Internal factors influencing the competitiveness of SMEs: the case of Binh Duong Province in Vietnam

Abstract

Small and Medium Enterprises (SMEs) in Vietnam in general and in Binh Duong province in particular are experiencing tough competition in the context of global and regional international integration. This study aims at identifying the internal factors affecting business competitiveness of SMEs in the province of Binh Duong. The proposed research model consists of seven independent variables (market orientation, organizational capability, reward and compensation, learning organization, technological innovation, brand orientation, access to finance) and one dependent variable (SME's competitiveness). Both qualitative approach and quantitative approach were adopted. The quantitative research was conducted through a survey of 350 business owners or their representatives. There are 345 valid returned questionnaires. The methodology of framework test involves validity and reliability of measure scales test and checking of variables. In order to test the hypotheses the structural equation modeling is employed with the help of SPSS 16.0 and AMOS 21.0. The findings show that only two factors affecting the competitiveness of SMEs which are learning organization and access to finance. The results are not in line with the current literature because the other constructs like reward and compensation, technological innovation and brand orientation have no impact on SMEs' competitiveness. This can be explained by limited sample size, lack of mediating and control variables. Implications are offered on the influence of learning organization and access to finance on SMEs' competitiveness. Recommendations for future research are also developed.