Resource misallocation of SMEs in Vietnamese manufacturing sector

2019 ◽  
Vol 26 (3) ◽  
pp. 290-303
Author(s):  
Phuong Thi Nguyen ◽  
Minh Khac Nguyen
Keyword(s):  
Developing Countries ◽  
Total Factor Productivity ◽  
Design Methodology ◽  
Large Scale ◽  
Manufacturing Sector ◽  
Factor Productivity ◽  
Content Type ◽  
Resource Misallocation ◽  
Productivity Decomposition ◽  
Enterprise Survey

Purpose The purpose of this paper is to examine resource misallocation among Vietnam’s small- and medium-sized enterprises (SMEs) in the manufacturing sector. The paper also aims to consider selective factors on reducing the level of resource misallocation in SMEs. Design/methodology/approach Resource misallocation and efficiency gains in total factor productivity (TFP) are assessed using Vietnam’s annual enterprise survey data for the period 2000–2015 and an appropriate productivity decomposition framework. Findings Resource misallocation is found to be higher among SMEs than large scale enterprises. TFP is found to 116.3 per cent greater if there is no resource misallocation among SMEs. Smaller scale, lower market concentration, trade liberalisation and corruption control are found to be associated with lower level of resource misallocation in SMEs. Research limitations/implications The major limitation of this study is that it has only decomposed misallocation of resources arising from output and capital distortions and that it focusses on selective factors contribution to reducing misallocation level in SMEs. Originality/value Resource misallocation is attracting attention in both developed and developing countries. However, knowledge about resource misallocation among SMEs is limited, particularly in the context of developing countries. This paper assesses the level of resource misallocation among SMEs in Vietnamese manufacturing sector.

Misallocation and reallocation of resources in Vietnamese manufacturing firms

2020 ◽  
Vol 47 (7) ◽  
pp. 1605-1627
Author(s):  
Phuong Thi Nguyen ◽  
Minh Khac Nguyen
Keyword(s):  
Market Share ◽  
Choice Model ◽  
Manufacturing Sector ◽  
Productivity Change ◽  
Aggregate Productivity ◽  
Firm Level ◽  
Content Type ◽  
Resource Misallocation ◽  
Productivity Decomposition ◽  
Exit Decisions

PurposeThis research identifies the level of misallocation in Vietnamese manufacturing sector for the period 2000–2015. Meltiz and Polanec dynamic productivity decomposition is used to compare the relative productivity contributions from surviving, entering and exiting firms to aggregate productivity change by the type of ownership. Heckman's two-step model is used to examine the effect of misallocation and industry- and firm-level factors on entry or exit decision and market share of firms in Vietnamese manufacturing sector.Design/methodology/approachThe level of misallocation and efficiency gains in total factor productivity (TFP) are assessed using Hsieh and Klenow (2009) productivity decomposition framework for the period 2000–2015. The dynamic productivity decomposition of Meltiz and Polanec (2015) is used to compare the relative contributions from surviving, entering and exiting firms to aggregate productivity change. The effects of misallocation and other factors on entry or exit decisions and market share of firms are determined by using Heckman choice model.FindingsThe results indicate three main points. Firstly, resource misallocation is found to be highest among state-owned enterprise (SOEs) and low technology industries. TFP is found to 81.2% greater if there is no resource misallocation among firms. Secondly, the aggregate productivity change for the entering, exiting and surviving firms is 35% due to productivity reallocation among three groups. Finally, the decision of entry or exit as well as the market share of firms are influenced by misallocation and industry- and firm-level factors such as Vietnam's WTO entry, tax policy, financial frictions, industrial concentration, technology gap, capital intensity, human capital, scale of firm, time entry and FDI spillovers. The result finds the higher misallocation level is, the lower the probability and market share for a new firm to enter in the industry is.Research limitations/implicationsThe main limitation of the study is that the market is assumed perfectly competitive and the method has only decomposed misallocation of resources to those arising from output and capital distortions. The results of Heckman choice model only clarify on the sub-sample of state-owned enterprises and low technology firms.Originality/valueThe focus of many previous research papers on resource misallocation was generally to look at the level of misallocation in developed countries. However, knowledge about the effect of misallocation and other factors on entry or exit decisions and market share of firms is limited, particularly in the context of developing countries. This paper clarifies the level of misallocation in Vietnamese manufacturing sector and the effect of misallocation and other factors on entry or exit decisions and market share of firms.

