Small and medium-sized enterprises and sustainable development: the case of Vietnam
Creators: name: Nguyen, Thi Thanh Huong
Publisher: name: RMIT University
Year: 2024
Subjects: classificationCode: 350711
subject: Organisational planning and management
classificationCode: 350716
subject: Small business organisation and management
classificationCode: 440709
subject: Public policy

description: The awareness and pursuit of sustainable development occupy an important place in recent business research. Sustainable development is a concept that considers economic, social and environmental aspects while pursuing any development activity. Although relatively large enterprises have started paying attention to sustainable development processes, small and medium-sized enterprises (SMEs) appear to be lagging behind. There is also a dearth of studies about how SMEs actually perceive and implement the concept, particularly from a developing country perspective. This study helps to fill these gaps by examining the way sustainable development is perceived and practised by SMEs in Vietnam.<br><br>The study has utilised case study research design to explore the extent to which the sustainable development concept has been understood and adopted by Vietnamese SMEs. It employed in-depth interviews, document review and direct observation as data collection techniques to answer the primary research question about how and to what extent Vietnamese SMEs are pursuing a sustainable development path. In-depth interviews were conducted with 21 Vietnamese SME owner-managers, five government policy makers and three industry representatives.<br><br>The findings reveal that sustainability practices in SMEs appear to be largely informal without any systematic and strategic plans. SME sustainability practices tend to be reactive aiming to comply with government policies. There is some evidence of active sustainable practices inspired by individual SME owner-managers. However, these are not widespread across the entire SME sector. Of the three dimensions of sustainability, economic sustainability including profits, long-term competitiveness and economic impacts, is perceived to be the most important dimension. This is because SMEs consider profits and wealth creation as their primary concerns. Social sustainability, comprising practices relevant to equality, internal social improvement and local social impact, is considered as the second most important dimension. This is because internal social practices directly affect business and economic results. The study has found environmental sustainability, including the efficient use of natural resources, reduction of waste and air emissions, and damage to the environment, as the least important one as perceived by the respondents. Within SMEs, key success factors in relation to pursuing sustainable development are identified as managerial capability, HR practices, networked partners, foreign customers and technological applications. Major challenges that tend to hinder their efforts include shortage of financial support, market competition, shortage of raw materials, bureaucratic government administrative procedures, limited knowledge and information, low levels of technological application and employee disengagement.<br><br>The study has found that despite the government’s declared determination to promote SME sustainability, SMEs in Vietnam are not responsive enough in pursuing sustainable development. Moreover, implementation processes for government policies are reported to be weak and slow. Inadequacy in government support is also apparent in overcoming low levels of technological application, lack of R&amp;D, shortage of raw materials and the low quality of the labour force.<br><br>The research makes an original contribution to important aspects of sustainable development theories while at the same time having essential implications for SME owner-managers, government policy makers and future research in Vietnam and other transitional economies.