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BACKGROUND
The most obvious illustration is the total investment capital and especially the number of SMEs increases annually. However, in parallel with that, the rate of enterprises facing difficulties in business investment and operation ceasing is also very high, accounting for about two thirds of enterprises that are set up every year. This proves that investment activities of SMEs now face many difficulties and obstacles, the sustainable and stable development is being threatened. If this situation is not resolved, it can completely create a warning effect of the investment decisions of SMEs. Although SMEs are not mentioned directly, the results of some recent studies have suggested the causes of the above limitations, lacking the investment environment is one of them. Tuyen T.Q. et al (2016); Viet P.H. (2013), Thuy & Dijk (2008) report annually on the provincial competitiveness of VCCI Vietnam, which initially pointed out that there are still many aspects of investment environment such as incomplete legal policy corridors, high unofficial fees or difficulties in accessing technology, land, capital and output markets. These limitations and shortcomings, let enterprises operate ineffective and unfavorable in terms of competitiveness (Phan Nhat Thanh, 2011). The investment environment may impact on the investment of SMEs in the context of Vietnam's economy, which lacking of specific scientific evidence. Improving the investment environment to create an effective support mechanism for SMEs with many characteristics which only from the perspective of differences between countries, or generally for all types of enterprises is very difficult. It is important to clarify the relationships of variable investment environment that affect the investment decisions of SMEs within a specific country like Vietnam. Thereby, it is possible to correctly and effectively adjust policies to create a better investment environment for these businesses and contributing to promoting economic development. This is an important and pressing issue in the development of Vietnam's economy, over time, that problem is not only lost, but on the contrary it becomes more and more urgent. Therefore, the topic "The impact of the investment environment on investment decisions of small and medium enterprises in Vietnam" of the thesis is to see whether the decisions of SMEs are really affected by the investment environment and What are the specific influences that have important implications both in theory and practice in the current context in Vietnam. 1. The rationale of the thesis The investment decision is the commencement of production and business activities, it also contributes to boosting economic growth, create jobs, reduce poverty and improves welfare. Therefore, in the process of development, countries always strive to improve their investment environment to meet the expectations better, this can help to promote strong investment. However, due to specificity, different types of businesses also have different motives and expectations when deciding on an investment. Since then, the improvement of investment environment has become complicated when taking into account both general and moderate factors to satisfy the differences between the businesses that need support. Meanwhile, small and medium enterprises (SMEs) in very large numbers appear in almost all geographical areas and these business sectors always occupy the key position of the economy. Therefore, the process of improving the current investment environment of all countries is interested in promoting investment, increasing business efficiency and competitiveness of these enterprises. As a prominent issue today, the investment environment in developing countries is affected by incompletion state management mechanisms, lacking of infrastructure and along with incomplete, unstable and difficult to predict polices and legal frameworks. A lot of research has focused on the investment environment context between countries, they made concentration in improving investment environment to attract foreign investment. Although making an important contribution, they even provide core information to help countries create an attractive investment environment, but changes at the national level to attract foreign investment are not quite suitable and enough to stimulate investment by domestic enterprises, especially SMEs with many different characteristics. In this context, it is necessary to consider at a more specific level, such as in a country to provide effective information for investment environment upgrading activities (Meyer, 2004). In Vietnam, the investment activities of Vietnamese enterprises create many jobs to help control unemployment while contributing to improve income as well as mobilizing and promoting idle resources in society. The Vietnam legal system and policies which support investment for SMEs have been improved, partly encourage enterprises have motivation and gradually expectation to build and implement investment decisions increasingly strong.
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improve investment environment effectively, helping SMEs to overcome difficulties, barriers and continue to increase investment. 2. Research objectives of the thesis The
thesis explores clearly defining components of investment environment, assessing the status of investment environment, investment situation of SMEs in Vietnam. At the same time, the thesis measures and analyzes the impact of investment factors on the investment decisions of SMEs. From the research results, the author proposes solutions to the investment environment towards promoting investment of SMEs in Vietnam.
Research questions: 1) What factors of the investment environment can affect investment decisions of small and medium enterprises ?, 2) How current situation of investment environment and investment situation of small and medium-sized enterpries in Vietnam are ?, 3) How does the investment environment affect investment decisions of small and medium enterprises in Vietnam ?, 4) How does Investment environment need to be improved to promote small and medium enterprises in Vietnam to invest more strongly? 3. Subjects and scope of research The direction and levels of influence of factors on SME investment decisions in Vietnam have been clearly established after empirical research was completed. This helps policymakers have information, firm foundation and ensure science in establishing and improving investment environment to promote investment more effectively, contributing to the implementation of the economic goals of the country as well as of the localities in the country. 5. Thesis structure The whole research content of the thesis includes 04 chapters: Chapter 1: Overview of research works and research methods; Chapter 2: Rationale for the impact of investment environment on the investment decisions of small and medium enterprises; Chapter 3: The reality of the impact of investment environment in the investment decisions of small and medium enterprises in Vietnam; Chapter 4. Solutions to improve the investment environment to promote the investment of small and medium enterprises in Vietnam.
