Assessing the Efficiency Costs of Vietnam's ‘Missing’ Small and Medium Sized Enterprises: A Panel Data Investigation

Abstract

This article investigates whether there are efficiency costs associated with the pronounced rightward skew in the firm size distribution, or Vietnam's 'missing small and medium size enterprise (SMEs)', drawing on panel data analysis of firm growth and survival. Specifically, it examines if factor allocation biases with respect to credit, preferable treatment of state owned enterprises, barriers to entry into export markets and economies of scale are important determinants of growth rates and survival probabilities of small, medium and large-sized firms. Overall, findings on the earlier variables do not support the view that there are large efficiency costs associated with Vietnam's 'missing SMEs'. Together with other results in the literature with do not find significant equity costs associated with Vietnam's 'missing SMES', these findings raise questions about policy initiatives in support of SMEs in Vietnam, such as the National SME Support program, in particular, through improved access to credit.

Financial performance and bankruptcy concerns of SMEs in their export decision

“…Those firms are more concerned about their risk of failure, thus, they more intensively perceive export obstacles including the costs of exporting (Sleuwaegen & Onkelinx, 2014;Carr et al, 2010) and government regulations, documentations, tax-related issues, crosscultural marketing activities as an obstacle (García-Vega et al, 2012). Some exporting firm have also experienced decreases in their revenues, thus, their willingness to continue their exporting activities also become reduced since they are afraid of facing with bankruptcy issues (Le & Shaffer, 2017;Lukason & Laitinen, 2016). For instance, by investigating Korean firms, Kim (2016) remarks that when firms feel that they might face bankruptcy issues, they might more intensively perceive export obstacles and might be risk averse to implement exporting strategies and activities in their operations.…”

Do intangible assets help SMEs in underdeveloped markets gain access to external finance?—the case of Vietnam

“…Third, we believe that the aforementioned business conditions are not specific to Vietnam but are typical of many developing economies. For example, prior studies show that SMEs in Thailand, Malaysia and Indonesia suffer from similar kinds of financial difficulties (Le & Shaffer, 2017). At the same time, businesses in these countries are also in the process of accumulating intangible assets (Wudhikarn & Pongpatcharatorntep, 2022).…”