Ảnh hưởng của đặc điểm và năng lực kinh doanh của doanh nhân đến hoạt động kinh doanh của các doanh nghiệp nhỏ và vừa trong lĩnh vực dịch vụ ở thừa thiên huế tt tiếng anh

HUE UNIVERSITY
UNIVERSITY OF ECONOMICS

HOANG LA PHUONG HIEN

THE INFLUENCE OF ENTREPRENEURIAL CHARACTERISTICS AND
COMPETENCIES ON THE PERFORMANCE OF SMALL AND MEDIUM SIZED
ENTERPRISES IN THE SERVICE SECTOR IN THUA THIEN HUE PROVINCE

SUMMARY OF DOCTORAL DISSERTATION
BUSINESS ADMINISTRATION

HUE - 2019


HUE UNIVERSITY
UNIVERSITY OF ECONOMICS

HOANG LA PHUONG HIEN

THE INFLUENCE OF ENTREPRENEURIAL CHARACTERISTICS AND
COMPETENCIES ON THE PERFORMANCE OF SMALL AND MEDIUM SIZED
ENTERPRISES IN THE SERVICE SECTOR IN THUA THIEN HUE PROVINCE

SUMMARY OF DOCTORAL DISSERTATION
BUSINESS ADMINISTRATION
Code: 9340101

Supervisor 1: ASSOCIATE PROFESSOR DR. TRUONG TAN QUAN
Supervisor 2: ASSOCIATE PROFESSOR DR. NGUYEN TAI PHUC

HUE - 2019


This study was completed at:
University of Economics, Hue University
Supervisor 1: Associate Professor Dr. Truong Tan Quan
Supervisor 2: Associate Professor Dr. Nguyen Tai Phuc
Reviewer 1: .......................................................
Reviewer 2: .......................................................
Reviewer 3: ........................................................
This dissertation will be defended in the Thesis Examination Council of
Hue University in: ..........................................
............................................................................
At………….am/pm on ………/…………/……..2019
This dissertation can be found in: The National Library and The library of University of

Economics, Hue University, 99 Ho Dac Di, Hue City, Thua Thien Hue province.


1. Introduction
1. 1. Rationale of the study
In Vietnam, especially in the Central region, SMEs in the service sector are considered
the key driving factor for economic growth, employment opportunity, governmental income,
growing export, and efficiency burst for the region and the country. Data from the Office of
Statistics department of Thua Thien Hue province (2017) shows that in 2016, the province
had almost 64% of the SME working in the service sector. The total business capital of these
in 2016 was 14059 billion VND, the total revenue being 21518 billion VND. These SMEs
had contributed to the government 1.023 billion VND, with the total contribution from the
province to the government being 5048.9 billion VND. Besides, these have provided
employment for 21250 individuals. Firms in the sector of retail, automobile repair,

accommodation and food, transport and warehouse have actively relieved the pressure of
unemployment, secured employment opportunity for many geographical areas and individuals
in secluded areas.
Being small in terms of scale, 79.71% of the firms in service sector in Thua Thien Hue
have micro size. Entrepreneurs in these firms actually are owners actively engaging in the
management of the firms. The status of the management in these SMEs reflect the
centralization of power, almost all decisions are made by the business owners. Thus, the
performance of the business is largely determined and influenced by the owners.
There are some distinctive features of entrepreneurs having generally been neglected in
the previous research. Although some authors have noticed on the impact of entrepreneurial
psychology on business performance (Hornaday 1971; Ahmed 1985; Hood 1993), these
studies still have not reached a consensus on the direction and extent of this relationship.
Also, most of the research on the entrepreneurs’ characteristics topic focus on the
demographic aspects (such as education, business experience), without considering
psychological ones simultaneously (Lee & Tsang 2001).
Furthermore, the topic of entrepreneurial competencies has been recognized as a field of
growing interest worldwide. Many research has been implemented to develop the evaluation
scale of entrepreneurial competencies (Baum et al., 2001; Sony & Iman, 2005; Sánchez,
2011). Some other authors interest in clarifying the relationship between entrepreneurial
competencies and the firm’s performance (Man et al., 2002). Despite the increase in the
number of related researches, there are still gaps in the knowledge base. While the
relationship between entrepreneurial competencies and firm performance has been clarified
by many researches, there is lacking statistical evidence in the case of SMEs entrepreneurs in
1


service sector in Thua Thien Hue province. Different from the other regions, under the effect
of unfavorable socio-cultural environment factors, entrepreneurs in small and medium sized
enterprises have less opportunity to capture start-up supporting resources, access business
training courses and need to balance between business and family responsibility.

Besides, although numerous scholars in entrepreneurship have developed a quantitative
scale to assess the entrepreneurial competencies (Brinckmann et al. 2013; Man & Lau 2000;
Lerner & Almor 2002). The evaluation scale of entrepreneurial competencies was not
thoroughly tested in the practice of a small and medium sized enterprises in the service sector.
In this study, to investigate entrepreneurs in service sector in Thua Thien Hue province,
Vietnam – an emerging economy, the adjusted measurement scales of entrepreneurial
competencies, psychological characteristics and firm performance would be developed. An
integrated model also is built to outline how these concepts influence each other. This
dissertation then illustrates the research methodology, present the hypotheses testing and
results. Finally, we discuss theoretical contributions, managerial implications, research
limitations, and future research directions.
1.2. Research objectives
1.2.1. General objectives
This research aims to examine the influence of entrepreneurial characteristics and
competencies on the performance of small and medium sized enterprises in the service sector
in Thua Thien Hue province.
1.2.2 Specific objectives
This research strives to address the following specific objectives:
- Review the existing literature to determine whether entrepreneurial characteristics and
competencies impact firm performance.
- Evaluate the level of competencies and psychological characteristics possessed by
SMEs’ entrepreneurs in the service sector in Thua Thien Hue province.
- Explore the impact of entrepreneurial characteristics and competencies on the
performance of SMEs in the service sector in Thua Thien Hue province.
- Propose some managerial implications to enhance the entrperneurial competencies of
SMEs’ entrepreneurs in the service sector in Thua Thien Hue province.
1.3. Research questions
In order to solve the research objectives, some research questions are set out as follows:
- Which theories / research frameworks are suitable to measure entrepreneurial
characteristics, entrepreneurial competencies, firm performance and support the relationship