CHAPTER 1. OVERVIEW OF THE THESIS AND RESEARCH METHODOLOGY
The research object of the thesis is the investment decision of SMEs in Vietnam and the impact of investment environment on the investment decisions of SMEs. The thesis focuses on the external investment environment factors, considering their impacts on investment decisions (in the field of development investment) of domestic SMEs. Subjects of the survey are the owners and directors of SMEs. The thesis is carried out from 2014 to 2017. 4. New contributions of the thesis
The thesis has systematized and clarified the content of investment environment, from each component element has been identified, the thesis clearly shows the ability of investment environment to influence investment decisions of SMEs. The results of empirical research contributed to strengthen the theory as well as new discoveries: First, the detection and the formation of new independent variable scale is the "administrative management efficiency" of the administrations showed that the investment environment with the investment decision of SMEs is considered by 6 component concepts instead of 5 concepts as originally planned. Secondly, the thesis assessed the level of influence of investment environment elements to the investment decisions of SMEs in Vietnam.
1.1. The thesis overview 1.1.1. Overview of investment environment Some researches considered investment environment to be an independent multi-factor set that reflects comprehensively the initial environment such as: Tidiane kinda and colleagues (2011); David Dollar et al. (2004), Lauren M. Phillips (2006). Meanwhile, a number of studies have combined the variables of investment environment into groups of component indicators, especially those related to enterprises investment decisions such as Li and Li (1999). ), Stern (2002), Chin-Shan Lu et al (2006). From assessing the advantages and disadvantages of the approaches, the author has chosen to approach the investment environment under 5 main elements, including: 1) Politics - law; 2) Infrastructure; 3) Cost; 4) Market; 5) Social culture. 1.1.2. Overview of foreign researches 1.1.2.1. Politics - law Hallward-Driemeier et al. (2006), Kaufmann et al. (2008) argued that political institutions directly influenced the establishment and maintenance of a Achievements and limitations in improving investment environment are clearly analyzed and related to the investment transformation of SMEs. This result provided orientations and warnings on key issues to be addressed to
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or not. The proximity to social culture is an advantage compared to other businesses in the area where the investment is expected. It is an important factor that facilitates the acceleration and rationalization of the transfer and assimilation of technological systems, knowledge and management for enterprises to make investment.
stable legal system and thus had the same impact on the enterprise's decision to invest. Schneider and Frey (1985), Henisz (2000), Hallward-Driemeier et al. (2006) assessed political institutions have a stronger influence on corporate investment decisions, institutional instability is a type of risk, and therefore businesses will decide to invest in a certain country based not only on wealth with a large population but also on the fact that in that country there are reliable political principles or not. 1.1.2.2. The infrastructure
1.1.3. Overview of studies in Vietnam In Vietnam, very few studies directly mentioned how investment decisions of SMEs are affected by investment environment, most of the research aimed at overall businesses in general or focused on foreign direct investment enterprises as competitiveness report (VCCI); Phan Nhat Thanh (2011); Viet, P.H. (2013) Hoa & Lin (2016) Route T.Q. et al (2016). There are several studies discussing the impact of investment environment on the investment decisions of enterprises, including a few studies on SMEs such as Le Hoang Ba Huyen (2012); Le The Phiet (2012), Hoa & Lin (2016), Le Lu LAN (2017) have shown that the investment decisions of businesses are affected by both internal factors and factors outside the enterprise.
1.1.4. General assessment and research gaps Previous studies have focused on reviewing investment environment of countries in a region or a group of countries to assess their impact on enterprises deciding to invest in a country. These research results do not provide many concrete results to realize which aspects of investment environment play an important role in the investment decisions of enterprises within a country.
There are quite a number of studies recognizing that infrastructure plays a major role in promoting enterprises to make investment decisions such as Root and Ahmed (1979), Wheeler and Mody (1992), Dunning (1981, 1988,1993), Chin. -Shan Lu et al. (2006), David Dollar et al (2005), Ching-Chiao Yang (2006), Mary Hallward-Driemeier (2006), Khalid Sekkat (2007), AJKhadarool and B. Seetanah (2010) and many other studies. Enterprises will decide to invest when they are satisfied and find that the place where the investment is expected to have more advantages in infrastructure than other locations. 1.1.2.3. Cost Wu and Strange (2000), Oum and Park (2004), Graeme Newell and Ross Seabrook (2006); Mebratu seyoum and Jihong Lin (2015) argued that the prices of labor and prices of other inputs such as land, energy, raw materials, and transport are important so that investors must consider before decide whether to invest or not. High costs have a negative impact on investment decisions, due to the impact of cost factors to the investment intentions of enterprises, the authorities need to provide inputs such as land and high quality labor to motivate investors. 1.1.2.4. Market - The researches are mainly concerned with the foreign direct investment enterprises or overall businesses in general. SMEs have many specific characteristics, so applying the above research results in practice may not be entirely appropriate.
According to Ekrem and Keith (1998), Oum and Park (2004), Chin-Shan Lu et al (2006), Buckley et al (2007), factors such as market size, market growth potential, the level of competition, economic growth in the place of investment played a positive role to attract investors. 1.1.2.5. Social culture A small number of studies on SME investment decision making have just stopped in one or a few aspects of investment environment, so it is not enough to make a general conclusion about the role and influence of the investment environment for investment decision making of SMEs.
