INTERNATIONAL SCHOOL | VIETNAM NATIONAL UNIVERSITY, HANOI NHU MINH QUANG DIGITAL TRANSFORMATION AND FIRM PERFORMANCE: A CASE STUDY OF MANUFACTURING FIRMS IN VIETNAM Field: Financial Management Code: 8340202.01 Hanoi, 2024 INTERNATIONAL 7 SCHOOL J VIETNAM NATIONAL UNIVERSITY, HANOI NHU MINH QUANG DIGITAL TRANSFORMATION AND FIRM PERFORMANCE: A CASE STUDY OF MANUFACTURING FIRMS IN VIETNAM Field: Financial Management Code: 8340202. Tran Quang Tuyen Hanoi, 2024 DECLARATION OF AUTHORSHIP I hereby declare that this thesis was carried out by myself under the guidance and supervision of Dr. Tran Quang Tuyen; and that the work contained in it and the results in it are true by the author and have not violated research ethics. The data and figures presented in this thesis are for analysis, comments, and evaluations from various resources by my own work and have been duly acknowledged in the reference part.
In addition, other comments, reviews and data used by other authors, and organizations have been acknowledged and explicitly cited. I will take full responsibility for any fraud detected in my thesis. Hanoi, date month year 2024. Author (Signature and full name) Nhu Minh Quang ABSTRACT This thesis focuses on evaluating the impact of digital transformation on the performance of manufacturing enterprises in Vietnam.
This study draws data from two distinct sources. Firstly, it utilizes the 2020 annual Enterprise Census conducted by the General Statistics Office of Vietnam. The second data source utilized in this study is Vietnam's Provincial Competitiveness Index (PCI). The results show that digital transformation affects firm performance in Vietnam.
By using a method to measure the impact of digital transformation on business performance in Vietnam. Digital transformation has greatly impacted all forms of organizations, from corporations to government organizations. Digital transformation can also affect all types of companies from small, medium and large. For traditional businesses, especially traditional manufacturing companies, digital transformation is no longer a matter of choice but of survival in today's competitive world.
Since the industrial revolution, the manufacturing industry has been an important vehicle of scientific advancement and technological innovation. Therefore, manufacturing enterprises in Vietnam need to have appropriate strategies and solutions for digital transformation. ACKNOWLEDGEMENTS I would like to thank the Board of Directors, International School, Vietnam National University, Hanoi for creating all conditions for me in the process of studying and completing this thesis. I would like to thank the teachers who have dedicatedly taught the Master of Financial Management (MFM4) class.
I would like to express my deep gratitude to my Supervisor, Dr. Tran Quang Tuyen, who wholeheartedly helped and guided me throughout the process of writing this thesis. I would like to thank all my friends, colleagues and family who have always supported, encouraged and created the best conditions for me to complete this thesis. Thank you! TABLE OF CONTENTS ABSTRACT 0.
4 TABLE OF CONTENTS0.- 7 LIST OF ABBREVIATION USED WITHIN THE MANUALL. Rationale of StudÌy. TH HH HH 10 1. Research Obj€CfÏV€.
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13 Chapter 2 : LITERATURE REVIENW. TH ng HH HH, 14 2.-- G11 SH TH HH Hư, 14 QLD.ĂĂQ HH HH HH kh 14 2. Stages of digital transformation At AN OrgqHizqfÏOI+. The role of digital transformation for manufacturing enterprises:.
Theoretical basis: Manufacturing Íirms. What are manufacturing firms Ê. Characteristics of MANUfACTUTING [ÏTIHNS. Production enterprise MANAGEMENT DFOC€SS:.
Perspectives on firm performancce. Some previous studies on the relationship between digital transformation and firm perforImanCG. -- 5 TH TH HT TH HH HH re 29 Chapter 3 : RESEARCH METHODOLUOOYY.- óc 3111k SH TH HH TH HH 35 Chapter 4 : RESEARCH RESUL/TS.-- G 13111 1H TH ng vg 41 4. The current situation of digital transformation in Vietnam.
