Conclusions
Innovation activities by enterprises have deciding roles for competitiveness
at enterprise and national levels. In Vietnam, leaders and policy makers get
aware deeply of this when promulgating policies toward stimulation and
supports of innovation activities by enterprises. However, the evaluation of
policies for promotion of innovation by enterprises needs to be based on
fundamental elements of policies such as backgrounds, targets, objective
figures, principles for implementation, component policies, solutions and
tools for realization of targets, and evaluation of eventual impacts toward
innovation activities by enterprises. The evaluation has become just and
urgent requirements in a society with trends of democratization in its
development. They also create solid platforms for development of
administration by the State toward enterprises in its orientation to become a
State really of people, by people and for people./.
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JSTPM Vol 8, No 1+2, 2019 71
CRITERIA FOR EVALUATION OF POLICIES
FOR PROMOTION OF INNOVATION BY ENTERPRISES
Nguyen Quang Tuan
Viettel Military Telocommunications Group
Bui Thi Hong Viet
National Economics University
Nguyen Thi Lan Huong1
University of Hanoi Industrial Textile
Abstract:
Innovation is one of important factors to help enterprises in enhancing their competition
positions and then pushing up fast and sustainable socio-economic development in
international competitive markets. This fact is internationally acknowledged largely. In
actual global competitive context, enterprises are facing a tough choice: innovation and
R&D or bankruptcy. Supports from the State through policies and mechanisms are
important driving forces to push enterprises to do innovations for development. The set up
of criteria for evaluation of policies for promotion of innovation by enterprises has highly
important roles for decision making by individuals or organizations. This paper is to give
answers to the following questions: (i) What are policies for promotion of innovation by
enterprises? (ii) What are factors which make impacts to policies for promotion of
innovation by enterprises? and (iii) What are criteria for evaluation of policies for
promotion innovation by enterprises?
Keywords: Innovation; Policy; Evaluation of policies; Enterprise.
Code: 19060701
1. Overview
1.1. Innovation
Innovation is activities where enterprises implement a new product,
process, method or system to create new markets or new industrial
organizational forms. In this concept the accent is focused on process of
innovation and output results of innovation (product, process) (Schumpeter,
1934). Zahra and Covin (1994) considered innovation as deciding factor for
existence and development of enterprises. Innovations are rich in their
forms. According to OECD (2005), innovations are divided into renovation
1 Author’s contact email address: lanhuongbk@gmail.com
72 Criteria for evaluation of policies for promotion of innovation by enterprises
of product, process, marketing method and organizational structure. This
classification is largely applied by the prestigious organization which helps
unify the concept of innovation and issue standards for all the nations in the
world to conduct surveys on innovation by enterprises.
Innovation helps enterprises enhane productivity, quality and added values
of their products and services, and orients enterprises to sustainable
development. While considering factors to impact innovation by
enterprises, we can identify the internal factors such as R&D, production
and marketing activities, common vision and innovation willing of leaders,
suitable organizational structure, key individuals, effective team working
practice, creative environment, trustful and open relations, acceptance of
risks and freedom, and external factors such as suppliers, customers,
competitors, relations with universities, research organizations and
Government agencies (Nham Phong Tuan, 2016). These factors are
presented in Fig. 1.
Source: The team of authors
Figure 1: Factors impacting innovation by enterprises
Innovation gets impacted from various factors including internal and
external ones which include also research results from universities and
research organizations, pressures from suppliers and customers and even
competitors from other countries and territories. Among them, State
policies are those important factors which impact heavily innovation
activities by enterprises.
1.2. Notion of policies toward innovation by enterprises
Policies are defined as well targeted process of actions by one or some
actors for settlement of their concerned problems (James E. Anderson,
Factors
impacting
innovation
by
enterprises
Internal
factors
External
factors
+ Capacity of human resources.
+ Finances (capital resources, possibilities of capital
mobilization for innovation activities).
+ Technologies for implementation of innovation.
+ Management methods (innovation culture, vision of
leaders).
+ Other factors (copyrights of innovation,
commercialization of innovation products).
+ Markets (existing and emerging competitors in
related sectors, substituting products and services).
+ Science-technology organizations.
