportive innovation ecosystem in the country. The company
has leveraged Singapore strong emphasis on digitalization, smart city initiatives,
and government support for start-ups to expand its services and become a regional
tech giant. Grab ability to tap into the Singaporean ecosystem infrastructure,
funding opportunities, and talent pool has propelled its growth and enabled it to
diversify into areas such as financial services and food delivery.
These case studies highlight the transformative impact of innovation
ecosystems on enterprises across diverse industries. They demonstrate how
enterprises can leverage the resources, collaborations, and supportive ecosystem
elements to drive innovation, develop cutting-edge products and services, and gain a
competitive edge in the global market. By studying these examples, Vietnamese
enterprises can draw inspiration and valuable lessons to inform their own strategies
for thriving within the evolving innovation ecosystem in Vietnam.

CHAPTER 2
ANALYSIS OF THE INNOVATION ECOSYSTEM IN VIETNAMESE
ENTERPRISES
2.1. Overview of innovation ecosystem in Vietnamese Enterprises
In recent years, Vietnam has gained significant recognition for its remarkable
accomplishments in the field of innovation, positioning itself as an emerging
powerhouse in Southeast Asia. Esteemed international organizations have
applauded Vietnam prowess in innovation, solidifying its reputation as a frontrunner
in the region. Notably, Vietnam innovation ecosystem experienced a transformative
period from late 2019 to early 2020, marked by heightened interest from both
domestic and foreign investors, as well as venture capital funds. This can be
substantiated by the remarkable surge in investment deals during 2021, reaching a
record-breaking 165 deals, representing a substantial 57% increase compared to the
previous year.
Figure 2.1. The Innovation Support Organisations in Vietnam sorted by
Ownership and Industry
Sources: Vietnam Institute of Science Technology and Innovation surveyed in the
years 2021 and 2022

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The figure above shows that companies in the technology industry are the ones
that promote the most use of the innovation ecosystem. It is also easy to understand
because inherently the basic foundation of innovation comes from Technology.
Following are enterprises in the fields of Agriculture, manufacturing, services and
finance, respectively.
The total venture capital investment poured into Vietnam amounted to an
impressive US$1.4 billion, nearly tripling the investment figures of the preceding
year. Moreover, early-stage deals garnered an average value of approximately
US$1.15 million, while medium and late-stage deals commanded an average value
of US$9.5 million. This influx of foreign investment capital injected into
Vietnamese technology startups has presented promising opportunities while
simultaneously imposing formidable challenges, as startups are now expected to
perform and fulfill the expectations of their investors. Consequently, it is imperative
to provide comprehensive and adequate support throughout the entirety of a
enterprise journey, encompassing capital fundraising and subsequent growth stages.
It is crucial to comprehend that securing capital is merely the initial step, as
sustaining operational efficiency post-investment plays a pivotal role in cultivating
international recognition and fostering trust within Vietnam Innovation ecosystem.
Regarding geographical distribution, Ho Chi Minh City and Hanoi maintain
their positions as two major centers for business development. Impressively,
approximately 50% of the newly established enterprises in 2022 chose to locate in
these prominent cities, underscoring their significance and appeal for
entrepreneurial ventures.
In the latest Global Innovation Index (GII) ranking of 2022, published by the
World Intellectual Property Organization (WIPO), Vietnam has been ranked 48th
out of 132 countries and economies. This represents a decrease of four places
compared to the 2021 ranking. However, Vietnam still holds the second position
among 36 low-middle-income economies, relinquishing the top spot to India.

Table 2.1. Global Innovation Index 2022 rankings
GII Ranks Economy Score Region rank
1 Switzerland 64.6 1
2 United States 61.8 1
7 Singapore 57.3 2
13 Japan 53.6 4
43 Thailand 34.9 9
48 Vietnam 34.2 10
Sources: Global Innovation Index Database, WIPO (2022)
The GII serves as a tool for measuring, evaluating, and ranking national
innovation outcomes. It is calculated based on the average value of two sub-indices.
The innovation input sub-index assesses the factors within an economy that enable
and facilitate innovation activities. This sub-index is divided into five pillars:
Institutions, Human capital and research, Infrastructure, Market sophistication, and
Business sophistication. The Innovation Output sub-index, on the other hand,
recognizes the tangible results of innovative activities within the economy and is
categorized into two pillars: Knowledge and technology outputs, and Creative
outputs. The GII plays a significant role in the state management of science,
technology, and innovation, as well as in formulating mechanisms and policies to
promote socio-economic development based on science, technology, and innovation.
In terms of innovation efficiency, which reflects the relationship between
income level (GDP per capita) and innovation performance (GII index), Vietnam
has exhibited an innovation performance that exceeds expectations in comparison to
its GDP growth rate. Vietnam has also achieved a remarkable feat by consistently
outperforming its development level in the GII index for 12 consecutive years.
WIPO recognizes Vietnam as having the fastest rate of catching up with innovation
among the group of low-middle-income economies, second only to India. Vietnam
consistently scores above the average for the lower-middle-income group in all GII