The context of digital transformation in Vietnamese manufacturing 3011/0000. Advantages and opportunities of manufacturing enterprises in digital EFCSPOVINALION. Difficulties and challenges when carrying out digital transformation in _)/2//131107,SR. Empirical results and discussion.-- 5 5 225 S* + ‡+svxeeerseeresse 70 Chapter 5 : CONCLUSION AND POLICY IMPLICATION.
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Quantifying valu€ CTIV€TS.-- -- c1 v1 TH HH kg 20 Figure 2. Basic model of a production SYSf€TH. Production value chain — core activities throughOout. Description of the quantile r€ØT€SSIOTI.
ICT index of economic groups and corporations from 2013 to 2020.2 Chart of the level of digital transformation of businesses .3: Sectoral distribution of enterprises surveyed 1n 2023.4 Readiness score of sectors and average of industry and trade industry. Main barriers in digital transformation for businesses .6 Digital transformation by firm type. ec eecceececeseeeeeeceececeeeeeseeeseeenseeesaes 72 LIST OF TABLES Table 2.Stages of digital transformation at an OTð4ñ1ZAfIOH. The role of digitalization in the manufacturing industry .0 changes and COMPANIES.
Dependent and independent var1abÏ€S. Descriptive statistics of firm charaCf€TISfICS.3 The impact of digital transformation on firms’ profitability.-- 73 LIST OF ABBREVIATION USED WITHIN THE MANUAL No. ABBREVIATION DESCRIPTION Al Artificial Intelligence AR Augmented reality ERP Enterprise Resource Planning +NOCDnHoB DT Digital transformation IT Information technology IOT Internet of Things ORM Operational Risk Management OLS Ordinary Least Squares regression PCI Provincial Competitiveness Index 10 QR Quantile regression 11 VCCI Vietnam Chamber of Commerce and Industry Chapter 1 : INTRODUCTION 1. Rationale of Study Today, our behavior has altered due to the expansion and development of information technology and the technological eruption in the digital arena.
Google, Netflix, and Amazon have profoundly transformed society and revolutionized interpersonal dynamics. The proliferation of e-commerce platforms such as Tiktok, Shoppee, and Tiki has significantly influenced our consumption patterns. Younger generations, in particular, choose customized solutions that cater to their own requirements. Businesses and the industry in general have the compulsion to adapt to evolving client demands and confront competition.
In Vietnam, digital transformation in enterprises refers to the conversion of outdated and traditional business models into digital enterprises through the adoption of new technology applications such as big data, IoT, cloud computing, operational methods, work processes, and organizational culture (Giang & Trung, 2023). Digitalization has become a transformative force, reshaping the digital aspects of the economic landscape and business operations, including competition, intermediation, product design, automation, accessibility, speed and analytics. Consequently, the contemporary perspective on digitalization has transitioned from focusing solely on the technological advancements facilitated by computers, telecommunications, and online connectivity to a comprehension of the evolving digital technologies and their impact on corporate interactions and operations.0 Industrial Revolution is characterized by a significant advancement in scientific and technical innovations, leading to a profound alteration in the way organizations operate due to the widespread adoption of digital technologies. The process of digital transformation offers several advantages to firms across their operations.
Furthermore, the COVID-19 epidemic has resulted in significant ramifications for both individuals and organizations, while also fostering digitalization, facilitating administrative restructuring, and generating optimal convenience for enterprises. Digital transformation in the context of the state involves 10 utilizing data and digital technology to enhance user experiences with state services, streamline business processes, and modify the operational models and procedures of the national administrative management agency. In the current highly competitive environment, traditional manufacturing enterprises are compelled to undergo digital transformation in order to survive. This change is no longer optional, but rather a must.