2


between entrepreneurial characteristics, competencies and firm performance?
- What are the level of competencies and psychological characteristics possessed by
SMEs’ entrepreneurs in the service sector in Thua Thien Hue province?
- To what degree do entrepreneurial characteristics and competencies impact the
performance of SMEs in the service sector in Thua Thien Hue province?
- How to improve entrepreneurial competencies of entrepreneurs in the service sector in
in Thua Thien Hue province?
1.4. Research object and scope
1.4. 1. Research object
The object of this dissertation is entrepreneurial characteristics, entrepreneurial
competencies, firm performance, and the influence of entrepreneurial characteristics and
competencies on the performance of SMEs in the service sector in Thua Thien Hue province.
1.4.2. Research scope
In terms of content:
Small and medium sized enterprises in the service sector are classified by the number
of employees according to Decree 56/2009 / ND-CP of the Government.
Entrepreneurs in these firms are owners actively engaging in the management of the
firms.
Firm performance is accessible from the perspectives of Kaplan and Norton's balanced
scorecard.
This dissertation only focuses on analyzing the impact of entrepreneurial characteristics
and competencies on firm performance, so the relationship between entrepreneurial
characteristics and entrepreneurial competencies is not be solved.
In terms of space: Data were collected from entrepreneurs and SMEs in the service
sector in Thua Thien Hue province.
In terms of time: Secondary data from 2013-2016 were collected for research
purposes. Primary data were collected and analyzed in the period 2017-2018, the managerial

implications were proposed until 2025.
1.5. Research contributions
This dissertation offers a wide range of contributions in terms of theory and practice as
follows:
First, multidimensional scales to measure psychological characteristics, entrepreneurial
competencies and firm performance are successfully developed for the case of SMEs’
entrepreneurs in the service sector in Thua Thien Hue province.
3


Second, the study describes the level of competencies and psychological characteristics
possessed by SMEs’ entrepreneurs in the service sector in Thua Thien Hue province.
Third, based on a sample of 418 SMEs’ entrepreneurs in the service sector in Thua
Thien Hue province and applying the structural equation modeling (SEM) method, this study
has found statistical evidence for the direct influence of entrepreneurial characteristics and
competencies on SMEs’ performance.
Last, some managerial implications are proposed to enhance the entrepreneurial
competencies of SMEs’ entrepreneurs in the service sector in Thua Thien Hue province.
2. Literature review and research methods
2.1. Literature review
2.1.1. Entrepreneurs
Facing a world with increasingly rough challenges in commercial navigation, small and
medium-sized enterprises (SMEs) are especially struggling to survive and succeed in the
global competition. Hence, defining the linkage between entrepreneurial roles and
entrepreneurial competencies contributes to economic and social welfare advances insights
(Ahmad et al., 2010). Accordingly, entrepreneurs are decision-makers utilizing opportunities
in business and resources with advanced technologies to produce their products or services,
which reflect their skills, experience, knowledge, and education (Bendary & Minyawi, 2015).
Their eventual targets are to maximize profits and minimize cost and make an effective
contribution to the society. Thompson (1999) referred entrepreneurs to as risk takers who sort

out high valued opportunities and start a new venture on the basis of resources in reality. This
encompasses the ability to set up strategies and tactics as well as to equip themselves with
appropriate competencies to promote the odds of their business success. These defined
characteristics of entrepreneurs are termed as “entrepreneurship”.
2.1.2. Psychological characteristics
Kotey and Meredith (2007) suggested four approach ways of analyzing psychological
characteristic, based on motivation, personal attributes, personal values, goals, and attitudes.
Timmons et al. (2011) have synthesized the previous studies on the psychological
characteristics of entrepreneurs. Through this research, the author pointed out ten most
popular aspects, including risk-taking the attitude, power ambitions, creativity and
innovation, responsibility, successful aspiration, internal control propensity, self-control/
aggressive, flexibility, ambiguity acceptance, intuition.
Korunka et al. (2003) concluded that there are four popular and classic psychological
characteristics in the entrepreneurship research topic, including successful aspiration, Internal

4


control propensity, risk-taking propensity and Innovation propensity (Duchesneau & Gartner
1990; Furnham et al. 1999; Neneh 2011). These are essential characteristics that distinguish
entrepreneurs from other people groups.
2.1.3. Entrepreneurial competencies
Entrepreneurial competencies are classified variously on the basis of traits, skills, and
knowledge (Man et al. 2005) or natural and unnatural competence (Meutia & Ismail 2012).
These entrepreneurial, managerial and functional characteristics are possessed by an
individual who is able to create a new venture and business success. Indeed, these
characteristics are considered to originate from genetic and specific knowledge which are
unconscious attributes of a person or acquired by learning and practicing (Boyatzis 2002).
Therefore, an entrepreneur’s intellectual, attitudinal, behavioral, technical and managerial
traits are supposed to be hard to change (Garavan & McGuire 2001; Man & Lau 2008).

