Performance of the Vietnamese Automobile Industry: A Measurement using DEA

Authors

  • Duc-Hiep Tran
  • NGO Dang Thanh Faculty of Political Economy VNU University of Economics and Business, Hanoi

Keywords:

automobile industry, Vietnam, data envelopment analysis, performance

Abstract

In Vietnam, the automobile industry was seen as a very important sector of the economy. This paper studies the efficiency and productivity change of the Vietnamese automobile industry during the 2004-2007 periods, employing the Malmquist - Data Envelopment Analysis approach. For the best of our knowledge, this is the first study to do so.

Our findings showed that efficiency of the Vietnamese automobile firms were low, with the highest average score of 0.500 in 2007. Major issues concerning inefficiency in the industry related to a big waste in using capital resources and thus, the actual turnovers were far less than its capability. By utilizing their production capacity, automobile firms in Vietnam could increase their productivity; however, its speed was decreased. Since technology could affect capacity utilization, it could be better for Vietnam to focus on this issue with preference.

 

References

• Womack, J. P., Jones, D. T., & Ross, D., The Machine that Changed the World, Rawson Associates, New York, NY, 1990.

• Ülengin, F., Önsel, Ş., Aktas, E., Kabak, Ö., & Özaydın, Ö., "A decision support methodology to enhance the competitiveness of the Turkish automotive industry", European Journal of Operational Research, vol. 234, no. 3, 789-801, 2014.

• McKenna, R., Reith, S., Cail, S., Kessler, A., & Fichtner, W., "Energy savings through direct secondary reuse: an exemplary analysis of the German automotive sector", Journal of Cleaner Production, vol. 52, 103-112, 2013.

• Berggren, C., & Magnusson, T., "Reducing automotive emissions—The potentials of combustion engine technologies and the power of policy", Energy Policy, vol. 41, no. 0, 636-643, 2012.

• Nieuwenhuis, P., Beresford, A., & Choi, A. K.-Y., "Shipping or local production? CO2 impact of a strategic decision: An automotive industry case study", International Journal of Production Economics, vol. 140, no. 1, 138-148, 2012.

• Schmitz, J., & Platts, K. W., "Supplier logistics performance measurement: Indications from a study in the automotive industry", International Journal of Production Economics, vol. 89, no. 2, 231-243, 2004.

• Wong, C. Y., Boon-itt, S., & Wong, C. W. Y., "The contingency effects of environmental uncertainty on the relationship between supply chain integration and operational performance", Journal of Operations Management, vol. 29, no. 6, 604-615, 2011.

• Wad, P., "The Development of Automotive Parts Suppliers in Korea and Malaysia: A Global Value Chain Perspective", Asia Pacific Business Review, vol. 14, no. 1, 47-64, 2007.

• Barnes, J., & Morris, M., "Staying alive in the global automotive industry: what can developing economies learn from South Africa about linking into global automotive value chains", European Journal of Development Research, vol. 20, no. 1, 31-55, 2008.

• Vietnamese Government, "Decree No. 177/2004/QÄ-TTg on the Approvement of the Development project for the automotive industry in Vietnam toward 2010, vision 2020 (in Vietnamese)", 2004.

• Business Monitor International, "Vietnam Autos Report Q4 2010", 2010.

• Business Monitor International, "Vietnam Autos Report Q1 2012", 2012.

• Economist Intelligence Unit, "Vietnam cars: Vietnamese car industry still stuck in reverse, claims official", 2013.

• Vietnamese Government, "Conclusions of the Prime Minister at the Government regular meeting on the Development project for the automotive industry in Vietnam toward 2020, vision 2030 (in Vietnamese)", 2013.

• Sturgeon, T. J., "The automotive industry in Vietnam: Prospects for development in a globalizing economy Industrial Competitiveness Review (pp. 46), Ministry of Planning and Investment (MPI), Hanoi, VN, 1998.

• Economist Intelligence Unit, "Automotive Report Vietnam", The Economist Intelligence Unit (EIU), London, UK, 2004.

• PricewaterhouseCoopers, "Vietnam’s Automotive Component Industry: Ready to go global?", PricewaterhouseCoopers LLP, Hochiminh City, VN, 2007.

• Thuy, N. B., "The Vietnamese Automobile Industry and Globalization", Paper presented at the The Fourth VDF-Tokyo Conference on The development of Vietnam, Tokyo, Japan, 2008.

