1. The neccesity of the topic
The concept of performance measurement system (PMS) was first
introduced in the US in 1976 when researchers searched for a tool that could
better promote the management by objective (MBO) program with the goal to
developing countries (Farashahi et al., 2005). However, the dynamic environment
of these developing countries is a fertile land to test new theories, new techniques,
new concepts in the field of business administration. There are very few
researchers questioning whether modern Western management tools work in
emerging markets. Researchers have acknowledged that cultural differences are
track, evaluate and support employees to improve their working performance.
PMS has drawn attention of researchers in the last 2 decades due to the changing
business environment, management team tend to apply modern management
tools to strengthen and enhance their business competitiveness.
There are three main reasons that PMS has been widely and effectively
adopted in businesses (Needly, 1999). Firstly, The fierce competition pressure
the main causes of differences in systems and measurement methods. The
performance measurement system can be considered as one of the theories that
need to be verified in the context of developing countries, where the business
environment could be more dynamic and different those of developed countries
(André A. de Waal, 2007).
Manufacturing enterprises in Vietnam play an important role in the
from the external environment that makes companies have to simultaneously find
the ways to improve their governance capability through the application of a
series of modern management tools to save cost, add value for customers,
improve their competitive position through products and services differentiation,
prompt response to customer demands. Therefore, companies are forced to
change their operational measurement systems to meet the requirements when
economy and most of them are young businesses. According to the General
Statistics Office (2016), the number of manufacturing enterprises is increasing
sharply from 45.742 enterprises in 2010 to 67.490 enterprises in 2015. This figure
show that more than 32% of manufacturing enterprises are less than 5 years old.
Although the number of manufacturing enterprises accounts for only 15,3% of
total enterprises in Vietnam, revenue from manufacturing contributes 33,5% of
the strategy changes. Secondly, to meet the increasing demands of customers,
many companies have been applying continuous improvement programs. The
modern tools to support improvement such as total quality management (TQM),
lean production which all base on measuring activities for improvement. When
the organization decides to improve, at least that organization must have
measures and know why and what to improve. Finally, with the development of
information technology, the data for the operational measurement system is
collected and analyzed much easier and simpler than before. These three reasons
have promoted the research and implementation of comprehensive performance
measurement systems, especially in recent years.
Many authors have studied PMS from different angles, in which the
research direction of PMS according to the characteristics of enterprises in
different countries is a popular research direction. However, in the last 20 years,
up to 95% of studies on applying economic theories have been studied in the
context of developed countries and only 5% of studies in the context of
the total turnover of all businesses. In the difficult economic context and
limitations in management capacity and qualifications, businesses are searching
for appropriate motivation for sustainable growth in order to improve the their
competitive advantage. To strengthen and enhance their competitiveness, besides
building strategies, investing in marketing activities, developing new products,
investing in modern technology, improving corporate governance capacity, the
application of modern corporate governance tools that are prioritized. PMS has
been effectively applied in developed countries but in Vietnam the application is
limited. So, how to apply PMS in manufacturing enterprises in Vietnam? How to
apply PMS effectively? Under what conditions can PMS be applied? In an effort
to seek the answers to these questions, the author conducted the research topic:
"Factors influencing performance measurement system effectiveness in
manufacturing enterprises in Vietnam" with the desire to help managers can
make the right and rational decisions to apply PMS effectively in their businesses,
thereby increasing competitiveness contributes to the overall development of the
2. Research objectives and research questions
The objective of this study is to clarify the influencing factors and analyze the
influencing level of each factor on PMS effectiveness in manufacturing enterprises
in Vietnam. Specific objectives are:
- Identify factors influencing PMS effectiveness in manufacturing
Manufacturing enterprises in Vietnam: Focusing on researching enterprises in
manufacturing and processing industry with factories located in Vietnam and
with scale of 10 employees and above.
- About research geography area: The author focuses on researching
manufacturing enterprises with factories located in Northern Vietnam, focusing
- Test the influence of these factors in the context of manufacturing
enterprises in Vietnam.
- Propose solutions for stakeholders to be able to apply PMS effectively.
on Hanoi and neighboring provinces.
- About research time: The secondary data used in this study is synthesized from
researches or documents published from 2017 onwards. Primary data is
collected by the author during the period from April 2017 to 5/2018.
4. New contributions
(1) Synthesized the factors influencing PMS effectiveness in enterprises.
To achieve the above research objectives, the author conducts research to
answer the following research questions:
- How has PMS been studied and applied in the world and in Vietnam?
