Performance of Vietnamese shipping firms: a four random components stochastic frontier approach

This study aims to measure the overall technical efficiency score and analyze its determinants in the Vietnamese shipping industry. The data used in the study is the enterprise census data set collected by the General Statistics Office of Vietnam from 2016 to 2020. A major difference in this study compared to other empirical studies about the efficiency in Vietnam is that we applied the stochastic frontier analysis with four random components. The results of measuring efficiency scores show that: The average overall technical efficiency (OTE) score of Vietnamese shipping firms is 0.539. In which the persistent technical efficiency (PTE) score averaged 0.883 and the transitory technical efficiency (TTE) score averaged 0.60. It shows that the potential for operational efficiency of Vietnamese shipping firms is still very large. The results of the analysis of the determinants of OTE showed that. Internal firm characteristics such as firm size, firm age, return on equity of firm have a positive effect on OTE. And state-owned firms are less efficient than non-state firms. Besides, factors such as participation in international shipping, the quality of economic institutions also have a positive relationship with OTE. However, financial constraint, specifically the level of credit outstanding, is the main cause of slowing OTE growth.