• VAMA, "Automotive market performance", Vietnam Automobile Manufacturers' Association (VAMA), Hanoi, VN, 2014.

• Farrell, M. J., "The Measurement Of Productive Efficiency", Journal of the Royal Statistical Society, vol. 120, no. 3, 253-281, 1957.

• Leibenstein, H., "Allocative efficiency vs. "X-efficiency"", The American Economic Review, vol. 56, no. 3, 392-415, 1966.

• Charnes, A., Cooper, W. W., Golany, B., Seiford, L., & Stutz, J., "Foundation of Data Envelopment Analysis for Pareto-Koopmans Efficient Empirical Production Function", Journal of Econometrics, vol. 30, 91-107, 1985.

• Seiford, L. M., & Thrall, R. M., "Recent developments in DEA: the mathematical programming approach to frontier analysis", Journal of Econometrics, vol. 46, no. 1, 7-38, 1990.

• Banker, R. D., Charnes, A., & Cooper, W. W., "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis", Management Science, vol. 30, no. 9, 1078-1092, 1984.

• Russell, R. R., "Measures of technical efficiency", Journal of Economic Theory, vol. 35, no. 1, 109-126, 1985.

• Tone, K., "A slacks-based measure of efficiency in data envelopment analysis", European Journal of Operational Research, vol. 130, no. 3, 498-509, 2001.

• Malmquist, S., "Index numbers and indifference surfaces", Trabajos de Estadistica, vol. 4, no. 2, 209-242, 1953.

• Caves, D. W., Christensen, L. R., & Diewert, W. E., "The economic theory of index numbers and the measurement of input, output and productivity", Econometrica, vol. 50, 1393-1414, 1982.

• Färe, R., Grosskopf, S., Norris, M., & Zhang, Z., "Productivity growth, technical progress, and efficiency change in industrialized countries", The American Economic Review vol. 84, no. 1, 66-83, 1994.

• Mukherjee, K., Ray, S. C., & Miller, S. M., "Productivity growth in large US commercial banks: The initial post-deregulation experience", Journal of Banking & Finance, vol. 25, no. 5, 913-939, 2001.

• Asmild, M., Paradi, J., Aggarwall, V., & Schaffnit, C., "Combining DEA Window Analysis with the Malmquist Index Approach in a Study of the Canadian Banking Industry", Journal of Productivity Analysis, vol. 21, no. 1, 67-89, 2004.

• Ngo, D. T., & Nguyen, L. T. P., "Total Factor Productivity of Thai Banks in 2007-2010: An Application of DEA and Malmquist Index", Journal of Applied Finance and Banking, vol. 2, no. 5, 27-42, 2012.

• Quynh Minh, The automotive industry: Vision 2030 (in Vietnamese), In Commercial & Industrial News Online, Retrieved from http://baocongthuong.com.vn/co-khi-luyen-kim/34927/cong-nghiep-o-to-tam-nhin-den-nam-2030-ky-i.htm, 2013.

• OICA, OICA Statistics, Retrieved from http://www.oica.net/category/production-statistics/, 2014.

• AAF, ASEAN Automotive Federation Statistics, Retrieved from http://www.asean-autofed.com/statistics.html, 2014.

• Berger, A. N., & Humphrey, D. B., "Efficiency of financial institutions: International survey and directions for future research", European Journal of Operational Research, vol. 98, 175-212, 1997.

Downloads

Published

2014-06-15

How to Cite

Tran, D.-H., & Thanh, N. D. (2014). Performance of the Vietnamese Automobile Industry: A Measurement using DEA. Asian Journal of Business and Management, 2(3). Retrieved from https://ajouronline.com/index.php/AJBM/article/view/1277

Issue

Vol. 2 No. 3 (2014): June 2014

Section

Articles

License

  • Papers must be submitted on the understanding that they have not been published elsewhere (except in the form of an abstract or as part of a published lecture, review, or thesis) and are not currently under consideration by another journal published by any other publisher.
  • It is also the authors responsibility to ensure that the articles emanating from a particular source are submitted with the necessary approval.
  • The authors warrant that the paper is original and that he/she is the author of the paper, except for material that is clearly identified as to its original source, with permission notices from the copyright owners where required.
  • The authors ensure that all the references carefully and they are accurate in the text as well as in the list of references (and vice versa).
  • Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
  • Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
  • Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
  • The journal/publisher is not responsible for subsequent uses of the work. It is the author's responsibility to bring an infringement action if so desired by the author.