Is being risky a part of growing your business? : evidence from Vietnam

This study is designed to shed light on the owners’ individual risk preferences on their firms’ total factor productivity via their innovation decisions regarding products and staff by using the 4101 Viet-namese Small and Medium-sized firms panel dataset over the course of 2011 to 2015. The effects of risk aptitude of the individual on a firm’s total factor productivity calculated from the Cobb-Douglas production function, along with the usage of the Probit model to indicate the probability of firms’ innovative intentions, and later with the application of Pooled Ordinary Least Square and Random Effects model to get estimation results. The outcomes reveal a positive correlation between the indi-vidual taste of risk towards the innovation intentions for products, but this result is the opposite for staff innovation. Moreover, the gap between the performance of the two types of owners is explicit, while the risk-averse type yields a lower total amount of productivity compared to its counterparts. The total results are supported by most of the previous papers regarding the relationship between risk aptitude towards innovation intentions and total factor productivity.