Identify factors affecting the sustainable development of micro and small-sized enterprises - A case study of Vietnam

Abstract

Enterprises play a vital role in every economy, serving as the backbone of economic activities worldwide. In recent years, environmental sustainability has become an increasingly pressing global concern, affecting not just developed nations but also micro and small-sized enterprises in emerging economies. Hence, approaches to the sustainable development of enterprises are the best way to deal with the environmental impacts of natural resource depletion. Many large enterprises joined the World Business Council for Sustainable Development. In addition, micro and small-sized enterprises also pay various degrees of attention to environmental issues and sustainable operations. However, in Vietnam, the owners of micro and small-sized enterprises mainly focus on short-term business performance. This study analyzes the factors affecting the sustainable development of micro and small-sized enterprises in Vietnam based on fundamental theories such as institutional theory, stakeholder theory, and legitimacy theory. Applied quantitative research methods to analyze data collected from 211 managers at micro and small-sized enterprise managers in five centrally-governed cities in Vietnam. The hypotheses and structure equation models were tested using SmartPLS software. The results showed that Environmental, Social, and Governance (ESG) has the highest direct impact on the sustainable development of micro and small-sized enterprises in Vietnam. Meanwhile, economic development has the lowest impact on the sustainable development of micro and small-sized enterprises in Vietnam. As a result, this study indicates that enterprises and governments must understand the importance of ESG practices for sustainable development in today’s economy. It highlights the need for both enterprises and government bodies to recognize and prioritize ESG principles to foster a more sustainable and inclusive economic future. By doing so, they can develop strategies that promote the long-term viability of domestic enterprises.