When it comes to measuring the entrepreneurial competencies, there are many
qualitative and quantitative research has been implemented to develop and validate the
measurement scale (McGee & Peterson 2000; Man 2001; Georgellis et al. 2004). The study
of Bird (1995), Busenitz and Barney (1997) suggest that we can build the solid
entrepreneurial competencies model on the basis of borrowing the management theories and
developing some further business skill components. On the basis of behavioral approach,
Man et al. (2002) proposed a theoretical model with seven aspects of entrepreneurial
competencies, namely opportunity capturing competency, analytical skills, networking skills,
commitment, strategic competency and organizational one. Winterton (2012) groups all
competencies into four main groups: cognitive ability, functional ability, human resource
management ability and adaptive one.
To verify the proposed theoretical models, many quantitative research has been
implemented. Man et al. (2002) has proved the essential of seven recommended components
and added three new ones, including innovative competency, human resource management
skills, and learning competency. In the case of 255 retail business owners in the US, McGee
and Peterson (2000) add customer relationship management skills, brand building skills,
useful control competence and staff training ability. In the case of 300 English enterprises,
Georgellis et al. (2000) have suggested that strategic competency, analytic and innovative
competency are the two most important characteristics of entrepreneurs.
Only a few studies address the measurement scale for women entrepreneurs.
Mitchelmore and Rowley (2010) develop the first measurement scale specifically for female
entrepreneurs. In this research, by surveying 210 female entrepreneurs in England and Wales,
5


the authors identify four factors of self-rated relevant entrepreneurial competencies: personal
competencies;

management

competencies;

entrepreneurial

skills;

and

networking

competencies (Mitchelmore & Rowley 2013).
From the analysis above, the measurement model suggested by Man et al. (2002) is the
most comprehensive one. This is because: (1) this scale is highly synthetic considering all
roles of an entrepreneur (a manager, a businessman, and a professional expert). (2) the study
gives a full description of how the proposed variables are analyzed. (3) the scale is widely
used in many studies on the relationship between entrepreneurial competencies and firm
performance. (4) this model provides the basis for behavioral categorization compatible with
each entrepreneurial competence. (5) This scale is also seen as one of the most suitable
measurement models for the case of Asian countries.
2.1.4. Firm performance
There are two most popular approaches to analyzing firm performance. The first way is
based on goal achievement which relates to the general strategy (Lohman et al. 2004). This
approach tends to use the financial indicators (such as revenue, profit, market share, ROA,
ROI) to assess firm performance.
Another research direction is based on stakeholders’ theory. In this aspect,
organizational performance can be assessed not only by financial returns but also by the level
of stakeholders involved in organizational processes (Hernaus et al. 2008). The non-financial
indicators (such as employee satisfaction, customer perception, investors’ attitude) are more
concerned (Murphy et al. 2009).
In terms of measurement scale, Balanced Scorecard (BSC) is the most popular tool

which is used by many researchers around the world (Wu 2016). This method was suggested
by Kaplan and Norton in 2001. Initially, it was designed as a framework for management
usage. Namely, BSC reports provide guidelines and information about the firm’s mission,
vision, and financial data. Due to the necessary of status quo assessment for firm activities,
BSC then is adopted as a strategy performance management tool.
Regarding BSC’s structure, the content is included in four aspects: finance, customer,
internal processes, learning, and development. These analyses provide the data of the firm’s
most important activities and highlight the relationship between firm strategy and its final
success (Kaplan & Norton, 1993). Basically, BSC can be used to give instructions on
managing the firm’s financial flows, improving customer perception and developing the
firm’s human resources (Schwartz, 2005).
2.1.5. The influence of psychological characteristics and entrepreneurial competencies on firm
6


performance
According to Litunen (2000), the psychological aspects of entrepreneurs have a direct
causal relationship with the firm performance. The entrepreneurs with high successful
aspiration tend to have better business-oriented, and this will help enterprises achieve better
business results (Lumpkin & Dess, 1996). Also, in the research of Rauch and Frese (2010),
the authors has reconfirmed the existence of a positive correlation between firm performance
and business owners’ successful aspiration by compiling quantitative statistical evidences
from the research of Di Zhang and Bruning (2011), Lee and Tsang (2001), Goebel and Frese
(1999).
Regarding the influence of Internal control propensity, entrepreneurs with this
characteristic believe that their selections and actions would decide the success or failure of
their business (Lee & Tsang 2001, Di Zhang & Bruning 2011). They thus tend to have a
higher responsibility, higher endeavors in improving their business efficiency and satisfying
customers. Numerous studies have found statistical evidence of the positive effects of
entrepreneurs’ Internal control propensity on firm performance (Hood 1993, Lee & Tsang

2001, Di Zhang & Bruning 2011).
Referring risk-taking propensity, Begeley and Boyed (1987) argue that this
characteristic would have a positive effect on firm performance up to a certain limit, after this
limit level of risk, the tendency would create a negative impact on the business outcome. By
contrast, many other quantitative research has found statistical evidence to prove that risktaking propensity is not a good psychological trait for the success in business. The higher
risky in business owners’ characteristic, the business outcome would be more unstable
(Duchesnau & Gartner 1990, Rauch & Frese 2000). This different point of view is rooted
from different perspectives on risk. On the standpoint of an observer, risk relates to the
uncertainty or potential hazards. Conversely, entrepreneurs perceiving risk-taking propensity
is necessary for confronting and overcoming difficulties in the marketplace (Chell et al.
1991).
Lastly, the research of Wijewardena and Zoysa (2005) show that entrepreneurs’
Innovation propensity have a positive impact on the business’ financial performance.
Especially, in the beginning, or downturn stages, entrepreneurs with more aggressive in
innovating would create better business outcomes. Similarly, many other empirical research
also gives evidence on the positive relationship between business owners’ innovation
propensity and firm performance (Lee and Tsang 2001).
H1: Psychological characteristics are positively associated with firm performance
7