Different perspectives exist about the role investment environment factors in investment decisions. At the same time, the use of evidence from studies in other countries may not reflect accurately when considering the context of According to Jose et al. (2007) and a number of other studies, socio- cultural factors, including: 1) Living standards and public services; 2) The attitude of the local community for enterprises; 3) Cultural similarity is a significant factor affecting whether an enterprise decides to invest in a locality
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1.2.4. Sample and research methods In order to achieve the objectives, the thesis used a combination of qualitative research methods and quantitative research methods
Vietnam's economy, a developing country along with a Socialist-oriented market economy. 1.2. Research Methods 1.2.1. Research process The main steps to accomplish the objectives of the thesis include: Determining the groups of factors of investment environment, building scales, preliminary research, qualitative research, quantitative research and finally proposing solutions Qualitative research method: With qualitative research method, the author has used the in-depth interview technique with the content prepared in advance with the variables, the observations developed from the research review process with the item destination check and complete the scale. In-depth interviews were conducted with 15 subjects, including 10 SMEs managers and 05 expert subjects.
Quantitative research methods are conducted through two steps: Preliminary quantitative research: Preliminary assessment of the reliability of scales and adjustments to build a complete set of scales before official quantitative research. The sample size used by the author is 72.
1.2.2. Models and research hypotheses From other theories and related studies, to conduct research on the impact of the investment environment on the investment decisions of SMEs in the context of Vietnam, the author has expected the research model with dependent variables is the investment decision of an enterprise under the influence of investment environment represented by five independent variables including: Politics, law; The infrastructure; Cost; Market and Social Culture. Together with 05 research hypotheses corresponding to these 5 variables. Official quantitative research: For the purpose of providing evidence and answering research questions. Selected samples included 231 enterprises in 5 provinces / cities in the survey are Hanoi, Hai Duong, Hai Phong, Quang Ninh and Ha Giang. The regression equation is expressed in the following equation: Y = β0 + β1.PL + β2.I + β3.C + β4.M+ β5.SC + (cid:1)
1.2.3. Investment environment scale Political-law: Political-legal variables in an investment environment reflect the factors related to the formation, maintenance and ability to implement common frameworks, which are mandatory for businesses in investing activities. Based on Chin-Shan Lu et al. (2006); Sun et al. (2002); Dollar et al. (2005) and some other studies have described this variable, the legal political scale will consist of 12 observed variables. In this equation, the dependent variable Y is the "Investment decision of SMEs"; 5 independent variables: PL, I, C, M,SC in turn correspond to Politics - Law, Infrastructure, Cost, Market and Social Culture. β0 is the coefficient of freedom, βi is the regression coefficient that needs to be estimated to measure the impact of the investment environment variable in the investment decision of SMEs and ultimately the random error
CHAPTER 2. THEORETICAL BASIS OF INVESTMENT ENVIRONMENT TO INVESTMENT DECISIONS OF SMALL AND MEDIUM ENTERPRISES Infrastructure: From the approach point of view, this is the technical infrastructure, reflecting the conditions that businesses can access the input, the output market and the ability to operate production. According to Galan et al. (2007); Chin-Shan Lu et al (2006); Sun et al. (2002) Infrastructure will be measured by 5 observed variables: 2.1. Investment environment and the necessary of improving the Cost: Factors that reflect the cost of approaching and using the main input investment environment resources of the business. Costs can be measured by 5 observations.
Market: a factor that expresses the ability and potential of consuming output products, directly related to the target market of the enterprise. Market variables are expected to be measured by 5 observations Social culture: Reflecting the ability of enterprises to adapt to culture at 2.1.1. Investment environment concept From the research perspective of the thesis, the author has drawn the concept that investment environment is a combination of factors outside the enterprise, where the business is operating or expected to invest, investment environment created advantages or difficulties for The process of implementing the place where enterprises invest, is measured by 3 observations.
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and operating investment activities therefore a consequence, therefore it will affect the investment decision of the business. difficulty, especially the capital. Countries that support SMEs are based on the principle of promotion and especially in particular to remove difficulties and limitations as mentioned above.
2.2.2. Some theories about investment decision making process Eclectic theory: Dunning's eclectic theory (1980, 1988, 1993) is considered a fundamental theory for empirical research on investment decision making, providing general concepts as well as shaping the factors which explain the reasons for investment decisions of businesses. Accordingly, three potential advantages serve as an incentive for businesses to decide to invest in a certain location, including: (1) Ownership advantages; (2) Internal advantage and (3) Location advantage.
