What are the characteristics of an efficient firm in developing countries’ private sector? The case of Vietnam
Keywords:efficiency, SMEs, transitional economy
AbstractThe private sector is the primary source of local development in developing countries. Previous research in developing countries has documented many factors contributing to firm-level efficiency. However, which of these factors are most likely to correlate with efficiency? This paper studies the relative importance of the firm-level efficiency determinants in a transitional economy, using a firm-level panel dataset in Vietnam between 2005 and 2013. The empirical results show that firm-specific production and labor characteristics are the most significant determinants of efficiency. Thus, firms actively seeking to improve their own production process and labor force can be well-rewarded. Moreover, government technical supports and human resource training programs, combined with anti-corruption efforts, are beneficial for firm-level efficiency, thereby improving the living standards in developing economies.
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