+ State policies for promotion of innovation by
enterprises
+ Other factors (position of buyers, suppliers, forms of
cooperation, level of competition, trends of
production shifts).
Innovation of
products
Innovation of
process
Innovation of
marketing
Innovation of
organization
JSTPM Vol 8, No 1+2, 2019 73
1983). Policies are sets of measures institutionized by controlling or
administering actors to offer privileges to some social groups, to activate
motivation of their actions, to orient their actions for realization of certain
priority targets in development strategies of a social system (Vu Cao Dam,
2011). Policy-based approaches under National Innovation System (NIS)
gain attentions and applications by many experts and policy makers to
cover market defects. Many studies have used NIS concepts and approaches
for actual contexts of developing economies and economies under
industrialization, such as works by Nelson (1993), Lundvall (1992) and
others. International organizations such as Asia-Pacific Economic
Cooperation (APEC) and Asia-Pacific Center for Technology Transfer
(APCTT) also issue initiatives to promote these approaches by country-
members for activation of innovation.
The starting point of innovation is creation of knowledge for users to get
access to and use knowledge. This causes certain influences to benefits of
enterprises from different views. First, social benefits of the entire society
are higher than the own benefits of single enterprises since customers and
competitors also get benefits from innovations made by enterprises.
Second, the created knowledge cannot be the own asset of enterprises,
cannot bring in the full benefits of enterprises and then do not stimulate
enterprises to do innovations. Since scientific knowledge have specific
features of commercial commodities then they easily lead to market failures
such as various risks and high costs. Therefore, State policies, as tools,
would support enterprises to conduct innovations through various measures
such as direct supports for research, particularly fundamental ones, granting
of patents, issuance of comfortable business environment for enterprises,
stimulation of investments and provision of taxation incentives and low
interest loans.
Policies for promotion of innovation by enterprises can be interpreted as
State interventions through stimulating measures (economic, administrative
and moral tools/measures) up to operational activities of enterprises to
target comfortable environment for enterprises to conduct innovations on
basis of global orientations of development of the country. Policies get
institutionized under forms of laws and ordinances, and sub-law regulations
such as decrees, resolutions, directives, and circulars by the Government.
Innovation activities by enterprises are found regularly under context of a
common system - National Innovation System - where the State applies
policies to balance development process, controls resources and social
conflicts, creates comfortable environment for socio-economic activities, all
74 Criteria for evaluation of policies for promotion of innovation by enterprises
targeting promotion of innovation by enterprises, activation and
enhancement of effective outputs of innovation activities.
1.3. Factors impacting policies for promotion of innovation by enterprises
A policy includes basic elements such as background for issuance, targets,
subjective figures, principles for realization of targets, solutions and tools
for implementation (Doan Thi Thu Ha, Nguyen Thi Ngoc Huyen, 2010).
Therefore, there exists many ways to define factors which impact policies
on basis of policy approaches.
For public policies, the factors impacting the process of their formation
include changes within leading positions or regimes, participation of social
communities and stakeholders, conditions required by financial and
technical sponsors, long term visions, technical management skills, political
orientations, rules of support and global resources, distribution and control
of resources. Among them, the political orientations are one of the most
important elements to impact formation and implementation procedure of
public policies. Technical supports from sponsors going together with
offered conditions cause strong impacts to formation and implementation of
public policies. The regime changes do not make any impact formation of
public policies but causes considerable impacts to implementation of
policies. Some forms of competition are observed between political regimes
for acceleration of implementation of policies (Salahuddin M.
Aminuzzaman, 2015).
Under procedural approach, policies get impacted from many factors
including innovation knowledge and activities, social-political-economic
context, legal regulation framework, actual events, institutional impacts and
external impacts. Innovation knowledge and activities cause impacts to
policies through catalysing actions for debates or set-up of awareness of
new opportunities. Policy makers always base their considerations on
social-political-economic contexts for political stability and national
development, extension of international impacts and development on basis
of available resources and administrative modes for management of
environment and policies. Policies depend on institutions which have well
defined organizational structures and tasks such as central government
agencies, local administrations, non-government organizations (NGOs),
private sector, political parties and organized religious organizations. Also,
policies get impacted from external factors such as sponsors, international
treaties and agreements, mass media and events (POP, 2009).
