Policy Recommendations to Enhance Vietnamese SMEs’ Ability to Access Venture Capital
Main Article Content
Abstract
Small and medium enterprises, which form a large part of the entity of the domestic private sector, play a vital role in economic growth, socio-economic development and the international integration process. However, SME groups in developing countries are under-developed and face a lot of difficulties in growth due to the absence of sufficient finance. Profoundly, venture capital is typically a suitable and sustainable external source of finance for Vietnamese SMEs with high growth potential. This study provides an overview of the venture capital market and its role in SMEs’ performance in Vietnam. This research also found that one of the reasons why foreign investment funds are not interested in the Vietnamese market is that they have not seen safe and sustainable opportunities for investment. This study not only contributes to the existing literature, because this topic in Vietnam has not received much attention and evidence is not available, but also gives policymakers, in developing countries in general and Vietnam in particular, some recommendations to determine areas of improvement in regulatory and policy aspects enabling increased responsible SME access to venture capital.
Keywords:
Venture capital, SMEs, Vietnam.
References
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[26] B.O. Biney, “Impact of Venture Capital Financing on SMEs’ Growth and Development in Ghana,” Doctoral Dissertation, Lincoln University, 2018.
[27] C. Esho and G. Verhoef, “The Funding Gap and the Financing of Small and Medium Businesses: An Integrated Literature Review and an Agenda,” 2018, https://mpra.ub.uni-muenchen.de/90153/ (Accessed December 20, 2021).
[28] M.H. Walter, A.I. Offiong and C.O. Udoka, “Venture Capital Financing and the Growth of Small and Medium Scale Enterprises in Calaber Metroplis, Cross River State, Nigeria,” World Journal of Innovative Research, 5 (1) (2018) 7-16.
[29] A. Sack and J. McKenzie, “Establishing a Venture Capital Firm in Vietnam,” IFC: The Mekong Project Development Facility Private Sector Discussions, 4, 1998.
[30] W. Scheela and N.V. Dinh, “Venture Capital in a Transition Economy: The Case of Vietnam,” Venture Capital: An International Journal of Entrepreneurial Finance, 6 (4) (2014) 333-350.
[31] M.C. Dao, “Legal Reforms on Venture Capital Industry in Vietnam,” LawArXiv 6byx5, Center for Open Science, 2019.
[32] J.W. Creswell, W.E. Hanson, V.L.C. Plano, and A. Morales, “Qualitative Research Designs: Selection and Implementation,” The Counseling Psychologist, 35 (2) (2007) 236-264.
[33] N. Nemoto and M. Koreen, “Digital Innovation Can Improve Financial Access for SMEs,” SME Policy Faced with Development of Financial Technology G20 Japan, 1 (2019) 1-11.
[34] Organisation of Economic Cooperation Development (OECD), Enhancing SME Access to Diversified Financing Instruments, Discussion Paper 22-23 February 2018, Mexico City, 2018.
[2] A. Đalić, S. Terzić and B. Novarlić, “The Role of Venture Capital in the Development of the SME Sector,” The European Journal of Applied Economics, 14 (2) (2017) 58-69.
[3] T.V. Nguyen, T.B.N. Le and N.J. Freeman, “Trust and Uncertainty: A Study of Bank Lending to Private SMEs in Vietnam,” Asia Pacific Business Review, 12 (4) (2006) 547-568.
[4] M. Abe, M. Troilo, and O. Batsaikhan, “Financing Small and Medium Enterprises in Asia and the Pacific,” Journal of Entrepreneurship and Public Policy, 4 (1) (2015) 2-32.
[5] P.A. Nguyen, T.A.T. Uong and Q.D. Nguyen, “How Small-and Medium-Sized Enterprise Innovation Affects Credit Accessibility: The Case of Vietnam,” Sustainability, 12 (22) (2020) 9559.
[6] T.B.N. Le and T.V. Nguyen, “The Impact of Networking on Bank Financing: The Case of Small and Medium-sized Enterprises in Vietnam,” Entrepreneurship Theory and Practice, 33 (4) (2009) 867-887.
[7] M. Puri and R. Zarutskie, “On the Life Cycle Dynamics of Venture‐capital‐and Non‐venture‐capital‐financed Firms,” The Journal of Finance, 67 (6) (2012) 2247-2293.
[8] R. Baldock and D. North, “The Role of UK Government Hybrid Venture Capital Funds in Addressing the Finance Gap Facing Innovative SMEs in the Post-2007 Financial Crisis-era,” Research Handbook on Entrepreneurial Finance, 125-146, 2015.
[9] F. Bertoni and T. Tykvova, “Does Governmental Venture Capital Spur Invention and Innovation? Evidence from Young European Biotech Companies,” Research Policy, 44 (2015) 925-935.
[10] T. Tykvová, “Venture Capital and Private Equity Financing: An Overview of Recent Literature and an Agenda for Future Research,” Journal of Business Economics, 88 (3) (2018) 325-362.
[11] A. Kato and G.E. Tsoka, “Impact of Venture Capital Financing on Small-and medium-sized Enterprises’ Performance in Uganda,” The Southern African Journal of Entrepreneurship and Small Business Management, 12 (1) (2020) 1-11.
