Dut, Vo Van
(2015)
The Effects Of Local Business Environments On
Smes' Performance: Empirical Evidence From
The Mekong Delta.
Asian Academy of Management Journal (AAMJ), 20 (1).
pp. 1-22.
ISSN 1394-2603
Abstract
This paper investigates how SME's local business environment affects its performance.
Theoretical arguments for business environment and performance go in both directions.
That is, on the one hand business environment enhances SME's performance; on the
other hand it also impedes its operation. Using these arguments, we hypothesise that both
favor treatment of local government for state-owned companies and bribery (or "speed
money") are negatively related to SME's performance. Promotion policies of local
government for private firm and local labour force have positive effects on SME's
performance. We test these hypotheses in a survey data from 63 manufacturing and
service SMEs locating in three provinces of the Mekong Delta within the period of 2011
and 2012. Using fixed effect and random effect models, the empirical results release that
local government's favour policies for private firms and labour force have positive effects
on SMEs' performance. The results revealed that although bribery has positively related
to SME's performance, this relation becomes negatively when the level of bribe is high. A
major implication is that the study provides better understanding for SMEs in addressing
the local environment factors, which significantly affect SMEs' performance. The results
of this study can also be used as reference for anyone who is interested in start their own
business providing insights into decision-making in starting a business and also for any
SMEs which are interested in continuing to sustain and grow. In addition, bribery
enables SMEs to use government resources, avoid red tape, and thus foster revenues.
High levels of "speed money" increasingly absorbs the returns on SME activities, and
distort entrepreneurial spirit and behaviour because favourable relationships with public
officials provide entrepreneurs legitimacy and thus decrease the risk for closure.
Actions (login required)
 |
View Item |
![[img]](http://eprints.usm.my/style/images/fileicons/application_pdf.png)
