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 (GVCs). However, multinational companies (MNCs) organize and manage the GVCs that are continuously seeking international locations possessing a business community that could add value by increasing the efficiency and effectiveness of product and service provision. Emerging economies are the ones in which such locations are often found. Using a single case study from the garment industry in Vietnam we explore how the case company internationalizes from Vietnam and what roles innovation play in shaping the internationalization path. We frame this study on global value chain and upgrading models. Our study finds a U-shaped internationalization model that the case company followed. Efficiency and reactive innovations played a crucial role for the first degree of internationalization on the global outsourcing market. While the domestic market demand and proactive innovations related to design and brand played a crucial role as a pre-requisite for a second degree of internationalization. The study contributes to the literature by aligning the internationalization path with an innovation path (reactive, interactive, and proactive innovation). Finally, we conclude that the upgrading theory drawn from the global value chain literature should, and could be, aligned with the broader frame of innovation theory.