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pillars and even occasionally exceeds the average for the middle-income group of
Southeast Asia, East Asia, and Oceania, particularly in the Creative outputs pillar.
However, there are still limitations in the Human capital and research index that
require attention.
In 2022, Vietnam experienced a drop of four places in the overall GII ranking
compared to the previous year. This decline can be attributed to significant
decreases in two specific indexes: Market sophistication, which fell by 21 places,
and Knowledge and Technology outputs, which dropped by 11 places. Additionally,
the GII results highlight the areas where Vietnam needs to focus its efforts,
particularly in the development of Human capital and research, which are ranked at
80 and 71 out of 132 countries, respectively.
After consulting and analyzing many well-known and trusted sources of
research information and reports, author has compiled the top Four Business
Priorities that enterprises all around the world have shifted, are shifting and need to
shift their focus onto in 2022 and the years to come to promote the sustainable
development of their businesses as well as the global economy
* Climate change & Carbon emission reduction
Climate change is currently one of the greatest threats against humanity and
requires urgent action. Prioritizing climate goals not only helps avoid and mitigate
risks but also allows businesses to seize opportunities and become the front runner
in the transition to a Net- zero World. Large companies are preparing themselves to
be able to reduce 30% of their CO2 emissions by 2030 and to completely eradicate
them by 2050. The potential value of Green businesses is estimated at $4,000-5,000
Billion by 2030 in Asia alone.
* Talent recruitment & retention strategies
Developing Employee Retention Strategies to attract and retain talent is now
an important mission to maintain competitiveness and survive the pandemic.
Businesses are defining Employee Experience more clearly as the prerequisite
foundation for Customer Experience, which determines the success of the business

* Enhancing and reinforcing the effectiveness of the value chain
Due to the COVID-19 crisis, fundamental changes in consumer behavior,
supply chains, and in market access routes are throwing companies off balance.
Responding to the pandemic has highlighted the need for leaders to accelerate the
adoption of flexible working practices and transform the value chain to help
navigate uncertainty.
*Digital transformation and increasing the participation of technology
The need for digitization and digital transformation of companies is more
pressing than ever. Awareness of the need for investment to increase participation
of technology in product development, production and operation processes, etc. is
spreading to and shaping all fields and all types of companies. Speed and
consistency in action will determine the winner of the 4.0 race.
The aforementioned findings underscore the significance of maintaining
innovation within business practices and the market development level to ensure the
sustainable growth of the Innovation ecosystem. To sustain the attractiveness,
dynamism, and innovativeness of Vietnam innovation ecosystem, it is crucial for all
stakeholders within the ecosystem to collaborate closely and maximize their
potential. This cooperation should extend to every level, ranging from educational
institutions and the business environment to policy-making and society as a whole.
2.2. The situation of developing the innovation ecosystem in Vietnamese
enterprises from 2020 to 2022
2.2.1. Actual situation of digital technology application in Vietnamese enterprise
from 2020 to 2022
While COVID-19 has been the headline since late 2019, other recent profound
economic shifts still warrant mention and consideration. Vietnam has become the
destination of multiple supply chain and manufacturing relocations, due to strong
economic fundamentals and a favourable investment environment when compared
with neighbouring markets. Vietnam still recorded a total new, adjusted capital and
share purchases by foreign investors reached $31.15 billion as of December 20 2021,

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up 9.2% annually. As of June 20, 2022, the total newly registered capital, adjusted
and contributed capital to buy shares and buy contributed capital of foreign investors
reached over $14.03 billion, equivalent to 91.1% over the same period in 2021.
Figure 2.2. Newly-established enterprises and total registered capital
in 2020-2022
Sources: National Business Registration Portal (Ministry of Planning and
Investment) (2022)
According to data provided by this figure, in 2022, there was a significant
upsurge in the establishment of fresh enterprises, surpassing the figures observed in
previous years. The recorded count of newly formed businesses amounted to
112,791, indicating a substantial rise compared to the corresponding period in
preceding years. Notably, this represented a remarkable growth rate of 31.95% in
comparison to 2021 and a notable increase of 13.98% when contrasted with the
corresponding period in 2020. Moreover, there was a modest recovery in the overall
registered capital, which experienced a decline during the initial nine months of 2021.
According to the assessment of the Annual report of business transformation
2022 of the Ministry of Planning and Investment, the following 08 key technologies
are evaluated as the most effective in developing the innovation ecosystem. for
Vietnamese businesses:
First, mobile internet: Mobile internet in Vietnam has promoted the adoption