A policy when introduced to practice gets impacted from numerous
objective and subjective factors which can push up or prevent it from
JSTPM Vol 8, No 1+2, 2019 75
implementation. Objective factors include the ones presenting essential
features of problems to be treated, actual contexts, political and economic
potentials of targeted object groups and population. Subjective factors
include organizational machines for implementation of policies,
administrative institutions and level of impact to attitude and behaviour of
population. When the policy targets the settlement of a complex problem
related to many sectors and causes it needs to coordinate with many inter-
linked policies and decisions. Policies are seen through legal documents
from central level to local one. They create legal environment for
implementation of policies, stability, order procedures for involvement of
administrative organizations and policy impacted groups. Before
implementation of a policy it is necessary to train human resources for
implementation of its contents and requirements. This work relates to
propaganda and dissemination of benefits from the policy among
population circles as well as evaluation of impacts from the policy through
survey or feedbacks for policy adjustments. In addition, the factors related
to traditional culture features cause also impacts to implementation of
economic policies (Doan Thi Thu Ha, Nguyen Thi Ngoc Huyen, 2010).
For evaluation of impacts of policies, politicians and policy makers
expected that the evaluations should be based only on quantified evidences
and avoid partial treatment for conclusion. The evaluation work should be
conducted in global manner and contain full information on contents from
policy makers which can be used for reference during debates of political
decisions (Burdge, 1987). Information contained in the report of evaluation
of impacts should have concrete targets for planning procedures which
should help decision makers to avoid or mitigate negative impacts
(Soderstrom, 1981). Decision makers have top important roles because they
receive all necessary information and have trends to treat them under their
planned vision (DiMento, 1982). Many research works related to decision
making process show that information feedback is not provided in unified
manner or commonly applied rules with some partial reflections and abuse
which lead to incorrect assessments (Kahneman, Slovic, Tversky, 1982;
Nisbett, Ross, 1980).
On basis of component elements of policies, every stage of implementation
process has inter-linked impacts. Policy makers should conduct a clear
analysis of inter-impacting factors to provide the most exact information for
the process of formation of policies. Particularly, the large policies have to
be put into agendas of the National Congress. Regarding policies related to
promotion of innovation by enterprises, administrative subjective figures
are State agencies and administrative objective figures are enterprises. For
introduction of policies into practice it is necessary to study objective and
76 Criteria for evaluation of policies for promotion of innovation by enterprises
subjective figures for promotion of innovation by enterprises and for
limitation of impacts from preventing factors. Objective figures include
factors presenting the nature of problems to be treated which are, in this
case, the promotion of innovation by enterprises for enhancement of their
competitiveness and the national one in perspective of the 4.0 revolution as
well as enhancement of political and economic potentials of the policy
targeted groups and population. The subjective figures include the
organizational units in charge of implementation of policies, administrative
institutions, financial resources for implementation, propaganda works and
impacts to attitude and actions of population. Policies for promotion of
innovation by enterprises would have impacts to innovation activities by
enterprises including innovation of product, process, marketing method and
organizational structure to achieve the made targets.
2. Policies for promotion of innovation by enterprises
Policies for promotion of innovation by enterprises can be classified in
different ways such as solutions to impact objectives, tools, levels to issue
policies, policy objectives, policy objects, scopes of impacts from policies,
areas under impacts from policies and various component parts of policies.
Policies for promotion of innovation by enterprises are divided into 4 main
groups on basis of main areas of innovation, namely: innovation of product,
process, marketing method and organizational structure.
2.1. Policies for promotion of innovation of product by enterprises
Policies for promotion of innovation by enterprises in terms of products
relate closely to planning works and strategies for competition and
development of enterprises. Innovation of product plays important roles
where it is considered as background for existence and development of
enterprises. Right policies for promotion of innovation of product by
enterprises is the starting point of success of enterprises because only after
the successful set up of policies for innovation of products by enterprises
they can identify orientations for investment and studies for design of new
products. In order to promote innovation of products by enterprises, the
State should issue policies toward financial supports for studies, technical
supports for research, joint cooperation with partners, policies and
mechanisms for R&D works, technical infrastructure and finances for
innovation of products (Sabet, SM, Heard, AC, Neilitz, S and Brown, AN,
2017), all targeting the renovation of existing products or creation of new
products.
