Doctoral thesis summary: The impact of the investment environment on investment decisions of small and medium enterprises in Vietnam

The thesis clearly determines the constituent elements of the investment environment, evaluates the investment environment; measure and analyze the influence of investment environment factors of small and medium enterprises in Vietnam

BACKGROUND

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

gradually improved, partly encourage enterprises have motivation and

expectation to build and implement investment decisions increasingly strong

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

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 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

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

improve investment environment effectively, helping SMEs to overcome difficulties, barriers and continue to increase investment

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 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

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

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

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

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

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

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

- 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

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

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

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

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

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:

Cost: Factors that reflect the cost of approaching and using the main input

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

the place where enterprises invest, is measured by 3 observations

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

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 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 +

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 2.1 Investment environment and the necessary of improving the investment environment

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

and operating investment activities therefore a consequence, therefore it will

affect the investment decision of the business

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

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

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

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

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 investment is always associated with the construction of new buildings or it can also be the production of new products and services, improving peoples' lives

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

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

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

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

Cost: For SMEs, cost becomes more important, not only by relying on simple

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

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

2.4 Practical experience and lessons for Vietnam in improving investment environment to promote the investment of small and medium enterprises

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 3.1 Overview of small and medium enterprises in Vietnam in the 2006-2017 period

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

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

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 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

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

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

The scale of investment capital for SMEs from 2006 until now has

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

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

3.2.3 The impact of the investment environment on investment decisions of small and medium enterprises

3.2.3.1 Positive effects from investment in SMEs' investment decisions

Firstly, the stability of political institutions and especially 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 Thirdly, Vietnam has established a financial support system for SMEs Not only commercial banks, but also investment funds, funds to support SMEs at all

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

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

decisions of SMEs

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

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

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

investment decisions of small and medium enterprises in Vietnam

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

Results of scale evaluation

Basically, the scale of the survey objects understands the meaning

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

The results of the dependent variable test

Comments are correctly understood and ensured about the ability of enterprises to make investment decisions

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)

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, quantitative research studies conducted, the main results are as follows:

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

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

(TT_4) of 0.436, which also meets the requirement as greater than 0.3

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

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

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

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

Factors (standardized)

Model 1:

No control variables

Model 2:

Control the type of business

Model 3:

control the number

of operation years

Model 4:

controlling the size of the business

Overall model (5): There are three control variables

Administrative management

- Dependent variable: Investment decision of SMEs

- ** Correlation is significant at 0.01 level (2 sides)

- * Correlation is significant at 0.05 level (2 sides)

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

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

investment decisions of SMEs can be expressed as follows:

Results of overall regression

Source: Research results

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

+ 0,310

Rejected

+ 0,267

- 0,218

+ 0,160 + 0,187

Political - Law

Infrastructure

Cost

Market

Investment decision

of SME’s

Socialcutral

Administrative management Operation

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

CHAPTER 4 SOLUTIONS TO IMPROVE THE INVESTMENT ENVIRONMENT WHICH PROMOTE INVESTMENT OF SMALL AND MEDIUM

ENTERPRISES IN VIETNAM 4.1 Development orientation of small and medium enterprises in Vietnam

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

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, 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 and pivotal role to motivate the development of Vietnam's economy