H1.1: Need for achievement is positively associated with firm performance
H1.2: Internal locus of control is positively associated with firm performance
H1.3: Risk – taking propensity is positively associated with firm performance
H1.4: Innovative propensity is positively associated with firm performance
Many studies have paid attention to the existence of the relationship between
entrepreneurial competencies and business performance (Tehseen & Ramayah 2015). The
resource-based view (RBV) suggests that a firm can distinguish itself from its competitors by
possessing valuable, rare, non-substitutable and inimitable resources which create a firm’s
sustainable competitive advantages (Barney 1991). In the view of RBV scholars,

entrepreneurial competence is an intangible asset that positively contributes to the firm
successfulness. Due to entrepreneurs’ knowledge, skills and attitudes are considered as a
precious and rare resource that competitors can not imitate, it creates added value and
sustainable competitive advantage for enterprises (Bird 1995). Indeed, RBV theory argues
that the successful strategies which help to find or develop resources are typically created by
competent entrepreneurs (Grant 1991; Barney 1991).
In another approach, the entrepreneurial competencies are closely associated with a
firm’s life cycle (Colombo & Grilli 2005; Baum et al. 2001). Many researchers have proved
that entrepreneurial skills result in firm performance and its long-term growth (Lerner &
Almor 2002; Bird 1995; Cooper et al. 1994; Chandler & Jansen 1992). For example,
Mitchelmore & Rowley (2010) gave evidence on the assumption that competent
entrepreneurs are more likely to seek out good opportunities for firm’s investments, or
formulate operational strategy fitting to each stage of business life cycle.
Freel (1999) analyze the influence of entrepreneurial competencies through
entrepreneurs’ three fundamental roles, including businessman, manager, and expert. The
authors found that the failure of small businesses is generally rooted in the weak management
competencies, such as poor planning, improper marketing, insufficient functional expertise,
are an inadequate human resource. By contrast, successful business is built on innovation,
risk-taking competence, strong leadership (Martin & Staines 1994).
H2: Entrepreneurial competencies are positively associated with firm performance
H2.1: Strategic competency is positively associated with firm performance
H2.2: Critical and creative competency is positively associated with firm performance
H2.3: Opportunity competency is positively associated with firm performance
H2.4: Learning competency is positively associated with firm performance
H2.5: Commitment competency is positively associated with firm performance
H2.6: Relationship competency is positively associated with firm performance

8

H2.7: Organising and leading competency is positively associated with firm performance
H2.8: Technical competency is positively associated with firm performance
H2.9: Personal competency is positively associated with firm performance
H2.10: Social responsibility competency is positively associated with firm performance
2.2. Research methods
Sample and data collection
In this study, the data were collected using structured questionnaires distributed with
referrals and using snowball sampling to get maximum variation in the data and to identify
cases of interest from the participants. The sample size was decided on the basis of referencing
the suggestions of Nunnally (1978) and Kline (2005). A total of 418 entrepreneurs were then
selected from various SMEs in service sector in Thua Thien Hue province that had a
membership-based network with The Thua Thien Hue Association of Enterprises, The Thua
Thien Hue Young Entrepreneurs’ Association and Tax Dapartment of Thua Thien Hue province.
The variables selected in this study are entrepreneurial characteristics, entrepreneurial
competencies and firm performance. Items selected to measure these variables were adopted
from previous studies.
Survey instrument
The survey instrument used to measure the entrepreneurial competencies was extracted
from the work of Man (2001) (for strategic competency, commitment competency, conceptual
competency, opportunity competency, organizing and leading competency, relationship
competency, learning competency, and personal competency) and Ahmad (2007) (for corporate
social competency). Four elements of psychological characteristics aggregated by Robinson et
al. (1991). Each of the entrepreneurs was requested to rate the items that best describe
the competencies they possess. A five-point Likert scale was used. The ratings started from 1 for
‘strongly disagree’ to 5 for ‘strongly agree’. The business performance in this research was
measured according to the perception of the entrepreneurs about business performance
against the goals that they want to achieve. The business performance measures that were
adopted and modified from Kaplan & Norton (1993) and Le Thi Phuong Thao (2016) consist of
four indicators: financial, customer, internal processes, and learning and growth. The rating was
also based on the five-point Likert scale as above.

Data analysis
The exploratory factor analysis (EFA) was conducted to determine the number of
extracted factors in each scale. In this study, the principal components factor analysis and
Promax rotation method were applied. Furthermore, the confirmatory factor analysis (CFA)
was conducted to test the scale reliability, the convergent and discriminant validity of the
constructs. CFA allows for a more objective interpretation of validity and establishes items
reliability and constructs’ accuracy. Also, the structural equation modeling (SEM) was used to
test the proposed hypotheses
3. Research findings and discussion
9


3.1. Sample description
The final sample of respondents in this study includes 418 entrepreneurs who are
owners of small and medium enterprises in sercice sector at Thua Thien Hue province. 79.9% of
them are male entrepreneurs. Most of the respondents have their level of education lower than a
university degree (60%), and approximately 57.9% of all entrepreneurs start up their business
between the age of 36 and 50. In terms of professional training, 92.3% of them receive the
managerial or technical or both kinds of training. Considering prior business experience, only
15.6% have business start-up experience before their current business. These respondents,
therefore, are regarded as “serial” entrepreneurs (Westhead & Wright, 1998). The results show
that 83.0% of the entrepreneurs have been involved in other businesses. Notably, enjoying the
financially independent life and free life as an owner are the most popular motivation of these
entrepreneurs (49.5%)
A majority of firms in this study have under 10 employees (78.0%) and are in wholesale,
retail, assembly and repair of vehicles and machinery sector (97,0%). The ownership structure
of these firms indicates that 34.9% are sole proprietorship, 51.7% are limited liability
companies, and 13.4 % is are partnership.
3.2. Factor analysis
3.2.1. Exploratory factor analysis

