Research On Factors Affecting The Performance Of Firms In Danang City, Vietnam.doc

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THE UNIVERSITY OF DA NANG
UNIVERSITY OF ECONOMICS
VO HONG TAM
RESEARCH ON FACTORS AFFECTING THE
PERFORMANCE OF FIRMS IN DANANG CITY,
VIETNAM
Major: Accounting
Code: 62.34.03.01
SUMMARY OF DOCTORAL DISSERTATION
Danang – 2022

The dissertation was completed at
UNIVERSITY OF ECONOMICS, THE UNIVERSITY OF DANANG
Supervisor: Assoc. Prof. Dr. Tran Dinh Khoi Nguyen
Assoc. Prof. Dr. Hoang Tuung
Reviewer 1: Assoc. Prof. Dr. Huynh Duc Long
Reviewer 2: Assoc. Prof. Dr. Nguyen Huu Anh
Reviewer 3: Assoc. Prof. Dr. Tran Thi Cam Thanh
The dissertation will be defended at the doctoral defence
committee from University of Economics, The University
of Danang on January 24th
, 2022.
The dissertation can be found at:
- National Library of Vietnam
- The University of Da Nang - The Center for Learning Information
Resources and Communication.

INTRODUCTION
1. The necessity of the research
Through a synthesis of some domestic and foreign research results, we can
see:
On measurement of performance: authors often consider financial or non-
financial aspects, only a few studies combine both measures simultaneously to get
a more multidimensional view of performance. In the context of enterprises'
operations that need to consider sustainable development, financial indicators do
not seem to fully demonstrate the achievements of a business performance. The
question is, is there a combination of ways to measure performance both
financially and non-financially; thereby pointing out the factors that affect the
enterprise's performance.
About the influencing factors: Most previous studies focused on a group of
factors for performance, such as the influence of the group of factors on human
capital, social capital, capital structure, corporate governance or local government
policies on performance. Studies on the effects of many groups of factors on the
performance are of little interest, especially the combination of internal and
external factors.
Regarding the impact of factors on business performance: In general, there is
a difference in the impact direction of factors on the performance of enterprises, so
the pre-test of it is necessary in the context of businesses in Da Nang City.
Regarding the research context: The study of factors affecting the business
performance of enterprises is carried out in both developed and developing
countries, according to different groups and industries with different contexts.
That is the changes in governance mechanism in joint stock companies after many
financial incidents requiring corporate governance to be considered to be results; it
is rapid innovation in technology companies, so information resources should be
viewed as a competitive advantage; It is the quality of human resources in the
context of equal accessibility to tangible assets ... Therefore, research gaps in
performance must be placed in a specific space, in a specific historical period.
Researches on this field in Vietnam are not only researched by domestic scholars
but also by foreign scholars, but mostly focused on enterprises in Ha Noi or Ho
Chi Minh City. Da Nang is an economic center in the Central region of Vietnam,
but so far there have been no studies assessing the influence of internal and
external factors on the performance of enterprises. In the context that the service
industries and high-tech enterprises are attracting investment in Da Nang, the
study of factors affecting the performance of firms in Da Nang has practical
meaning, contributing to additional theoretical treasure trove of research results.
Besides, in the context of global economic integration, firms have to compete
very hard. This poses in corporate governance in Da Nang that managers must see
the performance in financial and non-financial aspects. Managers need to see
which factors have positive and negative impacts on results in order to offer
solutions to improve business performance.

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From the mentions about, the author chose the topic: "Research on factors
affecting the performance of firm in Da Nang - Vietnam" as the research topic for
the doctoral thesis.
2. Research objective
- Building a system of criteria to measure the performance of enterprises in
Da Nang city.
- Evaluate the influence of factors on the performance of enterprises in Da
Nang city.
- Point out the difference in the influence of factors on the performance of
business groups in Da Nang city.
- Proposing solutions to improve the performance of businesses in Da Nang.
3. Research questions
- How is the firm performance in Danang city assessed in terms of non-
financial and financial aspects?
- What factors affect the performance of businesses in Danang city?
- Is there a difference in the influence of factors on the performance of groups
of enterprises?
- What are the recommendations for the City Government, managers, owners,
training units and employees to improve firm performance?
4. Research scope and object
- Research object:
Firm performance is measured in both ways: financial performance and non-
financial performance.
Internal and external factors effect on the performance of businesses.
- Research scope:
The scope of the research in terms of space: The thesis studies enterprises in
the area of Danang city, excluding foreign-invested enterprises (FDI).
Scope of the study in terms of time: from 2017 to 2019.
5. Research methodology
Qualitative method:
The author of the thesis uses the document research method: this method is
used to synthesize the theoretical basis and the results of domestic and foreign
empirical research on the factors affecting the business performance. This method
is foundation for the research design of the thesis.
The author has surveyed the opinions of experts who are researchers in the
field of governance to include variables in the research model as well as in the
evaluation and measurement adjustment of independent and dependent variables.
Quantitative method:
The thesis has used sampling investigation method to collect data on factors
affecting firm performance. Based on the survey results obtained, the surveyors
continue to collect financial data from the Financial Statement system that
businesses provide to the Danang Statistical Office.
The data after collected is the author using tools for data processing:

