Summary Doctoral thesis: The long-term short-term relationship between development investment and informal costs and production and business management of small and medium-sized enterprises

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SUMMARY OF THE THESIS
1. The need for research
Investment activities in the enterprise were carried out on the following
fields: investment in construction, investment in human resources development,
R & D investment, investment in marketing and investment in intangible assets,
etc, and all referred as development investment in enterprises. Theoretical and
practical evidence has shown the impact of these investments on the business
results of the business. However, apart from the "formal" investment
expenditures, businesses also have to pay money that the law does not officially
recognize; this money is used to bribe, lubricate, bribe, etc and referred as
"informal costs". These two segments are not only isolated but also closely
related, the same is the investment content of the business, just one side of the
current and one hidden side, as a side painting side when increasing one factor
will reduce the remaining factor. The issue is how these areas affect the results
of business production of the business? Which sectors impact sustainability,
which array is short term? Which is more profitable for businesses?
In fact, research is needed to analyze and assess the impact of developed
investments and informal expenses on business performance. From that, we
propose solutions that help businesses to develop a sound investment strategy,
improve their competitiveness and business efficiency, and pay more attention
to technological or product innovation - Developed in today's harsh international
competition environment.
On the subject of research, the author decides to choose small and
medium enterprises (SMEs) because SMEs occupy a large proport on of the
whole enterprise (over 97%), which is an important part of the economy. the
developing market in Vietnam. Together with the private sector, SMEs are an
important driving force for development. With limited resources, SMEs face
many difficulties in the production and business process, and are also vulnerable
to the unhealthy nature of the business investment environment such as complex
administrative procedures and infomal costs.

When a company has large resources, spending money on developed
investment or informal financing is not a difficult decision to make. However,
for SMEs, a characteristic of this group of enterprises is the limitation of
resources (finance, human resources, material resources), thus limited in
capacity (production capacity, R & D capacity, competing capability). The
allocation of finite resources for capacity building is always a challenge for
SMEs. In the context of current development, in addition to allocating capital for
developed investment to renovate technology equipment, capacity building,

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SMEs also have to spend a considerable amount to spend for the infomal costs,
make the development of SMEs is more difficult when the limited capital
resources have to be distributed to many, while uncertainty of what actually
benefits. This fact shows that studying the effects of developed investment and
informal costs on SMEs performance, identifying the problem and explaining
the causes of the problems is needed. It also helps SMEs better understand the
impact mechanism, and helps the government to have policies to ensure the
development of SMEs in accordance with the objectives, ensuring the important
role of the SMEs sector in the economy.
2. Purpose of the study
- Give a new perspective on the investment of the business, in that the
informal costs are also an investment. Investment activities of the enterprise
include investment in development (such as investment in human resources,
investment in fixed assets, R & D investment), and informal investment (is the
investment for informal costs)
- Develop a model for assessing the impact of formal and informal
investment on SMEs performance, especially to distinguish between short-term
and long-term impacts, from which to find out what is the factor to play a key
role in raising the SMEs performance, affecting the sustainable development of
SMEs.

- Propose solutions / recommendations to the SMEs community in
making decisions on allocation of investment capital: developed investment or
informal costs; Propose to the Government to promulgate mechanisms / policies
to support enterprises, improve business climate.
3. Subjects and scope of research
Research subjects: Developed investment in SMEs (focus on fixed asset
investment, investment in human resources and investment in research and
development R & D); informal costs of SMEs; SMEs perfomance; Impact of
developed investment and informal costs on SMEs perfomance.
Research scope:
Spatial: Study of SMEs, private sector, in the field of production, in Nghe
An province.
Time domain: Because the research results of the thesis have the results of
business production in the short and long term, the data collected also need a
long time. Author selects a time frame of 6 years, from 2011 to 2016.


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4. Research Methodology
The dissertation uses a combination of qualitative and quantitative
research methods. The quantitative approach aims to establish a model to test
the relationship between factors, while the qualitative approach (in the form of
in-depth interviews) is used to test and explain the quantitative results.
In quantitative research, data is collected in the form of Panel data.
Analytical methods: Use the Engle-Granger method to estimate the relationship
between variables in the short and long term, including the steps: Verification of
co-linkages to determine whether there exists a relationship between long-term
variables, then construct the co-ordinate equation using the OLS method to
determine the long-term impact relationships; Estimate and construct the ECM
error correction model based on the co-aligned equation in step 1. The analytical

software support is Eviews version 9.0.
5. Model and hypothesis of research
Research models

Research question:
- How do the developed investments affect the SMEs perfomance in the
short term and in the long term?
- How do informal costs affect SMEs perfomance in the short term and in
the long term?
6. The importance and new contributions of the thesis
Scientific significance
The thesis builds the framework for informal costs as a form of SMEs
investment. This is the money that the business spend "implicitly", not legally
recognized, but also aimed at developing business activities of SMEs, is also an
investment for the future, is just "informal investment" only.
Practical meaning

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The dissertation shows the relationship between developed investment
and informal costs on the SMEs performance. Accordingly, this impact
relationship is different over time. Specifically:
- Developed investment (including investment in fixed assets, investment
in human resources, R & D investment) in the short term generally does not
affect or negatively affect the SMEs performance. In the longer term, the impact
of investment on the SMEs performance is good, is positive, or in other words
developed investment is conducive to the development of the business in the
long term .
- Informal costs have an impact on SMEs performance in the opposite
direction: No short-term impact and long-term negative impact.
From the research

recommendations:

results,

the thesis

proposes

the

following

- For SMEs: The first and most important thing that SMEs need to do is
changing their mindset. SMEs need to identify the necessity and the effect of
developed investment on enterprises, This is the activity that helps businesses
achieve long-term sustainable business results. As for informal costs for bribes
and smuggling, SMEs should not do it, as it does not bring the same benefits as
expect, even negatively impacting businesses in long-term. Secondly, with its
limited resources, SMEs should exploit it more effectively by corporate
governance. The third is to increase access to resources. Finally, it is also
important to review your investment and do it in a way that is most effective.
- For state management agencies: Corruption or informal costs harm the
development of SMEs, thereby adversely affecting the business investment
climate and reducing growth and development national economy. Therefore, the
State should strengthen measures to prevent informal costs to facilitate SMEs
and businesses in general. The dissertation proposes some recommendations for
solving informal costs in a thorough manner.