The exploratory factor analysis (EFA) was conducted to determine the number of
extracted factors in each scale. In this study, principal components factor analysis and Promax
rotation method were applied. The results show that Psychological characteristics (PC) scale
and Firm Performance (FIRM) one are satisfied all requirements: Kaiser-Meyer-Olkin
coefficient > 0.5, the significance level of Bartlett's Test of Sphericity < 0.05, Eigenvalue of
each extracted factor > 1, total variance extracted > 50% and factor loading of each item > 0.5
(Gerbing & Anderson 1988; Hulland 1999; Hair et al. 2004) (see table 1). 4 representative
factors are extracted from 17 observed variables in the psychological characteristics scale,
include Need for Achivement (NA), Innovation propensity (INN), Internal locus of control
(INCO) and risk-taking propensity (RISK). Similarly, 13 observed variables in the firm
performance scale are represented by 4 factors, include internal process aspect (IP), customer
aspect (CUS), training and development aspect (TD) and financial aspect (FIN).
Regarding Entrepreneurial Competencies (EC) scale, although satisfying four of five
requirements mentioned above (See table 1), 6 items have factor loading value less than 0.5,
include STRA6, STRA2, OSA3, ORG4, PER1, and SRC1. After removing these items from the
scale and re-analyze the measurement scale, all of the six-factors are satisfied. 10 representative
factors are extracted from 52 observed variables in the entrepreneurial competences scale,
include critical and creative competency (CCC), personal competency (PER), strategic
competency (STRA), organizing and leading competency (ORG), social responsibility
competency (SRC), Relationship competency (RC), learning competency (LRN), commitment

10


competency (COMM), professional competency (PROF), opportunity competency (OC).
3.2.2. Confirmatory factor analysis
The confirmatory factor analysis (CFA) was conducted to test the scale reliability, the
convergent and discriminant validity of the construct. CFA allows for a more objective
interpretation of validity, establish items reliability and constructs’ accuracy (Hair et al. 2014).
Table 1. EFA and CFA of the measurement models

Exploratory Factor Analysis
Scale

Adjuste
KMO
d

Sig.
Barlet's
test

Total
variance
extracted

Confirmatory Factor Analysis
CMIN
/DF

GFI

TLI

CFI

RMSEA

Psychological
characteristics

-

.909

.000

81.751%

2.054

0.907 0.956 0.963 0.070

Entrepreneurial
Competences

Before
After

.894
.907

.000
.000

72.540%
72.939%

2.175

0.900 0.900 0.907 0.053

Firm
Performance

-

.859

.000

2.504

0.907 0.955 0.966 0.077

83.936%

Model fit
The key indicators in three measurement models provide good fit to the data: χ2/df < 3,
Comparative Fit Index (CFI) > 0.9, Goodness-of-fit index (GFI) > 0.9, Tucker & Lewis index
(TLI) > 0.9 and Root Mean Square Error Approximation < 0.08), (Kettinger & Lee, 1995;
Arbuckle, 2006) (See table 1). These hypothesized model then was compared with possible
alternative models. The results indicated that the hypothesized measurement models
outperformed the alternative ones.
Reliability Analysis
The indexes in table 2 indicate that the reliability values of three measurement scales are
higher than the recommended values: Cronbach alfa coefficient (Alfa) > 0.7, Composite
Reliability (CR) > 0.7, average variance extracted (AVE) > 0.5 (Slater, 1995, Hair et al., 2014).
These results mean all of three scales are reliable.
Table 2. Scale reliability analysis
Scale Reliability

Scale
PSYCHOLOGICAL CHARACTERISTICS
Need for Achivement (NA)
Innovation Propensity (INN)
Internal Locus of Control (INCO)
Risk Taking Propensity (RISK)

Alfa

CR

AVE

0.852
0.826
0.831
0.790

0.931
0.927
0.912
0.890

0.698
0.617
0.673
0.630

0.916

0.919

0.622

ENTREPRENEURIAL COMPETENCES
Critical and Creative Competency (CCC)

11


Personal Competency (PER)
Strategic Competency (STRA)
Organizing and Leading Competency (ORG)
Social Responsibility Competency (SRC)
Relationship Competency (RC)
Learning Competency (LRN)
Commitment Competency (COMM)
Professional Competency (PROF)
Opportunity Competency (OC)

0.910
0.910
0.917
0.920
0.896
0.903
0.848
0.867
0.874

0.914
0.911
0.918
0.921
0.896
0.906
0.851
0.868
0.876

0.641
0.631
0.652
0.700
0.635
0.659
0.588
0.623
0.703

FIRM PERFORMANCE
Internal Process Aspect (IP)
Customer Aspect (CUS)
Trainng and Development Aspect (TD)

0.824
0.817
0.827

0.928
0.627
0.926

0.622
0.691
0.708

0.784

0.884

0.692

Financial Aspect (FIN)
Construct Validity

The construct validity is evaluated through the convergent and discriminant.
Table 3. Analysis of discriminant validity
PSYCHOLOGICAL CHARACTERISTICS
NA
INN
INCO