JSTPM Vol 8, No 1+2, 2019 77
So, policies for promotion of innovation of product by enterprises should be
understood as the ways the State make direct or indirect impacts to
enterprises through State administration agencies and related legal
documents. They should support enterprises to innovate products through
use of better materials, stimulation of diversity of products in accordance to
trade agreements, promotion of development of material sources for
localization of products, promotion of new designs and supports for higher
quality of human resources involved into innovation of products through
use of taxation and credit tools.
2.2. Policies for promotion of innovation of process by enterprises
Actually, producing enterprises apply many automated production lines
where the production activities are controlled by programs, supported by
information technologies and computers and, in higher level, production-
business decisions are supported by information technologies. In addition,
producing enterprises pay more attentions to control of costs for every
function, management stage and saving of time, resources and materials
(Frederick W.Taylor, 1911). With targets to support enterprises in
innovation of process, the State should have policies, direct or indirect, to
support stages of production activity and distribution of products and
service of enterprises.
Therefore, policies for promotion of innovation by enterprises in terms of
process is understood as the ways the State, on basis of science and
technology progress, make impacts to enterprises through various forms of
supports such as change of production modes and stimulation of
management of value chains from material supply to distribution of
products, supports for shifting production modes from simple techniques to
integrated technologies, promotion of renovation of production process
through tools of productivity and quality, use of environment friendly
technologies, mastering and application of new technologies, application of
new advances for production process, access to information sources,
promotion of inspection and quality control works, overcoming of trade and
technical barriers, training of higher quality of human resources and
financial supports though taxation and credit tools.
2.3. Policies for promotion of innovation of marketing method by
enterprises
During recent years, innovation has changed mindset for development of
products and services by enterprises (Chesbrough, Henry William, 2003).
Innovation has been seen in new ways with changes of trade models and
adaptation to changes to promote better products and services (Theodore
78 Criteria for evaluation of policies for promotion of innovation by enterprises
Henderson, 2017). In context of internationalization and integration in the
world’s economy, producing enterprises need to follow rules and practice
of international trades and have to get impacted from political situations.
For promotion of innovation of marketing method by enterprises, the State
should provide supports for enterprises through market analysis and
forecast by research organizations, competition reports, intermediate
distributors, demand-supply links and, particularly, analysis of political,
legal economic, technological, social and cultural environments for efforts
to extend external markets.
Therefore, policies for promotion of innovation by enterprises in terms of
marketing method are understood as the ways the State make impacts to
enterprises through State agencies and organization for extension of export
markets, extension of domestic markets, application of financial policies
(taxation, credit), stimulation of introduction of products into market
through completed infrastructure of electronic trades, extension of trade
representatives and use of trade arbitrage service in external markets,
stimulation of dissemination and registration of trademarks, promotion of
trade exhibitions and fairs, and training of higher quality of human
resources to innovate selling activities.
2.4. Policies for promotion of innovation of organizational structure by
enterprises
Innovation of organizational structure and management methods in
production-business activities would help enterprises achieve higher
economic efficiency and self-governance in decision making process. For
promotion of innovation of organizational structure by enterprises, the State
should issue suitable policies to meet needs of innovation of technologies
which play increasing roles for enterprises. They should extend policies
toward human resources to meet requirements in management skills, set-up
of innovative eco-systems for sharing of knowledge resources and changes
of enterprise cultures as well as new needs in terms of human resources and
technologies between components in eco-systems.
Therefore, policies for promotion of innovation by enterprises in terms of
organizational structure are understood as the ways the State makes
impacts, direct or indirect, to enterprises through State administration
agencies and systems of regulation documents to encourage enterprises to
change organizational structures, to move production sites to suitable
clusters for enhancement of competitiveness and to use of higher
productivity and quality tools, renovation of management modes,
development of production activities in direction of value chains,
application of modern modes of production control and set-up of integrated
industrial clusters.