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CHAPTER 1: RESEARCH SUMMARY, MODELS AND
RESEARCH THEORY
1.1. Studies on development investment and its impact on firm performance

1.1.1. Development investment impacts firm performance
Research focus primarily on the impact of investment on the firm
performance. Investment affects the firm performance in many ways, such as
productivity and growth speed (Power, 1998; Bessen, 1999; Huggett and
Ospina, 2001; Nilsen, 2009; Shima, 2010), employment growth (Asphjell,
2010), sales growth (Licandrol, 2004) or other factors of production (Sakellaris,
2004; Nilsen, 2009). Investments add value to companies, shareholders and
increase wealth (Penman, 2010).
On the direction of impact over time, according to Power L. (1998),
Huggett M. and Ospina S. (2001), Shima K. (2010), some studies take the view
that the effect of investment on growth performance is negative in the short run;
in the long run, the impact is positive. Grazzi et al. (2013) argue that the higher
the investment, the better the investment will be, and the faster it will grow than
the other.

Thus, the research is consistent in view of the investment impact on firm
performance. It can affect various aspects of results such as growth, market
share, value... The dimension of impact is positive or negative depending on
time: in short is negative, the longer term is positive.
1.1.2. Investment in fixed assets affects the firm performance
Oiv et al. (2008), Xiao (2009), Duchin et al. (2010), Piris (2010), Umutlu
(2010), Geng and N'Diaye (2012), O'Reilly (2015) have studied and
demonstrated that fixed investment is a decisive factor for the firm's growth. De
Long and Summers (1991) found a link between investment in equipment and
growth: high investment in equipment led to rapid growth and low investment in
equipment led to slow growth. Doms and Dunne (1998), Nilsen (2009) also

investigated the impact of tangible asset investment on firm performance. Grazzi
et al. (2013) found that firms with higher levels of investment, after an
investment period, would be more efficient and grow faster than others.
Investing in assets after an extended period of investment, for example opening
a new factory, will negatively affect profitability but will have a positive impact
on sales and employment: higher sales and higher employment levels. Then
businesses with rapid growth, high profitability and productivity will be more
likely to invest.

Fundamentally, investing in tangible assets will have a positive impact
on firm performance, and this impact will manifest in the long term.

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1.1.3. Human resources investment (humman resourse investment)
affects the firm performance
Clarke M (2010) and Segal G (2009), Clarke (2010), Marimuthu (2009);
Ukenna et al. (2010) and many other authors examine the direct relationship
between human capital investment and firm performance. These findings
suggest that human resource efficiency is a particularly important factor for
businesses. Therefore, businesses will benefit from investing in employees with
their skills and knowledge. Moreover, research also suggests that human capital
investment is the strongest influence on financial firm performance. According
to studies conducted by Segal et al. (2009), investment in human capital has had
a positive impact on sound financial performance. Both education and industry
management experience is needed to improve financial performance.

As such, research has shown the content often in the investment of human
resources in the firm. The impact of human resource investment on firm
performance is that most studies have shown a positive effect. However, the
research has not found the link or impact it is negligible.

1.1.4. Investing in research and development (R & D investment) affects
firm performance
Economists have noted that investing in R & D facilitates innovation,
creates new knowledge and new technology. Studies by Sougiannis (1994),
Zantout and TSetsekos (1994), Green (1996), Goodacre and McGrath (1997)
also show similar results. The authors find that investing in R & D has a positive
effect on the value of the enterprise (Chauvin and Hirschey, 1993; Bae and Noh,
2001), R & D is a determinant of long-term productivity and well-being (Jones
and Williams, 2000), although the assessment may vary by firm size and
industry. The study by Lev and Sougiannis (1996) shows the existence of a
direct and positive correlation between R & D spending and economic growth,
resulting in increased productivity and productivity. Investment costs for R & D
allow businesses to earn more than normal or average returns (Erickson and
Jacobson, 1992). R & D investment in new products creates competitive
advantage and enhances company performance (Aboody and Lev, 2000). R & D
investment is considered as an investment in intangible fixed assets, contributing
to the long-term development of the company (Chan, 2001). A successful R & D
investment in a new product and service allows companies to increase the value
of intangible assets, thereby distinguishing them from other firms (Ehie and
Olibe, 2010). In addition, spillover effects from R & D are beneficial not only
for businesses but also for the economy (Bednyagin and Gnansounou, 2012).


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Thus, the impact of R & D investments on businesses is not consistent.
Basically it is a positive effect, is linear. But there is research that shows that it
is a nonlinear relationship and a positive or negative impact at different times.
1.2. Studies of informal costs and their impact on firm performance
Researchers show different perspectives on the positive or negative
impact of informal costs on business outcomes, most of which are still negative.

