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Journal of Science, Economics and Business 28, No. 2 (2012) 87‐102
Abstract. This paper focuses on analysing relationships between gender, innovation and the
growth of manufacturing SMEs in Vietnam. The analysis is based on the conceptual framework
outlined by Storey (1994). We used a sample of 353 SMEs derived from secondary dataset from
the World Bank. Our results indicate that gender, new product introduction strategy, firm size and
firm age are significant factors that influence the growth of SME manufacturing. Several
implications for SMEs, the government sector and researchers as well as future research direction
are also provided.
paper focuses on analysing the relationships Some researchers attempted to categorise the
between gender, innovation and the growth of research into specific models. Storey (2000),
SMEs in Vietnam. The purpose of the paper is cited in Curran (1997), noted that there are
to investigate whether gender and innovation three models for researching growth: stage
(focused factors) contribute to the growth of models, personality-based models, and
manufacturing SMEs in Vietnam. descriptive models. Davidsson et al. (2006) did
This paper uses data from the Productivity similar work when reviewing research on small
and Investment Climate Enterprise Survey firms’ growth and suggested two models of
implemented by the World Bank in 2005. The growth: “stages and transitions” and “growth
sample includes manufacturing SMEs in five antecedents and determinants”.
regions of Vietnam. Both Storey (2000) and Davidsson et al.
The paper is organised as follows: the first (2006) mentioned stage models that involve the
section (above) briefly reviews the literature on growth processes in the form of life cycle,
the growth model of the SMEs sectors and stage, and/or transition models that consist of
hypotheses development. The third section the entire life of an organization (see Greiner,
presents the data and sample as well as the 1972, Churchill & Lewis, 1983, Scott & Bruce,
analytical framework, variables and the related 1987). The life cycle model focuses on stages
measurement. The fourth section presents the or cycles such as start-up, growth, maturity and
models and methods used in the study. The fifth decline; whereas the stage model concentrates
and sixth sections report the results and its on the problems the organisation faces during
discussion and conclusion, respectively. growth (Davidsson et al., 2006) such as growth
transition and managerial role problems (Scott
& Bruce, 1987). However, these models have
2. Literature review and hypothesis limitations as not all firms begin at the first
development stage of start-up and move to the final stage of
decline. In practice, management roles do not
Growth has attracted the interest of many
move at the same time with their related stage;
scholars researching SMEs. According to
organisations may have a management style
Davidsson et al. (2006) Storey (1994, 2000),
that is more or less advanced than its stage
studies of small and medium firm growth have
(Storey, 1994).
so far been many. However, this does not mean
Models of growth antecedents and
that we understand everything about the growth
determinants actually referred to factors or
of the small and medium enterprises sector.
determinants that affect firm growth, including
Moreover, the authors of these reviews have
both indirect and direct effects of the factors.
come to realise that it is not easy to make a
Both the personality-based model and the
coherent review from the literature. Each
descriptive model are called “descriptive
research followed a different direction. The
models” (Curran, 1997). Hence, by nature,
reasons for that are likely due to differences in
descriptive models and models of growth
perspectives and theoretical backgrounds,
antecedents and determinants are the same,
empirical contexts, model and analysis
although their names are different. The reason
approaches, and the inherent complexity of the
for separating personality-based models from
nature of growth itself (Davidsson et al., 2006).
“descriptive models” is to distinguish models
based on personality or an entrepreneur’s
2.1. Growth models perception with a different analysis method
Research studies on firm growth have been from the other models (Storey, 2000). The
numerous and with different perspectives. origin of personality-based models is developed
N.P. Tuan / VNU Journal of Science, Economics and Business 28, No. 2 (2012) 87‐102 89
by Davidsson (1991). In Davidsson’s model, al. (1996) investigated the causes of growth in
the determinants are ability, need, and small manufacturing firms in the UK in 1996.
opportunity as well as the entrepreneur’s They used OLS regression techniques for
perception of each of these determinants. Based analysing only direct effects of firm
on Swedish data, the authors’ findings suggest characteristics, entrepreneur characteristics,
that all factors affect growth, but need business strategy and constraints to growth in
variables, with the age of the entrepreneur and turnover. They concluded that it was possible to
the size of the firm being the most effective in explain growth in small firms in terms of the four
explaining variance in growth. The variables groups of factors. It shows that there is an obvious
also had the most stable effects across need for a comprehensive multivariate empirical
industries (Storey, 2000). analysis of small firm growth from which
The other “descriptive models” were theoretical development may proceed (Barkham
summarised in a framework by Storey (1994) et al., 1996), especially in developing countries
and updated by Barkham et al. (1996). In the where there has not been a great deal of empirical
framework, a large number of influences on research conducted. Theoretically, the growth of
growth are categorised into three groups of Vietnamese SMEs was empirically researched,
factors. These are “the starting resources of the which focuses only on firm characteristics such as
entrepreneur, the firm, and strategy” (see Table firm size, firm age, ownership structure and
1, Figure 1). Growth in small firms is location (Hansen et al., 2005).
