This study explores the effect of external engagements on innovationoutputs of firms using a cross-sectional survey data set on Vietnamese privatemanufacturing SMEs conducted in 2009.For theoretical framework, we use the the knowledge production functionmodel (PKF) (Griliches, 1979, 1990) and the network models of innovation(NMI) (OECD, 2005; Osamu, 2008).Based on PKF and NMI models, we found that there was generally apositive impact of international engagements (export, import of equipment/machinery, and the supports from foreign donors/NGOs) and other domesticengagements (subcontracting, purchasing outside business service, and beingmember of business association activities) on innovation outputs. This may bebecause externally engaged firms invested more in innovation, and/or becausethese firms were able to learn from their worldwide partners or access to a widersource of knowledge flows.Our study gives some theoretical and managerial implications. Fortheoretical implications, the findings support KPF and NMI. Firm innovationbecomes open and interconnected to external factors. For managerialimplication, increasing external engagements is a good strategy for firms toovercome their weaknesses of limited internal resources. Increasing externalengagements can also force firms to innovate more
