The impact of firm size on the performance of Vietnamese private enterprises: A case study

Cuong Vu Hung,Binh Dang Thai,Tuong Phi Vinh

doi:10.21511/ppm.19(2).2021.20

Abstract

This article investigates the effect of firm size on the performance of Vietnamese private enterprises. Based on the data from the Annual Enterprise Survey from 2009 to 2018, this study uses an ordinary least-squares regression model (OLS) to point out the effects of firm size (growth rate, total assets, and total labor) on the performance of Vietnamese private enterprises in both static and dynamic states. According to the results of the quantitative model, total assets are the biggest factor for determining firm performance, followed by total labor and growth rate. The results highlight the issue in Vietnamese private enterprises development in terms of scale, despite the fact that their number is growing, as the scale of enterprises decreases (the proportion of micro and small enterprises increases, but the proportion of medium and big enterprises decreases). Besides, the disadvantages of scale also negatively affect the development process of Vietnamese private enterprises, including accessing capital, increase in production or productivity, business expansion, and improving competitiveness. AcknowledgmentsThis research is supported by the National Science Project “Development of Private Enterprises in the Southwest Region in the new context” (KHCN-TNB/14-19/X15).

Highlights

Firm size is among determinant factors of firm performance and shows the profitability of business (Oyelade, 2019; Isik et al, 2017)
0.4064 corresponds to P-value = 0.000 < 0.05, The research results showed that among the variawhich indicates that all variables: firm size and control variables tal assets is the crucial factor determining firm per
This study examined the relationship between firm size and firm performance of Vietnamese private enterprises

Summary

INTRODUCTION

Firm size is among determinant factors of firm performance and shows the profitability of business (Oyelade, 2019; Isik et al, 2017). In the context of international integration, emergence and vast influence of large enterprises-multinational corporations (MNCs) have proved the important role of scale in firm performance and business environment (Babalola, 2013). Otherwise, regarding the economy of scale, enterprises can produce more efficiently, reduce costs, apply technology to production negotiate with suppliers increase competitiveness, and access to capital etc. In Vietnamese enterprises of the private sector, especially micro and small sized, have been developing based on exploiting the domestic market even though there is dynamic development and significant contribution to the growth of the economy. The small size limits access to capital, the ability to apply innovative technologies, and the capacity to create good quality jobs, which government expects from enterprise development. Figuring out the optimal firm size is a current issue for Vietnamese enterprises in general and for private enterprises in particular

LITERATURE REVIEW

RESEARCH RESULTS

CONCLUSION