Determinants of Technical Efficiency of Microenterprises in Vietnam

The aim of this study is to examine the determinants of technical efficiency (TE) of microenterprises (MEs) operating in the coconut handicraft industry in the Mekong Delta of Vietnam. In the first stage of analysis, output-oriented Data Envelopment Analysis (DEA) method is employed to estimate the technical efficiency of the 120 microenterprises operating in the coconut handicraft industry in the Mekong Delta, specifically in Ben Tre province over the year 2019 by using pre-determined three input and one output variables. The estimation results reveal that on average, variable returns to scale technical efficiency (VRS TE), constant returns to scale technical efficiency (CRS TE) and scale efficiency (SE) are 68.4%, 58.0%, and 87.3%, respectively. Tobit regression is applied in the second stage to examine the influences of the determinant factors on VRS TE. The empirical findings of the study imply that firm size, membership in economic association, application of science and technology, and cost-to-revenue ratio positively affect the technical efficiency of the microenterprises operating in the coconut handicraft industry in the Mekong Delta of Vietnam. Considering the results, several governance recommendations are given for business owners to improve firm technical efficiency in order to enhance the brand name of coconut handicrafts.