The Entrepreneurial Role of the State and SME Growth in Vietnam

Since the introduction of ‘Doi Moi (economic transition) of the economic transition to socialist market economy in 1980s, the business environment in Vietnam has improved significantly. This paper examines the extent to which Vietnam’s policies support the development of market principles for the growth of SMEs and assesses issues of the sustainability of the measures engaged by the government. The qualitative interview approach applied a conceptual framework of ‘enabling’ and ‘hindering’ factors to the relationship between the state and the market, and the impact on SME development. The findings indicate that where defective market factors and inadequate institutional support mechanisms are evident, it is vital that the state pursues a more entrepreneurial role to facilitate the development of SMEs. Further, the social networks and private credit for the development of SMEs in the early stages of Vietnam’s journey towards a market economy still plays a key role.