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Cronbach's alpha analysis, Exploratory factor analysis, multi-structural regression
(SEM), correlation analysis, Anova analysis .
6. Contribution
Academic contributions:
Firstly: The thesis has pointed out the deficiencies in measuring the firm
performance of domestic and foreign researchs about factors affecting on business
performance. Thereby, the thesis builds a scale of business performance combined
in both non-financial and financial aspects. Therefore, the results of building this
performance scale contribute to supplementing the lack of measurement of
business performance.
Second: When considering the impact of factors on the performance of
enterprises in Da Nang city, the thesis has considered the simultaneous impact of
two groups of factors inside and outside of the firm. Research results contribute to
enriching the theory of the impact of factors on business performance.
Practical contributions:
This thesis is one of the fairly comprehensive studies on the effects of factors
on the performance of businesses in Da Nang City - Vietnam. The thesis has
combined quantitative and qualitative research to study the effects of human
capital factors, social capital, leadership aspects, capital structure, other internal
resources, and business supportive policies of Da Nang city as well as the city's
infrastructure to achievements. These research results help enterprises to have
policies to enhance and promote human capital potentials, social capital potentials,
other internal resources ... to improve their performance.
The research results of the thesis help the city government to review the
usefulness of the city's policies to support business development, then take
measures to make these policies really meaningful.
Besides, the research results of the thesis serve as a basis for training units in
the city to take measures to change the quality of training to meet the needs of
enterprises.
7. Structure
In addition to the introduction and conclusion, the thesis is organized into 4
chapters. Chapter 1 presents the theoretical and practical basis of the influences of
factors on business performance. Chapter 2 presents the research design to
determine the effects of these factors on the performance of businesses in Da Nang
city. Chapter 3 presents the results of empirical research on the effects of these
factors on the performance of enterprises in Da Nang city. Discussion and
recommendations from research results are presented in the 4th chapter of the
thesis.
CHAPTER 1: THEORETICAL AND PRACTICAL BASIS OF FACTORS
EFFECT ON FIRM PERFORMANCE
1.1. Firm performance and firm performance measurement
1.1.1. Firm performance defination
Lebas & Euske (2004) provide a set of definitions for firm's performance.

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Whereby:
- Firm performance is a set of financial and non-financial indicators that
provide information on the achievement of goals and outcomes.
- Firm performance is dynamic, requiring judgment and interpretation.
- Firm performance can be illustrated using a causal model describing how
present action will affect future results.
- Firm performance can be understood differently depending on who
evaluates the organization's performance
- The concept of Firm performance must understand the basic characteristics
of each area of responsibility.
1.1.2. Measure firm performance
1.1.2.1. Measure performance with an individual approach
Table 1. Indicators measuring performance in terms of accounting
Indicator Author
Indicators measuring business results
1 Sale
Chen, Cheng, & Hwang (2005), Magableh, Kharabsheh,
& Al-Zubi (2011)
2 Profit
Ismail & King (2005), San & Heng (2009), Zakaria
(2015).
Indicators measuring business efficiency
4 ROA
Jantina et al. (2013), Bansal & Sharma (2016), Lin & Fu
(2017),
5 ROE
Addae, Nyarko-Baasi, & Hughes (2013), Tran,
Nonneman, & Jorissen (2015).
6 ROS
Choe (2004), Filatotchev, Isachenkova, & Mickiewicz
(2007), Ebaid (2009)
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Asset turnover
Ang & Ding (2006), Najid & Rahman (2011a)
(Source: author's synthesis)
Table 2. Indicators measuring performance in terms of market
Indicator Author
1 Tobin’ Q Bansal & Sharma (2016), Lin & Fu (2017)
2 M/B
Al Farooque, Van Zijl, Dunstan, & Karim (2007), Najid &
Rahman (2011),
Table 3. Indicators measuring performance in terms of non-financial
Indicators
TT measuring Index Author
performance
Employee
Change of position,
Kaplan & Norton (1992),
1
Investment in training and
satisfaction
development, Salary and
Zaman (2004), Lynch &
Cross (1990)…
bonus policy, Pathway to

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advancement in the
organization, Working
environment, ...
Mixture of products and
services, Number of
complaints, Percentage of
Customer
product acquisition, New
2 customer intentions,
satisfaction
Number of new products
and services, overall
customer satisfaction ...
Number of projects to
Environmental
improve the environment,
Use of recycled materials, Zaman (2004), Delmas &
3 performance
Level of reuse of waste, Blass (2010)
Energy consumption
The number of vulnerable
Social
workers employed, the
4 number of social and Perrini & Tencati (2006)
contribution
community projects,
1.1.2.2. Measuring performance in an integrated approach through a performance
measurement model
The Balanced Scorecard
The performance Pyramid
Performance Prism
1.2 Factors affecting business performance
1.2.1 Internal factors
1.2.2 External factors
1.3. Theoritical base
Resources-based view
Market-based view
Stakeholders theory
Other theories
1.4. Literature review
1.4.1. Overview of research in the world
1.4.1.1 Internal factors
a. Human capital, social capital

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The effects of the above capital types on performance have been verified by
many empirical studies. However, there are differences in research results due to
their relevance to measurement of performance by financial or non-financial
indicators, and the connotation of the concepts of the above types of capital, when
measured, is different. We can take a look at some of the following typical works:
Gary & Birger (1989) in a study in the United States has shown that human
resources, environmental factors and organizational structure have a positive
impact on performance (ROA). Research by Price & Stoica (2015) at 229 small
and medium enterprises in the United States also shows that human capital, social
capital, knowledge and startup orientations affect non-financial performance.
Salina et al (2010) in a study of 833 small enterprises in Malaysia through
sampling survey showed that knowledge management (receiving, transferring,
applying) and social capital (through creating relationships with the parties) had a
positive influence on performance. With this same point of view, a study in Laos
was conducted by Inmyxai & Takahashi (2012) show intangible and tangible
resources have positively influenced the performance of SMEs in Laos in the
period 2005-2009. Research by Saha & Banerjee (2015) conducted in small
enterprises in West Bengael (Bangladesh) shows a positive impact between social
capital and firm performance.
However, in the opposite direction, research by Lakse Mudiyanselage (2020)
shows that social capital, particularly social relations, has a negative impact on
firm performance.
Besides the human capital studies mentioned above, there are quite a few
studies on the deeper aspect which is leadership and firm performance.
Explain the relationship between the factors: Age, education, experience,
social backgrounds ... to strategy, to business performance, the authors use Upper
Echelon Theory introduced by Hambrick & Mason (1984). According to this
theory, the organization's results - strategic choices and performance levels - are
partly predicted by the manager's fundamental characteristics.
b. Other internal resources
- Management information system
The information system is seen as a resource affecting competitiveness and
contributing to increased results
- Facilities system
Facilities are always very important factors affecting firm performance.
Although there are quite a lot of studies on the impact of other internal resources
on enterprise performance, there is inconsistency in research results c. Capital
structure
The research results show that the impact of capital structure on performance
is still inconsistent, partly because of differences in capital structure metrics and
performance indicators, and partly because of different economic contexts in each
phase. In addition, the impact of capital structure has not been considered in
harmony with other resources, so it is not clear that the combined effects of many

