Inclusive innovation in small producers’ clusters in Vietnam: policy implications from grounded theory

Innovation is increasingly acknowledged as essential for economic growth in developing countries. However, do current formal science, technology and innovation (STI)-based policy approaches involve the right assumptions and provide the appropriate models for such contexts? In some places the informal institutions play an important role in exerting the functions of an innovation system as well. Empirical evidence from small business clusters in northern Vietnam show how informal institutions provide an enabling environment for innovation. The evidence suggests a more complementary role for innovation policy in supporting the informal institutional context, rather than overruling or replacing it by formal STI institutions. Moreover, the innovation manifestations in the research cases implied negative environmental and social externalities. The proposed concept of ‘inclusive innovation’, modelled as a societal process, refers to small producers initiating and owning the innovation process, appropriating the created value and acknowledging responsibility for the negative externalities. The study suggests that policy for ‘inclusive innovation’ in the context of these small producers’ clusters should focus on facilitating the dynamics of the societal process by monitoring and safeguarding the quality of the societal process.