Industry level analysis of productivity growth under market imperfections

2019 ◽  
Vol 13 (1) ◽  
pp. 155-174
Author(s):  
Ramaa Arun Kumar ◽  
Mahua Paul
Keyword(s):  
Total Factor Productivity ◽  
Productivity Growth ◽  
Manufacturing Sector ◽  
Product Market ◽  
Market Imperfections ◽  
Total Output ◽  
Factor Productivity ◽  
Empirical Estimation ◽  
Content Type ◽  
Solow Residual

Purpose This study aims to estimate total factor productivity (TFP) growth for the post-2008 period for selected industries in the manufacturing sector at NIC 3-digit. Total factor productivity growth (TFPG) estimates are based on the theoretical framework provided by studies such Hall (1988), Abraham et al. (2009) and Crepon et al. (2005) that incorporate market imperfection in labour and product market, thereby modifying the traditional TFP estimation as Solow Residual. Design/methodology/approach Based on the theoretical model that incorporates market imperfections in labour as well as product market in modifying the TFP estimates using the Levinsohn–Petrin framework of empirical estimation, the authors have calculated industry wise TFPG for 62 industries at NIC 3-digit level. Findings The study finds three distinct trends: first, there are considerable industrial disparities in productivity growth in terms of TFP. The estimates have been found to be higher than the conventional Solow Residual for most industries, indicating the role played by market imperfections in affecting the conventional measure of productivity growth. Second, estimates of bargaining power are found to be lower than those compared to the earlier estimates in Maiti (2013) for the Indian organised manufacturing case for 1998-2005. This observation is commensurate with the observation in recent years of a falling share in labour wage in total output in organised manufacturing sector. Finally, the study also found a statistically significant contribution of greater mechanisation on TFPG while an adverse effect of the rising dependence of organised manufacturing on contractual labour. Originality/value The role of market imperfections in measuring TFPG has been undertaken, and it has been found to be an important factor, as the estimated measures vary from the conventional measures of TFPG. Moreover, the study has considered a very recent period from 2008-2015 in estimating TFPG, as well as analysing the factors behind the trends in TFPG at industrial level.

Growth and productivity performance of small manufacturing enterprises (SMEs)

2009 ◽  
Vol 1 (1) ◽  
pp. 39-56 ◽  
Author(s):  
S.N. Rajesh Raj ◽  
Mihir K. Mahapatra
Keyword(s):  
Total Factor Productivity ◽  
Low Income ◽  
Productivity Growth ◽  
Manufacturing Sector ◽  
Sample Survey ◽  
Annual Data ◽  
Factor Productivity ◽  
Content Type ◽  
Manufacturing Enterprises ◽  
The Government

PurposeThe purpose of this paper is to examine the performance of small manufacturing enterprises (SMEs) in India during the pre‐reforms (prior to 1991) and reforms period (1991 onwards) with focus on 15 major states from different levels of development.Design/methodology/approachIn order to capture variation across different categories of states, 15 major states in India have been classified into high‐, middle‐ and low‐income states. Further, to capture productivity growth in the sector during the pre‐reforms and reforms period, both partial factor productivity and total factor productivity method (growth accounting approach) have been adopted. The analysis is based on different rounds of nationwide survey conducted by the National Sample Survey Organization (NSSO) of the Government of India during 1978‐2001.FindingsThe findings of the study reveal erosion in growth of output in the SMEs during the reforms period as compared to the pre‐reforms period with variation across different categories of states. The decline in growth of output during the reforms period can be primarily on account of fall in growth of employment and investment. The total factor productivity growth has also declined during the reforms period suggesting the need to enhance the level of technical efficiency and skills of the labour force in the sector. This is noticed in spite of major role played by the SMEs in providing employment (80 per cent of the total manufacturing sector employment) opportunities and in generating output (contributes 60 per cent of net domestic product) in the country.Research limitations/implicationsOn account of non‐availability of annual data, the study relied on data collected by the NSSO of the Government of India periodically. In addition, the study did not examine the factors that explain decline in productivity growth in the sector.Originality/valueThere is a large body of literature on regional growth and productivity in the Indian manufacturing sector but most of the studies have considered only the organized manufacturing sector. This study contributes to the literature by analyzing the inter‐state variation in growth and productivity performance of SMEs in the pre‐reforms and reforms periods.