considered to be the result of the direct and This study applies a more comprehensive
indirect influences of three separate but framework modified from Storey (1994) and
interrelated sets of those factors. with a different dataset to show more robust
The approach adopted in this study is based results. This study will focus solely on the
on the framework outlined by Storey (1994). direct effects from groups of those factors,
Storey’s (1994) framework with some especially the effect of gender and innovation
modifications was mostly implemented in on the growth of manufacturing SMEs in
developed countries. For instance, Barkham et
gfh
Vietnam.
Growth
Strategy
Business Strategy
Firm characteristics
(Bollingtoft, Ulhoi, Madsen and Neergaard, experience of the owner/manager, three studies
2003), and technology-intensive firms (McGee show that prior sector experience is associated
and Dowling, 1994). Among these specific with slower-growing firms, and one suggests
samples, the determinants that affect growth or that prior sector experience is related to faster-
performance of firms are different, and if growing firms. Although there are different
similar contribution of those factors is not results, probably due to measurement problems
consistent. These samples showed that the as well as the samples used, prior sector
performance of firms might be different among experience of owner/manager is often
various industry sectors according to their associated with the growth of the firm. We
technological levels, and these different therefore hypothesised that prior sector
samples should not be predicted by the same experience is significantly related to faster-
factors. Therefore, it is necessary to examine growing firms.
the growth of firms in different industry sectors, H6: Prior sector experience of
and the determinants for each specific industry owner/manager has a positive and significant
sample. The following relationship is effect on the growth of the firm.
Gender
hypothesized:
Previous studies suggest that there are a
H4: Growth of the firm is different among
number of reasons why females and males
industry sectors with various technological
perform differently in businesses. The majority
levels.
of the literature generally found that male-
Owner/manager Characteristics
owned/headed firms performed better than
Educational Background female-owned/headed firms. Female
Storey (1994) reviewed seventeen studies entrepreneurs have been stereotyped as
related to the education level of the conservative and risk-averse, while male
entrepreneur. He found there is no relationship entrepreneurs are seen as taking more risks than
between educational backgrounds and growth female entrepreneurs (Meier & Masters, 1988).
in nine studies, but there is some form of The liberal feminist theory asserts that
positive relationship in eight studies. Once SMEs operated by females prove to have poorer
again, measurement problems are raised to performance because females explicitly suffer
explain these different results. In addition, the discrimination by lenders and consultants or
nature and grading of educational qualifications because of other systematic factors such as lack
vary from country to country. However, the of relevant education and lack of experience
general positive results provide fairly consistent that serve as barriers for females to access key
support for the point of view that a higher level resources (Fischer et al., 1993). Also, the social
of education is more likely to cause faster- feminist theory suggests that males and females
growing firms. Moreover, in Vietnam’s case, a are inherently different in nature (Fischer et al.,
higher level of education is often related to a 1993). However, the differences between male
higher reputation and position in firms. The and female approaches to doing businesses do
following relationship is hypothesized: not necessarily mean that male entrepreneurs
H5: Educational background of are more effective than female entrepreneurs.
owner/manager is positively and significantly The existing studies often compare differences
related to the growth of the firm. between male and female characteristics and
Prior Sector Experience values. The findings confirm that differences
Storey (1994) also reviewed prior sector exist but may not have a strong impact on firm
experience in nine of his studies. The result is performance (Fischer et al., 1993).
mixed. Five studies do not show a relationship Several studies have shown that female
between business growth and prior sector entrepreneurs suffer from discrimination by
N.P. Tuan / VNU Journal of Science, Economics and Business 28, No. 2 (2012) 87‐102 93
including missing data, a total of 353 SMEs are 197 firms followed by 127 low technology
used as the analysis sample in this study. manufactures (see Table 2). There are 273
Table 3 shows that the majority of SMEs in male-owned SMEs compared to 80 female-
our sample are operating in the traditional owned. Table 4 shows that most of the SMEs
sectors such as food & beverage and wood & are located in two of the most developed
wood products, to make use of Vietnam’s regions of the Red River Delta and South East
abundant resources and labour. In addition, Hanoi. Our sample also indicates that legal
based on industry classification by forms of limited liability and foreign direct
technological level (Lall, 2000) most of the investment (FDI company), and sole
SMEs are resource-based manufactures with proprietorship are popular (see Table 5).