Corruption raises operational costs, creating uncertainty and thus discourages
investment (Shleifer and Vishny, 1993; Wei, 1997; Campo, 1999). Corruption
has a negative impact on productivity, sales growth, (Gaviria, 2002, Seker and
Yang, 2012, De Rosa, 2010) and return on investment (O'Toole and Tarp, 2014).
Corruption has a negative impact on the level of human resources (Mo, 2001).
Businesses can lose more of what they can get from corruption because of the
invisible barriers to corruption that will arise and ultimately hurt the business: A
business that is engaged in corruption is often describing is ineffective and
embarrassing in the organization (Ashforth and Mael, 1989; Hogg and Terry,
2000), the danger of corruption may not be reflected in a direct result in a
particular transaction, but it will turn into a series of obstacles in the overall
operation of the business later.
From a positive point of view, some studies have validated the positive
but conditional effects on firm earnings (Dreher and Gassebner, 2013) and sales
growth (Mendoza et al. , 2015). Bribes increase trust and establish a reciprocal
shared belief (Graeff, 2005), from which entrepreneurs gain favorable
conditions to increase sales (as it allows them to win the projects or to obtain a
loan). However, afterwards, firm will suffer "imminent damage" (Nguyen Van
Thang et al., 2014) in that: the opportunity to expand is no longer difficult to
reach new customers or localities; quality pressures (as the business focuses on
building relationships that lose competitive motivation by quality, there is no
creative motivation, these effects are implicit and slow, but there are This
reduces the competitiveness of enterprises.

As such, there are quite a number of studies on informal costs that affect
the results / performance of a firm. Impacts are found to be quite different,
divided into positive and negative impacts, short-term and long-term.
1.3. Case studies on the use of analytical models of impact between
variables in the short and long term
The relationship between variables that need to be differentiated in the short

and long run is very specific, not simply linear or nonlinear regression models,
simple variables or multivariable ones. There are two common methods used to test
- short-term and long-term relationships, namely the two-step Engle-Granger

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method and the Johansen method. These methods have been applied by many
authors in the world and in Vietnam for use as Sung and Urrutia (1995); Taghvaee
and Hajiani (2014); Kasperowicz (2015); Nguyen Minh Kieu et al. (2013); Truong
Minh Tuan (2013); Le Quang Canh (2011); Le Thanh Tung (2014) ...
1.4. Study space
Based on the theoretical foundations and published studies, author founds
that there are many gaps that can be approached:
- The studies on impact relationships of each pair of factors (investment in
fixed assets, human resources, R & D) to the firm performance are not
consistent with each other, different subjects, scope of research, research
context. From here opens the opportunity for research on different subjects (be it
different businesses in the field of business, type of business), or different
research areas and contexts (different countries, different localities ...).
- There have been no research studies on the simultaneous effects of
developed investment and informal costs on the firm performance. There are no
authors who consider informal costs as an investment of the enterprise
(underground investment) besides developed investment (informal investment),
comparative analysis and evaluation of the level of impact. The effect of the two
contents on the firm performance.
- There have been no research topics and fully quantified contents of
developed investment in enterprises (including fixed asset investment, human
resources investment, investment in R & D research) . Research only stops at the
general impact of investment on the business or study the individual impact of
each content on the business. In these studies there are also some shortcomings
such as: short study period, major studies conducted abroad, rare research in

Vietnam (not to mention local specific), especially research for SMEs. Studies
also use qualitative methods rather than quantitative methods to quantify the
level of impact, building models that reflect the relationship.
- There are no research topics at the same time both developed investment
and informal costs affect the results of business production.
- There are no topics using short-term and long-term relationship
estimation methods as Engle-Ranger or Johansen apply to relations between
developed investment factors, and firm performance.
In summary, the gap that author found through the review process is the
simultaneous study of the impact of the two factors: Developed investment and
Informal Costs to Firm Performance, studying with Vietnamese firms and using
the short-term and long-term relationship estimation and control methods of
Engle-Ranger or Johansen.


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CHAPTER 2: THEORETICAL BASIC OF DEVELOPMENT
INVESTMENT AND INFORMAL COSTS IN SMALL & MEDIUM
ENTERPRISES
2.1. General concepts

2.1.1. Investment and development investment in the firm
- Investment in fixed assets: including tangible fixed assets and intangible
fixed assets. Tangible fixed assets include material assets such as machinery,
land, buildings, tools, raw materials, transport means, or technological
equipment. Inventions, inventions, copyrights, trademarks (including branding
marketing), trademarks, licenses, contracts, methods, programs, systems,
forecasts, estimates, numbers technical details ...
- Investment in human resources: including investment in recruitment,
training, payroll, health care, improvement of working environment.

- Investment in research and development (R & D) of science and
technology: including research, development and application of new products,
new processes, new methods ... for production and business. of the business.

2.1.2. Informal costs in firm
2.1.2.1. Concept
"Informal costs are expenditures of enterprises for State officials for the
purposes of bribery and lubrication, which are not recognized by Vietnamese
law." This study identifies informal costs with corruption and bribery.
2.1.2.2. Classify
The informal cost divided by Nguyen Van Thang et al. (2014) consists of
two types: lubrication corruption and competitive corruption. informal costs for
lubrication: These are costs to promote administrative procedures, including the
cost of hand-washing for tax officers, the cost of hand-washing for customs, the
cost of administration other state agencies such as fire safety, social workers,
food safety, market management, natural resources and environment,
construction, public security, treasury, banking, insurance. Informal costs to
compete is the cost of competing for business opportunities with competitors
(other businesses), including the cost of obtaining a paper business licenses in
conditional businesses; The cost of accessing information about business
opportunities; expenses for applying for land use right or exploitation of natural
resources; eosts for funding sources; eost to win the contract / win the right to
supply goods; eosts to withdraw the project gut in the course of contract
performance / contract settlement.

