THE IMPACT OF INTERNAL AND INSTITUTIONAL FACTORS ON INNOVATION CAPABILITY: EVIDENCE FROM SMALL AND MEDIUM ENTERPRISES IN HANOI

Abstract

This paper examines the impact of internal and institutional factors on the innovation capability of small and medium-sized enterprises (SMEs) in Hanoi,
Vietnam. Drawing on dynamic capability theory and institutional theory, a research model was developed and empirically tested using survey data from 267
firms. The analysis reveals that several internal and institutional factors have a positive and statistically significant effect on innovation capability, while others
show no clear impact. The findings contribute to a deeper understanding of the conditions that support innovation in SMEs operating in transitional economies.
Based on the results, the study offers general policy implications aimed at enhancing innovation performance by strengthening internal capacity and improving
the institutional environment for innovation.