The Relationship Between Governance Capacity and Business Performance: A Case Study of Vietnam’s Auto Auxiliary Industry

The purpose of this study was to assess the present business performance of Vietnam’s auto auxiliary industry. Another aim was to identify the factors, including organizational factors, internal capacities, and external networks, that positively and negatively impact the governance capacity of Vietnam’s auto auxiliary industry. Finally, the relationship between governance and business performance within the context of Vietnam’s auto auxiliary industry was examined in the study. The research methodology employed a comprehensive approach, combining Partial Least Squares Structural Equation Modeling (PLS-SEM) utilizing Smart-PLS 3.0, interviews conducted through the Delphi technique, and an exhaustive table study. Three hundred questionnaires were distributed, yielding 265 responses from diverse participants, including private enterprises, state-owned enterprises, joint-venture enterprises, and governmental bodies. The results of the study were that Governance Capacity mediated the relationship between organizational factors (Government Policies, Market Competition, Globalization and Supply Chains, Economic Conditions, Environmental and Sustainability Concerns, and Human Resources Expertise) and Business Performance within Vietnam’s auto auxiliary industry. The recommendations provided practical insights for industry stakeholders seeking to improve governance practices and optimize business performance within Vietnam’s auto auxiliary sector.