Gjkk
years. Therefore, this variable is measured as a Growth of sale(4) (GrS): In order to calculate
dummy variable (yes =1; no=0). growth, only the first year and end year data have
Firm size (FS): according to the definition been frequently used in previous studies.
of SMEs from the World Bank and that of the However, this method has been criticised because
Vietnamese Government, the size of firm used it models growth as one giant leap (Davidsson et
in this study is measured by a scale from 10 to al., 2006). Therefore, in this study, growth rate of
300 employees. sales is calculated by the mean value of sales
Firm age (FA): This variable is measured growth rate from 2002 to 2004.
by using scales from the year of establishment
to the year 2005. SMEs used in this study were
established in the years prior to, and including 4. Analysis
2002. Therefore, the age of SMEs in this
sample is from 3 to 47 years. The quantitative method used in our study
Educational Background (ED): This variable is Multiple Regression analysis. The
is measured by ordinal numbers from 1 to 6 relationship between independent and
corresponding to the level of education of the dependent variables is modeled in the following
owner/manager from the lowest through the equation:
highest level: Did not complete high school; High Yi = a + bXi + e
school; Vocational training; Some College or Where Y represents growth rate of sales (GrS)
University training; Graduate degree (BA, BSc in ith SMEs, Xi represents seven independent
etc.), and Post graduate degree (PhD, Masters). variables such as new product introduction (NPI),
Prior Sector Experience (PSE): This firm size (FS), firm age (FA), Industry sector (IS),
variable is measured by years of experience educational background (EB), prior sector
working in this sector before managing the experience (PSE), gender (GD), a is intercept, and
firm. In this study, prior sector experience e is error term.
ranges from 0 to 40 years. The relationship between the variables is
Industry sector (IS): There are many illustrated in the equations below:
methods to classify industry sectors. However, GrS = a + b1NPI + b2FS + b3FA + b4IS +
this study focuses on the technological levels of b5EB + b6PSE + b7GD + e
products identified by Lall (2000). According to
Lall, there are five technological levels of
products including Primary products, Resource- 5. Results and discussion
based, Low-technology, Medium-technology
and High-technology manufactures. Due to the Table 6 provides the descriptive statistics
availability of the data we have, only four levels including product moment correlation
are used - we excluded primary products. Based (Pearson), mean, and standard deviations of all
on these four levels, the numbers of firms are variables in the research. The correlations
grouped into three smaller samples - Resource- among the independent variables are not
based, Low-technology, and Medium and High- ______
technology manufactures. Therefore, this (4)
Davidsson et al., (2006) lists a range of growth
variable is coded by ordinal numbers 1, 2 and 3 indicators, which were used to measure growth, including
corresponding to three technological levels. The assets, employment, market share, physical output, profits,
number of firms belonging to level 1, 2 and 3 in and sales. There are three choices of indicators among the
above alternatives: 1) use a multiple indicator index; 2) use
this sample is 197, 127 and 29, respectively.
alternative measures separately, and 3) use the best and most
Gender (GD): This refers to the gender of appropriate indicator (Davidsson et al., 2006). The third
the principal owner of the firms. Male choice seems to receive an emerging consensus and the most
entrepreneur = 0, female entrepreneur = 1. preferred indicator should be sales growth (Weinzimmer et
al., 1998; Davidsson et al., 2006).
N.P. Tuan / VNU Journal of Science, Economics and Business 28, No. 2 (2012) 87‐102 97
significant or very low; therefore, this early with multicollinearity that would violate
analysis is indicating that there are no problems assumptions for the general linear model.
Table 6: Descriptive statistics of all variables in the research
Variables Mean S.D 1 2 3 4 5 6 7 8
(1)NPI 0.3 0.46
(2)FS 87.31 88.22 0.12*
(3)FA 8.17 7.32 0.02 0.19**
(4)IS 1.52 0.644 -0.005 -0.066 -0.03
(5)ED 3.93 1.52 0.03 0.29** 0.08* 0.18**
(6)PSE 9.31 7.69 0.02 0.13* 0.18** 0.12* 0.02
(7)GD 0.23 0.42 0.28** 0.17* -0.046 0.02 -0.022 -0.05
(8)GrS 0.33 1.08 0.158* 0.14* -0.06 -0.02 0.04 0.034 -0.09
** and * shows statistical significance at 1% and 5% level, respectively
kjl
Table 7 shows the results of multiple influence on growth rate of sales at 5% and 1%
regression analysis. The result shows New level of significance, respectively. Industry
Product Introduction (NPI) has a positive Sector (IS), Educational Background (EB) and
impact on the growth rate of sales at 1% level Prior Sector Experience (PSE) are insignificant.
of significance. Similarly, Firm Size (FS) has a These findings support hypotheses H1, H3
positive effect on the growth rate of sales at 1% and H7, and reject the hypotheses H2, H4, H5
level of significance. On the other hand, Firm and H6.
