Product-Market Resource Management practices in SMEs can make

Product-Market
Competition 

Currently,
Hanoi has 160,000 SMEs which are weak in capital, technology, management
capacity and market experience (“Mot so han che”, 2015). Limited resource,
capabilities and experience result in huge challenges for SMEs in competing
with large firms in both domestic and international market. Moreover, SMEs are
disadvantaged through limited brand recognition of products in comparison with
larger firms. In addition, SMEs in Hanoi will face a lot of new challenges when
Vietnam’s Free Trade Agreements and the Trans-Pacific Partnership become
effective. It will facilitate foreign enterprises pouring into the Vietnamese
market; especially in Hanoi, and this lead to increase stronger competition. Nevertheless,
Asiedu & Freeman (2007) affirmed that higher product-market competition can
improve SMEs productivity due to the pressure to survive. It means limited
ability to increase efficiency may require SMEs to be even more efficient. 

 

Limited
Access to Financial Support 

Limited
access to finance capital has been identified as one of the most significant
obstacles SMEs must overcome so that they can survive and grow in business
market (Zhu, Wittmann & Peng, 2012). It is the fact that nearly 70 percent
of private SMEs cannot access bank loans (“Private SMEs”, 2017). SMEs tend to
look for other available sources of capital, such as relatives and the black
market, which offers high-interest rates and risks. There are two main reasons why
SMEs have difficulties in accessing financial support from commercial banks and
investors. Firstly, local banks still circumspectly consider business plans of SMEs
and hardly change their policies to meet businesses’ requirements. Secondly, SMEs
profile is more high-risk compared to that of large firms such as level of
information ambiguity, an uncertainty of loan guarantee arrangements and
collateral, and deficiency in mechanisms for dispute resolution of property
ownership in the event of bankruptcy (Arora, 2009).

 

Low
Level of Employees’ Awareness 

In
transition economies, the shortage of skilled workers is a disadvantage for
firms’ stable operation. A low level of employee awareness of sustainability
development can reduce the possibility of successful implementation. In
addition, a high turnover rate may lead to low levels of worker productivity which
will limit firms’ overall performance. The lack of formal Human Resource
Management practices in SMEs can make it difficult in dealing with the
disengagement of employees. In Vietnam, Human Resource Management’s roles mostly
focus on monitoring, controlling and punishing, rather than supporting and
inspiring, as is the practice in Western countries. In fact, the role of the
human resource in SMEs in Hanoi is simply administrative and primarily follows
a top-down hierarchical approach. Therefore, these can negatively affect the
sustainable development process within the organization; and social and
environmental issues would not be paid attention to.

 

Limited
Knowledge and Information 

It is
common that SMEs have limited information and knowledge of the targeted markets
on product requirement and operation standards. This issue critically hinders
SMEs’ actions, particularly in regard to their social and environmental
practices (Azmat & Ha, 2013). Despite SMEs owners are aware of sustainability
and responsibility issues, they lack knowledge about the expertise for formal
practices in ensuring economic, social and environmental sustainability.

Limited knowledge and information can result in poor understanding; thus,
reduce market access potential.

 

Low
level of Technology and Innovation Application 

SMEs
remain a low level of technological application. In fact, in transition
economies, inadequacy in technological cooperation and research institutions interfere
with adopting technology in SMEs (Zeng, Xie & Tam, 2010). In addition, firms
in transition economies have little access to new and high technology,
resulting in lower productivity and competitiveness (Gashi, Hashi & Pugh,
2014). Due to strict property and invention rights from developed countries, it
is difficult for SMEs in developing countries to acquire full access to the
most up-to-date technology (Abor & Quartey, 2010). Therefore, in developing
countries, most of the applicable technology in SMEs is simple, inexpensive and
adaptable. In Vietnam, there is a challenge to the country’s high level of
commitment to property rights, patents and trademarks and technological
transfer through free trade agreements, while SME capacity is limited.

Therefore, increasing the level of technological application in SMEs can become
even more difficult. 

 

Environmental
pollution

In
Vietnam, manufacturing and processing SMEs are important industrial sectors for
gaining economic value from exports. Nonetheless, these sectors are reported to
create more pollution and use more energy and natural resources than other
economic sectors. Reports indicate severe impacts from SME operations on local
residents and the environment due to pollution from improperly treated solid,
liquid and gaseous emissions. The reasons for these serious impacts are based
on cheap technology operation, poor environmental performance, improper
attention from environmental management bodies, and limited information and
educational support. In transition economies, there is a shortage of capacity
and manpower for implementing environmental protection policies, as the state’s
effort is concentrated on economic activities (Anh et al., 2011). This, in
turn, affects firms’ competitiveness due to failure in environmental
assessment, and lowering opportunities for entry into the global market.