[12] S.F. Memba, W.R. Gakure and K. Karanja, “Venture Capital (VC): Its Impact on Growth of Small and Medium Enterprises in Kenya,” International Journal of Business and Social Science, 3 (6) (2012) 32-38.
[13] R. Klingler-Vidra, “Building a Venture Capital Market in Vietnam: Diffusion of a Neoliberal Market Strategy to a Socialist State,” Asian Studies Review, 38 (4) (2014) 582-600.
[14] G. Boocock, “Venture Capital in Malaysia: The Role of Government,” Development Policy Review, 13 (4) (1995) 371-390.
[15] J. Wonglimpiyarat, “Venture Capital Financing in the Thai Economy,” Innovation, 9 (1) (2007) 79-87.
[16] S.K. Agyeman, “Challenges Facing Venture Capitalists in Developing Economies an Empirical Study about the Venture Capital Industry in Ghana,” 2010, http://www.diva-portal.se/smash/get/diva2:392862/FULLTEXT01.pdf (Accessed December 20, 2021).
[17] S. Divakaran, P.J. Mcginnis, P.J. and M. Shariff, “Private Equity and Venture Capital in SMEs in Developing Countries: The Role for Technical Assistance,” 2014, The World Bank, http://econ.worldbank.org (Accessed December 20, 2021).
[18] A.S. Trbovich, A. Malešević-Drašković and J. Miljković, “The Role of Venture Capital in Economic Transition in Serbia,” Ekonomika Preduzeća, 62 (1-2) (2014) 99-115.
[19] E. Antarciuc, Q. Zhu, J. Almarri, S. Zhao, Y. Feng, and M. Agyemang, “Sustainable Venture Capital Investments: An Enabler Investigation,” Sustainability, 10 (4) (2018) 1204.
[20] F. Bertoni, M.G. Colombo and A. Quas, “The Patterns of Venture Capital Investment in Europe,” Small Business Economics, 45 (3) (2015) 543-560.
[21] A. Croce, J. Martí and S. Murtinu, “The Impact of Venture Capital on the Productivity Growth of European Entrepreneurial Firms: ‘Screening’ or ‘Value Added’ Effect?,” Journal of Business Venturing, 28 (4) (2013) 489-510.
[22] V. Capizzi, R. Giovannini and V. Pesic, “The Role of Venture Capital and Private Equity for Innovation and Development of SMEs: Evidence from Italian Puzzle,” Journal of Applied Finance and Banking, 1 (3) (2011) 189.
[23] M. Brandt and S. Stefansson, “The Personality Venture Capitalists Look for in an Entrepreneur: An Artificial Intelligence Approach to Personality Analysis,” Master of Science Thesis, KTH Royal Institute of Technology School of Industrial Engineering and Management, 2018.
[24] F. Boadu, G. Dwomoh, S. Appiah and E. Dwomo-Fokuo, “Venture Capital Financing: An Opportunity for Small and Medium Scale Enterprises in Ghana,” Journal of Entrepreneurship and Business Innovation, 1 (1) (2014) 1-15.
[25] A. Kwame, “Assessing the Impact of Venture Capital Financing on Growth of SMEs,” Texila Internafional Journal of Management, 3 (2) (2017) 13.
[26] B.O. Biney, “Impact of Venture Capital Financing on SMEs’ Growth and Development in Ghana,” Doctoral Dissertation, Lincoln University, 2018.
[27] C. Esho and G. Verhoef, “The Funding Gap and the Financing of Small and Medium Businesses: An Integrated Literature Review and an Agenda,” 2018, https://mpra.ub.uni-muenchen.de/90153/ (Accessed December 20, 2021).
[28] M.H. Walter, A.I. Offiong and C.O. Udoka, “Venture Capital Financing and the Growth of Small and Medium Scale Enterprises in Calaber Metroplis, Cross River State, Nigeria,” World Journal of Innovative Research, 5 (1) (2018) 7-16.
[29] A. Sack and J. McKenzie, “Establishing a Venture Capital Firm in Vietnam,” IFC: The Mekong Project Development Facility Private Sector Discussions, 4, 1998.
[30] W. Scheela and N.V. Dinh, “Venture Capital in a Transition Economy: The Case of Vietnam,” Venture Capital: An International Journal of Entrepreneurial Finance, 6 (4) (2014) 333-350.
[31] M.C. Dao, “Legal Reforms on Venture Capital Industry in Vietnam,” LawArXiv 6byx5, Center for Open Science, 2019.
[32] J.W. Creswell, W.E. Hanson, V.L.C. Plano, and A. Morales, “Qualitative Research Designs: Selection and Implementation,” The Counseling Psychologist, 35 (2) (2007) 236-264.
[33] N. Nemoto and M. Koreen, “Digital Innovation Can Improve Financial Access for SMEs,” SME Policy Faced with Development of Financial Technology G20 Japan, 1 (2019) 1-11.
[34] Organisation of Economic Cooperation Development (OECD), Enhancing SME Access to Diversified Financing Instruments, Discussion Paper 22-23 February 2018, Mexico City, 2018.