The theory of institutions underscores the influence of government by establishing rules and rules for the behavior of different subject in economic and social life. In addition, a number of other theories can explain business investment decisions such as optimal choice theory, local marketing theory. 2.2.3. Investment decisions and differences in investment decisions of small and medium enterprises
2.1.2. The factors that constitute the investment environment Investment environment is made up of many factors, Chin-Shan Lu et al. (2006), Galan et al. (2007) and many other scientists have established groups of components of investment environment on the basis of their ability to influence to the responsiveness and potential profitability of the business. The thesis also uses this approach, whereby, investment environment includes the following main elements: Politics-law; The infrastructure; Cost; Market and Social Culture. 2.1.3. The necessary to improve the investment environment A good investment environment promotes investment and opens a premise to promote production, develop a range of low-cost goods and services, create greater consumer benefits. At the same time, it also supports the government's budget by sustainable tax revenues to finance other important social goals such as investment in health, education and other welfare policies. Therefore, the improvement of investment environment is necessary, but the ability to improve investment environment also depends on many factors such as: Natural conditions; Political institutional characteristics and economic development strategies and policies of the country and the locality; Cultural characteristics; The status of economic integration and Finally is the ability of the government
investment
Concept of investment and development investment It can be understood that investment is the process by which businesses use their resources to achieve beneficial outcomes or achieve a range of desirable goals. Development investment is the use of current capital and other resources to maintain activities and increasing new assets, improving the state of technology, quality of human resources and thereby improving capacity business production of enterprises. Development is always associated with the construction of new buildings or it can also be the production of new products and services, improving peoples' lives.
2.2. Investment decision of small and medium enterprises 2.2.1. Some basic issues about small and medium enterprises The criteria for classification of SMEs can be classified into two groups: Quantitative criteria and Qualitative criteria. The current classification of SMEs in Vietnam is basically based on the size of the capital and the annual average number of employees of each enterprise, have additional industry criteria. It means that basically according to quantitative criteria. The role of small and medium enterprises SMEs have great contributions to the production and supply of goods to society. The main roles of widely recognized SMEs include Promoting economic growth; creating jobs, gathering small and idle capital sources
The nature of investment decisions. The investment decision is essentially a form of governance decision, which is the process that senior managers based on both internal and external factors to make a variety of decisions such as decisions whether to invest or not, where to invest, what areas and scale of investment, ... all these decisions always come with the enterprise having to spend an additional cost at the present in order to gain greater benefits in the future, therefore after all, it is the decision on the amount of invested capital to be deployed. Factors affecting investment decisions Characteristics of small and medium enterprises SMEs have a number of characteristics that are relatively easy to set up, which are diverse, flexible and widely distributed throughout the economy. SMEs also have their own limitations, notably resources constraints and
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stimulate investment. If the output market is stable and has the potential to expand, it will help reduce the challenges and difficulties in product consumption, help businesses expand the market to seek profits and vice versa. Social culture: Culture forms the basis of a society, is able to lead change and dominate the process of change in political, legal, technological acquisition, economic conditions, the cultural transformation in a locality can set a series of opportunities as well as challenges for businesses. Based on previous theories and results of relevant studies, it can be seen that the investment decision making process is influenced by the combination of many factors, including the internal and external factors of enterprises. The above mentioned factors are actually a set of factors that constitute investment environment. Since then, the potential advantages from the investment environment will have an important impact on the expected investment and business performance and are considered an intangible asset for investors when they decide to invest in a local or national or not.
2.4. Practical experience and lessons for Vietnam in improving investment environment to promote the investment of small and medium enterprises
Some differences in investment decisions of small and medium enterprises. The investment decisions of SMEs have noticeable differences compared to other types of businesses. It can be summarized through a number of key points such as: Investment decisions in capital scarcity and difficulty in accessing official capital sources; Investment decisions are accompanied by small and odd capital sizes that lack strategicity; Missing information; Being spontaneous and less sustainable; Less emphasis on investment in technology. 2.3. The impact of the investment environment on investment decisions of small and medium enterprises
Politics -law: Enterprises must base on political and legal factors to know what they can do or not. The addition and changing of these factors may occur when relevant organizations wish to orient investment activities to achieve specific economic, political and social objectives. Therefore, this is a factor that can influence investment decisions through a number of key aspects such as political stability, legal system, preferential policies and public services to support investment, effective administrative administration. Japan, China and South Korea are certain countries that have had certain successes in improving the efficiency of their investment in boosting the investment of SMEs. These countries all take concrete actions to empower businesses to invest, from thinking to supporting core issues such as management experience, building strategies; Regarding financial support, tax reduction, labor training. Some lessons learned for Vietnam, such as improving investment environment, need to pay attention to the practical and core contents of SMEs' investment activities; Increasing professionalism, consistency and smoothness in operation, implementing support policies among relevant agencies; Need to concretize support content, support level for specific objects; To adopt policies to reasonably prioritize prospective, more efficient or priority investment enterprises according to regions and industries with particularly difficult conditions to be developed; Accurately grasp and timely solve obstacles between businesses and organizations implementing policies on investment environment
CHAPTER 3 THE CURRENT STATUS OF THE INVESTMENT ENVIRONMENT AFFECTING TO INVESTMENT DECISIONS OF SMALL AND MEDIUM ENTERPRISES IN VIET NAM Infrastructure: Infrastructure such as transportation, improved energy development has created better conditions for businesses to easily access the input and output markets, as well as conditions to maintain product stability export, cut business costs. Since then, it is possible to stimulate investment decisions of enterprises, in other words, an investment environment ensure the availability of quality infrastructure will have a positive impact on investment decisions. 3.1. Overview of small and medium enterprises in Vietnam in the Cost: For SMEs, cost becomes more important, not only by relying on simple 2006-2017 period revenue and cost forecasts, their ability to mobilize capital are very limited
Market: The market is the base of ideas and investment opportunities, a condition to maintain the continuity of business and production activities. In general, market size and development potential are important factors to Along with the economic growth in Vietnam were positive changes, increasingly strong development of SMEs. If there were only 125.1 thousand enterprises in 2006, then by 2017, the number of SMEs reached over 508 thousand enterprises. The number of newly established SMEs was also very
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close in the last 5 years, ranging from 72,597 thousand enterprises (in 2014) to 106,797 enterprises (in 2016). The total capital of the entire SME sector was increasing every year, from VND 954.4 trillion in 2006 to an increase of approximately 20 times to over VND 19.4 million. However, the development of Vietnamese SMEs has more or less shown spontaneity, lack of efficiency and sustainability. Notably, the smaller the enterprises, the greater the loss rate. Every year, the number of SMEs ceases which is equivalent to about 70% of the number of SMEs registered for establishment.