scholarly journals Human Capital Spillovers, Productivity and Growth in the Manufacturing Sector of Pakistan

2009 ◽  
Vol 48 (2) ◽  
pp. 125-140
Author(s):  
Abdul Hamid ◽  
J. Hanns Pichler
Keyword(s):  
Developing Countries ◽  
Human Capital ◽  
Total Factor Productivity ◽  
Production Technology ◽  
Manufacturing Sector ◽  
Value Added ◽  
Jel Classification ◽  
Factor Productivity ◽  
Major Factors

Manufacturing is an important sector of Pakistan’s economy. The main focus of this paper is to analyse the major factors of value-added growth and productivity in the manufacturing sector by using Translog Production Technology over the period 1971-72 to 2004-05. The empirical findings show that the contribution of productivity and human capital is around one- third of the total value-added growth in manufacturing sector which is less than the contribution attributed to these factors in developed and many other developing countries. Conventional factors like capital and labour are still the mainstay in the value-added growth of Pakistan’s manufacturing sector. JEL classification: O1, O3, O4, O14, O15, O31 Keywords: Human Capital Spillovers, Total Factor Productivity, Absolute and Relative Shares

scholarly journals State of Technology and Productivity in Pakistan’s Manufacturing Industries: Some Strategic Directions to Build Technological Competence

2000 ◽  
Vol 39 (1) ◽  
pp. 1-21 ◽  
Author(s):  
Zafar Mahmood ◽  
Rehana Siddiqui
Keyword(s):  
Total Factor Productivity ◽  
Large Scale ◽  
Slow Growth ◽  
Manufacturing Sector ◽  
Careful Analysis ◽  
Manufacturing Industries ◽  
Factor Productivity ◽  
Technology System ◽  
The Public ◽  
The Status

Historically, Pakistan’s economic growth record, especially of the manufacturing sector, has been quite satisfactory. However, since the late 1980s Pakistan has been facing a slow growth of manufacturing industries, particularly of the large-scale manufacturing units. This has led some economists to express the apprehension that perhaps de-industrialisation is taking place in the country. A careful analysis of the causes of this sluggish growth suggests that one of the main contributory factors is the slow growth in total factor productivity (TFP)—the best overall measure of competitiveness. What has caused this productivity slow-down? For Pakistan there is clear evidence of a relationship between the growth in total factor productivity and the ailing S & T apparatus. The results presented in the study also lend support to the hypothesis that knowledge capital, human capital, openness, and government policies are crucial determinants of total factor productivity growth. Given a liberal economic environment in the country, which is essential to improve efficiency and productivity, the paper offers four strategic directions in order to improve the status of the S & T system in Pakistan: (1) augment the public sector S & T apparatus with the private sector funding and oversight; (2) take measures to upgrade scientific research institutions to the international standard; (3) streamline the technology creation, absorption, and diffusion system; and (4) enhance the demand for S & T in industries. These strategic directions are designed in such a manner that they work together towards a series of phased reforms, which can create incentives and market-based mechanisms to enhance the technology system without relying on a radical shift in the governance element of the bureaucracy.

IS RESOURCE MISALLOCATION LEADING TO PRODUCTIVITY GAPS IN MALAYSIA’S MANUFACTURING SECTOR?

2020 ◽  
Vol 65 (05) ◽  
pp. 1213-1235
Author(s):  
LAY LIAN CHUAH ◽  
NORMAN V. LOAYZA ◽  
HA NGUYEN
Keyword(s):  
Total Factor Productivity ◽  
Manufacturing Sector ◽  
Aggregate Productivity ◽  
Factor Productivity ◽  
Gross Domestic Product Growth ◽  
Large Aggregate ◽  
High Productivity ◽  
Resource Misallocation ◽  
Productivity Gains ◽  
Reallocation Of Resources

The reallocation of resources from low- to high-productivity firms can generate large aggregate productivity gains. The paper uses data from the Malaysian manufacturing censuses of 2005 and 2010 to measure the country’s hypothetical productivity gains if all misallocation within industries are removed. Comparing the results across the two census waves, we conclude that efficiency gaps (that is, the degree of misallocation) in Malaysia have narrowed by one-fifth. The efficiency gaps, however, appear to be over 40%, indicating a substantial room for improvement. This is important, particularly if total factor productivity growth is expected to support future economic growth. The analysis in this paper accounts only for resource misallocation within sectors. There may be other, possibly large, resource misallocation across sectors. Closing those gaps could boost total factor productivity and gross domestic product growth even further.