JSTPM Vol 8, No 1+2, 2019 79
Policies
for
promotion
of
innovation
by
enterprises Promotion of innovation
of marketing method
Promotion of innovation
of process
Promotion of innovation
of product
Promotion of innovation
of organizational structure
Innovation
activities
by
enterprises
Targets of policies:
+ Enhancement of awareness
of innovation by enterprises
+ Increase of the number of
enterprises realizing
innovation activities
+ Higher investment by
enterprises for innovation
+ Higher efficiency of
innovation activities by
enterprises
As summary, the policies for promotion of innovation by enterprises are
presented in Fig. 2.
Source: The team of authors
Figure 2: State policies for promotion of innovation by enterprises
Policies may get evaluated before or after their promulgation. For decision
makers, the evaluation made in advance appears more important. The
incorrect assessment would lead to policies with undesired outcomes for
policy makers. Deviations in implementation of policies would occur when
policy makers estimate relative costs and benefits from policies and their
wrong assessments should be particularly serious when the issued policies
could lead to negative impacts to health and wealth of future generations or
environmental pollution (Katherine A. Lyon, 1990). Therefore, it is
necessary to have criteria for evaluation of impacts from policies for
promotion of innovation by enterprises.
3. Criteria for evaluation of policies for promotion of innovation by
enterprises
The 2015 Law on issuance of legal documents and Resolution No.
34/2016/ND-CP by the Government stipulated some articles and measures
for implementation of the Law where they require the files submitted for
setting-up of laws and ordinances have to present the contents of the related
policies and the impacts from their implementation. But these documents
do not provide concrete regulations as criteria for evaluation of policies.
The evaluation of policies is the work to get information about objects of
policies, being based on certain criteria. The objectivity of evaluation
outcomes depends on evaluating subjective figures, ways and criteria for
evaluation. Therefore, it is necessary to build up criteria for evaluation to
get quality results which are really valuable for decision making process.
80 Criteria for evaluation of policies for promotion of innovation by enterprises
The criteria used for evaluation of policies are also multiform. In evaluation
of implementation of public policies some basic criteria are used such as
validity, effectiveness, fair treatment, sustainability, impacts and settlement
rate of policies (Nguyen Dang Thanh, 2012). For evaluation of policies in
relations between two nations, the criteria include validity, effectiveness,
feasibility, economic aspects and fair treatment of policies (Nguyen Thi
Ngoc Hoa, 2018). Regarding policies for promotion of innovation by
enterprises, the criteria for evaluation have to identify clearly targets,
objective and subjective figures of evaluation, scope, principles and data
sources used for evaluation, and individuals and organizations responsible
for evaluation outcomes. The evaluation of policies for promotion of
innovation by enterprises can be conducted by authorities, organizations
and individuals on basis of criteria for evaluation such as validity,
effectiveness, suitability and sustainability of policies to define strong
points and shortcomings of policies. And then measures are conducted for
revisions, amendments, additions and completions of existing policies or
issuance of new policies to substitute unsuitable policies for effective and
integrated implementation of solutions for promotion of innovation by
enterprises.
3.1. Criteria for validity
The validity can be understood as to reflect the real targeted impacts and
operability of a policy on basis of consideration of costs, benefits, budgets,
resources and other conditions. The validity of policies requires the
conformity and application of all the related regulations. The validity of
policies for promotion of innovation by enterprises is measured by the rate
of effectiveness of achieved activities in comparison to defined objectives
including the rate of use of resources, technical tools and measures for
implementation, the consensus and conformity of impacted figures. The
validity of policies for promotion of innovation by enterprises can be
classified according to the time of issuance, scope of impacts, issuing
authorities and objects of application.
The identification of validity of policies for promotion of innovation by
enterprises can be made through beneficiaries and impacted figures,
assessments by experts and independent evaluating agencies. It is also
evaluated through component policies for product, process, marketing
method and organizational structure.
3.2. Criteria for effectiveness
The effectiveness of policies is to reflect the comparative relations between
gained outcomes and used expenditures. Effectiveness of policies is
JSTPM Vol 8, No 1+2, 2019 81
measured by the size of gained outcomes compared to the used of defined
resources. Analysis of costs and benefits for definition of effectiveness of
policies, without considering effectiveness, would lead to wastes and losses
of State budgets.
