MINISTRY OF EDUCATION AND TRAINING
CAN THO UNIVERSITY
SUMMARY OF THE THESIS
Major: Business administration
Code: 62340102
DINH CONG THANH
STUDY THE IMPACT OF OUTSOURCING
ON THE PERFORMANCE OF SMALL AND MEDIUM
ENTERPRISES IN THE MEKONG DELTA
Can Tho, 2021
THE THESIS ARE COMPLETED AT
CAN THO UNIVERSITY
Supervisors: - Le Tan Nghiem, Ph.D.
- Nguyen Hong Gam, Ph.D.
The dissertation is defended in front of the doctoral thesis committee at
university level
Meeting at: …………………………….
At ... hour ... day ... month ... year ...
PhD dissertation reviewer 1: ………………………………….
PhD dissertation reviewer 2: ………………………………….
PhD dissertation reviewer 3: ………………………………….
The dissertation can be found at the library:
Learning Resource Center, Can Tho University.
Vietnam National Library.
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LIST OF PUBLISHED ARTICLES
1. Dinh Cong Thanh, Le Tan Nghiem, 2016. Examining factors affecting level of
outsourcing of companies in Can Tho city. Can Tho University Journal of Science.
Vol 46: 1-11.
2. Dinh Cong Thanh, Le Tan Nghiem, 2017. Examining the influence of benefits and
risks of outsourcing on attitude of business managers towards outsourcing service
and level among companies in Can Tho City. Journal of Science Ho Chi Minh City
Open University. Vol 52 (1): 93-104.
3. Dinh Cong Thanh, Le Tan Nghiem, 2017. Factors influencing human resources
outsourcing decisions: the case of the enterprises in Tra Vinh province. Journal of
Science and Technology - Industrial University of HCMC. Vol 26(2): 32-43.
4. Dinh Cong Thanh, Le Tan Nghiem, 2018. Factors influencing the outsourcing
decisions and the importance of outsourcing on financial performance of SMEs in
Can Tho city. Journal of Science Ho Chi Minh City Open University. Vol 63(6):
88-104.
5. Dinh Cong Thanh, Le Tan Nghiem, Nguyen Hong Gam, 2020. The effect of
outsourcing on the non-financial performance of SMES in the Mekong Delta.
Journal of Trade Science. 8(1): 62 – 72.
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CHAPTER 1: INTRODUCTION
1.1 BACKGROUND
Outsourcing is understood as an enterprise hiring an outside service provider to perform
part or all of the work instead of the business itself, having to perform those parts (Yang et
al., 2007). The current service areas include outsourcing information technology, part-time
employees, pay outsourcing, outsourcing accounting, tax reporting, medical services,
healthcare, and office cleaning services, 24/24 security, full package office transportation,
network installation/administration, or maintenance of office computers/equipment, and
translation services. Today, businesses worldwide use it to gain benefits and competitive
advantages (Wekesa and Were, 2014). Outsourcing is also known as a solution to help
enterprises cut costs for businesses (Gilley et al., 2004; Handley, 2012; Sani et al., 2013;
Gerald et al., 2013; Yıldız et al., 2014), increasing profits (Elegbede, 2013), simplifying the
corporate structure, saving time in management (Sadi and Ahmed, 2011; Gerald et al., 2013).
With those benefits, businesses around the world have increasingly used outsourcing.
In Vietnam, outsourcing is also widely used by companies (Hong, 2012). In the
challenging economic context and fierce competition of enterprises, especially SMEs,
enterprises must have the most effective business strategy by reducing business costs
reasonably to survive on the market. One of those solutions is to use outsourced services
(Hafeez and Andersen, 2014; Isaksson and Lantz, 2015; Montaseb et al., 2018). Despite
facing many difficulties, SMEs in Vietnam in general and the Mekong Delta in particular
have made significant progress, making generous contributions to socio-economic
development, contributing to economic restructuring, significantly Solving employment
problems (using 50% of the labor force), increasing income for workers, contributing to
poverty reduction and contributing more than 40% of GDP1. By 2018, the entire Mekong
Delta region has 97.16% of which are SMEs2. Most of them still face many difficulties
and limitations in the operation process such as management skills, lack of capital,
unbalanced output, and increased operating costs. It isn't easy to compete with other
domestic and foreign enterprises. Those are also the reasons for more than 4,500
enterprises in the Mekong Delta to dissolve and suspend operations in 2019, an increase
of more than 30% compared to 20183. Therefore, the orientation for SMEs in the Mekong
Delta to effectively use outsourced services is essential to promote operational efficiency
and increase competitiveness for businesses.
However, outsourcing also has potential risks for businesses. Indeed, research by
Milena et al. (2011) has shown some disadvantages from outsourcing such as: (1)
Enterprises may lose control from service providers; (2) The enterprise will be at a
disadvantage if the service provider ends its operation; (3) it is not easy to keep
information confidential of enterprises; (4) the lack of motivation of the service provider's
1 The banking conference - business connection in the Mekong Delta was held by the State Bank of Vietnam on August
29, 2019, in Can Tho City.
2 The data is recalculated from The White Book on Vietnamese Businesses 2020 of the Ministry of Planning and
Investment, according to the Government's Decree No. 39/2018 /ND-CP.
3 Data are compiled from The White Book on Vietnamese Businesses 2020.
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staff will adversely affect the progress of completing the job. It is this that negatively
affects the business performance of businesses.
Many studies show that outsourcing has affected the performance of businesses.
There are conflicting arguments about this effect. Most studies show that outsourcing
positively affects enterprises' financial performance (Bin et al., 2006; Kroes and Ghosh,
2010; Gilley and Rasheed, 2000; Bustinza et al., 2010; Kamyabi and Devi, 2011; Agburu
et al., 2017). However, some studies show that outsourcing does not improve or even
negatively affect enterprises' financial performance (Isaksson and Lantz, 2015). It is also
suggested that outsourcing only affects non-financial performance but does not affect
financial performance (Gilley et al., 2004). Some studies have also shown that outsourcing
affects financial and non-financial performance (Gilley and Rasheed, 2000; Elmuti, 2003;
Bustinza et al., 2010; Kamyabi and Devi, 2011; Elegbede, 2013). Besides, it is argued that
there is no relationship between outsourcing and efficiency (Leiblein et al., 2002).
Practical research shows that each author has a different approach to outsourcing and
various indicators to measure the performance of enterprises because each research has a
different approach in terms of theory. Most of the studies have not generally presented the
impact of factors affecting outsourcing and have not generally evaluated the indicators to
assess a business's performance compared to the theory.
With the above arguments, research on the impact of outsourcing on the performance of
SMEs in the Mekong Delta is conducted to understand better the situation of using
outsourcing resources of SMEs in the Mekong Delta, research Factors affecting outsourcing,
and studying the effects of outsourcing on the performance of SMEs in the Mekong Delta is
necessary.
1.2 RESEARCH OBJECTIVES
(1) Analyze the outsourcing situation of SMEs in the Mekong Delta;
(2) Investigate factors affecting the degree of outsourcing of SMEs in the Mekong
Delta;
(3) Analyze the impact of outsourcing on the performance of SMEs in the Mekong
Delta;
(4) Propose managerial implications to improve the efficiency of outsourcing for
SMEs in the Mekong Delta.
1.3 SCOPE OF STUDY
1.3.1 The scope of space
The survey was conducted in 6 provinces of the Mekong Delta: Bac Lieu, Soc Trang,
Dong Thap, Vinh Long, Tra Vinh, and Can Tho City.