Impact of Determinants of Industrial Development on Employment and Wages in Indian Manufacturing

2020 ◽  
pp. 18-30
Keyword(s):  
Technical Efficiency ◽  
Total Factor Productivity ◽  
Technical Change ◽  
Positive Impact ◽  
Manufacturing Sector ◽  
Factor Productivity ◽  
Firm Level ◽  
Employment Level ◽  
The Impact ◽  
Level Performance

ABSTRACT The present study was undertaken to explore the evolution of the impact of firm-level performance on employment level and wages in the Indian organized manufacturing sector over the period 1989-90 to 2013-14. One of the major components of the economic reform package was the deregulation and de-licensing in the Indian organized manufacturing sector. The impact of firm-level performance on employment and wages were estimated for Indian organized manufacturing sector in major sub-sectors in India during the period from 1989-90 to 2013-14 of the various variables namely profitability ratio, total factor productivity change, technical change, technical efficiency, openness (export-import), investment intensity, raw material intensity and FECI in total factor productivity index, technical efficiency, and technical change. The study exhibited that all explanatory variables except profitability ratio and technical change cost had a positive impact on the employment level. Out of eight variables, four variables such as net of foreign equity capital, investment intensity, TFPCH, and technical efficiency change showed a positive impact on wages and salary ratio and rest of the four variables such as openness intensity, technology acquisition index, profitability ratio, and technical change had negative impact on wages and salary ratio. In this context, the profit ratio should be distributed as per the marginal rule of economics such as the marginal productivity of labour and capital.

How to do business in Brazil

2017 ◽  
Vol 33 (8) ◽  
pp. 36-38
Keyword(s):  
Developing Countries ◽  
Latin America ◽  
Design Methodology ◽  
Reading Time ◽  
Content Type ◽  
Business People ◽  
The World ◽  
Pertinent Information ◽  
Specific Culture ◽  
Practical Implications

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings It is said that Latin America is one of the hardest places in which to do business, and within Latin America as well as considering the differing challenges that Argentina or Columbia may present, Brazil is perhaps the most difficult place to go to in order to develop trade and commercial agreements. In addition to the different language as compared to the rest of the region, there is a very specific culture and life view that will be wholly alien to many business people, whether they are from developed or developing countries around the world. Practical implications The paper provides strategic insights and practical thinking that have influenced some of the world’s leading organizations. Originality/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

How “The Three Rules” guide strategy and investment decisions at Deloitte Consulting LLP

2015 ◽  
Vol 43 (3) ◽  
pp. 7-14 ◽  
Author(s):  
Jim Moffatt
Keyword(s):  
Design Methodology ◽  
Large Scale ◽  
Investment Decisions ◽  
Decision Makers ◽  
Research Project ◽  
Content Type ◽  
First Case ◽  
Practical Implications ◽  
Thought Leadership

Purpose – This case example looks at how Deloitte Consulting applies the Three Rules synthesized by Michael Raynor and Mumtaz Ahmed based on their large-scale research project that identified patterns in the way exceptional companies think. Design/methodology/approach – The Three Rules concept is a key piece of Deloitte Consulting’s thought leadership program. So how are the three rules helping the organization perform? Now that research has shown how exceptional companies think, CEO Jim Moffatt could address the question, “Does Deloitte think like an exceptional company?” Findings – Deloitte has had success with an approach that promotes a bias towards non-price value over price and revenue over costs. Practical implications – It’s critical that all decision makers in an organization understand how decisions that are consistent with the three rules have contributed to past success as well as how they can apply the rules to difficult challenges they face today. Originality/value – This is the first case study written from a CEO’s perspective that looks at how the Three Rules approach of Michael Raynor and Mumtaz Ahmed can foster a firm’s growth and exceptional performance.

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