Effectiveness of policies for promotion of innovation by enterprises is
considered on basis of actually achieved outcomes in activities of
innovation and input expenditures. Input expenditures of policies may
include costs for implementation of policies and investment volumes for
innovation such as operational costs of enterprises for their innovation of
product, process, marketing method and organizational structure. Real
outcomes of policies for promotion of innovation by enterprises can be seen
through the volume of turnovers gained by commercialization of innovated
products, process, marketing method and organizational structure as well as
gained interests in terms of benefits, human resources, export values and
etc.
In addition, effectiveness of policies for promotion of innovation by
enterprises is also considered through their impacts toward economic,
cultural and social aspects which are not easily defined quantitatively in
terms of costs and gained outcomes. These items cannot be measured
directly and quantitatively due to not-easy-to-be defined qualitative
propagation of innovation activities. They can be defined by global
assessments of enterprises and socio-economic experts.
3.3. Criteria for suitability
Policies for promotion of innovation by enterprises need to reflect the
suitability to development strategies and innovation plans of enterprises,
organizations, local administration, countries and regions. They have to fit
assigned functions, duties and authorities of State administration agencies
in charge of innovation in enterprises, issued policies, policies by higher
ranked organizations and international engagements.
Suitability of policies for promotion of innovation by enterprises has to fit
targets of national socio-economic development. These criteria need to be
evaluated from views of both the State and enterprises in conformity to
formalities and procedures of registration for taxation incentives and other
supporting measures.
3.4. Criteria for sustainability
The sustainability of policies for promotion of innovation by enterprises is
seen through creation of positive and long lasting impacts and balanced
state between related parties. For evaluation of sustainability of policies for
82 Criteria for evaluation of policies for promotion of innovation by enterprises
promotion of innovation by enterprises it is necessary to examine long
lasting positive impacts to objective figures (individuals and organizations)
and global socio-economic development of the country as well as their
negative impacts in these aspects.
Evaluation of sustainability of policies for promotion of innovation by
enterprises is a complex work due to difficulty of quantitative definition of
their positive and negative impacts. Therefore, it is possible to evaluate
sustainability of policies for promotion of innovation by enterprises through
assessment by objective figures, beneficiaries and related parties. As
example: Sustainability of policies for promotion of innovation by
enterprises in textile-garment sector in Vietnam is evaluated through
assessments by enterprises such as: (i) Rate of impacts from provision of
information on textile-garment industrial clusters to innovation activities by
enterprises; (ii) Rate of planned material supplying zones to meet demands
of innovation by enterprises; and (iii) Rate of training support programs
through universities and vocational colleges to meet demands of innovation
by enterprises in terms of high quality human resources. Sustainability of
policies for promotion of innovation by enterprises in textile-garment sector
in Vietnam is evaluated also by State administration agencies, namely: (i)
Positive effects from support policies for management of value chains; (ii)
Positive impacts from taxation and finance policies toward innovation
activities by enterprises; and (iii) Positive outcomes of supports for
enterprises to carry out quality inspection and control works (to overcome
trade and technical barriers) and forecasts of new production trends.
Recently, according to Circular No. 04/2018/TT-BKHCN on 15th May 2018
by Ministry of Science and Technology governing science-technology
statistic surveys, outside of national programs of statistic surveys, the
innovation survey of enterprises is to be conducted every 3 years. However,
policies related to stimulation and supports for innovation by enterprises are
not evaluated in terms of validity, effectiveness, suitability and
sustainability.
4. Conclusions
Innovation activities by enterprises have deciding roles for competitiveness
at enterprise and national levels. In Vietnam, leaders and policy makers get
aware deeply of this when promulgating policies toward stimulation and
supports of innovation activities by enterprises. However, the evaluation of
policies for promotion of innovation by enterprises needs to be based on
fundamental elements of policies such as backgrounds, targets, objective
figures, principles for implementation, component policies, solutions and
tools for realization of targets, and evaluation of eventual impacts toward
JSTPM Vol 8, No 1+2, 2019 83
innovation activities by enterprises. The evaluation has become just and
urgent requirements in a society with trends of democratization in its
development. They also create solid platforms for development of
administration by the State toward enterprises in its orientation to become a
State really of people, by people and for people./.
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