Improving Management Practices to Reduce Corruption among Small and Medium Enterprises (SMEs) in Vietnam

Although Small and Medium Size Enterprises (SMEs) play a growing role in the Vietnamese economy, they are still challenged by limited capacity, scale, and internationalization. Government agencies in Vietnam have found that these challenges are directly correlated with inadequate management quality and corruption in the domestic sector. DCID aims to incorporate the latest insights from economics and business strategy literature to improve management practices among SMEs through an innovative training program for managers. The training program will test the idea that better training leads to increased productivity, business expansion, faster wage growth, and higher employment.

The training program developed by DCID will be offered to randomly selected restaurant owners and managers in Hanoi, Vietnam. The program will train managers on more streamlined practices to cut waste and help businesses operate more efficiently. The training will also allow managers to better monitor operations, reducing the risk that lower-level employees will violate regulations without managerial awareness. By implementing better managerial practices, SMEs should be able to remain competitive without engaging in corruption. To assess the impact of the training program, DCID will provide additional training courses to other SME owners and managers and then compare outcomes related to management capacity, productivity, regulatory compliance, and participation in corrupt activities such as bribery.  

DCID will work with the Office for Business Sustainable Development (SDforB) and Vietnam’s National Economics University over the course of two years to track productivity via monthly workbooks and measure corruption using behavioral and shielded survey techniques. After determining which trainings affect corruption most, DCID will develop a comprehensive cost-benefit analysis of specialized management training compared to other interventions. This program will provide a strong evidence base for whether improvements to managerial practices affect corruption. Another unique component of this program is the focus on the service sector in Vietnam, which now accounts for 42% of GDP and 35% of the labor force and is on track to be the fastest-growing retail market in Southeast Asia.

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