Internationalization of Vietnamese Garment Manufacturers from an Innovation Perspective: Toward a U-Shaped Internationalization Path

Innovation is a prerequisite for growing firms in a competitive market that is increasingly structured within global value chains. These global highways are organized and managed by multinational companies (MNCs), which are continuously seeking international locations possessing a business community that could add value by increasing the efficiency and effectiveness of product and service provision on a broad scale. Such locations are often found within emerging economies.
This single case study from the garment industry in Vietnam explores how the case company internationalizes and the role played by innovation in shaping the internationalization path. The frame for the study is the global value chain and its associated upgrading models.
A U-shaped internationalization model is found for the case company.. Efficiency and reactive innovations play a crucial role for the first degree of internationalization on the global outsourcing market, and the domestic market and proactive innovations related to design and brand play a crucial role as a pre-requisite for a second degree of internationalization. The study also contributes to the literature by aligning the internationalization path with an innovation path (reactive, interactive, and proactive innovation). Finally, the study concludes that the upgrading theory drawn from the global value chain frame should and could be aligned with the broader frame of innovation theory.