Intangible assets, global value chains, and innovation: evidence from Vietnamese SMEs.

This article examines the impact of participation in global value chains (GVCs) on innovation upgrading—specifically product and process innovation—among Vietnamese small and medium enterprises (SMEs). Using panel data from 2005 to 2013 and controlling for endogeneity and unobserved heterogeneity, the study finds that GVC participation positively influences product innovation but not process innovation. The research further highlights that investments in intangible assets—such as research and development (R&D), worker training, and advertising—significantly enhance the innovation benefits derived from GVC participation, with training and advertising showing stronger moderating effects across different forms of GVC governance (arm's length market, networks, and quasi-hierarchy). These findings suggest that the gains from GVC integration depend critically on a firm's internal capabilities and governance relationships, emphasizing the importance of knowledge-based asset investments for SMEs in emerging economies like Vietnam.