- What factors influencing PMS effectiveness in manufacturing
enterprises in the world in general and in Vietnam in particular?
- What is the impact of these factors in the context of manufacturing
enterprises in Vietnam?
- What should businesses and stakeholders do to be able to apply PMS
effectively to improve their management level?
3. Research object and scope
Object of this research is "Factors influencing PMS effectiveness in
manufacturing enterprises in Vietnam".
- About the content
Factors influencing PMS effectiveness: There are many factors influencing PMS
effectiveness including internal factors and external factors. This thesis focuses
on researching 6 internal factors including: (1) Multidimensional performance
measures; (2) Top management support; (3) Training about PMS; (4) Employee
participation; (5) The link of performance to rewards; (5) Employee attitudes
PMS effectiveness: The concept of "PMS effectiveness" in this thesis is
understood as whether the application of PMS in the enterprise is effective or
not through the outputs of the system.
(2) Developed a model of factors influencing PMS effectiveness in manufacturing
enterprises and verified the model in the context of manufacturing enterprises
(3) Confirmed the factors factors influencing PMS effectiveness in manufacturing
enterprises in Vietnam and the impact level of each factor: These factors
include: Multidimensional performance measures; Top management support;
Training about PMS; Employee participation; The link of performance to
rewards; Employee attitudes towards PMS.
(4) Discovered two new observed variables to complete the set of scales for two
independent variables: "Employee participation" and "The link of performance
(5) Proposed a number of solutions to consult managers and stakeholders in the
process of implementing PMS effectively in manufacturing enterprises in
5. Research structure
In addition to the introduction, conclusion, list of references and annexes, the
research is structured with 4 chapters as follows: (1) Chapter 1: Literature review on
PMS; (2) Chapter 2: Models and research methods; (3) Chapter 3: Analysis of research
results on factors influencing PMS effectiveness in manufacturing enterprises in
Vietnam; (4) Chapter 4: Recommendations and proposals.
LITERATURE REVIEW ON PMS
1.1. Nature of PMS
1.1.1. PMS concept
The concept of PMS used in this study is based on the definition of Neely
(2003): Performance measurement can be defined as the process of quantifying the
efficiency and effectiveness of action, including the process of selecting, designing
metrics, collecting and analysising data, managing information, evaluating
1.1.2. Role of PMS
The effective performance measurement system plays a very important role
for the following reasons: (1) PMS can help implement the strategy, unify the goals
of the individual with the goals of the organization, control the progress of the
organization's objectives; (2) PMS can provide information that enables managers
to monitor their own performance and evaluate employees performance, thereby
providing solutions to build and develop human resources; (3) PMS can be used for
internal and external communication.
1.2. Factors influencing PMS effectiveness.
1.2.1. PMS componants
An organization is considered to have a performance measurement system
when it has at least one set of metrics which are designed, applied, reviewed
provided with relevant data. PMS comes from strategy, links activities with
strategic objectives, deployed as a tool to measure strategies and track results of
Figure 1.1: PMS components
Source: Franco – Santos et al. (2007)_
1.2.2. Factors influencing PMS effectiveness
Contingency theory is applied in PMS research at different levels. The main
argument of contingency theory is that the design and application of a control
system depends on the context of the organization including the internal and
external factors of the organization. Patrizia Garengo and Umit Bititci (2007)
synthesized previous studies and divided the contingency factors influencing the
PMS effectiveness into two groups:
- Internal factors: Includes factors related to organizational structure and
organizational scale; organizational culture and management style; leadership
style, management skills, commitment of leaders:
- External factors: The uncertainty of the external environment is one of the most
business performance, can change flexibly when strategy changes. PMS is defined
studied aspects of the external factors (Chenhall, 2003).
specifically, clearly, in accordance with the specific requirements of production
1. 1.3. Literature review and research gap
and business activities, long-term and easy to apply. The three basic components
of PMS are shown in the following figure:
1.3.1. International researches on PMS
PMS is used in non-profit organizations, in different types of businesses. PMS
effectiveness in these types of organizations are different because of the different
context, objectives and service objects of each type of organization. International
research on PMS can be grouped as: (1) researches on PMS in public organizations
and non-profit organizations; (2) researches on PMS in non-manufacturing enterprises;
RESEARCH MODEL AND RESEARCH METHODOLOGY
(3) researches on PMS in manufacturing enterprises.
