Title: State ownership, formality status and technical efficiency: evidence from Vietnamese SMEs

Authors: Nguyen-Thi-Kim Nguyen; Tiet Tuyen; Nguyen-Anh Tuan; Nguyen-Anh Thu; Nguyen-Quoc Viet; To-The Nguyen

Addresses: SAO DO University, 24, Street Thai Hoc 2, Sao Do Ward, Chi Linh city, Hai Duong Province, Vietnam ' UMT Business School, University of Management and Technology, 11 Street 35CL, Cat Lai Ward, Thu Duc City, Ho Chi Minh City, Vietnam ' VNU University of Economics and Business, Vietnam National University, Building E4, 144 Xuan Thuy, Cau Giay, Hanoi, Vietnam ' VNU University of Economics and Business, Vietnam National University, Building E4, 144 Xuan Thuy, Cau Giay, Hanoi, Vietnam ' Vietnam Institute of Economics and Policy Research, Vietnam National University, Building E4, 144 Xuan Thuy, Cau Giay, Hanoi, Vietnam ' VNU University of Economics and Business, Vietnam National University, Building E4, 144 Xuan Thuy, Cau Giay, Hanoi, Vietnam

Abstract: Small and medium-sized enterprises (SMEs) are critical in a rapidly growing economy like Vietnam, which requires significant government assistance. Our analysis begins by examining the technological efficiency of enterprises utilising data from Vietnamese SMEs from 2017 to 2018. We then examine the effects of formality status and state ownership as a proxy for political ties on the technical efficiency of SMEs in Vietnam. We found that policies should reduce cronyism in firm-state relationships to incentivise firms to invest in improving productivity. Moreover, to boost productivity, it is critical to promote formalisation by raising the number of legally registered businesses, the level of tax registration, and the number of formal labour contracts.

Keywords: formality; small and medium scale firms; state ownership; technical efficiency; Vietnam.

DOI: 10.1504/IJMED.2023.128162

International Journal of Management and Enterprise Development, 2023 Vol.22 No.1, pp.25 - 44

Received: 22 Feb 2022
Accepted: 10 Sep 2022
Published online: 09 Jan 2023 *