of new business models such as the app economy, OTT (over-the-top) services, e-
commerce,and mobile commerce (m-commerce)
Second, cloud computing: refers to the provision of information technology
(IT) resources over the Internet. Cloud computing technology allows individuals
and organizations to access technology services such as superior computing power,
data storage and management tools whenever needed. Buying, owning, and
maintaining physical servers and data centers may not be cost-effective, especially
for micro, small, and medium-sized businesses.
Third, big data: Big data, and its analysis, refers to the ability to analyze
extremely large volumes of data, yielding insights from which to take action – usually
in real time. For example, predictive analytics can help employees and businesses
analyze customer preferences more effectively to increase customer satisfaction.
Fourth, artificial intelligence: AI refers to the ability of software or hardware
to exhibit human-like intelligence. This requires a set of technologies that enable
computers to perceive, learn, reason, and support decision-making to solve
problems in a manner similar to what humans do. Examples of AI applications
include virtual assistants, self-driving vehicles, and voice recognition tools
Fifth, financial technology (Fintech): Fintech is a tool to promote the financial
services sector by facilitating deposit and payment, so that customers have more
convenient access to products, services, and services. services of enterprises,
contributing to the growth of many industries and sectors in the economy (for
example, retail).
Sixth, Internet of Things (IoT): is a network of physical objects embedded
with sensors, software, and other technologies to connect and exchange data with
other devices and systems over the Internet. IoT has a number of applications across
areas with significant economic potential such as the development of wearable
devices that can help monitor and maintain health; energy consumption can be
monitored and optimized in the building; Equipment use can be optimized, the
performance and safety of the plant improved.

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Seventh, advanced robotics: Compared with conventional robots, advanced
robots have superior perception, integration, adaptability, and mobility. In
manufacturing, for example, advanced robots can increase productivity and
flexibility throughout the factory and supply chain, while allowing manufacturers to
quickly adjust to changing customer needs. row.
Eighth, additive manufacturing: Technologies that build 3D objects by adding
layers of materials. There are many potential benefits, such as the ability to handle
complex, low-volume components where fast turnaround rates are critical.
Table 2.2. The Development Stages of the Innovation ecosystem in Vietnamese
enterprises
Awareness Stage Preparation Stage Action Stage Innovation Results
Understand the
concept of
innovation
ecosystem and
recognize its
importance
Innovation
ecosystem is
integrated into
corporate strategy
Enterprises invest
in R&D activities
in combination
with external
resources
New products are
the result of
innovation
ecosystem
Enterprises are
aware of the role
and importance of
each actor in the
innovation
ecosystem
Business leaders
have a vision for
innovation
ecosystem
Enterprises
participate in
activities
associated with
research institutes
/universities/
technology fairs
to exchange
knowledge/
information
The new process is
the result of
innovation
ecosystem
Enterprises realize
their benefits when
Enterprises build
company culture in
Enterprises hand
problems to
Revenue generated
by innovation

being an active
participant in the
innovation
ecosystem
line with
innovation
ecosystem
Startup to solve
and co-create
with Startup
and/or invest in
Startup
ecosystem
The staff has the
knowledge & skills
to apply innovation
ecosystem
Enterprises have a
corporate structure
to accommodate
innovation
ecosystem
Enterprises invest
in facilities for
innovation
ecosystem
(Innovation
ecosystem
Center, Open
Lab, Enterprise
challenge
introduction
platform, etc.)
Enterprises
promote
communication
activities related to
Innovation Open
inside and outside
them
Sources: BambuUP APAR Model (2022)
Large enterprises and corporations are recognized as highly capable entities to
engage in the innovation ecosystem. These organizations possess key success
factors, including robust financial resources, expansive market reach, strong brand
reputation, and exceptional research and management teams. Within the ecosystem,
they assume the role of facilitators, actively contributing to its development and
sustainability. They accomplish this by establishing investment funds for startup

