There is evidence that small and medium firms usually do not have high
productive efficiency. This phenomenon can be explained by several factors.
In this paper, it is analyzed by using the panel data of 1,492 firms from the
Economic Census for Enterprises conducted by the General Statistics Office
of Vietnam (GSO) during the period 2000-2003 with a parametric approach
(based on stochastic frontier production function ⎯SFPF) and a nonparametric
approach (based on data envelopment analysis ⎯DEA). Under
the specification of variable return to scale (VRS), the mean technical
efficiency of these small and medium firms was about 50 percent under the
SFPF approach, and about 40 percent under the DEA approach. We also
explore possible factors determining the differences in technical efficiency
levels of these firms, and find that there existed slightly heterogeneous
efficiency level in these firms across sub-industries and regions in the study
period.