NA
INN
(**)
0.835
0.439
0.785

0.465
0.438

RISK

0.487

0.501

FIRM PERFORMANCE

INCO RISK

FIN
CUS IP
TD
FIN 0.832
CUS 0.444 0.831
IP
0.420 0.430 0.789

0.820
0.406

TD

0.794

0.563 0.486 0.384

0.841

ENTREPRENEURIAL COMPETENCES
STRA
STRA
COM
M
CCC
OC
ORG
REA
LRN
PER
SRC
PROF

COM
M

CCC

OC

ORG REA

LRN

PER

SRC

PROF

0.794
-0.180

0.767

0.285
0.326
0.373

-0.013
0.151
0.000

0.789
0.485 0.838
0.330 0.470

0.460
0.484
-0.234
0.371
0.215

0.161
0.059
0.088
0.310

0.057

0.435
0.453
-0.183
0.446
0.300

0.262
0.509
0.491
-0.172
0.414

0.807
0.475
0.327
0.392
-0.149
0.314

0.797
0.533
0.470
-0.188
0.437

Note: ** - Square root AVE of each variable - sqrt(AVE)
12

0.812
-0.316 0.801
0.483 -0.155 0.837
0.373 -0.193 0.160

0.789


The scale achieves convergent validity if it satisfies two requirements: the standardized
weights in the measurement model are higher than 0.5, significant with P-value < 0.05, and
the average variance extracted (AVE) > 0.5 (Hair et al., 2010; Fornell & Larcker, 1981). From
the analysis results, the standardized weights range from 0.705 to 0.957, with all of the Pvalue lesser than 0.05. Besides, all of the AVE values from table 2 are higher than 0.5.
Therefore, all three measurement model in this study achieves convergent validity.
Regarding discriminant validity, this requirement means a variable is unique and captures
phenomena not represented by other varying constructs in the model. Fornell-Larcker
criterion is the most popular method used in assessing discriminant validity. This
standard requires square root AVE of each variable higher than the correlations among
variables in the measurement model. The results in table 3 show that all of three models meet
the above requirement.
Overall, the three tests mentioned above suggest that all of three measurement models are
fit, reliable and construct validity.
Second-order Confirmation Factor Analysis
Table 4. Path regression coefficient in the second-order construct models
Factor

Path

Construct

Estimate

NA
INN
INCO
RISK

<--<--<--<---

PC
PC
PC
PC

1.042
1.000
0.967
0.799

SRC
STRA
COMM
CCC
OC
ORG
REA
LRN
PROF

<--<--<--<--<--<--<--<--<---

EC
EC
EC
EC
EC
EC
EC
EC
EC

1.533
1.314
0.160
1.198
1.543
1.191
2.001
1.460
1.000

PER

<---

EC

-0.640

FIN
CUS

IP
TD

<--<--<--<---

FIRM
FIRM
FIRM
FIRM

1.030
1.000
0.948
1.098

S.E.

P

Result

0.113
9.256
Reference point
0.103
9.41
0.092
8.677

***

Significant

***
***

Significant
Significant

0.198
7.727
0.189
6.967
0.097
1.658
0.169
7.074
0.204
7.571
0.177
6.743
0.256
7.812
0.194
7.515
Reference point

***
***
***

***
***
***
***
***

Significant
Significant
Significant
Significant
Significant
Significant
Significant
Significant

-4.872

***

Significant

0.112
9.227
Reference point
0.114
8.295
0.117
9.399

***

Significant

***
***

Significant
Significant

0.131

Note: *** - equivalent to the value of 0.000
13

C.R.


The second-order CFA method was conducted to re-examine and re-confirm the abovementioned measurement models remains validity in the form of second-order construct.
Testing the model fit, scale reliability, the convergent and discriminant validity show that all
estimate parameter is still significant. Besides, the results of the path regression coefficients in
table 4 also indicate a strong correlation between 3 representative variables (PC, EC, FIRM)
and 16 latent variables, with all estimate parameter > 0.5 and all p-value < 0.05 (Anderson &
Tatham, 2006).
3.3. Hypotheses testing
The structural equation modeling (SEM) was used to test the developed hypotheses. From the
analysis results, 2 direct tested relationships and 22 indirect ones are supported with p-value
range from 0.00 to 0.05. Namely, both psychological characteristics (PC) and entrepreneurial
competencies (EC) are positively and strongly affect firm performance (FIRM), with the
standardized regression weights are 0.623 and 0.450 respectively. These factors also indirectly
affect four components of firm performance (FIN, CUS, IP and TD). The regression

coefficients of the PC with four above components are 0.723, 0.818, 0.783, 0.864 in the order
given. Similarly, the implication coefficients of EC are 0.498, 0.563, 0.539 and 0.595.
Table 5. Results of model testing using structural equation model

Hypotheses

Standardized S.E.
coefficients
()
0.623
0.124

H1. PC



FIRM

H1.1. NA
H1.2. INCO
H1.3. RISK





FIRM
FIRM
FIRM

0.168
0.178
0.341

H1.4. INCO



FIRM

H2. NLKD
H2.1. STRA
H2.2. CCC
H2.3. OC



FIRM





H2.4. LRN
H2.5. COMM
H2.6. REA
H2.7. ORG
H2.8. PROF

C.R.

P

Result

6.588

***

0.017
0.019
0.023

2.832
2.959
5.078

0.005
0.003
***

Supported
Supported
Supported
Supported

0.170

0.018

2.839

0.005

Supported

FIRM
FIRM
FIRM

0.450
0.543
0.562
0.634

0.115
0.025
0.031
0.027

4.913
6.914
6.925
7.529

***
***
***
***

Supported
Supported
Supported
Supported






FIRM
FIRM
FIRM
FIRM

0.287
0.368
0.446
0.480

0.024
0.032
0.019
0.025

4.403
5.204
6.193
6.410

***
***
***
***

Supported
Supported
Supported
Supported



FIRM

0.558

0.029

6.960

***

Supported

14


H2.9. PER
H2.10. SRC




FIRM
FIRM

0.447
0.276

0.026
0.021

6.218
4.350

***
***

Supported
Supported

Another 14 hypotheses between the latent variables of PC, EC factors and the dependent
variable – FIRM are also supported. Namely, four components of psychological
characteristics (NA, INN, INCO, and RISK) are significantly and indirectly affect of the firm
performance, with the regression weights are 0.168, 0.170, 0.178 and 0.341. Similarly, ten
components of entrepreneurial competencies (include SRC, STRA, COMM, CCC, OC, ORG,
REC, LRN, PROF and PER) are positively affect on the firm performance, with parameter
estimates are 0.276, 0.543, 0.368, 0.562, 0.634, 0.480, 0.446, 0.287, 0.558 and 0.447
respectively.
3.4. Discussion

