Application of SEM in analysing the effect of competitiveness, operating effectiveness and risk management on the stability of Vietnamese construction corporations

Abstract

This research focuses on analysing the impact of competitiveness as measured through the Lerner competitiveness coefficient, operational efficiency, and risks to financial stability through the Z-score bankruptcy risk ratio of Vietnam’s leading prestige construction groups in the context of economic integration. From there, the extent of the influence of factors on the long-term stability and development of corporations operating in the construction sector is inferred. The research data was collected from audited annual financial statements of 17 construction companies operating between 2013 and 2020, with a total of 136 observations. The main research method of this work is the application of SEM linear structure modelling for panel data in multivariable regression analysis. The final results of the study show that most impact variable groups have an influence on the stability of the business. In addition, the results of the study provide an answer on the competitiveness index as having a positive effect in promoting the financial stability of enterprises in the short term. Conversely, if a business abuses this index in the long term, a reaction against the expectations of managers will occur.