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2.2.3. Firm performance
Firm performance is known as its efficiency, efficiency and
effectiveness... and is used by researchers to use a variety of measures /

indicators to measure.
2.2. The theory of development investment and informal costs in SMEs

2.2.1. SME characteristics
SMEs have the following characteristics: SMEs have limited resources:
low capital, low manpower, less material assets, less developed technology;
compact SME management machine, management capacity is limited; SMEs are
usually private sector enterprises; SMEs have a very diverse sector / sector
structure, covering the economy, but often focus on sectors close to consumer
goods such as apparel - food - small - industrial auxiliary ... those sectors do not
require too much resources for development.

2.2.2. Advantages and disadvantages of SMEs
Advantage: Easy to start up, easy to choose the industry / field of
operation, ie easy to insert and fill the market gap; Flexibility in business
transformation, adaptation to market changes, shocks to the economy; The
machine is compact, facilitating the operation; Easily make management
decisions to keep up with changes in demand, prices, supply, customers ...;
Easily access supporting areas to participate in the global production chain; Can
be linked together to create value chains, for example value chains in agriculture
Disadvantages: Difficult access to important resources is capital and land;
Difficulties in developing human resources; Difficult to approach and innovate
advanced production technology, friendly with the environment; Difficulties in
investing in R & D to improve and upgrade the production process, research and
find new ways to improve the quality of products and services; Difficulties in
transaction and implementation of state administrative procedures; Greater
dependence on the business environment, partners and customers; Competitive;
High operating costs due to the lack of economies of scale; Difficulties in export
and integration; Difficulties when expanding the market, expanding the field of
activity; Great risk

2.2.3. Developed investment in SMEs
Developed investment in SMEs: investment in fixed assets, investment in
human resources, R & D investment (like in big firms)
The difference of development investment in SMEs with other firms:
- Ownership: Large firm are associated with ownership of resources when
they invest, while SMEs often consider renting or borrowing resources.


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- Frequency: SMEs are difficult to decide where to invest, how much
investment, when to invest, often or not often
- Intensity of investment: Large enterprises can spend a lot of money on
an investment activity, and spend enough for each stage, each content, in a way.
In contrast, SMEs invest less and less often, less content.
- Efficiency of investment: Large enterprises invest regularly, large
investment, investment so often to achieve high efficiency; On the contrary,
SMEs will be less effective.

2.2.4. Informal costs in SMEs
SMEs with small and weak characteristics, limited resources, so in the
operation process less favor from the government as compared to large
enterprises, so when contact with public officials, SMEs often spend the bribes
are not discriminated against, which facilitates the implementation of
administrative procedures. In addition, because of its small potential, the ability
to access business opportunities is limited, it is difficult to compete with large
enterprises, so SMEs pay for winning contracts, winning contracts to supply
goods . In practice, SMEs are more likely to pay informal costs than larger ones.

2.2.5. Factors influencing investment decision and decision to pay

informal costs of SMEs

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results, ie in the long run. Developed investment creates resources, so it helps to
create long-term positive business results (positive relationships). And informal
costs do not create resources, so it not only does not help to generate good
business results, but can even hurt or erode the long-term development of the
business, in that way. The other is having a negative relationship in the long
term.
CHAPTER 3: RESEARCH METHODOLOGY FOR TERMINOLOGY
RELATIONSHIP SHORT - LONG TERM BETWEEN DEVELOPMENT
INVESTMENT AND INFORMAL COSTS TO SMES PERFORMANCE
3.1. Research process
The research process of the thesis goes through the following steps:
Identifying research topics; Study overview; Defining research objectives;
Theoretical framework; Develop research methodology; Measurement, design of
questionnaires, in-depth questionnaires; Data collection; Model testing; Report
on research results.
3.2. Scales
Biến số

The decision to invest in an enterprise will be influenced by a number of
factors, which have been explained by investment theories and tested in many
other studies and are divided into two main groups: Look at the external factors
and look at the internal or internal factors of the business.

Investing in
Investment for
human
resources staff incentive

system:
“NL”
salaries,
bonuses,
allowances,
insurance

Percentage of
R&D
Investment /
Revenue

Direct survey

Direct survey
Combined PCI
survey data
- Nghe An Tax
Department (Get
financial reports)
- Nghe An
Department of
Statistics (annual
survey results)
-

Ghazawi (2012)

Investment
policy

treatment
R&D
Investment
“RD”

Nguồn thu thập
dữ liệu
-

Investment for
staff training

2.3. Theory explains the relationship between development investment and
informal costs with the SMEs performance
Barney's (1991) management-based theory of management has built a
strong relationship between the firm's competitive strengths and competitive
advantages, thereby explaining the phenomenon of over-performance. dominant
and sustainable business. Accordingly, only when an enterprise invests in what
is considered a resource, can it achieve sustainable and long-term business

Nghiên cứu tiền đề

HR policy,
procedures in
recruiting and
recruiting staff

- Factors influencing the investment decision of SMEs

- Factors influencing the decision to pay informal costs of the enterprise:

business environment (transparency, publicity, fairness); administrative
procedures, policies to support enterprises ..., the broup on the future benefits of
the business: the benefits of building relationships with the government from
which to gain advantages such as bidding , administrative procedures,
exploitation of resources ...

