Research on the Influence of Internal Control Systems on the Financial Performance of Small and Medium-Sized Enterprises in Hanoi

Hoang Xuan Hieu

doi:10.56201/jafm.vol.12.no10.2026.p50.59

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Research on the Influence of Internal Control Systems on the Financial Performance of Small and Medium-Sized Enterprises in Hanoi

Hoang Xuan Hieu

Abstract

This paper employs a desk research method to synthesize, analyze, evaluate, and compare empirical evidence on the influence of internal control systems on the financial performance of small and medium-sized enterprises in Hanoi, drawing on agency theory combined with institutional theory. A synthesis of studies from Vietnam, Nigeria, and Ghana shows that the control environment is the only component with a relatively consistent positive effect on financial performance. The other four components - risk assessment, control activities, information and communication, and monitoring activities - show a clear effect only in Ghana, where corporate governance plays a moderating role. The current state of internal control implementation in Hanoi indicates that control activities is presently the weakest component. On this basis, the paper recommends that SMEs prioritize strengthening the control environment, and that the training content under Hanoi’s 2026-2030 SME support policy should focus on control activities and monitoring. The paper also identifies the limitations of the desk research method and proposes directions for future quantitative testing, with corporate governance as a moderating variable.

Keywords

internal control system; financial performance; small and medium-sized enterprises

References

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Research on the Influence of Internal Control Systems on the Financial Performance of Small and Medium-Sized Enterprises in Hanoi

Abstract

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