3.2. Current status of investment environment and the impact of investment environment on investment decisions of small and medium enterprises in Vietnam generally increased, averaging over VND 558 trillion annually. From VND 79.6 trillion in 2006, the total investment capital in 2017 reached VND 455.9 trillion. In particular, small businesses always accounted for the largest proportion of investment capital with about 58.4% of the total investment capital of the entire SME sector. In terms of regions, the majority of SMEs' investment capital is contributed by non-state enterprises, corresponding to a rate of over 60%, followed by the foreign-invested enterprises, SMEs in the state sector. According to the business sector, the SMEs in the construction industry contribute a large amount of investment annually, with a ratio of 56.3% to 95.4% of the mobilized capital of SMEs. The service sector tended to fall sharply in 3 years from 2013 to 2015.
3.2.1. Investment environment in Vietnam The investment environment in Vietnam has had more positive changes, some of the most positive changes have been drawn, including Regarding legal politics, Vietnam maintains good stability of social- political security, legal system and investment-related sub-law documents. Regarding Capital structure of SMEs From 2006 up to now, the ratio of equity capital of enterprises over the years has gradually decreased, the self-financing coefficient from 43.9% in 2006 to 33.4% in 2017, it means that capital was mobilized from other sources have increased. Accordingly, in 2006, a capital of SMEs had 0.561 dong of capital, which was the contribution from creditors, then by 2017, in each investment capital that enterprises made, creditors contribute 0.666 dong.
Business investment results In terms of absolute numbers, the profit before tax of SMEs has increased over the years, but the growth rate of profit is smaller than the growth rate of capital, equity and revenue. In general, the investment situation of SMEs is much more difficult, the benefits to investors are being reduced. infrastructure, Vietnam continuously spends a high proportion of investment in infrastructure, total investment capital for transport, telecommunications, electricity, gas and water supply accounts from above 10.3. % Of GDP / year. A series of important projects such as transportation, energy are implemented and promoted effectively in practice, this helps to improve Vietnam's global competitiveness from ranking 75 in 2012 to 55 in 2017. 3.2.3. The impact of the investment environment on investment decisions of small and medium enterprises
the stability of political 3.2.3.1. Positive effects from investment in SMEs' investment decisions Firstly, institutions and especially In terms of cost, with the spirit of serving businesses, encouraging investment, Vietnam has many policies and actions towards the goal of how to cut the most of costs for businesses such as leasing and using. land and capital mobilization costs; Transportation costs, Labor costs and electricity costs.
the improvement of the legal system and SME support policies, concretized in many aspects which has strengthened the confidence and optimism for enterprises making investment decisions to exploit business opportunities. Secondly, accessing the ability of infrastructure, labor and land were improved, contributes to the business needs of businesses that also bring positive effects. Regarding the market, in addition to the advantages of large market size and market growth rate, the government and organizations also have many support activities such as national trade promotion programs, fairs and exhibitions, trade promotion for the business community, 90% of participating enterprises are SMEs. 3.2.2. Investment situation of small and medium enterprises The scale of annual investment Thirdly, Vietnam has established a financial support system for SMEs. Not only commercial banks, but also investment funds, funds to support SMEs at all The scale of investment capital for SMEs from 2006 until now has
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levels are the basis for businesses to approach and solve the need for capital, a difficult problem that Vietnamese SMEs have ever come to now always face.
correctly and can be answered easily. In addition to the comments on the expression, the linguistic structure of some variables, there are only a few minor issues for some observations on the political-legal and social-cultural variables. Therefore, the basic scales will be preserved to be included in the detailed questionnaire in quantitative research after a few minor adjustments in the scale of Political-legal and social-cultural variables. Words and expressions of some observed variables are also reviewed to be more appropriate. Fourthly, the general level of the cost of using infrastructure and other inputs in Vietnam is relatively stable, along with some effective support policies such as policy implementation. Tax incentives, land rental costs, business premises and wage labor policies are favorable conditions for businesses to reduce investment costs at startup as well as reduce production costs and product costs help increasing the competitiveness of businesses. 3.2.3.2. Negative effects from investment environment to investment The results of the dependent variable test Comments are correctly understood and ensured about the ability of decisions of SMEs enterprises to make investment decisions. Firstly, many policies and incentive programs from the government and local governments diverge from the ability to access and benefit SMEs.