This study develops and tests the integrative model of entrepreneurial competencies and
psychological characteristics of SMEs’ entrepreneurs influencing the firm performance in
service industry in Thua Thien Hue province.
Regarding the measurement scales, the study found that in the entrepreneurial
competencies scale, work-family balance ability, high physical and mental endurance need to
add on the assessment of personal competency (PER).
Besides, the assessment of social responsibility competency (SRC) is proposed adding
two items: pay attention to employee welfare, and create employment opportunities for the
community. Because Vietnam is a developing country with low average labor income, the
issue of ensuring workers' lives is considered very important. Besides, Hue culture also
upholds community values. These adjustments are supported by the research of Orme and
Ashton (2003).
Referring the direction and extent of tested hypotheses, the study found that both of two
latent variables, psychological characteristics (PC) and entrepreneurial competencies (EC),
are significantly and positively impact on firm performance (FIRM). This result advocates
some previous research outcomes of Baum et al. (2001), Man, et al. (2008), Bendary &
Minyawi (2015), and Ahmad et al. (2010). Also, the verified hypotheses support the view of
RBV theory that considers the feature of business owners as firms’ sustainable competitive
advantage (Barney & Arikan 2005). Notably, the effect of psychological characteristics (PC) on
business outcomes is stronger than entrepreneurial competencies (EC). This once again
emphasizes the importance of analyzing the psychological aspect of assessing an entrepreneur
(Lee and Tsang 2001).

15


Another interesting finding from the SEM analysis, among the manifest variables of firm
performance, training and development aspect is most strongly affected by two latent
independent variables (regression coefficients are 0.864 and 0.595). From the explanation of
respondents, due to most Thua Thien Hue enterprises are small and medium-sized ones, many

companies do not have a human resource (HR) department. Business owners thus need to
participate directly to HR training and developing activities; they need to interact and consult
for employees day by day. Hence, entrepreneurs’ characteristics would dramatically affect
training and development outcomes. This result is highly supported by Ahmad (2007) who
researched the case of Australian and Malaysian entrepreneurs.
The findings relates to the manifest variable group of entrepreneurial competencies show
that critical and creative competence (CCC), opportunity competence (OC) and professional
competence (PROF) are the most critical factors affecting the firm performance.
According to Thua Thien Hue entrepreneurs, due to unstable market condition and lack of
intellectual properties protected methods in Vietnam, business owners need to own high
critical and creative competence (CCC). This allows them to respond promptly to the market
changes and the hostile actions of competitors. Further, the high critical and creative ability
also help these entrepreneurs discover new distinctive ideas and commercialize it. Sánchez
(2011) also proved that owners’ analytical ability dramatically affect the business outcomes
and is a backbone of corporate life.
Another essential competence is opportunity competence (OC). The interviewees
acknowledge that because of the limited financial and organizational capabilities, many small
and medium sized companies in Thua Thien Hue province do not have a business analytic
department or even marketing one. These firms usually do not have any preparation for
business chances. The market opportunities thus are mostly recognized by fortuitous
discovery, or entrepreneurs’ intuition, and seized by business owners’ immediate decisions.
Sony and Iman (2005), and Bendary and Minyawi (2015) also found persuasive evidence to
prove that businessman’s opportunity seizing skills have an indirect relationship with firms’
venture growth.
The third important competency is professional competency (PROF). The majority of
SMEs in the service sector in Thua Thien Hue province are family-owned businesses, and
many business owners have not formally experienced any professional training course.
Especially, for the case of SME’s entrepreneurs in service sector, they are still dealing with
many unfavorable socio-cultural environment factors. This limits their opportunity to access
business training courses or professional ones. Consequently, owners tend to focus on the

16


short-term business target, instead of on the long-term strategic decision. They could not
monitor their employees thoroughly or figure out a comprehensive business plan. Hence,
many surveyed entrepreneurs believe that professional training courses would create a strong
effect on their performance and the business outcomes of their company. This result generally
advocates for the research findings of Chandler and Jansen (1992).
Referring to the manifest variable group of psychological characteristics, risk-taking
propensity (RISK) and Internal control propensity (INCO) are the most influential factors to
firm performance. This is quite understandable, Thompson (1999) referred entrepreneurs to as
risk takers who sort out high valued opportunities and start a new venture based on their
actual resources. This encompasses the ability to set up strategies and tactics as well as to
equip themselves with appropriate competencies to promote the odds of their business
success. These defined characteristics of entrepreneurs are termed ‘entrepreneurship.’
4. Managerial implications
4.1. For strategic competency
4.2. For critical and creative competency
4.3. For organising and leading competency
4.4. For social responsibility competency
4.5. For commitment competency
4.6. For relationship competency
4.7. For technical competency
4.8. For personal competency
4.9. For opportunity competency
4.10. For learning competency
5. Conclusion
In this dissertation, by utilizing both quality data collection methods (reviewing secondary
data, in-depth interview) and quantitative data analysis techniques (factor analysis: EFA and
CFA), the authors have successfully developed measurement scales for the case of SMEs’

entrepreneurs in the service industry in Thua Thien Hue province. Besides, based on
analyzing the sample of 418 entrepreneurs and applying the SEM analysis method, this study
has found statistical evidence to prove the existence of the direct relationship between
entrepreneurial competencies, psychological characteristics and firm performance. Moreover,
the tested indirect correlation also highlights the different importance level of each manifest
variables in contributing better business outcomes.
The followings are some research objectives achieved by this dissertation:
First, multidimensional scales to measure psychological characteristics, entrepreneurial