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factors on performance.
d. Factors related to firm ownership
- Ownership concentration
- Ownership structure
- The independence between the owner and the
manager. 1.4.1.2 External factors
a. Government support policy
Government support policy is a very broad issue and always affects the
performance of businesses. Whether a free market economy model or a regulated
market economy model, government supportive policies play an increasingly
important role. The specific manifestations of the policy support the government
through policies on corporate income taxes, and policies related to fees and
charges. That is the policy of operating the foreign exchange rate (floating or
controlling in a defined frame), interest rate policy. We cannot deny that if a
business receives a lot of government support, its chances of growth will be
higher.
b. Industry characteristics
c. Other factors
1.4.2 Overview of research in Vietnam
1.4.2.1 Internal factors
a. Human capital, social capital
Intangible resources play an important role and influence the performance of
businesses in Vietnam. However, most of the studies were conducted in two key
economic regions of the country, Hanoi and Ho Chi Minh City, with mainly
SMEs.
Human capital is not only considered in terms of employees' resources, but
also in-depth studies in terms of leadership aspects. However, the studies look at
one dimension of human capital in terms of employees or go deep into the aspect
of leadership. The combination of human resources (employer and employee) has
not been considered at the same time, although both of these resources have a
positive effect on performance.
Social capital is particularly interested through relationships with sellers,
buyers and banks or through organizations and professional associations.
However, the influence of factors of social capital is still unclear, and results are
not consistent. This requires empirical studies to clarify the role of social capital in
enterprises.
b. Other internal resources
- Management information system
Currently, researching the impact of management information systems on
business performance in general and the effect of building, using strategic
management accounting information on the performance of enterprises
particularly in Vietnam has not been paid attention.
- Tangible fixed assets factor

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Tangible fixed assets play a very important role in the operations of
businesses. However, considering the relationship between investment of fixed
assets to the performance of enterprises, researchers still give different results. c.
Capital structure
Research on the effects of capital structure on the performance of enterprises
in Vietnam is concerned by many researchers. Research results on the impact of
this factor on this achievement tend to be negative affected (Nguyen Thanh Hieu
& Nguyen Huu Anh, 2020), ( Vo & Ellis, 2017), (Chang & cộng sự, 2014) differs
from the world research results presented in the previous section.
d. Factors related to ownership
- Ownership concentration
- Owner structure
- Duality
- Board size
1.4.2.2 External factors
The influence of external factors on the performance of enterprises has also
been mentioned in a number of studies, but most of it is focused on and supported
by the government or local authorities. This is considered appropriate in the
context of Vietnam implementing the economic reform policy following the
socialist-oriented market economy. However, studies on the impact of government
support policies on operational performance are not commensurate.
1.5 Research Gaps
1.5.1 Research gaps on performance measurement
1.5.2 Research gap on factors affecting business performance
CHAPTER 2: RESEARCH DESIGN
2.1 Research model and hypotheses development
2.1.1 Research model
Y = β0 + β1 INTERF + β2 EXTERF + β3 CONTROL +
ε Y: Firm performance
INTERF: Internal factors, included:
HCAP: Human capital
REL: Social capital
ORS: Other internal resources
DEBT: Debt ratio
EXTERF: External factors, included:
GOVS: Support policy of local government
INFR: Infrastructure of the city
CONTROL: Control variables
SIZE: firm size
AGE: firm age
2.1.2 Hypotheses development
H1: Human capital has a positive impact on business performance

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H2: Firm performance will be higher when men lead the business.
H3a: Manager's education level has a positive impact on the performance of
businesses
H3b: Manager's management experience has a positive impact on the
performance of businesses
H3c: Management training activities for managers have a positive impact on
the performance of businesses.
H4: Social capital is positively related to firm performance.
H5: Other internal resources (investment in information systems, fixed assets
for production and business) have a positive impact on the performance of firms.
H6: Capital structure is positively related to firm performance.
H7: Supportive policies of local authorities have a positive impact on firm
performance.
H8: The city's infrastructure positively affects business performance.
2.2. Measurement of research variables
2.2.1 Measure the dependent variable
- Financial aspect
ROA = Profit before tax / Average total
assets ROE = Profit after tax / Average equity
- Non-financial aspect: based on researchs of Fernandes et al. (2005);
Akintimehin et al. (2019)
Table 4. Measure performance by non-financial indicators
Aspect Content
Recruiting many new employees
Employee Employee satisfaction
Productivity of employees has been improved
The number of new customers is increasing
Customer Customer satisfaction is increasing
The number of customer complaints is decreasing
Internal Quality products and services are getting better and better
process Product and service supply time is shortened
( Source: Author's synthesis)
Besides, the thesis
also measures
financial
performance
through the
perception of business managers through two observed variables: The revenue and
profit of the business have increased over the years.
2.2.2 Measure the independent variables
2.2.2.1 Human Capital Variable Measurement
Based on researchs of Carmeli & Tishler (2004); N. Bontis (1998); Sulait et
al (2014)
Table 5. Measure human capital variable in terms of labor potential.

