Drivers of productivity in Vietnamese SMEs: the role of management standards and innovation

Abstract

Using a rich panel dataset of small and medium scale manufacturing enterprises (SMEs) active in the manufacturing sector in Viet Nam, this paper investigates the drivers of firm productivity, focusing on the role played by international management standards certification. We test the hypothesis that, accounting for technological innovation (product and process) and other variables related to technological capabilities, international standards are conducive to higher productivity, through improved management practices and business organization. In line with the requirement of continuous improvement implied by most international standards, the main findings show that the possession of an internationally recognized standard certificate leads to significant productivity premium. We further find that the effect of certification on productivity is particularly strong for firms with technological innovation, located in southern provinces, and operating in more scale-intensive industries.

Just a Piece of Paper? Domestic Standards Certification and Small Firm Growth in Viet Nam

“…For firm level performance, we investigate firms' sales growth, using empirical specifications from the industrial economics literature studying firm dynamics and explaining firm size distributions in developed and developing countries (Evans, 1987a(Evans, , 1987bSleuwaegen & Goedhuys, 2002;Sutton, 1997). This focus on sales growth and on domestically awarded certificates represents a novelty within the body of empirical literature on SMEs performance in Viet Nam, since empirical studies have, instead, looked at the effects of international certifications on other performance indicators, such as labour productivity (Calza, Goedhuys, & Trifković, 2019;Trifković, 2016), business risk (Trifković, 2018), work conditions (Trifković, 2017), and environmental performance (Nguyen & Hens, 2015).…”

The influence of standards and patents on long-term economic growth

“…To get a clearer understanding of the long-term effects of innovation and to check the results of this study for robustness, it would be desirable to see more research of this kind in the future. Finally, linking macroeconomic studies with the insights of the already existing microeconomic studies (Bourke & Roper, 2017;Calza et al, 2019;Wakke et al, 2015) might generate additional insights about the obviously complex and long-lasting impacts of standards.…”

The Impact of Innovation on the Performance of Manufacturing Enterprises in Vietnam

“…They concluded that the possession of an internationally recognized standard certificate leads to significant productivity. They also proposed that the effect of certification on productivity is particularly strong for firms with technological innovation [23].…”