Firm resources and business performance in the Lao PDR : Implications for SMEs in the LDC context

Purpose – Resource‐based view (RBV) has been a very well‐known theory to explain performance over the past decades. The purpose of this paper is to apply RBV's concept to investigate the resources of firms in Lao PDR that influence its business performance. Design/methodology/approach – Secondary data that are collected by Enterprises Baseline Survey in 2005 from Germany Agency for Technical Cooperation (GTZ) is used. For this purpose, samples of 388 firms in three sectors: manufacturing, trading, and service are used. The resources of firms include human resources (developed through education and training); intangible resources (reputation among customers obtained by investment in marketing and advertising); and tangible resources (physical resources with technology and business finance). By the regression methodology, this paper examines how the resources of the firm affect firm performance in the case of Lao PDR. The ranking of the important critical firm resources and firm performance is also identified. The firm size, firm age, and industry sectors are controlled. Findings – The findings suggest that human, intangible, and tangible resources selected in this paper have a positive impact on firm performance. The interesting finding is that physical resources for the manufacturing sector is insignificant to firm performance in the Lao context, which seems to be consistent with the economic development stage of the country. Research limitations/implications – This paper uses secondary data with limitations in selecting theoretical meaningful variables, obtaining the comprehensive performance indicators and controlling other variables. Future studies should conduct the survey and include other internal and external factors that affect firm performance. Practical implications – This paper can provide the policy implications for both policymakers and implementers to emphasize on the key resources of the firms, which underline firm success. Originality/value – The unique contribution of this study is twofold: first, it takes initiative to examine the importance of firm resources in the following subsectors: manufacturing, trading and service, so that the industry can emphasize on their priority resources to achieve better performance. Second, to date, a considerable amount of studies are mainly in the developed context. The dearth of study in this area has made it interesting to explore more the least developed countries (LDC) context.