Aspect Content
Knowledge
Education is appropriate for completing the job
The employees are retrained, in accordance with the practical
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requirements of the work
Skill
Have the right experience to get the job done
Have the high working-skills to complete the job
Cooperate well with colleagues to do the job.
Attitude
Proactively learn from each other to perform better at work
Business owners / managers always organize for employees to
learn and share experiences
(Source: Author's synthesis)
Leadership aspect
Table 6. Measure the variables of the business leader characteristics
Aspect Content Reference
Harymawan và cộng sự
Management experience
0: less than 3 years (2019); Rodenbach và
1: three years or more Brettel (2012); Bontis và
cộng sự (2000)…
1: Female
Khan và Vieito (2013);
Gender Jadiyappa và cộng sự
0: Male
(2019)…
1: attended
Management training
0: have never attended
Bryan (2006)
any management
training course
Education
Level EDU1 EDU2 Reference
Under-graduate 0 0
Ujunwa (2012);
Graduate 1 0
Darmadi (2013)
Post-graduate 0 1
2.2.2.2 Social Capital Variable Measurement
Based on researchs of Akintimehin et al (2019); Park & Luo (2001)
Table 7. Measure social capital
No Content
1 Relationship with family
2 Relationship with friends, colleagues
3 Relationship with customers
4 Relationship with suppliers
5 Relationship with credit institutions
6 Relationship with professional associations
7 Relations with the government
2.2.2.3 Measure other Internal Resources variable
Table 8. Measure other Internal Resources variable

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Upgrading, investing in
machinery and equipment, Olatunji et al (2014); Chukwu &
accommodation and restaurant Egbuhuzor (2017)
Fixed assets
Upgrade, invest in store system
Chukwu & Egbuhuzor (2017);
Upgrade and invest in warehouse Okeyo et al (2014)
system
Investing in an online sales Konings & Roodhooft (2002);
IT
system Salwani et al (2009)
Investment in internal Olatunji et al (2014); Schief et al
management software system (2013)
Trademark branding, image of enterprise
Greenhalgh & Rogers (2012);
Agostini et al (2015)
2.2.2.4 Measure capital structure
This thesis looks at the effect of capital structure from a general perspective
(using the ratio of Liabilities / Total assets), not considering the duration of debt of
firms. (Majumdar & Chhibber (1999), Khatab et al. (2011), Dada & Ghazali
(2016).
2.2.2.5 Measure Local Government Support
Table 9. Measure Local Government Support
No. Content Reference
1
Support for receiving and Mbugua & Moronge (2016); Nguyen et al
training for workers (2019); Phan (2011); Decision No. 01/2018
/ QD-UBND of Da Nang City.
Mbugua & Moronge (2016); Nguyen et al
2 Support for low-interest loans (2019); Phan (2011); Resolution No.
149/2018 / NQ-HDND of Da Nang City
3 Support land rental costs
Phan (2011); Decision No. 36/2013 / QD-
UBND of Da Nang City.
4 Trade promotion support
Nguyen et al (2019); Phan (2011); Decision
No. 13/2016/QD-UBND of Da Nang City.
5
Funding fortechnology Nguyen et al (2019); Phan (2011); Decision
innovation No. 36/2016/QD-UBND of Da Nang City.
2.2.2.6 Measure local infrastructure variable
Table 10. Measure local infrastructure
The city's aviation infrastructure is VCCI (2018); Zamberi
Traffic convenient for businesses
Ahmad & Xavier
The city's seaport infrastructure is (2012)
convenient for the transportation of goods

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The City's Railway infrastructure is
convenient for transporting goods and Kinyua (2014), VCCI
tourists
(2018);
The city's road infrastructure is convenient
for transporting goods and tourists
IT
The city's IT infrastructure is convenient
for businesses
VCCI (2018); Zamberi
The system of vocational schools, colleges Ahmad & Xavier
Education and universities in the city provides human (2012)
resources for business activities of
enterprises
Electricity Clean water and electricity supply system Kinyua (2014), VCCI
and water is convenient for business (2018)
Waste Waste collection and treatment system
treatment actively supports businesses
Zamberi Ahmad &
The system of supermarkets and
Commerce
Xavier (2012)
traditional markets of the City is
convenient for businesses.
2.2.3 Measure control variables
Control variables are measured based on the studies of Price & Stoica (2015);
Sengaloun & Yoshi (2012).
Table 11. Measure control variables
No. Variable name Measure
1 Size Number of labor
2 Age Number of years the enterprise has been
operating since its inception
2.3. Sample selection, data collection and processing
2.3.1 Sample selection
The thesis used stratified random sampling method. Sample size is
determined based on researchs of Hair et al (2010), Burns et al (2017).
2.3.2 Data collected
Primary data: questionaires was sent to manager to collect information.
Secondary data: data from the financial statement system of selected
companies above was collected.
2.3.3 Data processing
Step 1: Clean the data to enhance the reliability of the data analysis results in
the future.
Step 2: Analyzing the characteristics of the sample to consider the
characteristics of the sample, thereby serving as a basis for making appropriate
evaluation comments.
Step 3: Preliminary test the reliability of the scale through Cronbach's Alpha

