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Study the impact of labor outsourcing on the financial performance of small and medium enterprises in Mekong Delta, Vietnam

Author

Listed:
  • Dinh Cong Thanh

    (Can Tho University, Vietnam)

  • Le Tan Nghiem

    (Can Tho University, Vietnam)

  • Nguyen Hong Gam

    (Nam Can Tho University, Vietnam)

  • Pham Le Hong Nhung

    (Can Tho University, Vietnam)

Abstract

The study aims to identify factors influencing labor outsourcing and analyze the impact of outsourced resources on small and medium enterprises’ financial performance in the Mekong Delta. Based on theories (including TCE, CCT, RT, and SCT theory), previous studies, and expert interviews, this research model has been developed and tested in SMEs in the Mekong Delta. The study collected data from administrators at 409 SMEs who used outsourced labor services in the last two years. Analytical methods are used, including Cronbach’s Alpha test, Exploratory Factor Analysis (EFA), Confirmatory Factor Analysis (CFA), and Structural Equation Modeling (SEM). The research results show that outsourcing depends on the functional characteristics of enterprises, risk control, managers’ attitude, and relationships in outsourcing. The study also confirms that labor outsourcing positively affects financial performance. However, the relationship between the use of outsourced resources and enterprises’ financial performance is very modest. Based on the research results, the authors also suggest managerial implications to improve SMEs’ performance through outsourcing.

Suggested Citation

  • Dinh Cong Thanh & Le Tan Nghiem & Nguyen Hong Gam & Pham Le Hong Nhung, 2022. "Study the impact of labor outsourcing on the financial performance of small and medium enterprises in Mekong Delta, Vietnam," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 12(1), pages 67-83.
    • Handle: RePEc:bjw:econen:v:12:y:2022:i:1:p:67-83
    DOI: 10.46223/HCMCOUJS.econ.en.12.1.1415.2022
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    References listed on IDEAS

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    1. John I. Agburu & Nyianshima Calvin Anza & Akuraun Shadrach Iyortsuun, 2017. "Effect of outsourcing strategies on the performance of small and medium scale enterprises (SMEs)," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 7(1), pages 1-34, December.
    2. Anders Isaksson & Björn Lantz, 2015. "Outsourcing Strategies And Their Impact On Financial Performance In Small Manufacturing Firms In Sweden," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 9(4), pages 11-20.
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