Does Quality Certification or Product Diversification Improve the Performance of Small and Medium Enterprises?

Duc-Niem Le () and Nguyen Van-Hoa
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Duc-Niem Le: Faculty of Economics, Tay Nguyen University, 567 Le Duan, Buon Ma Thuot 63000, Vietnam
Nguyen Van-Hoa: Faculty of Economics, Tay Nguyen University, 567 Le Duan, Buon Ma Thuot 63000, Vietnam

Sustainability, 2024, vol. 16, issue 5, 1-11

Abstract: This study utilizes a Cobb–Douglas production function and an instrumental variables regression approach to analyze the impact of quality certification and product diversification on asset productivity at the firm level. Analyzing a panel dataset of approximately 2500 firms from 2011, 2013, and 2015 showed that regional norms significantly influence adoption behaviors, which vary across industries and business types. The study reveals that firms employing computers and those with a larger scale are more inclined to adopt these strategies. The results showed that quality certification enhances asset productivity by approximately 26%, highlighting its positive role. In contrast, firms with diversified products exhibit about 18% lower asset productivity than mono-product firms, suggesting a trade-off inherent in diversification. The study concludes with policy recommendations emphasizing the promotion of quality certification while carefully considering the complexities and potential inefficiencies arising from product diversification strategies.

Keywords: SMEs; quality certification; product diversification; firm performance; asset productivity; Vietnam (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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