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coefficients to eliminate trash variables.
Step 4: Exploratory Factor Analysis
Step 5: Analyze the SEM
CHAPTER 3: RESEARCH RESULTS
3.1 Characteristics of the research sample
3.1.1 Firm performance characteristics
ROA: the results can be obtained that the enterprises with the lowest rate of
return are -0.22 and the enterprises with the highest rate of return are 0.32, the
average rate of return of assets in the surveyed companies is 17.8 %. This figure
shows that in the 2016-2018 period, businesses in Da Nang city used assets for
business purposes very effectively.
ROE: The survey results obtained the enterprises with the lowest rate of
return were -0,089 and the enterprises with the highest rate were 0.25, the average
rate of return of equity in the surveyed companies was 9.06%. This indicator also
shows that businesses have used equity capital relatively effectively.
Non-financial performance: the survey results show that all the variables have
the average value is greater than 3.2, it can be concluded that most of the
respondents Management feels the achievements of the business in the period
2017 - 2019 are quite good.
3.1.2 Internal resources
3.1.2.1 Human capital
The survey results show that the average value of all observations on the
variables measuring the performance has a pretty large value. 3.68/5.0. As can be
seen, the enterprise managers highly appreciate the human capital resources.
Managerial aspect
Survey results show that it is not common for women to lead businesses in
Da Nang city.
In terms of education, management experience; The survey results show that
76.5% of director enterprises have college and university degrees, 8.8% of director
enterprises have postgraduate degrees, the rest 14.8% of director enterprises have
high school education. Most of these directors have experience in management
and administration for more than 3 years (447 enterprises, 93.1%).
In addition, 69.3% of these business leaders have at least attended business
management training. Thus, it can be seen that the quality of business leaders is
high, this is a great resource to create business performance.
3.1.2.2 Social capital
Similar to human capital, social capital is also measured on a 5-point scale,
the survey results show that this resource is also highly rated by business
managers. The average value of the obtained observations ranged approximately
3.15/5 to 3.8/5.
3.1.2.3 Other internal resources
Other internal resources to be considered include investment in intangible and
tangible fixed assets for business such as machinery, shops, warehouses, and

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software...
The survey results show that the average value of all observations on the
variables measuring performance is has quite small value from 3.15/5.0 to
3.39/5.0. This shows that businesses in the city have not paid much attention to
investing in these resources.
Research results show that the performance of enterprises using internal
management software is better than those that do not use these management
software.
3.1.3 External resources
3.1.3.1 Support policies of Đa Nang city
Descriptive statistics show that most of surveyed enterprises do not appreciate
the city's support policies for enterprises, the average value of the observed
variables ranges from 2.43 to 2.76.
3.1.3.2 Infrastructure of Da Nang city
The survey results show that the average values of the observed variables in
the table below are all greater than 3.5, which means that the majority of business
managers believe that the city's infrastructure has a positive impact on the
production and business activities of the enterprise.
3.2 Test reliability
Cronbach's Alpha coefficients of the scales in the study from 0.813 to 0.885
and Total variable correlation coefficients are greater than 0.3. Thus the scale
requirements, except for observed variable PER1. The number of observed
variables to be removed only one variable is used to measure the performance of
the business: PER1.
3.3 Explore factor analysis
3.3.1 Firm performance explore factor analysis
The results of the 4th EFA analysis created two factors. Two newly created
factors are named: Product, service quality (QPER) and business results (RPER).
3.3.2 Human capital explore factor analysis
The extracted factor was named HCAP.
3.3.3 Social capital explore factor analysis
Analysis results have created two factors named relations with the business
community (MREL) and relations with organizations (OREL).
3.3.4 Other internal resource explore factor analysis
The extracted factor is named as other internal resource (ORS).
3.3.5 Support policies of Đa Nang city explore factor analysis
The extracted factor is named as the enterprise support policy of the local
government (GOVS).
3.3.6 Infrastructure of Da Nang city explore factor analysis
Analysis results have created two factors named transport infrastructure
(TINFR) and the supporting service infrastructure (SINFR).
3.4 Evaluate the impact of these factors on firm performance in Da Nang city
3.4.1 Influence of factors in research model on firm performance

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3.4.1.1 Internal consistency reliability
Analysis results show that Cronbach's alpha and Composite reliability
indexes ranged from 0.76 to 0.9, so the measurement model meets the standard of
internal consistent reliability.
3.4.1.2 Convergent validity
Analysis results show that most of the observed variables have outer loading
value greater than or equal to 0.7 and all factors have AVE index greater than 0.5,
so the measurement model used in the thesis meets the convergence requirements.
3.4.1.3 Discriminant validity
The analyzed data shows that the HTMT indicators are less than 0.85. Beside,
the results of testing the confidence interval for HTMT by Bootstrapping column
2.50% and 97.50% are not content valuables 1. Thus, the measurement model
meets the standard of discrimination.
3.4.1.4 Evaluate the collinearity of the model
Analytical data shows that all VIF coefficients are less than 5, so there is no
collinearity problem in the formative measurement model.
3.4.1.5. Anslysis results
a. Model with the depenvariable is the perceived performance
Model fit
The research results show that the SRMR of the model is 0.064, so the
research model conclusions are consistent with the experimental data obtained.
Impact of factors on perceived performance
The results presented above show us the independent variables explain 39.8%
of the variation for the QPER and 24.1% of the variation for the RPER with 5%
statistical significance. Thus, the independent variables that can explain 63.9% for
the dependent variable of the study are perceived performance. This result is
considered quite good.
Considering the effect of factors on the quality of products and services, the
above data shows that other internal resources in the enterprise are the most
influencing factor, the path coefficient is 0.227, the coefficient f2
is 0.050,
followed by relations with organizations (0.197; 0.040), third is human capital
(0.157; 0.026).
Similar to considering the effect of factors on perceived business results, the
above data also show that the factor that relates to the business market is the most
influential factor with a path coefficient of 0.273 and coefficient f2
is 0.054, the
second most influential factor is the other Internal Resources (0.168; 0.022).
Bootstrapping test results are as follows:
For the dependent variable quality of products and services: impacts of
human capital variables, relations with business community, relationships with
other organizations, internal resources, and transport infrastructure is was
statistically significant at the 5% significance level (p <0.05 and the 95% BCa
confidence interval did not contain value 1).
For the dependent variable business results: the impact of the business