1.3.2. Researches in Vietnam on PMS
According to the author's research, the researches on PMS in Vietnam are
very limited. These researches mainly focus on designing and building PMS in
specific situations, which can be divided into 2 groups: (1) Researches on improving
the system of business performance measure criteria in Vietnamese enterprises; (2)
Researches on the application of Balanced Scorecard and KPI in Vietnamese
1.3.3. Research gap
PMS is a modern management tool and has been implemented in developed
countries. Researches on PMS are also conducted mainly in developed countries
such as the US, Australia, and European countries and there are very few studies
conducted in the context of transition economies such as Vietnam. One of the
research directions on PMS in the world is the research and application of PMS
according to the characteristics of each country with different socio-economic
characteristics and business environment. Studies in the world have pointed out the
2.1. Research process
The steps in the research process are built based on the research process of
Nguyen Dinh Tho (2011), summarized as follows:
- Identify the factors influencing PMS effectiveness in manufacturing
enterprises based on the theory, review of previous studies, characteristics of
manufacturing enterprises in Vietnam. Then the author proposed the model and
- Test the model and scales: Based on the model, scales and research
hypotheses developed from the theory and literature review, the author conducted
interviews with consultants to implement PMSvin manufacturing enterprises and 4
other manufacturing business leaders to adjust the questionnaire for the first time,
then the author conducts case studies at two specific manufacturing enterprises, one
representing the large companies and 1 enterprise represent small and medium
companies. The purpose of this case study is to examine the relevance of the model
and scales, research hypotheses and find new points in the context of Vietnamese
factors influencing PMS effectiveness in enterprises but no author has studied these
factors in terms and conditions of manufacturing enterprises in Vietnam.
In Vietnam, according to the author's knowledge, a number of factors
influencing PMS effectiveness as well as the difficulties in the application process
have been raised by researchers and consulting companies. There has been no
research on the factors influencing PMS effectiveness to help managers to
implement PMS in the most effective way.
Therefore, studying factors influencing PMS effectiveness in the specific
conditions of manufacturing enterprises in Vietnam helps to fill the above research gap,
not only in terms of practicality but also contribute to supplement the theory of
performance measurement system.
After revising the questionnaire from the literature review and the results of
the case study at the two enterprises, the author adjusted the questionnaire the
second time and conducted a pilot survey on 136 staff members from enterprises to
check the reliability of the scales, complete the questionnaire before conducting the
- Collect survey data: In this stage, the author sent questionnaires to the survey
subjects and follow up to collect the answers.
- Analysis of survey results: After collecting the questionnaires, the author
cleaned the data, removed invalid answer sheets and put into SPSS 20 software to
analyze the data.
- Conclusions on the influencing factors, the impact level of each factor and
research hypotheses based on the results of the survey data analysis.
- Propose solutions and conditions applicable in the context of manufacturing
enterprises in Vietnam.
2.2. Research model and hypotheses.
Hypothesis H6: Employee attitudes towards PMS has positive impact on PMS
effectiveness in manufacturing enterprises in Vietnam.
2.2.1. Select research models and research hypotheses.
2.2.2. Assessing the relevance of the research model.
From two situational reseached of two businesses, North Kinh Do Company
(NKD) and Novaco Pharmaceutical Joint Stock Company (Novaco) with the
aim of examining models and factors influencing PMS effectiveness in
manufacturing enterprises in Vietnam, the author discovered the following
- There is a link between the 6 factors influencing PMS effectiveness:
Multidimensional performance measures; Top management support; Training
about PMS; Employee participation; The link of performance to rewards;
Employee attitudes towards PMS. These findings are consistent with results
from previous studies.
- In both companies, when referring to the performance measurement system,
the leaders and managers participating in the interview are immediately connected
to the KPI system they are applying. In other words, the concept of PMS and KPI is
understood by both businesses as quite similar and the KPI term is more frequent
mentioned when referring to performance measurement system.
Figure 2.2: Research model
Hypothesis H1: Multidimensional performance measures has a positive impact on
PMS effectiveness in manufacturing enterprises in Vietnam.
Hypothesis H2: Top management support has a positive impact on PMS effectiveness
in manufacturing enterprises in Vietnam.
Hypothesis H3: Training about PMS has positive impact on PMS effectiveness in
manufacturing enterprises in Vietnam.
Hypothesis H4: Employee participation has a positive impact on PMS effectiveness
in manufacturing enterprises in Vietnam.
Hypothesis H5: The link of performance to rewards has a positive impact on PMS
effectiveness in manufacturing enterprises in Vietnam.