Secondly, ineffective in facilitating investment capital, the mobilization rate from informal credit sources is very large, which will cause difficulties in stability, interest expense ...
Adjusting and encoding the scale Specifically, after the qualitative research step, the set of scales is composed of 5 independent variables which are used to analyze the impact of investment in the investment decisions of SMEs. In particular, political-law variables include 10 observations, 4 independent variables, each of which is measured by 5 observations. This scale will be used for quantitative research sections (see Appendix 06 for details). Thirdly, the orientation and support of the output market is still weak, causing many enterprises to lack information to follow unproven market demands, leading to unsold goods that cannot be consumed.
Fourthly, the policy of training, supplying and using labor has not kept pace with the reality, SMEs must accept the use of nearly 75% of the labor force who have not undergone technical and professional training (Cao Sy Kiem, 2013 ) is clearly a big difficulty in labor performance and business efficiency.
3.3.2. Preliminary quantitative research results In the preliminary quantitative study, the scale continued to be assessed for reliability through Cronbach’s Alpha coefficients with data from 72 questionnaires obtained from the survey subjects. In the results, the Cronbach’s Alpha reliability coefficient for all scales are greater than 0.7. The correlation coefficients are greater than 0.3. The scales generally guarantee reliability for use in official quantitative research.
3.3.3. Results of official quantitative research Based on the data set from 231 valid responses from the official investigation, Fifthly, the level of science and technology is low, Vietnamese SMEs face increasingly fierce competition of enterprises from the big economies with high technology and management level. . It is a severe and heavy challenge for SMEs which are weak in innovation capacity and backward technology 3.3. Experimental results of the impact of the investment environment on quantitative research studies conducted, the main results are as follows: investment decisions of small and medium enterprises in Vietnam Evaluating the reliability of the scale All scales have Cronbach’s Alpha confidence coefficients ranging from
0.780 to 0.875 and the correlation coefficients are greater than 0.3 Validating the value of the official scale by exploratory factor analysis (EFA
3.3.1. Results of qualitative research Test results of independent variables: Based on the results of qualitative research, Political-legal factors, infrastructure, costs, markets and social culture can be used to determine and predict investment decisions of SMEs. Therefore, the preliminary research model will be used to conduct research.
First EFA result: From the first 30 observed variables, 7 factors were extracted, the total variance explained when the factor group was drawn was 67,088 (> 50%) Factor value loading received of all the observed variables are greater than 0.5, except for the fourth observed variable of the market variable Results of scale evaluation Basically, the scale of the survey objects understands the meaning
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(TT_4) of 0.436, which also meets the requirement as greater than 0.3.
obtained the adjusted R2 coefficient of 0.420, the largest in the models, that would better explain the variation in the investment decisions of the business. (Explain 42% of the variation of investment decision variable). Therefore, the results of model 5 are selected to demonstrate the impact of investment in the investment decisions of SMEs in Vietnam. Results of verification of research models
Variables and parameters Accreditation
Particularly for Political-legal variables, the study has made noticeable findings, 10 political measurement criteria - the law is loaded into 2 different factors. Therefore, theoretically, these 10 observed variables measure the concept of Politics-law, but in fact in Vietnam, they are separated into two separate concepts. Reference some previous studies such as Thuy & Dijk (2008); Chin-Shan Lu et al (2006); David Dollar et al (2005); Wei (2000), the author named this new variable "administrative governance effectiveness", It does not reflect problems in the formulation and issuance of legal and policy documents, but the internal function is the deployment process, perform with the right nature as committed to those documents or not.
Model 1: No control variables
Model 4: controlling the size of the business
Model 2: Control the type of business
Factors (standardized) Model 3: control the number of operation years
.121*
.155**
Overall model (5): There are three control variables .121*
.149*
.132*
management
.289**
.296**
.293**
.266**
.267**
The results of the second EFA re-run: Results of KMO and Bartlett tests still ensure that the variables are related to each other and are qualified to conduct exploratory factor analysis with KMO results = 0,759, Bartlett testing for Sig value is 0,000. From the original 29 observed variables, 6 factors were extracted, the total variance explained when the factor group was extracted was 64,788 (> 50%). Factor values loading the lowest is 0.425 (TT_4), meeting the required standard. The results of testing the impact of the investment environment on the
investment decisions of small and medium enterprises. Results of hypothesis testing: Firstly, the study examines the relationship of 6 independent variables with the dependent variable of investment environment without the participation of control variables. Then, the research continues to consider the role of control variables when participating in the model. There are all three control variables selected: Type of business, number of years of operation and size of investment capital
.318** -.224** .190** .001 -.107 .355 1.814 19.093 0.000
.296** -.200** .213** -.022 .365 1.781 21.446 0.000
.306** -.205** .165* .008 .228** .396 1.822 22.514 0.000
.287** -.199** .200** -.018 .207** .388 1.762 21.810 0.000
.310** -.218** .150* .020 -.063 .187** .160** .420 1.810 19.538 0.000
Correlation
significant
**.
is
0.01
level
(2
sides)
Politics - Law Administrative efficiency Infrastructure Cost Market Socialcutral Business types Operation years Capital Adjusted R Square Durbin-Watson Fchange Sig. - Dependent variable: Investment decision of SMEs at - - *. Correlation is significant at 0.05 level (2 sides).
