Functional competencies and their effects on performance of manufacturing companies in Vietnam

The manufacturing industry plays a key role in Vietnam (due to its labour advantage), generating jobs, contributing to social and political stability, and adding high value exports to help the balance payment. As Vietnam becomes more and more active in its pursuit of global economic integration, the entry of many foreign giants into its own domestic market will surely intensify the competition. Recognizing the importance of functional competencies to the firm’s performance will help the companies improve its competitiveness. In addition, many researchers had emphasized the importance of an integrative perspective study. Therefore, this study integrates four functions to investigate relationship between four functional competencies and firm performance of manufacturing companies in Vietnam. To address these issues, a field survey of manufacturing companies in Vietnam was conducted with the use of structured questionnaires and mail survey. A total of 725 questionnaires were sent by mail to manufacturing companies. Consequently 125 questionnaires were mailed back at gross response rate of 17.24%. The sample composed of 63.6 per cent limited or joint-stock companies, 27.3 per cent state-owned enterprises and 9.1 per cent foreign capital organizations. Various data analysis procedures were applied including factor analysis, descriptive analysis, single regression and multiple regression in order to accomplish the objectives of the study. The findings identified four set of items of functional competencies namely manufacturing, marketing, research & development (R&D), and human resource and two set of items of organizational performances called profitability and market performance. All of these factors had high loadings (all above 0.541) and high reliability (all above 0.794), indicating internal consistency. Although these dimensions retain a certain degree of similarity with others found in previous studies elsewhere, this collection of dimensions offers typical feature