- When referring to the "Employee participation" factor in PMS effectiveness,
at both companies, employees are involved in designing, selecting their own
measures, participating in the discussion of KPI results. Thus, the set of scales
includes independent variable "Employee participation" consisting of 2 items
(employees are allowed to participate in PMS design; employees are allowed to
participate in the selection of measures) is incomplete in previous studies. One more
item (employees are involved in discussion, explain their KPI performance results)
should be added in to complete the scales of this variable.
- When referring to the " The link of performance to rewards ", in NKD and
Novaco, achievement is not only associated with financial and non-financial
benefits but also an important factor to consider in the process of task assignment,
salary increase, career path. Similar to the above, the set of scales for independent
variables consists of two items (Performance is linked to financial benefits;
Performance is linked to non-financial benefits) from previous studies should be
added 1 more items on the connection between achievement and career development
in the long term.
The findings from the case study at the two companies helped the author
finalize the model, scale and questionnaire to conduct the next step of the study.
Scales used are multi item scales. These scales have been proven in value and
reliability from previous studies on PMS in manufacturing companies.
Observed variables in the model are measured by the 5-point Likert scale
(representing the level of agreement from the lowest (1) to the highest (5))
2.3. Survey method
2.3.1. Sample design
This study selected a convenient probability sampling method. Due to limited
resources, the author focuses on surveying manufacturing enterprises in Northern
Vietnam, including 700 manufacturing enterprises as potential partners and partners
of the CEO program - the key to success and 415 manufacturing enterprises have
staff members participating in CEO professional training programs that the author
has direct access, via email and phone to follow up the answer.
of 3 main parts:
- The introduction refers to the purpose of the study
- The main part is the content related to the statement in order to record the
opinion of the respondent. The content of the statements is designed based
on the scales and research model.
- The personal / business information section includes information related to
the respondents themselves and the businesses they are working for the
purpose of statistics as well as further explanation for the main information
in case needed.
2.3.3 Data collection
Data collection was conducted by online survey method and hard copies. The
author designed the online questionnaire with the help of Google docs and posted it to
the address: https://goo.gl/forms/4YwxIBmQwmlPgm382, then send an email with
this link to businesses participating in the survey.
Besides sending online questionnaire via email, the author also takes
additional method to increase the response rate such as direct phone calls, attended
training sessions / seminars where target respondents participated and asked them
to answer questionnaires in hard copies
According to Hair et al (1998), the minimum sample size for EFA exploratory
factor analysis must be at least 5 times the size of the propositions in the scale. There
are 41 observed variables used in this study, so the minimum sample size must be 41
* 5 = 205 observed. The minimum sample size for multivariate regression is 50 + 8 *
m (m is the number of independent variables), in this study, the number of independent
2.3.4. Data analysis
variables is 6, the minimum sample size should be: 50 + 8 * 6 = 98 observations. Thus,
to meet these two requirements, the minimum sample size must be 205 observations.
EFA factors, finally multivariate regression analysis.
2.3.2 Questionnaire design
In this study, the questionnaire was first designed based on the rationale and
literature review, revised the first time after consulting with experts and business
leaders. Then, through the situational study at the two companies (NKD and
NOVACO), the author has made the second revision. The questionnaire consists
After collecting the questionnaires, the author screened questionnaires, removed
incomplete answer sheet, coded and imported data into SPSS software version 20. After
data entry, the author conducted the descriptive statistics, assessing the reliability of the
scales with Cronbach’s Alpha coefficient, testing the value of variables by analyzing
ANALYSIS OF RESEARCH RESULTS ON FACTORS INFLUENCING
PMS EFFECTIVENESS IN MANUFACTURING ENTERPRISES IN
0,7. Thus, it can be said that the scale is suitable for measurement. Corrected Item Total Correlation of observed variables ranges from 0,711 to 0,844, greater than 0,3,
so observed variables can be retained for measurement. Cronbach's Alpha if Item
Deleted are smaller than Cronbach's Alpha coefficient of 0,962 scale, so there is no
need to remove any variables for better measurement scale. Thus, the scales of the
3.1. Descriptive statistics
The data collection process through questionnaires was conducted as described
above. The total number of questionnaires sent via email is 3.030, the number of hard
copy questionnaires sent is 315, the total number of answers collected is 262, of which
there are 231 online answers and 31 paper answer sheet, accounting for 8% of return
Out of 262 answers collected, after the cleaning process, 43 answers were
rejected due to lack of information at the required questions or sent from nonmanufacturing enterprises. The number of qualified answers to be analyzed is 219
(accounting for 84%), sent from 185 businesses.