Results of accreditation of regression models: There is enough basis to assume that there are 5 out of 6 groups of factors of investment environment that affect the investment decisions of enterprises. Among them, there are 4 positive influences, including: Political law, Administrative management efficiency, Infrastructure and market. There is another factor that negatively influences SMEs' investment decisions. At the same time, all the models result that there is not enough basis to conclude that cultural and social factors positively affect the investment decisions of enterprises. Regarding the explanatory level of each model, it can be seen that the regression model 05 From the results of the regression model 05, the estimates of the parameters of the relationship between the 6 investment environment variables and control variables show that the relationships between the Political-legal
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variable and the Market are statistically significant at p <0.05, variables of Administrative Performance, Infrastructure and Costs are statistically significant at p <0.01, it means that basically the hypotheses H01, H02, H03, H04 , H05 on the relationship of concepts proposed in the research model is accepted. After experimentally studying the impact of investment environment on administrative management efficiency, Cost, Market and Politics law. At the same time, the analytical results also show that there is no basis to affirm social culture that affects the investment decisions of enterprises. In addition, the research results also show the existence of a positive relationship between the size of capital and the age of enterprises with the possibility of increasing the investment of SMEs.
Market
+0,121
Political - Law
+ 0,150
CHAPTER 4 SOLUTIONS TO IMPROVE THE INVESTMENT ENVIRONMENT WHICH PROMOTE INVESTMENT OF SMALL AND MEDIUM ENTERPRISES IN VIETNAM
Rejected
Socialcutral
Infrastructure
4.1. Development orientation of small and medium enterprises in
+ 0,310
Investment decision of SME’s
Vietnam
+ 0,267
- 0,218
Cost
Administrative management efficiency
Capital
Operation years
Firstly, in terms of target, specific target in the immediate future, by 2020, Vietnam must have at least 900 thousand of SMEs, the private sector is mainly SMEs contributing from 48 to 49% of GDP, about 49 % of total social investment capital.
+ 0,187
+ 0,160
Secondly, the development of SMEs should attach importance to the mechanism and a roadmap for enterprise development in the field of industrial production. Thirdly, the science and technology level of SMEs is improved, Source: Research results narrowing the gap with the average level of the world.
Fourthly, to improve competitiveness, SMEs must be able to respond quickly and effectively to the signals of the market and competitors, not only in the country but more importantly the international market. Fifthly, forming a part of SMEs with good ability to meet product quality requirement in the supporting industry. Sixthly, maximizing the spread of management skills, technology and production techniques from big enterprises, FDI enterprises to SMEs.
Seventhly, SMEs are positive factor in the process of creating a fair and transparent investment environment, not merely an awaiting or be demanded passively subject. Eighthly, SMEs are an important economic force which play fundamental investment decisions of SMEs can be expressed as follows: Results of overall regression 3.4. Comment on research results The study has found new in the content of exploratory factor analysis, when 10 Political-legal scales have been split into two groups of factors. This shows that in theory this is the component concepts of a variable, but in the context of the rural environment in Vietnam for SMEs they represent two different variables. With 5 observable variables separated for the definition of a new variable, based on the internal meaning and reference to some previous relevant studies, this new variable is called " administrative management efficiency ". The result of official quantitative research has shown the impact of investment environment on the investment decisions of SMEs in Vietnam. Overall, the local infrastructure is an important factor, the most positive and strongest influence on the investment decisions of SMEs, followed by the factors of and pivotal role to motivate the development of Vietnam's economy.
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4.2. Some solutions to improve the investment environment to promote the investment of SMEs in Vietnam
investment of SMEs in Vietnam. Land, labor, capital, energy and materials, transportation infrastructure all need to be improved to avoid the possibility of damage and become direct barriers to investment activities. 4.2.4. Solution on investment and business costs Input cost is an issue that takes much of the interest of SMEs in making investment decisions. The most prominent issues need and can take actions to reduce costs for SMEs such as capital mobilization costs, logistics costs, land use and labor costs.
