Critical Factors Influencing Small and Medium-Sized Enterprises' Business Efficiency

Abstract

This study investigates the critical factors influencing the business efficiency of small and medium-sized enterprises (SMEs) in Vietnam and proposes institutional and policy implications to enhance their sustainable competitiveness. A mixed-methods design was employed. First, qualitative interviews with 30 experts were conducted to refine the conceptual framework and measurement scales. Second, a quantitative survey was administered to 700 SME managers in Ho Chi Minh City and Dong Nai Province, yielding 645 valid responses for analysis. The data were processed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to examine the relationships among Policy and Law, Finance, Technology, Human Resources, Creative Innovation, Enterprise Size, and Business Efficiency. The findings indicate that Finance, Technology, Human Resources, Creative Innovation, and Enterprise Size all have significant positive effects on business efficiency, while Policy and Law strongly influence these firm-level capabilities. Enterprise Size also plays a moderating role in the relationships between Finance, Technology, and business efficiency. The study’s novelty lies in integrating Institutional Theory and the Resource-Based View into a unified framework and empirically demonstrating how institutional conditions shape internal capabilities and SME performance in a transition economy. These results provide practical implications for improving legal support, financial access, innovation, digital transformation, and human capital development.