3.2. Testing results of factors influencing PMS effectiveness in manufacturing
enterprises in Vietnam
To test the factors influencing PMS effectiveness in manufacturing enterprises
in Vietnam, the author conducted (1) Test the reliability of the scale to check whether
the scale is suitable for independent variables or dependent variable or not; (2) Test the
value of the variable to extract the observed variables corresponding to each factor.
(1) Testing results of the scale reliability
The reliability test of the scale is to test whether the scales are appropriate for
independent or dependent variables. Cronbach’s Alpha values reflect the correlation
level of observations with the total items. This larger value indicates that this
relationship is more closely and meaningful.
The reliability of the scale is evaluated by the author for each group of
observed variables of each different factor
a. Assessing the reliability of the scale for variable "Multidimensional
performance measures "
With the scale of the variable "Multidimensional performance measures",
when running SPSS, the value of Cronbach’s Alpha coefficient is 0,962 greater than
variable "Multidimensional performance measures" include 15 observed variables.
b. Assessing the reliability of the scale for variable "Top management
With the scale of the variable "Top management support", when running
SPSS, the value of Cronbach’s Alpha coefficient is 0,693 greater than 0,6. Thus, it
can be said that the scale is suitable for measurement. Corrected Item coefficient Total Correlation of observed variables ranges from 0,488 to 0,514, greater than 0,3,
so observed variables can be retained for measurement. Cronbach's Alpha if Item
Deleted are smaller than the Cronbach's Alpha coefficient of the scale of 0,693, so
no need to remove variables for better measurement scale. Thus, the scales for the
"Top management support" variable consist of 3 observed variables
c. Assessing the reliability of the scale for variable "Training about PMS"
With the scale of the variable "Training about PMS", when running SPSS, the
value of Cronbach’s Alpha coefficient is 0,854 greater than 0,7. Thus, it can be
said that the scale is suitable for measurement. Corrected Item coefficient Total Correlation of observed variables ranges from 0,666 to 0,859, greater than
0,3, so observed variables can be retained for measurement. Cronbach's Alpha
if coefficient Deleted items are smaller than Cronbach's Alpha coefficient of
0,854, so there is no need to remove any variables for better measurement scale.
Thus, the scales of the variable "Training about PMS" include 3 observed variables.
d. Assessing the reliability of the scale for variable "Employee
With the scale of the variable "Employee participation", when running SPSS,
the value of Cronbach’s Alpha coefficient is 0,852 greater than 0,7. Thus, it can
be said that the scale is suitable for measurement. Corrected Item - Total
Correlation coefficient of observed variables ranges from 0,683 to 0,746, greater
than 0.3, so observed variables can be retained for measurement. Cronbach's
Alpha if coefficient Deleted are all smaller than Cronbach's Alpha coefficient of
0.852, so there is no need to remove any variables for better measurement scale.
Thus, the scales for variable "Participation of employees" include 3 observable
Correlation of observed variables ranges from 0,457 to 0,695, greater than 0,3, so
observed variables can be retained for measurement. Cronbach's Alpha if coefficient
Deleted are all smaller than Cronbach's Alpha coefficient of 0,878, so there is no
need to remove the observed variable for better measurement scale. Thus, the scales
of the "PMS effectiveness" variable include 10 observed variables
e. Assessing the reliability of the scale for variable "The link of
performance to rewards”
With the scale of the variable "The link of performance to rewards", when
running SPSS, the value of Cronbach’s Alpha coefficient is 0,894 greater than 0,7.
Thus, it can be said that the scale is suitable for measurement. Corrected Item
coefficient - Total Correlation of observed variables ranges from 0,740 to 0,891,
greater than 0,3, so observed variables can be retained for measurement. Cronbach's
Alpha if coefficient Deleted items are smaller than Cronbach's Alpha coefficient of
0,894, so there is no need to remove variables for better measurement scale. Thus,
the scales for the variable "The link of performance to rewards" include 3 observed
f. Assessing the reliability of the scale for variable "Employee attitudes
With the scale of the variable "Employees attitudes towards PMS", when
running SPSS, the value of Cronbach’s Alpha coefficient is 0,865 greater than 0,7.
