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positive international correlation between ecological regulations and patents, while
Mappong (2023) studies the regulation of the amount of funds for Corporate Social and

Environmental Responsibility. This evidence supports the notion that more stringent
environmental regulations can encourage innovation. While rigorous environmental
governance may act as a catalyst for technology investment, the specific impact can
vary depending on the province’s policies, the industry, and the readiness of
corporations to embrace sustainability and innovation. As a result, in Vietnam’s case,
we develop the second hypothesis:
Hypothesis: Provinces with higher levels of efficiency in environmental
governance are more likely to have corporates that prioritize and invest in technology

investment strategies.
3. Research methodology
3.1. Sample construction
Our sample intersects two primary data sources: (i) The Viet Nam Provincial
Governance and Public Administration Performance Index (PAPI) is the country’s
largest annual time series. PAPI assesses three mutually reinforcing processes: policy

making, policy implementation, and the monitoring of public service delivery. Our
sample contains provincial-level panel data on 523 companies of
63 provinces between 2019 and 2021. We use one component of the PAPI index that
appeared in 2019: Environmental governance; (ii) secondary data of audited financial
statements from the FiinPro data system provided by FiinGroup Joint Stock Company
(Vietnam). We exclude observations with insufficient information for constructing firm-
level technology investment measures and those with missing values for control

variables. This filtering process and merging with other databases yield a final sample
of 1,886 firm-year observations between 2019 and 2021.
3.2. Measuring Corporate Technology Investment
We gauge a company’s technology investment by examining its Science and
Technology Development (STD) fund, as reported in its financial statements. The STD
investment fund represents the portion of the company’s STD fund that remains unspent

at the reporting date. In Vietnam, listed firms establish STD funds to finance scientific
research and technological development. 116 When the value of the STD fund increases,
it indicates that the unutilized STD fund for the year has increased, suggesting a decrease
in the efficiency of using the fund for science and technology development and vice
versa. Accordingly, we measure the level of corporate technology investment by using
the value of STD found in the balance sheet from FiinPro data as follows:
(1) TEC1 is defined as the natural logarithm of the STD funds.

116 The Technology Transfer Law No. 07/2017/QH14 of 2017 stipulates: “Enterprises are allowed to use their
science and technology development funds to invest, match capital, receive co-investment for technology
innovation, technology incubation, incubation of science and technology enterprises, innovative startups, and the
commercialization of their scientific research and technology development results.”

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