DIVERSIFICATION OF BUSINESS AND TECHNICAL EFFICIENCY OF COMPANIES IN VIETNAM

This study focuses on assessing the technical efficiency of enterprises across 63 provinces of Vietnam from 2015 to 2018 and the factors affecting their technical efficiency, in which, we focus on two factors: business diversification and an Information and Communication Technology (ICT) index. In this research, we use the data envelope analysis (DEA) method to group effective and ineffective enterprises, then use the GMM method to estimate the factors affecting the firm's performance. The research results show that the technical efficiency of enterprises in the provinces is quite small (about 10%); most of the enterprises have not achieved technical efficiency due to the wasteful use of input factors. Research shows that business diversification and ICT both have a positive impact on efficiency. Therefore, to increase firm's efficiency, we recommend to consider increasing the level of diversification and increasing the ICT index from the perspective of businesses and local government.