Thước đo

-

Lee & Marvel (2009), Rugman
& Sukpanich (2006), Beld
(2014), Krasnikov &
Jayachandran (2008),
AYAYDIN & KARAASLAN

Direct survey

Direct survey


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3.4.3. Design the questionnaire

(2014)
Fixed asset Percentage of
investment Fixed Assets /

“HMTSCĐ” Revenue

Informal
costs
“TYLEIP”

Firm
performace
“SALE”

Percentage of
Informal costs
/ Revenue

Logarith's
Revenue

Olatunji & cộng sự (2014),
Okwo & cộng sự (2012)

- Nghe An Tax
Department (Get
financial reports)

Asiedu & Freeman (2009),
Nguyen & cộng sự (2012),
WILLIAMSABBI &KEDIR - Direct survey
(2016), Nguyen Van Thang,
- Combined PCI
Ho Dinh Bao, Le Quang

survey data
Canh, Nguyen Vu Hung
(2015), VCCI
Jong & cộng sự (2010),
Nguyen Van Thang, Ho Dinh
Nghe An Tax
Bao, Le Quang Canh,
Department (Get
Nguyen Vu Hung (2015),
financial reports)
Lim & cộng sự (2011),
Zhang & cộng sự (2014)

In-depth interviews will be conducted with selected enterprises, with
broad coverage of the sectors and localities. In-depth interviews were used to
collect qualitative information to examine and explain quantitative research
results. Interview content includes questions that are flexible depending on the
context of the interview, and around the following topics: Which businesses
invest in fixed assets? What is the content of the investment in human
resources? How to understand R & D investment? What are the unofficial
expenses? How does the content affect the company in the short and long term?
3.5. Expected data analysis
The thesis selects the Engle-Ranger method with the dependent variable
being the output of the business activity, while the independent variable is the
development investment and the unofficial cost. The relationship between the
variables will in the long run use the Engle-Ranger coherent model, while the
short-term relationship will use the ECM error correction model. The analysis
goes through the following steps:

3.5.1. Insert information

3.3. Sample design

3.5.2. Descriptive statistics analysis

3.3.1. Overall and research sample
The sample consisted of SMEs, in the manufacturing sector, the private
sector, and in Nghe An province.

3.3.2. Sampling method
Author selects a combination of methods: stratified sampling and
convenient sampling.
- Select stratified sample: stratified 3 times: 1st by local, 2nd by field and
3 by scale
- Convenient sample selection: After sample of 412 SMEs selected after
stratified sample, author will continue to use convenient method, based on the
ability to reach the target.

3.5.3. Test the stopping of table data
The thesis uses the unit test method of Levin, Lin and Chu. If the variable
is not stopping, we use the wrong variable in step. Then continue to test stopping
for differential variables until the data stops.

3.5.4. Selection of regression models

SALEit = β 0 + β 1*HMTSCDit + β 2 * NLit + β 3 *RDit + β 4 *TYLEIPit + ε it
The regression analysis of the table data usually includes some major
estimation methods such as Pooled OLS, FEM, REM. It is necessary to
determine which model is suitable for the data of the study.

3.5.5. Test the relationship in the long term
The hypothesis testing process has to go through the following steps:

3.3.3. Sample size
For each SMEs surveyed, the data will be collected over 6 years (from
2011 to 2016), forming a data panel data panel, with each observer having 6
observations. Thus the number of observations of the thesis is 6 * the number of
respondents. Author sent questionnaires to 412 businesses, with 168 responses,
of which 123 were valid. So the sample of the thesis has a scale of 123 * 6 = 738
observations. This figure is perfectly consistent with 5/6 of the sample size
norms in the above studies.

3.4.2. Design survey form

- Step 1: Verification of co-linkages: Verification of co-ordination to
determine whether there are long-term relationships between variables.
- Step 2: Verify the relationship between the variables in the long term
with the appropriate model.

3.5.6. Short-term correlation assay using the ECM error correction
model


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To test the short-term impact relationships, the method used was the
Engle-Granger method, in which the short-term effects of the variables were
tested by constructing the ECM error correction model as follows:
p

∆ SA L E

t

= ϕ

0

+

∑

q

ϕ

1

∆ L H M T S C D

t −1

+

i= 0

k

ϕ

2 i

∆ N L

t −1

i=1

m

+

∑

+

∑

ϕ

3 i

∆ R D

t −1

i= 0

n

∑

ϕ

4 i

∆ T Y L E I Pt−1 +

i= 0

∑

ϕ

5 i

∆ S A L E

t −1

+ θ E C

t −1

+ v

t

i= 0

Where: the variables ∆SALE, ∆LHMTSCD, ∆NL, ∆RD, ∆TYLEIP,

are the first differential variables of the original variables. The EC is the residue
that is retained after the regression model of the co-link in the long-term
relationship test.
CHAPTER 4: RESULTS OF THE SHORT- LONG TERM
RELATIONSHIP BETWEEN DEVELOPMENT INVESTMENT AND
INFORMAL COSTS TO SMES PERFORMANCE
4.1. Research background

4.1.1. The scene of Nghe An firms
The number and type of enterprises, business lines, business size

4.1.2. The situation of production and business activities of the firm
4.1.3. Informal costs for firm
Corporate context throughout the country:
The payment of Informal costs is a trend, a habit, an unwritten law, and
even become a culture in the business community of Vietnam. Informal costs
surveys in Viet Nam give very alarming results on the share of informal costs:
59% of businesses donate gifts and / or money to officials to handle their work
(World Bank , 2012); 50.5% of enterprises regularly pay informal costs (VCCI,
2013); 45% of enterprises paid bribes (CIEM, 2013), 64.5% of enterprises paid
informal costs (VCCI, 2014), 65% of enterprises paid informal costs, 66%
28.4% agreed to pay commissions when bidding, 89% said they would be
disadvantaged in bidding if they refused to pay commissions (VCCI, 2015).
Nghe An enterprise:
In terms of the unofficial costs index, Nghe An is always the lowest
among the 63 provinces. The low scores show that in Nghe An, over the years,
enterprises have been paying a lot of money for informal costs for the public
administration system, and at the same time expressing distrust of main system
actions, rights to improve the business investment climate in Nghe An.
4.2. Descriptive statistics

Descriptive statistics show the characteristics of the sample on each
variable.

