Does Innovation Increase Labor Wage and Boost Firm’s Financial Performance? Evidence of Agricultural Firms in Vietnam with Bayesian Approach

Abstract

Many studies have agreed that innovation leads to product and process improvements, allows firms to grow more quickly, be more efficient, and ultimately be more profitable than non-innovators. In this study, we explore the impact of innovation (including product innovation, process innovation, organizational innovation, and marketing innovation) on firms’ financial performance and employees’ wages in Vietnamese agricultural firms. We take a survey from 257 agricultural firms in Vietnam and analyze our dataset with the Bayesian multiple regression ap­proach. Our results show that product, process, and marketing innovations positively affect firms’ financial performance, while organizational innovation contributes positively to an increase in average labor wage. These results give some inside implications for firms and the government in distributing resources efficiently for promoting different aspects of innovation.