15

community-related variables, other internal resources is statistically significant at
the 5% significance level (p <0.05 and 95% BCa confidence interval did not
contains the value 1).
To consider the predictive capacity of the model, the thesis performs the
Blindfolding test. As a result, the Q2
values is greater than 0, and have the
predictive relationship of the model to endogenous latent variables. b. Model with
the depenvariable is the financial performance
Model fit
The results of testing the suitability of the model with the dependent variable
are financial performance with the model's SRMR of 0.076, thus concluding the
research model is suitable with obtained experimental data.
Impact of factors on financial performance
The independent variables account for 39.1% of the variation in the firm's
financial performance (FPER) with a statistical significance of 5%. This result is
considered quite good.
The results of the analysis of the path coefficient and the impact of factors
based on the coefficient f2
show that the independent variable capital structure has
the strongest impact on financial performance, the path coefficient is -0.511, the
coefficient f2
is 0.401 , followed by the variable of support policies of the local
government (0.118, 0.019) and the third was the variable of supporting service
infrastructure (0.116; 0.016) and the fourth was the human capital variable (0.110;
0.013). However, considering the impact on the model when the variables are
excluded, the variable of supporting services infrastructure and the human capital
variable has the coefficient f2
which is much less than 0.02, so the impact level is
assessed as low.
The thesis continues to consider the significance of the effects of the
independent variables on the dependent variable of financial performance through
the Bootstrapping test.
For the dependent variable financial performance, the impact of human
capital variables, transport infrastructure, local government support policies and
capital structure are statistically significant at the level of significance at 5% (p
<0.05 and the 95% BCa confidence interval contains no value 1)
Similar to the analysis results with the dependent variable model being
perceived performance, the model with the dependent variable being the financial
performance has the coefficient Q2
= 0.223 significantly greater than 0, so there is
the forecast correlation of the model to endogenous latent variables.
Through performing related tests, the results of data analysis showed:
Human capital positively affects perceived performance of product or service
quality (path coefficient 0.157, p = 0.009) and positively affects financial
performance (path coefficient 0.110, p = 0.006). Thus, hypothesis H1 is supported.
The results of data analysis with the PLS-SEM model showed that the
relationship factor with the business community positively affects perceived
results of product and service quality (path coefficient 0.115 and p = value 0.048)

16

at the same time positively affects perceived performance of business results (path
coefficient 0.273 and p-value = 0.000) and relationship factor with organizations
(relations with individuals in commercial banks trade, professional associations
and individuals in the government apparatus) positively affects perceived results in
terms of product and service quality (path coefficient 0.197, p-value = 0.003).
Similar hypothesis H4 is supported.
The analysis results show that other internal resources factor positively
affects business results (path coefficient = 0.168 and p value = 0.002) and
positively affects the quality of products and services (path coefficient = 0.227 and
p-value = 0.000). Thus, it can be concluded that hypothesis H5 is supported.
Capital structure has a negative impact on financial performance with a path
factor = -0.511 and p-value = 0.000. Thus, hypothesis H6 is rejected.
Local government business support policies positively affect financial
performance with path coefficient = 0.118 and p-value = 0.015. Hypothesis H7 is
supported.
The city's transport infrastructure has a positive impact on financial
performance (path coefficient = 0.099, p-value = 0.008) and positively affects the
quality of products and services (path coefficient = 0.131, p-value = 0.013)
therefore hypothesis H8 is supported.
Control variables considered in the research model of the thesis include: firm
size and firm age also have a positive impact on business performance. However
this effect is not significance at the 5% and 10% levels.
3.4.2 Influence of managers' characteristics on firms performance
The gender of managers has no impact on firm performance in Da Nang city.
Thus, hypothesis H2 is rejected.
The analysis results show that the higher the qualifications the manager, the
better the business performance will be. Specifically, university level has a
positive impact on financial performance measured by ROA (correlation
coefficient 0.110 and p-value is 0.016) and positively affects perceived
performance (correlation coefficient is 0.149 and p-value is 0.001). Postgraduate
education is positively related to perceived performance with a correlation
coefficient of 0.101 and p-value of 0.027. Thus, hypothesis H3a is supported.
The factor of managerial experience of business managers positively affects
both financial performance with the correlation coefficient of 0.151, the
coefficient p is 0.001 and also positively affects perceived performance with the
correlation coefficient. is 0.204 and the p-value is 0.000. This result shows that
hypothesis H3b is supported.
For the aspect of participating in management training courses, similar to
education, management experience, this factor positively affects ROA (0.133;
0.004) and positively affects perceived performance. (0.234; 0.000). Hypothesis
H3c is supported.
3.4.3 Evaluate the difference between enterprises using and not using internal
management software to firm performance

17

Research results show that businesses that use internal management software
outperform those that do not use these software.
Summary
Table 14. Summary of hypothesis testing results
No. Content Result
H1
Human capital has a positive impact on business
Accepted
performance
H2
Firm performance will be higher when men lead the
Rejected
business
H3a
Manager's education level has a positive impact on the
Accepted
performance of businesses
H3b
Manager's management experience has a positive impact
Accepted
on the performance of businesses
H3c
Management training activities for managers have a
Accepted
positive impact on the performance of businesses
H4 Social capital is positively related to firm performance Accepted
Other internal resources (investment in information
H5 systems, fixed assets for production and business) have a Accepted
positive impact on the performance of firms
H6
Capital structure is positively related to firm
Rejected
performance
H7
Supportive policies of local authorities have a positive
Accepted
impact on firm performance
H8
The city's infrastructure positively affects business
Accepted
performance
(Source: Synthesize the research results of the thesis)
CHAPTER 4: DISCUSSION AND
RECOMMENDATIONS 4.1 Discussion
4.1.1 Firm performance
The performance of businesses in Da Nang city in the period of 2017 - 2019
is quite high. Average return of assets in the period 2017 - 2019 is 17.8% and the
average rate of return on equity is 9%. In the period of 2017 - 2019, the economy
of Da Nang city develops rapidly, especially in the service and tourism sectors.
According to data from the Statistics office of Da Nang City, the number of
domestic and foreign visitors to the city is the largest ever, bringing positive
business results for service and tourism businesses in the city. city. In addition,
because businesses are located in a convenient location, they save a lot of
transportation costs. This factor is one of the important factors that increase the
financial performance of the business.
Managers do not really appreciate the results in terms of employees. The
reason may be due to the establishment of many service and tourism business units
in this period, resulting in a flow of personnel and a shortage of staff to carry out
production and business activities.