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4.3. Correlation testing, multi-collinear
All variables from independence to dependence are included in the
correlation test. According to Evan (1996), the correlation coefficient between
0.4 and 0.59 was significant, ranging from 0.60 to 0.79, which was strong and
less than 0.39, respectively. The correlation coefficients of the model are less
than 0.39, indicating that the correlations are weak, thus confirming that the
variables do not exist in multipliers.
4.4. Stationary test
All of the variables do not stop at the base sequence and stop at the first
differential, satisfying the conditions required to use the ECM model to test the
short-term significance relationship.
4.5. Choice the accreditation model
The results show that the randomized REM model is appropriate
4.6. Long-term impact relationships test

4.6.1. Cointegration test
Using the Engle-Granger co-test method, Kao's optimum latency is
automatically selected according to the Akaike Info Criterion standard, resulting
in Resid (-1) residue , the hypothesis H0 is rejected (H0: non-stop, no cohesive
relation exists). Thus the variables have a cointegration relationship, proving
that they have a long-term impact.

4.6.2. Long-term impact regression
The RD (R & D investment) and the TUOI variable (business age) do not
have an impact on SALE (Business performance of the business. Impact is (+),
positive. The HMTSCD (fixed asset investment) has a SALE effect, and the

magnitude of the impact is (+) positive. The TYLEIP variable (unofficial cost)
has the effect SALE , and the impact dimension is (-), negative.
4.7. Short-term impact relationships test
In the short term the independent variables affecting the dependent
variable are as follows: The DNL variable (human capital investment) and the
DTYLEIP variable (unofficial cost) have no impact on DSALE (Business result
The DRM (investment in R & D) has the effect of DSALE, and the impact is (-),
negative. The DHMTSCD (fixed asset investment) has a SALE impact, and the
impact is (- ), negative.


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4.8. Sumary and discuss the research results
After the verification process, the research results are summarized as
follows:
Variable
name

Expected impact
indicator

Marked impact indicator

Short
term

Long
term

Short term

-

+

-

Long term

SALE
HMTSCD

+

NL

-

+

No impact

+

RD

-

+

-

No impact

TYLEIP

+

-

No impact

-

Thus, the accreditation practice has some differences from the initial
expectations when considered for each variable. However, when placed in a
general population, the results are consistent with the original hypothesis.
Specifically:

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- For R & D investment: In the short term, R & D investment has a
negative impact on business results, as expected. However, in the long term, this
relationship is not statistically significant, no impact. This can be explained by
the fact that the research SMEs are investing in R & D is limited or not large
enough to have a positive impact, or R & D investment in Vietnam in general
and Nghe An in particular, has not been invested properly, or has not achieved
any significant results. This finding is consistent with Beld (2014).
- Informal variable costs: In the long term, empirical results show the
relationship between informal costs and SMEs performance as negative as
expected. In the short term, contrary to the initial expectation that this is a

positive relationship, the fact that it does not work. It is not like the business
thinking that informal costs will make good business results in the short run, but
in reality it has no impact at all. The longer it goes, the worse it will be for the
business.
CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS
5.1. Conclusions on the short and long-term relationship between developed
investment and informal costs with Vietnamese SMEs performance
The results show that:

- With Fixed Asset Investment: This is the only variable that has the
desired results as expected and consistent with previous studies: Fixed asset
investment will negatively affect results in short-term, and long-term business
activities will have a positive impact. This is extremely easy to understand,
because investing in fixed assets usually requires a large amount of capital, takes
time to disburse and work. Fixed asset investment has a time lag, its results /
effects will not be immediately promoted in the investment period.

With developed investment in the SMEs: In general, this is a waste of
resources and short-term effect on the business result, however, after a period of
time it It is very good for the business, making the business results higher.
Specifically, for each development investment, the enterprise should pay
attention as follows:

- With the investment of human resources: In the short term, investment
in human resources does not affect the results of production and business
activities, but in the long term the positive impact. Long-term impact is
consistent with the original theory. Why in the short term these two variables
have no impact? The reason may be explained by the small sample, convenient
sampling should not reflect the nature. It is possible that the fact that enterprises
invest in human resources is not really significant, not enough to bring about

immediate impacts. Human resource investment is also a part of developed
investment, similar to fixed asset investment, it has a time lag, which is a period
of time later than investment. This result is similar to the study of Perera and
Thrikawala (2012). The research model also has independent variable is human
resource investment, the dependent variable is corporate financial performance
(measured by level market capitalization, ROE, ROA).

- Investment in human resources: The research results show that when
investing in human resources in the long run, it will be very good, and in the
short term, it will not work. Therefore, enterprises should revise their investment
policies. Is your workforce reasonable? Find out why in the short term has not
worked? Does the company invest heavily in long-term human capital
investment programs, such as long-term education and training. If this is the
case, SMEs should strengthen their short-term investment programs such as
short-term training courses in order to quickly apply them to production.

- Fixed asset investment: Construction and procurement of buildings,
offices, offices, machines, tools and tools will cost businesses a lot of money in
the first place, but then it will work, bring revenue to the business.