17


competenies and firm performance are successfully developed for the case of SMEs’
entrepreneurs in the service sector in Thua Thien Hue province. Regarding the entrepreneurial
competency scale, social competency and professional competence are added. The study also
found that work-family balance ability, high physical and mental endurance need to add on
the assessment of personal competency. Besides, the assessment of social responsibility
competency is proposed adding two items: pay attention to employee welfare, and create
employment opportunities for the community. The scale of business performance uses both
financial and non-financial indicators to reflect objectively, comprehensively and ensure the
balance between four separate areas.
Second, the study describes the level of competencies and psychological characteristics
possessed by SMEs’ entrepreneurs in the service sector in Thua Thien Hue province.
Specifically, among the 4 typical groups of psychological characteristics, the entrepreneurs in
Thua Thien Hue have the highest need for achievement, followed by the internal locus of
control and the lowest is the innovative propensity, and risk taking propensity with an average
score of 4.36; 3.9; 3.67; 3.63. As for entrepreneurial competencies, the entrepreneurs
participating in the survey have higher performance in relationship competency, personal
competency, commitment competency and professional competency with an average score of
4.01 points or above. The remaining competencies have lower response levels than the above

competencies with an average score of 3.17 to 3.82. In addition, the results of the importance
and performance analysis IPA show that strategic competency, analysis – creative
competency, organizing – leading competency, corporate social responsibility competency
need to be especially developed in future because they are considered to be important for
boosting firm performance but the current level of response is not as high as the remaining
competencies. Personal competency, commitment competency, and professional competency
are over-develped competencies because they are not appreciated in importance but the level
of response is higher than the remaining competencies. Finally, the learning competency is not
high in the importance as well as the performance, so it should not be too focused on
improving.
Third, based on a sample of 418 SMEs’ entrepreneurs in the service sector in Thua Thien
Hue province and applying the structural equation modeling (SEM) method, this study has
found statistical evidence for the direct influence of entrepreneurial competencies and
psychological characteristics on SMEs’ performance with p-value range from 0.00 to 0.05.
Both psychological characteristics and entrepreneurial competencies are positively and
strongly affect firm performance, with the standardized regression weights are 0.623 and
18


0.450 respectively. Specifically, need for achievement, innovative tendency, internal locus of
control, and risk taking propensity which are four components of psychological characteristics
significantly affect firm performance, with the regression weights are 0.168, 0.170, 0.178 and
0.341. Similarly, ten components of entrepreneurial competencies including social
responsibility competency, strategic competency, commitment competency, critical - creative
competence, opportunity competence, organizing - leading competency, relationship
competency, learning competency, professional competency and personal competency
positively affect the firm performance, with parameter estimates are 0.276, 0.543, 0.368,
0.562, 0.634, 0.480, 0.446, 0.287, 0.558 and 0.447 respectively. In addition, education level,
age, gender, working in the business before being the current enterprise owner, the condition
of having a family owned company, business scale and business sectors all affect firm

performance of SMEs in the service sector in Thua Thien Hue with P-value <0.05.
Last, some managerial implications are proposed to enhance the entreperneurial
competencies of SMEs’ entrepreneurs in the service sector in Thua Thien Hue province. For
the local governments, this study provides precious information for releasing support policies,
so as to develop the start-up eco-system, especially for entrepreneurs in service sector in Thua
Thien Hue province and Vietnam in general. The results of this study also help institutes,
schools to design the most suitable entrepreneurial training courses to meet the demand of
learners, employers and society.
Regarding the limitation of this study, the research scope was limited to one country and
was conducted on the basis of surveying 418 SMEs’ entrepreneurs in the service sector in
Thua Thien Hue province, Vietnam. Hence, future research could collect data from different
markets to advance the understanding of the research topic from a more generalizable
perspective. Besides, the survey data for both predictors and outcomes were provided by only
one source, from business owners. In the future, multiple sources of data collection by
surveying not only owners but also employees and business partners could triangulate the
research findings and minimize the possibility of common method bias. Furthermore, future
research could investigate the impact of business environment variables on the performance
of SMEs and explore the relationship between entrepreneurial characteristics and
entrepreneurial competencies.

19


AUTHOR’S PUBLICATIONS
1. Hoang La Phuong Hien, Truong Tan Quan, Duong Dac Quang Hao (2019).
Influence of entrepreneurial competencies of women entrepreneurs on the performance of
small and medium enterprises in Thua Thien Hue province, Hue University Journal of
Science, 128 (5B), 23–36. DOI: 10.26459/hueuni jed.v127i5A.4610.
2. Hoàng La Phương Hiền, Trương Tấn Quân (2018). Phân tích vai trò của năng lực
kinh doanh đối với kết quả hoạt động kinh doanh của các doanh nghiệp nhỏ và vừa trên địa

bàn tỉnh Thừa Thiên Huế. Tạp chí Công Thương, 3, 90-96.
3. Hoàng La Phương Hiền, Trương Tấn Quân (2017). Năng lực kinh doanh của doanh
nhân trên địa bàn tỉnh Thừa Thiên Huế trong tiến trình hội nhập. Tạp chí Khoa học Ðại học
Huế: Kinh tế và Phát triển, 126 (5C), 61–74.
4. Trương Tấn Quân, Hoàng La Phương Hiền, Dương Đắc Quang Hảo (2018). Mối
quan hệ giữa đặc điểm tâm lý, năng lực kinh doanh của doanh nhân và kết quả kinh doanh
của các doanh nghiệp nhỏ và vừa trên địa bàn tỉnh Thừa Thiên Huế. Kỷ yếu Hội thảo Quốc
tế “Cách mạng công nghiệp 4.0: Cơ hội và thách thức đối với phát triển kinh tế Việt Nam”.
Nhà xuất bản Hà Nội, 2, 15-29.
5. Hoàng La Phương Hiền, Trương Tấn Quân (2017). Năng lực kinh doanh của nữ
doanh nhân trên địa bàn tỉnh Thừa Thiên Huế trong tiến trình hội nhập quốc tế. Kỷ yếu Hội
thảo Quốc tế “Phát triển kinh tế Việt Nam trong tiến trình hội nhập quốc tế”. Nhà xuất bản
Hà Nội, 2, 21-33.

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