18

4.1.2 The effect of internal factors on firm performance
- Influence of human capital on firm performance in Da Nang city
Human capital positively affects financial performance (path coefficient
0.011, p = 0.006). The results of this study are similar to those of Gary & Birger
(1989), Sulait et al. (2014), Khan & Quaddus (2018). As for the impact on
perceived performance, the research results show that the human capital factor
positively affects the quality of products and services perceived (non-financial
results). This result is similar to some authors Salina et al. (2010), Sengaloun &
Yoshi (2012).
The research results show the following aspects: Education level, experience
management and participation in management training courses positively impact
corporate performance on both perceived and financial performance. This thesis
results show a very important role of business managers in small and medium
enterprises. The results of this study are completely reasonable in the context of
businesses in Da Nang city, when their operations are mainly based on business
managers. The research results are similar to those of Sitthipongpanich & Polsiri
(2015), Duc Vo & Thuy Phan (2013). Besides, research shows that the gender of
business managers has no impact on the performance of firms. This result is
different from the studies of Amran et al. (2014), Vintilă et al. (2015). This is
considered a good sign in eliminating gender inequality in business.
- Influence of social capital on firm performance in Da Nang city
Social capital, in particular the relationships with the business community,
has a positive impact on the perceived performance of business results. Business
managers in Da Nang city believe that once businesses establish good
relationships with suppliers, they will be able to purchase materials, goods and
services with reasonable prices. if the business has good relationships with
customers, they will sell many products and services. This factor makes revenue
and profit increase. This result is similar to the studies of Yadong & Min (1997),
Fernandes et al. (2005).
In the aspect of social capital measured by relationships with organizations,
This variable positive impacts on the perceived performance in terms of product
and service quality. The explanation for this problem is as follows: When the
business has close relations with the individuals in the organizations, it is easier
for businesses, shorter time in the implementation of related procedures. the
provision of products and services such as licensing procedures, payment
procedures, payment guarantee, certification of product and service quality ... It is
this that increases customer satisfaction, shorten Time to supply products. This
result is similar to the research results of Salina et al. (2010), Sengaloun & Yoshi
(2012), Saha & Banerjee (2015).
- Influence of other internal resources on firm performance in Da Nang
city.
Analysis results show that this factor positively affects perceived business
results and service and product quality perceived. The business managers said that

19

with the investment in information systems to implement corporate governance, it
will contribute to increase the efficiency of work processing, increase customer
satisfaction, and invest in the system. Fixed asset systems such as shops,
restaurants, machinery and equipment ... will increase the attractiveness in
attracting customers, save materials in production ... will increase results. This
result is similar to the studies of Le & Han (2016), Iqbal & Mati (2012),
Ravichandran & Lertwongsatien (2005). The explanation for this relationship is as
follows:
+ The use of the website to sell or promote products by businesses helps
businesses increase the ability to reach, interact with customers, timely grasp the
needs and complaints of customers, thereby quickly solving the problems.
complaints as well as timely product deliveries. the results increase customer
satisfaction. In addition, when businesses use the website to sell or promote their
products, they will save a lot of advertising costs, rent goods ... this increases
profits for the business.
+ The enterprise equipped with ERP software creates many benefits for
businesses: increasing labor productivity, higher customer satisfaction.
+ The characteristics of enterprises in Da Nang city operating in the field of
tourism, hotels and services. This is an area that requires businesses to invest in a
truly large-scale and modern fixed asset system and at the same time businesses
must constantly change and renew these assets to generate revenue, profit. That is
the reason for the impact of this factor on business performance.
- Influence of capital structure on firm performance in Da Nang city. The
capital structure factor has a negative impact on financial performance.
This result is not consistent with the study of Khatab et al. (2011), Rahman et al.
(2019). The reason is that the interest rate in the period of 2017 to 2019 is quite
high, fluctuating at approximately 9%, enterprises borrow a lot, the average value
of the debt ratio is 0.48, the average of the research companies using 48%. capital
from borrowing to finance production and business activities, this makes
enterprises incur large interest costs and as a result, reduces financial efficiency.
4.1.3 Influence of external factors on firm performance
- Influence of the local government's business support policies on firm
performance in Da Nang city
This factor positively affects financial performance, this result is similar to
the study of Mbugua & Moronge (2016), Kraja et al. (2014), Phan (2011).
- The impact of the city's infrastructure factor on business performance
Since the city was separated from Quang Nam Da Nang province, the city
government has had a lot of policies to invest in infrastructure, so far it can be said
that the transport infrastructure of the city is very advanced. This creates a
significant advantage for businesses in the city of Da Nang. With this traffic
advantage, businesses can easily approach customers, save transportation and
transportation costs, thereby increasing the revenue and profit of the business.
Support service infrastructure systems: information technology infrastructure,