- R & D investment: Research shows that R & D activities have not
impacted the business well. Do the SMEs really not invest seriously, have the
strategy for R & D? Businesses need to find the cause and solution to make the


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R & D sector more effective, especially in today's era, the era of knowledgebased economy, as SMEs compete with high- intellectual, high technology.
With informal costs in the SMEs: The results confirm once again that
informal costs are not good for businesses: it does not affect business results in
the short run, and even negative impact in the long run. So do not spend money

on informal costs, it does not affect the business, erodes the competitiveness of
the business, affects the long-term development of the business, and it it also
seriously affects the general business environment, affecting the overall
development of the country.
5.2. The development context of Vietnamese SMEs
At present, at the time when the research is completed (in 2018),
Vietnam's SMEs are in the context of development with many opportunities and
challenges, created by three groups of factors: the deepening of the national
economy, the economic restructuring, the transformation of the growth model,
the introduction of the Small and Medium Enterprises Promotion Law of 2017.
SMEs are facing a lot of Assembly and challenge. In order to achieve good and
solid business results in the long run, SMEs should take advantage of the
opportunities and overcome the challenges in a rational manner.

5.3.1. Recommendations for SMEs in Vietnam
5.3.1.1. Change the mindset of developed investment and informal costs
Thinking and awareness of SMEs in Vietnam is mainly "short-term
raising", considering the immediate benefits, so they temporarily shelve or limit
the amount of money for developed investment, firstly bride to find the business
opportunity, developed investment later. However, contrary to the expectations
of enterprises, having to reallocate % when implementing a contract will make
the company think it is beneficial, but because of the high cost, the profit on
each contract is reduced sharply, even losses. Therefore, SMEs do not have to
pay for unofficial costs, but focus their limited resources on development
investment. SMEs should carefully study the opportunities, challenges, strengths
and weaknesses of their competitors and thus develop a long-term business
investment strategy. This strategy should aim at building a real capacity for
SMEs, which can bring long-term benefits to SMEs, and determine what they
will focus on. Once the strategy is in place, action plans need to be developed
for each content, including the work to be done, the objectives to be achieved,

the resources to be mobilized, and possible risks.
5.3.1.2. Improve the efficiency of using existing resources
SMEs have limited resources, so if you do not make the most of available
resources, it is unfortunate. So before thinking about mobilizing more resources

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from outside, SMEs should improve the efficiency of using existing resources,
avoid waste. The calculation of resource efficiency will help SMEs realize the
current exploitation results compared with their maximum ability to meet, as
well as help SMEs find the causes that affect the output efficiency. The
calculation of efficiency will be done by calculating a system of financial
indicators including cost effectiveness, efficiency and efficiency of operations,
efficiency in payment, performance and investment of enterprises.
5.3.1.3. Improve the ability to mobilize external resources
Access to and mobilization of external resources is always difficult for
SMEs. The resources that SMEs need, but the most difficult to access are capital
and land.
a. Mobilize capital
With regard to capital mobilization, there are many sources of capital
which SMEs can access to supplement their production and business capital,
including credit, joint venture capital, joint venture, capital mobilized through
the stock market and market. hire purchase credit. SMEs usually use only
traditional mobilization channels for credit, and low capital access efficiency
because, according to the Ministry of Planning and Investment, only about 30%
of SMEs have access to credit. The ratio of outstanding loans to small and
medium enterprises is about 22-25% of total outstanding loans for the whole
economy in the period 2012-2017, nearly 70% of SMEs have to continue using
capital. Own or borrow from other sources of funds at very high cost, risky. The
solution for SMEs is to improve access to credit, while diversifying capital
mobilization channels.

- For credit capital:
- For capital contributed to joint ventures:
- For capital mobilized through the stock market (securities market):
b. Access to land
Most SMEs, when they need land and land, think of private land rents, but
they do not think about accessing the land because they are unlikely to have
access to land. This is due to the large number of reasons such as complicated
administrative procedures, unfavorable access to information and high land
prices. Meanwhile, the reality of access to land is difficult due to lack of land,
but there are opportunities for SMEs to approach, specifically:
- Regarding the administrative procedures:
- On the issue of high land prices:


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5.3.1.4. To carry out investment activities in the direction of improving
efficiency
On the whole, development investment is totally beneficial to SMEs, it
may not be effective in the short term, but in the long run will make the results
of production and business activities of SMEs. better. However, not all
enterprises can carry out development and development activities properly and
properly, especially for SMEs, where the resources are limited, SMEs often
ignore some of the steps, or but cutting costs. Therefore, it is necessary to
redefine the way and content for each development investment in SMEs so that
it can be improved in order to improve its efficiency.

5.3.2. Recommendations to the State
5.3.2.1. Continue to improve business investment climate, reduce
informal costs

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5.3.2.1. Increasing support for developed investment of SMEs
The introduction of the SME Law has demonstrated the State's efforts to
support SMEs, which see SMEs as a driver of growth. The most supportive
component for SMEs in development investment is providing multi-dimensional
capital access channels for SMEs with three types of funds: SME Development
Fund, SME Credit Guarantee Fund, creative work. The issue is whether SMEs
can access these funds in a convenient way. They need direct guidance, specific
guidance to responsible units, propaganda and dissemination to SMEs for SMEs.
to know, to issue strict penalties for misuse of funds, or SMEs that need bribes
to access ...
Apart from supporting SMEs in all development investment activities, the
State needs to have individual support for each investment activity of SOEs,
specifically:

Establish a strict punishment mechanism for corruption: This is one of
the most important issues that have the effect of deterrence and punishment of
individuals and organizations that commit bribery or corruption, including fines.
formal, administrative (disciplinary, dismissal) and criminal prosecution.

