What are the characteristics of an efficient firm in developing countries’ private sector? The case of Vietnam



The 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.


efficiency, SMEs, transitional economy

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DOI: https://doi.org/10.26458/jedep.v7i2.584


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