Thus, it can be said that the scale is suitable for measurement. Corrected Item
coefficient - Total Correlation of observed variables ranges from 0,649 to 0,833,
greater than 0,3, so observed variables can be retained for measurement. Cronbach's
Alpha if coefficient Deleted are smaller than Cronbach's Alpha coefficient of 0,865
scale, so there is no need to remove any observed variables to measure better. Thus,
the scales of the variable "Employees attitudes towards" include 4 observed
g. Assessing the reliability of the scale for variable "PMS effectiveness”
With the scale of the "PMS effectiveness" variable, when running SPSS, the
value of Cronbach’s Alpha coefficient is 0,878 greater than 0,7. Thus, it can be said
that the scale is suitable for measurement. Corrected Item coefficient - Total
(2) Testing results of variable value by EFA method
After testing the reliability of the scale, 31 observed variables are included for
factor analysis. Factor analysis to group the original observed variables into new factors
that are meaningful for research. Factor analysis also finds new structures, potential
structures between research concepts.
The factor of loading value represents the correlation between the main
factors extracted with each observed variable, so the factor of loading of each
observed variable for each factor is extracted should be greater than or equal to 0,5
to ensure the correlation between the variables observed with the extracted factor,
the observed variables with the value of loading less than 0,5 will be excluded from
the analysis to ensure the explanatory meaning of the factors.
Analysis results show that with 31 criteria for assessing scales on PMS, 6
main factors can be extracted.
The factor of loading value of 31 criteria included in the EFA are in the range
of 0,629 to 0,971, (all larger than 0,5), satisfying the conditions for conducting
3.3. Analysis of the factors influencing PMS effectiveness in manufacturing
enterprises in Vietnam
To analyse the factors influencing PMS effectiveness in manufacturing
enterprises in Vietnam, the author conducted: (1) regression analysis to determine
the causal relationship between 6 independent variables and dependent variables;
(2) testing research hypotheses; (3) check whether there is a difference in the impact
level of the independent variables on the dependent variable between different
Results of regression analysis
To determine the causal relationship between 06 independent variables and
variables depending on PMS effectiveness in manufacturing enterprises, the author
uses regression analysis. The regression model will show which independent
variables affect the dependent variable and which independent variables do not affect
the dependent variable. This research model consists of 06 independent variables and
Table 3.12: Results of regression analysis
one dependent variable, so the author uses multivariate regression analysis with the
support of SPSS 20 software
Std. Error of the
Table 3.11: Summary of regression model
a. Predictors: (Constant), TD, DC, DT, LI, NV, LD
b. Dependent Variable: AD
a. Dependent Variable: AD
According to the results in the table above, R Square = 0,603, the explanatory
ability of the research model is 60,3%. This means that 6 independent variables
explain 60,3% of the variation of the dependent variable "PMS effectiveness".
Results of hypothesis test
Test results show that the hypotheses H1, H2, H3, H4, H5, H6 are accepted
because the statistical significance value is less than 0,05. This means factors
including “Multidimensional performance measures”; “Top management support”;
“Training about PMS”; “Employee participation”; “The link of performance to
rewards”; “Employee attitudes towards PMS” has an impact on the "PMS
effectiveness" in manufacturing enterprises in Vietnam. Regarding the sign and
magnitude of the Beta values with the variables, all the independent variables are
positively correlated with the dependent variable "PMS effectiveness", which is
consistent with the research hypotheses proposed from beginning.
Summary of research results:
Based on previous theories and researches, the author applied two methods
of qualitative research and quantitative research. Case studies were conducted to
examine research models and discover new findings according to the
characteristics of manufacturing enterprises in Vietnam. Quantitative research
method was conducted through online surveys and paper copies to collect
information from 185 businesses. The author used multivariate regression methods
to test the hypotheses of the model as discussed above, the results summarized as
it will not be able to evaluate the whole process of implementing the plan of the whole
company, from it will not promptly make timely corrective actions when the goal is
not implemented as expected. A set of performance measurement indicators is
considered comprehensive and multidimensional when there are sufficient indicators
to measure four aspects of the organization: finance, customers, internal processes,
(1) There are 6 factors identified that influence PMS effectiveness in
manufacturing enterprises in Vietnam: “Multidimensional performance
measures”; “Top management support”; “Training about PMS”; “Employee
participation”; “The link of performance to rewards”; “Employee attitudes
towards PMS” These six factors positively affect PMS effectiveness,
consistent with results from previous studies.
