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Firm Performance in Vietnam:Evidence from Manufacturing Small and Medium Enterprises

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Abstract

This paper examines the performance of domestic non-state manufacturing small and medium enterprises (SMEs) in Vietnam. Specifically, it evaluates firm level technical efficiency and identifies the determinants of technical efficiency of these SMEs. The paper uses an econometric approach based on a stochastic frontier production function to analyse 5,204 observations of SMEs from three surveys conducted in 2002, 2005 and 2007. The results from the estimations reveal that manufacturing SMEs in Vietnam have relatively high average technical efficiency ranging from 84.2 percent to 92.5 percent. The paper further examines the factors influencing efficiency. It finds that firm age, size, location, ownership, cooperation with a foreign partner, subcontracting, product innovation, competition, and government assistance are significantly related to technical efficiency, albeit with varying degrees and directions. Exporting does not appear to influence technical efficiency. The paper offers some evidence-based policy recommendations to improve the technical efficiency and competitiveness of manufacturing SMEs.

Suggested Citation

  • Le, Viet & Harvie, Charles, 2010. "Firm Performance in Vietnam:Evidence from Manufacturing Small and Medium Enterprises," Economics Working Papers wp10-04, School of Economics, University of Wollongong, NSW, Australia.
  • Handle: RePEc:uow:depec1:wp10-04
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    File URL: http://www.uow.edu.au/content/groups/public/@web/@commerce/@econ/documents/doc/uow090518.pdf
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    References listed on IDEAS

    as
    1. Soderbom, Mans & Teal, Francis, 2004. "Size and efficiency in African manufacturing firms: evidence from firm-level panel data," Journal of Development Economics, Elsevier, vol. 73(1), pages 369-394, February.
    2. Vo Tri Thanh & Nguyen Tu Anh, 2006. "Institutional Changes for Private Sector Development in Vietnam : Experience and Lessons," EABER Working Papers 21826, East Asian Bureau of Economic Research.
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    Cited by:

    1. Charoenrat, Teerawat & Harvie, Charles, 2014. "The efficiency of SMEs in Thai manufacturing: A stochastic frontier analysis," Economic Modelling, Elsevier, vol. 43(C), pages 372-393.
    2. Souksavanh VIXATHEP & Nobuaki MATSUNAGA, 2015. "Entrepreneurial Human and Social Capital in Small Businesses in Vietnam - An Extended Analysis -," GSICS Working Paper Series 29, Graduate School of International Cooperation Studies, Kobe University.

    More about this item

    Keywords

    manufacturing small and medium enterprises; firm performance; technical efficiency; stochastic frontier production function; Vietnam.;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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