The roles of human and social capital in the development of manufacturing SMEs in Vietnam. Many studies show that promotion of the development of small and medium-sized enterprises (SMEs) in developing countries requires support for innovation. Nevertheless, there have been few rigorous studies about determinants of innovation carried out by SMEs, especially in transition economies. | Journal of Economics and Development, , , April 2014, pp. 5-22 ISSN 1859 0020 The Roles of Human and Social Capital in the Development of Manufacturing SMEs in Vietnam Vu Hoang Nam Foreign Trade University, Vietnam Email: hoangnamftu@ Abstract Many studies show that promotion of the development of small and medium-sized enterprises (SMEs) in developing countries requires support for innovation. Nevertheless, there have been few rigorous studies about determinants of innovation carried out by SMEs, especially in transition economies. Based on data collected from surveys of SMEs from 2005 to 2011, this study shows that the human and social capital of SMEs is a key to innovation in product, production process, marketing, and performance of SMEs in Vietnam. Keywords: Innovation, SMEs, human capital, social capital. Journal of Economics and Development 5 Vol. 16, , April 2014 1. Introduction Small and medium-sized enterprises (SMEs) are important in transition economies because they help reduce poverty. According to the OECD (2004), SMEs account for more than 90% of the enterprises in the non-farm sector and create a great deal of employment. In countries in the Asia-Pacific region, SMEs play a central role in promoting economic dynamism, innovation and job creation (UN, 2012). As a result, governments of many developing countries are eager to support the development of SMEs. cant effects on the innovation of SMEs. Nguyen et al. (2008) find that innovation is important for exports of SMEs. Nam et al. (2009) and Nam et al. (2010) show that in an iron and steel industrial cluster the household enterprises that carry out multifacted innovation perform better than others. In these studies, they show that formal schooling, experience, and social capital, measured by the family ties of the proprietors of the enterprises, determine innovation. Nevertheless, there have been few rigorous studies about what determines the innovation and performance