20

schools, waste collection, clean water supply, electricity has a positive impact on
results. receive and financial performance at the 10% significance level. With the
socio-economic characteristics of a tourist city, these factors are good to help
business customers get more added value such as: customers can easily exchange.
more information, living in a clean environment, safe and healthy.
An interesting point in this thesis is that the factor of the city's supermarket
and traditional markets infrastructure does not affect the performance of the
business. Although supermarkets and convenience stores have sprung up quite a
lot in the city in recent years, this does not affect the results of businesses because
their customers are mainly retail customers. This result is completely consistent
with the impact of traffic infrastructure factors on business performance.
4.2 Implications
4.2.1 For business owner and manager
First: Focusing on the training of employees after the recruitment so that they
can meet the job requirements fastest.
Second: Business owners and business managers need to build good
relationships with individuals in the government management apparatus so that
they can promptly grasp information about the policy regime, as well as Get
advice and support to be able to receive these support policies.
Third: Business owners, business managers need to build trust with
individuals in the family, with friends to be able to access this capital.
Fourth: Managers and business owners need to pay more attention to
investing in e-commerce systems, internal management software systems. .
Entities need to have websites, social networking sites used to promote the image
of their business, to introduce products, to do business online, to get opinions from
customers, to have software to manage sales. inventory, accounting ...
Fifth: Business managers need to change their thinking in management, need
to apply scientific management knowledge gained from participating in
management training classes, postgraduate study into public practice. Giving birth
brings the highest business results.
4.2.2 For city government
- Continue to implement more effectively the policy of supporting loans with
low interest rates and supporting trade promotion. These are the two main
problems that small and medium enterprises face many difficulties.
- Coordinate with universities in the city to effectively support human
resource development for small and medium enterprises based on the spirit of
Circular No. 05/2019 / TT-BKHDT.
- Regularly organize human resource seminars so that businesses and training
units have opportunities to meet. Through that, training units can grasp the labor
needs of enterprises in the city to have appropriate training policies.
- Provide training units with plans to plan human resources into professions
so that training units are proactive in building training, enrollment and training
programs.

21

- Improve the legal system for businesses to easily access the city's policies to
support businesses.
In the coming time, the city government should pay more attention to
perfecting supportive service infrastructure system.
4.2.3 For training institution
- Need to train human resources to match the needs of the labor market.
- It is necessary to have forecasts about the labor market, combined with the
planning of human resource development of the city to proactively develop new
professions for the future trend.
- The training program needs to combine theory with practice so that learners
can achieve high vocational skills after graduation.
- The curiculums should focus on developing foreign language skills,
computerization of other soft skills so that after graduation, learners can easily
integrate into the new working environment and easily approach partners ...
- Develop training programs suitable to the training programs of schools in
the world and the region to create the best opportunities for employees willing to
participate in working in foreign enterprises investing in the city.
4.2.4 For employee
- Employees themselves need to pay attention to improve their own capacity.
- Employees must cooperate with each other, be more proactive in learning
from each other to perform better jobs.
- Sales, purchasing and accountants also need to establish close and close
relationships with customers and suppliers to help businesses improve the
efficiency of sales and purchase activities. Thereby increasing business
performance.
- Employees need to be more active in establishing relationships to create a
huge opportunity for enterprise survival and growth.
- In addition, in the current digital era, in order to make good use of the
information technology system, employees must pay attention to improving their
skills in using information technology to contribute to business performance.
CONCLUSION
Researching on factors affecting the business performance of the business,
thereby proposing solutions to improve business performance is always a matter of
great importance. There are quite a lot of researches by domestic and foreign
authors on this field, but there is not a single study done within the space of
Danang city. In addition, most studies often measure performance in one aspect,
few studies have done combining measuring business performance on both
perceived and financial performance. With the above reasons, the author of the
thesis researches the factors affecting enterprise performance in Da Nang city,
with the measured results combining the two above aspects.
The author has fully and logically synthesized the theory related to the topic
as well as synthesized and comprehensively evaluated domestic and foreign
research works related to the research field of the thesis. This is an important

22

premise for the author to design the study.
Based on the results of the synthesis and evaluation of the results of existing
studies and analysis of characteristics of surveyed enterprises, local characteristics,
the thesis has built a research model and selected variables. Besides, the thesis has
also presented fully the criteria used as a basis for evaluating the results of data
analysis for the study.
The data collection was done through the Statistics Office of Danang.
Therefore, the collected research data is very reliable. Research data includes
primary data collected via questionnaires sent to business managers and secondary
data from corporate financial reporting systems. In 2020, businesses are severely
affected by the Covid 19, especially services and tourism businesses, so financial
data is only collected over 3 years 2017 - 2019 to ensure the significance of the
results.
The thesis has used many statistical techniques to process the data to verify
the established research hypotheses, specifically: Using the statistical software
SPSS 22 to perform the statistical analysis of the description, Cronbach's alpha
analysis, exploratory factor analysis, correlation analysis, anova analysis and
Smart-PLS 3.3.3 software for PLS-SEM model analysis.
The research results have shown the impact of the independent variables on
the dependent variable in a fairly comprehensive research model. Most of the
factors of internal resources: Human capital, social capital, other internal resources
all have a positive impact on the performance of businesses in Da Nang city. This
result is similar for external resource factors affecting performance. The
characteristics of education, management experience, participation in management
courses have a positive impact on business performance. Besides, a rather special
point in the research results of the thesis is that the factors belonging to the aspect
of the manager are that the gender of the manager does not have an impact on the
results.
With the research results, the thesis has given some policy implications for
the subjects closely related to the production and business activities of the unit:
Employees, managers, local authorities and training institutions to improve
business performance in Da Nang city.

23

LIST OF PUBLISHED SCIENTIFIC ACHIVEMENTS
1. Vo Hong Tam, Tran Dinh Khoi Nguyen. (2019). Measuring firm
performance – An overview of approaches in the current context. Journal of
Accounting and Auditing, 11-2019(193), 33-36.
2. Tran Dinh Khoi Nguyen, Vo Hong Tam. (2020). Impacts of Human capital
on the performance of businesses in Da Nang city. Journal of Accounting and
Auditing, 11-2020(206), 29-33.
3. Tran Dinh Khoi Nguyen, Vo Hong Tam. (2020). Impacts of Social capital
on the performance of businesses in Da Nang city. Viet Nam Trade and Industry
Review, 11-2020(27), 99-104.
4. Tran Dinh Khoi Nguyen, Vo Hong Tam. (2021). Government support
policies, infrastructure and firm performance in Da Nang city. Journal of
Accounting and Auditing, 5-2021(212), 28-34.
5. Vo Hong Tam, Tran Dinh Khoi Nguyen, Ha Phuoc Vu. (2021). Human
capital, social capital and firm performance in Da Nang city. The 6th International
Conference on Accounting and Finance 2021 (ICOAF), 6-2021.

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