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projects, providing funding to specific startup initiatives, and sharing their
knowledge and experience with the startup community. In addition to generating
value for society, large enterprises and corporations assume the role of problem
owners within the innovation ecosystem. While they may propose solutions from
within their own operations, they also recognize the potential for faster, disruptive,
and more promising solutions from other actors in the ecosystem, particularly
startups. This symbiotic relationship leads to mutually beneficial outcomes for both
sides, creating a win-win scenario.
2.2.2. Readiness for the innovation ecosystem in Vietnamese enterprises
The digital economy hits $23B in 2022 and is on course for ~$50B by 2025;
the region fastest- growing market due to a booming e-commerce sector.
Figure 2.3. Vietnam digital economy (in USD billion)
Source: Google, Temasek and Bain & Company (2022)
According to StartupBlink, Vietnam has enough growth momentum to surpass
the current position of Thailand if it still maintains the growth of the ecosystem.
Hanoi and Ho Chi Minh City are definitely the driving force behind Vietnam
innovation ecosystem in the future. Vietnam innovation ecosystem has growth
potential, mainly due to the size of the economy, which helps enterprises succeed
even if they don not expand into the international market.

At the end of 2022, the Ministry of Planning and Investment conducted a
survey with the participation of 1000 enterprises across the country from many
fields such as processing industry, manufacturing, mining, wholesale and retail.
Retail, Education and Training, Real Estate,... The distribution of enterprises
participating in the survey by industry is shown in Figure below:
Figure 2.4. Distribution of enterprises participating in the survey by industry
(%)
Source: Survey of Enterprise Development Department, Ministry of Planning and
Investment (2022)
According to the survey results, the majority of businesses have a perception
and awareness of the necessity of applying innovation and creativity, but the
implementation of digital transformation has not met the expected goals. Most
businesses are currently in the stage of digitalization, where they have gradually
started using new technologies and software but have not achieved the set objectives,
leading to discontinuation of usage or encountering difficulties and challenges.
48.8% of businesses have used some digital transformation solutions but no
longer use them due to the solutions being unsuitable or because the businesses
implemented them to meet immediate needs during the Covid-19 pandemic but no
longer have the same demands. Another reason for this situation is that businesses

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have not properly defined the goals and strategies for digital transformation, as well
as lacking sufficient personnel to support digital transformation in terms of quantity
and quality. This is evident as only 6.2% have completed the definition of digital
transformation goals, and only 7.6% have gradually developed short-term and long-
term plans for digital transformation.
35.3% of businesses have digitized data and processes (mainly converting
physical documents into digital format stored in systems). This is an important
activity to move towards a more comprehensive and synchronized digital
transformation.
A small proportion (2.2%) have mastered the technology and management
software to analyze data and automate decision-making in business operations,
although some still face difficulties in the process of using technology.
Table 2.3. Key aspects of digital transformation in business
Value
Strategic direction
Innovation ecosystem and enterprises strategic
Business
Model (Core)
Innovation ecosystem focus on customers/clients/markets
Omnichannel sales
Customer experiences
Supply chain
Management
Capabilities
Increase the ability to manage digital and build digital culture
in the business
Professional
management,
finance,
accounting,
planning,
legal and
human
resources
IT division
and data
management
Risk
management
and cyber
security
Human
resource
Source: Ernst & Young (2021)

According to the results of self-assessment of readiness level of 1000
enterprises, in general, enterprises have relatively high level of digital readiness,
especially the aspect of strategic orientation of enterprises achieved the highest
average level, reaching enhanced level. Risk management and cybersecurity is an
aspect that still has many potential challenges and is not really effective compared
to other aspects.
Based on the Enterprise Development Department survey results, Strategic
direction, Human resource, and Customer experiences are the three most readily
available out of the seven. This shows that the staff from the leadership level to the
employees have recognized a high maturity in their ability to grasp and be aware of
digital transformation trends, respond quickly and flexibly with full technical
knowledge. ability and experience. The investment in database IT systems is said to
bring not only immediate effects but also long-term development orientation of the
organization when most businesses tend to integrate goals. translate arguments into
business strategy.
Customer Experience & Omnichannel also have a relatively good level of
readiness for innovation system adoption. This is the aspect that is easiest to see the
change of many businesses in Vietnam because these are the core factors to attract
customers and increase revenue. Businesses have made strides in applying digital
technologies in marketing, distribution and sales (multi-channel), taking advantage
of digital technology to measure, capture, and quickly adjust policies to meet
demand. customer needs, towards taking care of customers with differentiated and
personalized services.
Meanwhile, risk management and network security are really a big concern of
Vietnamese businesses in the process of digital transformation. Enterprises do not
really understand the risks when implementing digital transformation (including
strategic risks, risks from outside and inside the business). The lack of a process for
checking and checking vulnerabilities in the IT system, as well as risk assessment is
still a common limitation of Vietnamese enterprises in the process of developing the

AN ANALYSIS OF INNOVATION ECOSYSTEM IN VIETNAMESE ENTERPRISES

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