(2) The influencing degree of each factor is different, in terms of specific values
showing the degree of impact of the factors that are different from previous
studies. Multivariate regression models are shown as follows:
AD =f(x) = 0,144 DC + 0,166 LD + 0,331 DT + 0,182 NV + 0,218 LI + 0,212 TD + ε
The interpretation ability of the model is 60.3% (R square = 0.603), which
means that the independent variables explain 60.3% of the variation of the
training and development.
Second, leaders demonstrate their determination in a practical way to
implement PMS. The development and application of PMS requires determination
and consensus from leaders to employees. Leaders must create an atmosphere and
motivation, and at the same time, help individuals to have proper awareness about
KPIs. Among successful companies in deploying PMS, the leader is always the one
who has a clear stance of management, who understands the organization, is the person
who expresses the determination and perseverance with the set plan, always encourage
employees in the implementation process. The results of this study show that " Top
management support " is one of the most important factors influencing PMS
effectiveness in manufacturing enterprises in Vietnam.
Third, employees are involved in the process of designing, implementing
RECOMMENDATION AND SUGGESTION
4.1. Development orientation of manufacturing enterprises in Vietnam
Manufacturing and processing industry plays an important role in the
economy and is prioritized by the government for development in the coming time.
One of the key tasks being implemented is the application of management tools to
improve productivity and product quality in order to improve the competitive
position of manufacturing enterprises.
4.2. Proposal of solutions to apply PMS in manufacturing enterprises in
First, the set of measuring indicators should be designed in a complete,
balanced manner, reflecting all aspects of the enterprise's activities. The parts
of the business are organized to perform a specific task to serve the common goals
of the company and are closely related. If the enterprise is only interested in the results
of the sales department or the production department, regardless of the remaining parts,
and applying PMS: The role of employees is very important in the success of
businesses in general and in the process of applying PMS in particular. Employee
involvement in business decisions helps employees understand and commit to
perform required tasks.
Fourth, members of all levels in the enterprise are trained to understand
the principles, how to do it, measure the evaluation of PMS as well as the
responsibilities that they must perform. The members of the organization who are
well trained about PMS will have the following benefits: Mobilizing knowledge
and experience of many people; Increasing the level of employee understanding
of the content and principles of PMS because they themselves are the ones who
perform the work and produce results, which will lead to a higher level of
commitment to implementation. The resistance to the change brought about by
PMS is less and the organization will be more likely to achieve the desired goals.
Fifth, link the results of PMS with benefits. Linking performance results to
benefits will create better motivation for employees. Employees in the enterprise
will be encouraged to work when it is assumed that his efforts will lead to outputs
or goals are fulfilled and this result will make him able to receive the desired reward.
However, it is advisable to avoid measuring results of job results to punish
employees because this can lead to some consequences such as employees avoiding
responsibility, trying to hide when not completing tasks. This will negatively affect
(1) Specific programs need to be strengthened to support enterprises to
raise awareness about PMS and provide effective implementation methods
from state management agencies: Under the project "Improving productivity and
quality of industrial goods" under the national program "Improving productivity and
product quality of Vietnamese enterprises by 2020 ", chaired by the Ministry of
the overall performance of the whole organization.
Industry and Trade, the PMS / KPI is one of the tools applied in manufacturing
Sixth, promote the positive attitude of employees towards PMS: When
employees have a positive attitude, they will always create a way to complete the job with
high performance instead of dealing, blame or justify when the result is not complete. In
order for employees to have a positive attitude to PMS, businesses should not use PMS as
a discipline or punishment tool, but should communicate the benefits brought by PMS.
enterprises to improve productivity and quality. Specific programs need to be
In addition to the above six factors, investing in information systems to
Vietnam, organizing training courses, visiting domestic and foreign enterprises to
provide useful reports for PMS is essential. In parallel with the design of
exchange experience, developing human resources, especially management
multidimensional measures, investing in the data collection system for such
capability for key employees of the enterprise. Besides, there should be research and
measures is extremely important because without information reflecting the
consultancy projects to improve the effectiveness of PMS application for
performance results, the measurement system becomes useless. Therefore,
Vietnamese enterprises in general and manufacturing enterprises in Vietnam in
enterprises need to consider the issue of investing a cross-information system to
further invested to replicate this tool.