age (FA) and Gender (GD) have a negative
Table 7: Results of multiple regression analysis
Explanatory Variables Growth rate of sales
Coefficien VIF
t
Constant 0.29
New Product
0.45** 1.09
Introduction
Firm Size 0.002** 1.21
Firm Age -0.016* 1.07
Industry Sector -0.02 1.08
Educational
-0.007 1.15
Background
Prior Sector Experience 0.003 1.07
Gender -0.44** 1.13
R square 0.075 0.093
Adjusted R square 0.056 0.064
F statistics 3.989 3.245
Durbin-Watson 1.945 1.893
N(firms) 353 197
** and * indicate statistically significance at 1%
and 5% level, respectively
98 N.P. Tuan / VNU Journal of Science, Economics and Business 28, No. 2 (2012) 87‐102
have a higher growth rate than SMEs who do useful business development services in order
not introduce new products. In terms of the to produce qualified entrepreneurs for private
impact of firm age, younger businesses grow firms. These policies can reduce the difference
more rapidly than older ones. There are gaps in terms of the growth of male and female
differences in the gender-based growth of firms headed firms.
in which male-owned/headed firms perform For researchers, this study provides
better than female-owned/headed firms. additional empirical evidence that SMEs’
However, firm size, industry sector, education growth should be based on a multidimensional
and experience of owner/managers are not framework. Particularly, the multidimensional
determinants for the growth of SMEs in the model should be tested in developing countries
Vietnamese case. where socio-economic conditions are rather
Based on the empirical findings, we can vulnerable. Moreover, when researching any
draw some implications for the SMEs, the samples, the multidimensional model should be
government sectors and researchers. For the modified in conformity with practical
SMEs sector, firstly, owners/managers should conditions of each sample. Specifically,
implement the strategy of new product hypotheses H2, H4, H5 and H6 are rejected in
introduction. They should engage in the Vietnam’s case. Obviously, the growth of
strategy of technological innovation and human SMEs is multidimensional and contingent.
resource training. This kind of strategy should Like all other research, this study also has
be long term and should be planned carefully. some limitations. The data used in this study
Secondly, investment in practical training for has some weaknesses. The data comes from a
entrepreneurs needs to be done continuously in World Bank survey. Some important variables
order to improve skills and knowledge at the could not be included in the study’s model
leadership levels for both gender headed firms. because the measurement of those variables was
In addition, although working experience and not appropriate.
education are not determinants in this sample, Finally, based on this study, further studies
they will be important in a new business should be implemented with the support of a
context following Vietnam’s WTO membership more comprehensive and coherent theoretical
in 2006 because they impart necessary background. Although this study focuses much
capabilities, skills and knowledge, which are on gender and innovation in relation to firm
critical to firm performance. growth, further studies should consider building
For the government, the different
a better and comprehensive model of growth by
backgrounds of both firms lead to different
adding other important external factors in the
outcomes, thus gender differences should be
model to reflect actual conditions. For instance,
considered in the policies for female owned
the effect of government support to SMEs in
firms. The government should pay more
Vietnam appears as an interesting variable for
attention to female owned firms because they
have just entered the economy and are not as analysis. There are forms or aspects of growth
mature as male-owned/headed firms. Thus, that our data did not capture (such as growth
female-owned/headed firms should have more achieved through acquisition). This is a
support from the government in order to potentially important form of growth that
improve their performance. The government should be considered in the design of future
may assist the female-owned/headed firms to studies. This study used a model that captures
reflect on gender-based differences so that it only the direct effects on growth. Future studies
can mitigate such differences. The government should also consider other effects such as
can help both firms by providing training, mediated or moderated effects. These effects
improving the educational system and having may show better results.
100 N.P. Tuan / VNU Journal of Science, Economics and Business 28, No. 2 (2012) 87‐102
Tóm tắt. Nghiên cứu này phân tích mối quan hệ giữa giới, sự đổi mới và tăng trưởng của các
doanh nghiệp sản xuất quy mô vừa và nhỏ (SMEs) ở Việt Nam. Bài viết đã xây dựng một mô hình
kinh tế lượng dựa trên khuôn khổ lý thuyết hay mô hình tăng trưởng của SMEs của Storey năm 1994.
Cụ thể hơn, bài viết đã sử dụng mẫu phân tích gồm 353 doanh nghiệp có quy mô nhỏ từ bảng dữ liệu
thứ cấp của Ngân hàng Thế giới. Sau khi phân tích mô hình hồi quy tuyến tính, kết quả đã chỉ ra rằng
giới, chiến lược giới thiệu sản phẩm mới, quy mô và tuổi doanh nghiệp là những nhân tố quyết định
đến sự tăng trưởng của các doanh nghiệp này. Cuối cùng, bài viết đề xuất một số kiến nghị cho SMEs,
chính phủ và các nhà nghiên cứu cũng như định hướng nghiên cứu trong tương lai.