Internationalisation activities and performance of Vietnam SMEs

Small and medium enterprises accounts for a majority of Vietnamese enterprises. They have made significant contributions to the economy of Vietnam by creating employment, income and economic growth. Increasingly, they also participate in internationalisation activities as Vietnam is furthering its integration to the global economy. This paper focuses on the impact of internationalisation activities and the performance of Vietnamese manufacturing SMEs. Specifically, it examines the impact of exporting, subcontracting and cooperation with a foreign partner on the technical efficiency of SMEs in the manufacturing sector and its subsectors from three surveys of domestic private SMEs in 2002, 2005 and 2007. Using a stochastic frontier production function model and a technical inefficiency effects model the paper found that there are limited benefits of these activities on the technical efficiency performance of manufacturing SMEs across different sub-sectors. Thus, the paper suggests SMEs to upgrade their technology and skills of their employees to become competitive and benefit from these internationalisation activities. In addition, it emphasises the need for the government to focus on encouraging SMEs in sub-sectors which are competitive in the international markets to pursue these activities and provide quality information to help domestic SMEs to identify the right partners from overseas.