(2) Enhance the role of business associations, organizations to support
and development enterprises: The role of these organizations can be explored
through their host of workshops on experience in applying PM in real enterprises in
collect data, synthesize reports automatically, helping managers to get results as
(3) Universities, research institutes and other training institutions should
soon as possible. Data should be compiled from different sources to get accurate
actively participate in active research, training and development projects of
results on the performance of the business.
effective management models such as PMS. It is very necessary for the support
4.3. Recommendations to stakeholders
of the consulting units and training units to develop a source of guidance on PMS
effectiveness in the conditions and circumstances of Vietnamese enterprises so that
In order to implement PMS effectively in manufacturing enterprises in
Vietnam, besides the efforts of the enterprises themselves, the support of relevant
associations and organizations is required, specifically as follows:
managers can explore and apply by themselves, because in fact, the fee for
consulting the application of the system is very high and not affordable to all
business, especially small and medium enterprises.
(1) Specific programs need to be promoted to support enterprises to
raise awareness about PMS and support effective methods from state agencies:
In the framework of the project "Improve quality of industrial products" under the
By combining qualitative research methods and quantitative research methods
based on case studies in 2 manufacturing enterprises and surveying through
questionnaires 185 manufacturing enterprises in Vietnam on factors influencing PMS
national program "Improving productivity and quality of Vietnamese products by
2020", chaired by the Ministry of Industry and Trade, the PMS / KPI is one of the
tools applied in manufacturing enterprises to improve productivity and quality.
Specific programs need to be further invested to replicate this tool.
effectiveness in manufacturing enterprises in Vietnam, the author's research has drawn
new points and important conclusions. Specifically, there are 6 influencing factors and
the influencing level of each factor is different, which are: (1) Multidimensional
performance measures; (2) Top management support; (3) Training about PMS; (4)
Employee participation; (5) The link of performance to rewards; (6) Employee
attitudes towards PMS. In particular, the study has developed two observable variables
to supplement and complete the set of scales for two independent variables: "Employee
In the model, there are 2 observed variables developed by the author from
qualitative research, which have been tested for reliability and added to the scale of
2 independent variables: “Employee participation”; “The link of performance to
rewards”. However, these scales should be tested in future researches.
participation" and " The link of performance to rewards ". In practice, the study has
also pointed out important points to help manufacturing enterprises in Vietnam to apply
PMS is a modern management tool, in order to apply and promote the
effectiveness of PMS, in addition to the efforts of enterprises, there is a need for
simultaneous participation of state management agencies, associations and
focuses on studying the factors influencing PMS effectiveness in manufacturing
enterprises in Vietnam but not in non-manufacturing enterprises, public
organizations and non-profit organizations. This study also does not mention the
factors influencing the design of measurement indicators (KPI) as well as the impact
of PMS on the performance of enterprises. Although developed on the basis of
contingency theory, this study has not studied all the elements that the theoretical
supporting organizations. Business support, training units through specific and
framework refers to as the group of factors related to the strategy and external
Besides the above achieved results, this study also has some limitations:
PMS has been frequently studied in the world but in Vietnam, the level of
deep and large-scale research on PMS is very limited, so the next research direction
is quite diverse. Based on the findings from the study and the limitations mentioned
above, the author proposes the following three research directions: (1) Research on
(1) Limitations on research samples: In the quantitative research section,
the author conducted research at two different production companies. Although
these two companies represent large companies and small companies, they are not
enough to represent the manufacturing enterprises in Vietnam. Quantitative research
to select non-probability sampling methods, focusing on businesses in the CEO
program network. With the number of 219 samples satisfying the conditions for
regression analysis, however, this sampling method and the number of research
samples are limited compared to the total number manufacturing enterprises in
(2) Limitations on data collection and processing methods: For qualitative
research methods, although the author has conducted in-depth research in two
enterprises, data collection and direct interviews with related people . However, not
all the desired information can be gathered, some of the information needed for the
study may be missed. For quantitative research, the data collection method is mainly
implemented online through questionnaires with a low response rate, although
additional measures have been taken to increase response rates such as phone, email
urging, face-to-face meetings with businesses to collect data through printed
(3) Limitations on the scope and content of the study: This study only
PMS design: although the concept of PMS is not new in the world, but due to the
fact that most businesses in Vietnam are still very young and initially apply modern
management systems. KPI implementation programs have become quite popular in
recent years. The design of a set of measuring indicators suitable to the conditions
and circumstances of their enterprises is a matter of great concern for enterprises;
(2) Research on the level of PMS impact on business performance: PMS is
considered an important management tool and research to determine the importance
of PMS to operational efficiency. It is essential for managers to be more confident
when using the system; (3) In-depth study of PMS according to specific field of
manufacturing enterprises, this research direction will give more accurate results
and higher application levels because of the characteristics of the different
production sectors which may cause the different in the influencing factors on PMS