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Asian Journal of Agriculture and Development (AJAD) - Call for papers!

Clustering and Technical Efficiency of Micro and Small Enterprises in Thua Thien Hue Province, Central Vietnam

(Vietnam), Doctor of Philosophy in Agricultural Economics (University of the Philippines Los Baños)

Dissertation Abstract:

 

The study was the first attempt to estimate technical efficiency of micro- and small enterprises and analyze the significance of different factors, including clustering, in determining technical efficiency of small firms in Thua Thien Hue province, Central Vietnam. It was inspired by the literature on clustering which stresses that high availability of information and factor inputs, and competitive environment are of strategic importance to bringing about improved technical efficiency. The study used firm-level data collected through direct interview with prepared questionnaire for a sample of 140 micro- and small enterprises of two sectors, construction materials and furniture, which are most numerous and important sectors, typically rural-based, in the province of Thua Thien Hue.

Econometric analysis using stochastic frontier methods was undertaken to estimate levels of technical efficiency of firms in the two sectors. It was found that there existed a wide dispersion of technical efficiency across firms, especially for non-clustered ones, and clustered firms were more technically efficient than their non-clustered counterparts. Analysis of technical efficiency showed that clustering, among other things, was a significant determinant of firm-level technical efficiency. The study also showed that clustering attributes and firm’s characteristics exerted effects on technical efficiency in a sector specific manner.

The study offered a number of policy implications to increase technical efficiency of firms and to reduce the inter-firm variance in efficiency. Proposed policies included those at national and industry levels to make market more competitive and transparent as well as policies firm-level to improve firms’ human capital and technical capability.