(Tuan, 2022) Presently, in light of the fast advancement of the digital economy, it is crucial to intensify the technological overhaul of the manufacturing sector as a pivotal measure to drive the transformation and enhancement of Vietnam's manufacturing industry. This will bolster its competitiveness in the worldwide market. (Dinh, 2022) With the complexity of information flows related to production and business activities, the complexity of the field of activity leads to very high business risks and the need to collect, process and analyze information with very high confidence. In order to make low-risk judgments for enterprises, administrators want high-quality information and digital transformation to facilitate the reduction of time, operational expenses, and administrative procedures.
This enables them to make prompt and highly dependable decisions. In theory, digital transformation offers advantages to firms, including reduced expenses, enhanced operational efficiency, and increased creativity. However, in reality, implementing digital transformation is very complicated because of the huge costs and adjustments involved., 2023) Therefore, the research question is whether a company's adoption of digital transformation improves its performance. This dissertation will examine the impact of implementing a digital transformation strategy on firm performance and evaluate the main influencing factors, thereby helping manufacturing businesses adjust their transformation strategies according to their transformation stage and transformation capabilities, and finally successfully complete enterprise digital transformation.
Research Objective The goal of the research is to examine the impact of digital transformation on business performance in Vietnam. It also clarify reasons for the effective or ineffective application of digital technology in businesses as well as propose some feasible directions to improve firm performance 11 Specifically, the thesis will answer the following questions: - What is the the reality of digital transformation among firms?? - How digital transformation affect firm performance? - What can be suggested for enhancing the digital transformation and firm performance? 1. Method and Data 1. Method The main objective of this study is to investigate how digital transformation affects the performance of manufacturing enterprises.
The theoretical framework used in this study is based on the Cobb-Douglas production function, which provides the basis for gathering information and forms the foundation of the study. The paper uses ordinary least squares (OLS) regression, which facilitates the estimation of the conditional mean located in the center of the distribution. In addition, the thesis also employs quantile regression (QR). In contrast to conventional regression techniques that focus on the conditional mean, QR evaluates the influence of regressors at different positions in the conditional distribution of the dependent variable.
Data This study draws data from two distinct sources. Firstly, it utilizes the 2020 annual enterprise census conducted by the General Statistics Office of Vietnam. In this census, all registered businesses are required to complete a questionnaire that furnishes information regarding various aspects of their operations, including business characteristics, ownership structure, activities, employment, financial performance, assets, and tax contributions. Notably, this dataset stands out as the sole source that comprehensively surveys different aspects of firms' digital transformation endeavors.
The second data source utilized in this study is Vietnam's Provincial Competitiveness Index (PCI). With the assistance of USAID, the Vietnam Chamber of Commerce and Industry (VCCI) has been compiling this index on an annual basis since 2007. The PCI is a composite measure derived from ten component indicators, each gauging various aspects of the quality of the business environment. The survey encompasses all 63 provinces in Vietnam.
12 The Provincial Competitiveness Index encompasses annual government surveys, assessments, and evaluations of public governance aimed at fostering a conducive business climate for private sector growth in Vietnam. It comprises ten distinct subgroups, each of which reflects different dimensions of economic governance that impact the advancement of the local private sector. Structure of Study The master's thesis makes an outline with the main idea in each chapter as follows:. This section discusses the drivers and related overview of how digital transformation affects firm performance Chapter 2: Theoretical basis.
This chapter presents the theory of digital transformation, enterprise efficiency and the relationship between digital transformation and manufacturing enterprise efficiency. Chapter 3: The impact of digital transformation on firm performance in Vietnam This chapter addresses the digital transformation situation in Vietnam in 2021. The impact of COVID-19 greatly affects digital transformation in businesses. Shaping and changing business models Chapter 4: Results and Evaluation of the current research situation This chapter studies the impacts of digital transformation on firm performance.
The content will focus on the performance of manufacturing enterprises in Vietnam Chapter 5: Conclusion This section summarizes the thesis and provides further discussion on digital transformation's positive impact on the performance of manufacturing enterprises in Vietnam.