Based on the research results and discussion, the study proposes some solutions to improve the investment environment in order to support SMEs to operate effectively as well as to increase investment. 4.2.1. Groups of political factors - law Some issues need to be implemented such as: First, promoting the mechanism of effective dialogue and cooperation with SMEs in removing the difficulties in implementing policies and legal regulations. Second, it is necessary to concretize legal conditions to implement SME support. Thirdly, selective supporting is better than equal supporting, regardless of SMEs. Fourth, facilitating SMEs to help themselves by removing barriers instead of providing direct support. Fifth, strengthen coordination between the central government and local authorities. Sixth, strengthen mechanisms for monitoring the implementation process of law and SME support policies. 4.2.2. Improving the effectiveness of governance, implementing the
commitment of the government raising Improving and the administrative efficiency,
4.2.5. Market solutions The type of SMEs is facing difficulties and disadvantages in approaching and exploiting the target market compared with large enterprises, economic integration, technological revolution not only creates opportunities but challenges also increase. Therefore, if the development investment enterprises want to take advantage of new opportunities, it is necessary to have policies to support the market for these businesses such as: Promoting the linkage between SMEs, both horizontal and vertical; Helping and linking mutually beneficial relations between SMEs and large enterprises, especially FDI enterprises; Enhancing the effectiveness of trade promotion activities for SMEs; Promoting the application and development of e commerce infrastructure for SMEs; Support SMEs in exporting goods. 4.2.6. Solution on cultural and social factors
Although research has shown that there is no evidence of cultural influence on SME investment promotion, maintaining and promoting mutual understanding and strengthening cultural and social exchanges are the most necessary in the context of the current globalization with the strongly developed information system, the cultural flows become easier to affect the awareness of both people, businesses and forces human resources in governments
in which, bureaucracy, complexity in implementing procedures and transaction costs in the process of implementing investment is one of the most important bottlenecks and challenging to remove in order to promote the investment of small and medium enterprises in Vietnam. The solution can be divided into two impact ways, the first, including indirect measures, to improve the quality of human resources in the administrative apparatus, it can include reducing the staff, advanced professional training and especially moral ideological education working style, income improvement ... Second way is called direct measures, derived from senior management commitment to lower levels to change bureaucracy and harassment situation to enterprises. In addition to continue researching to minimize and transparent administrative procedures and still achieve the set legal objectives, it is more important to drastically reduce communication channels and direct contact between businesses with personnel in the local government apparatus.
4.2.7. Some suggestions for SMEs All support policies will be difficult to promote effectively if SMEs are not self-aware of favorable conditions, objective and subjective difficulties to actively improve their performance. In other words, businesses must support themselves first, such as: Having a long-term and methodical investment and business strategy; Building and confirming the core values of enterprises and products; Eliminating the point of view that technology is only a race of large 4.2.3. Approach to infrastructure and some input resources Satisfying the need for approaching to infrastructure plays an important role with the development of SMEs' business and production, promoting the
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still faces many difficulties, implicating in the launching of investment decisions
enterprises with advantages in resources, to have a reasonable investment strategy because only mastering new technology makes SMEs have opportunities to break through.
Experimental research results in addition to clearly determine the level and direction of the impact of specific factors in the investment environment that have made it clear, the effectiveness of administrative governance or the ability to enforce legal policies investment as committed has become a separate concept in an investment environment for SMEs. This shows that no matter how good the creation of a good framework for investment activities is, deploying them is still the key to the final decision.
4.3. Limitations and future research directions The thesis has answered the initial research questions, though, besides the results obtained, the thesis also has some limitations of the scope of the survey without provinces in the regions of Central and South Vietnam, have not studied the factors within the enterprises. Subsequent studies related to this topic can be developed in the following directions: (i) Expanding the scope of the survey to have a better representative province, possibly surveying cities and provinces in provinces in the regions of Central and South Vietnam, (ii) Expanding the content of influencing factors located both inside and outside of the business environment or or expand to the remaining business objects.
CONCLUSION
From the main results, the thesis has proposed a number of solutions for investment environment to promote investment decisions of enterprises. It is a series of activities related to many aspects, but based on the common view that a good environment must create advantages for SMEs to decide to invest in business opportunities, enhance efficiency and promote national economic growth. Therefore, SMEs' investment promotion policies should be integrated into economic development strategies both at the national level, local level and specific occupations. That process will face many difficulties, so it requires organizational and scientific change in many areas, many stakeholders, and requires coordination of both public and private sector, governments at all levels and the system of public and private support organizations are essential factors, contributing significantly to this process. Effective sharing of responsibilities and cooperation can help accelerate the process of identifying and correctly handling barriers, enhancing the likelihood of success and thereby promoting strong SME investment.
Although the study still has some limitations and can develop further research directions to add new findings as acknowledged above, however, the research has been based on research methodology and process which has the necessary reliability. Therefore, the results of the study are certain valuable information in developing policies to actualize the development prospects and the role of Vietnamese SMEs. By using survey data at the enterprise level, based on a sample of 231 enterprises in three economic sectors including Industry and Construction, Services / Trade and Agriculture / Forestry / Fisheries, this is the first experimental studies analyzing the impact of environment investment on the investment decisions of SMEs in Vietnam. Initially, the study presents a conceptual framework of environmental investment, used as a basic theoretical perspective to examine factors that motivate enterprises to make investment decisions. Next, the results of qualitative and quantitative research have affirmed that the investment decisions of SMEs can be explained by the components of environment investment concepts. The thesis has inherited previous studies to build basic arguments and research model . On that basis, the thesis analyzed the most basic aspects of the investment environment and the investment situation of SMEs in Vietnam. On the one hand, investment environment is increasingly improved, leading to strong development and investment of enterprises, but on the other hand, there are many limitations, if the limitations are not solved, they can cause extreme negative effects , obstruct to investment capacity. One of the major limitation is the fact that the introduction of policies and laws into the real life of enterprises