- With investment in fixed assets: tangible fixed assets or machinery and
equipment: To create mechanisms to assist SMEs when SMEs import modern
technologies from the United States, EU or Japan and receive financial support.
In addition, through the activities of the associations associated with the State
Agency for Science and Technology to guide the SMEs in purchasing
technology abroad; Intangible fixed assets: support SMEs in the registration of
intellectual property and reward SMEs for valuable patents that can be applied
and disseminated widely.

Simplicity and transparency of procedures, development of online

services: administrative procedures, fees and hotline denunciation of corruption
need to be publicly disclosed at state agencies, help SMEs can easily access
information and participate in monitoring the implementation of their rights and
responsibilities.

- With investment in human resources: To create a mechanism to assist
SMEs in training human resources, it is possible to organize training courses
free of charge or partly finance the training needs of SMEs. If it is not possible
to organize the training that SMEs need, there is a mechanism to provide partial
support to SMEs.

Bidding Control: There are a lot of negative behaviors, such as bracketing
between government agencies and contractors, where the commission rates paid
by SMEs are around 10% of the value of the tender package, up to 15 - 20%.
From here, businesses have to legalize the above expenses to deal with
inspection agencies, and a bribe. Therefore, it is necessary to strictly control the
bidding process with strong sanctions in order to raise efficiency and prevent
negative impacts.

- With investment in R & D: Create support mechanism from the State's
research, scientific and technical units for SMEs. When SMEs need support for
research and development, these agencies should have a department responsible
for supporting SMEs, this support may be mandatory, or there are incentives for
the unit does good support for SMEs.

Informal costs not only adversely affect business performance but also
erode competition, make business investment climate less attractive, and further
outstrip growth. Therefore, the State should take measures for informal costs,
corruption.

Integrity in business: Integrity and transparency in business is legal
business, no bribery, ... It is tied to ethical and legal norms that create a barrier.
prevent corruption, bribery. To implement integrity measures such as internal
control, expenditure control, implementation of transparent reporting
mechanism with tax authorities, customs ...

5.4. Limitations of research and future research directions
Empirical studies have shown incomplete results as originally expected.
Causes can come from many aspects:

First, because the sample is not really large, the table data used in the
study included two parts of space and time: In terms of space there are 123 units
corresponding to 123 SMEs are quite good for a socio-economic study such as
thesis. However, in terms of time, the new thesis studied over a period of 6 years


23
is not long, limited to reflect the long-term effects as desired, especially when
the variables do not stop, to do differential analysis reduced the study time to 4,
reducing the number of observations from 738 to 492.

Secondly, the subjects of the thesis are only production enterprises, private
enterprises, and SMEs, so the research results may be suitable for this enterprise
which is not suitable for the enterprises. other business. For example, industrial
production may be different from agricultural production. Or the medium
enterprise, but with a business capital of 10 billion, has a business of 100 billion,
this difference will also have different impact on the same analytic relationship.
Third, the use of a metric for a variable, the results of a SME performance
may not be optimal. The results of SMEs performance can be measured by
different measures.

Fourthly, the control variables introduced into the model are limited,
which may lead to the lack of generalization.
Fifth, not to mention the endogenousness of the variable.
Sixth, restricting from the average regression approach to non-regression
analysis.
Seventh, the sampling method using a stratified sampling technique and a
convenient sample selection may lead to a poorly stratified sample, or a
convenient selection may ignore the possible study subjects. represent.
The above limitations will open new directions for further research. These
are studies that may share the relationship between development investment and
informal costs with the results of business activities, but may follow other
directions:

First, broaden the subject and scope of the study, including:
- Research for big business subjects.
- Research for businesses in the field of trade or services, or for a specific
sector / industry such as cement production, building materials production,
agricultural production, build…
- Research for State enterprises, or foreign investment enterprises.
- Studying businesses in the localities of Vietnam
- Studying businesses in other countries.

Secondly, change the measure of the variables, for example measure the
business output of the business by ROA, ROE ...
Thirdly, add variables to the model: for example, the development
investment (investment, branding, investment in intangible assets ...) and other
control variables (export, Foreign ownership…)

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CONCLUSION

SMEs development is an issue that attracts the attention of the whole
Vietnamese society as it is seen as a driver of development in the future. With
limited resources, how can SMEs utilize such resources, maximize their
potential and overcome the limited constraints to achieve good results that can
be developed sustainably? This is a concern of the SMEs themselves and also of
the State authorities, in order to be able to support SMEs more.
At present, SMEs have also undertaken investment activities to exploit
and develop their resources, such as investment in fixed assets, investment in
human resources, investment in R & D. However, SMEs also have to pay for
unofficial expenses for agencies and public officials in the hope of bringing
good results to their businesses. When the money goes to informal costs, SMEs
no longer have or have little money to spend on these development investment
activities. So where can the activities bring good results for SMEs, help SMEs
develop sustainably?
The research results of the thesis have responded to the above question:
developed investment includes investing in fixed assets, investing in human
resources, investing in R & D to bring good results to SMEs in the long term. shortterm, there may be no impact or even negative impact (depending on investment
activities); informal costs are not as beneficial as the expected SMEs, but they also
negatively impact and hinder the development of SMEs in the long run.
Based on the research results, the thesis proposes recommendations for
both SMEs and the State. For SMEs, the thesis suggests that SMEs first need to
change their thinking, increase their investment and limit their spending on
informal costs, as new development investments bring good results for SMEs.
Castle. SMEs should exploit and improve the efficiency of using available
resources while improving access to external resources. More importantly,
SMEs need to know how to invest in developing the best results. The
dissertation also proposes recommendations to the Government on improving
the business investment environment, addressing the issue of informal costs, and
strengthening SMEs support for SMEs develop effectively.