IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v40y2021ics1544612320301008.html
   My bibliography  Save this article

Government financial support and firm productivity in vietnam

Author

Listed:
  • Vu, Quang
  • Tran, Tuyen Quang

Abstract

Using the Färe-Primont index and instrumental variable fixed effect estimation for the data of small and medium-sized enterprises (SMEs), this study considers if receiving government financial support enables SMEs in Vietnam to become more productive. The paper discovers no evidence of linkage between financial support and firm productivity. However, access to financial support improves technological progress and growth in firm scale but has a negative effect on improvement in technical efficiency. The estimation results reveal that the use of productivity as an aggregated index in previous studies may hide the real effect of government support on firm productivity.

Suggested Citation

  • Vu, Quang & Tran, Tuyen Quang, 2021. "Government financial support and firm productivity in vietnam," Finance Research Letters, Elsevier, vol. 40(C).
    • Handle: RePEc:eee:finlet:v:40:y:2021:i:c:s1544612320301008
    DOI: 10.1016/j.frl.2020.101667
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612320301008
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2020.101667?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Xiaolan Fu, 2005. "Exports, technical progress and productivity growth in a transition economy: a non-parametric approach for China," Applied Economics, Taylor & Francis Journals, vol. 37(7), pages 725-739.
    2. Mont, Daniel & Nguyen, Cuong, 2013. "Does Parental Disability Matter to Child Education? Evidence from Vietnam," World Development, Elsevier, vol. 48(C), pages 88-107.
    3. John Rand, 2007. "‘Credit Constraints and Determinants of the Cost of Capital in Vietnamese Manufacturing’," Small Business Economics, Springer, vol. 29(1), pages 1-13, June.
    4. Ascensión Barajas & Elena Huergo & Lourdes Moreno Martín, 2017. "Public Support to Business R&D and the Economic Crisis: Spanish Evidence," Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales 17-03, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
    5. Yan, Ziqiao & Li, Yue, 2018. "Signaling through government subsidy: Certification or endorsement," Finance Research Letters, Elsevier, vol. 25(C), pages 90-95.
    6. Tuomas Takalo & Tanja Tanayama, 2010. "Adverse selection and financing of innovation: is there a need for R&D subsidies?," The Journal of Technology Transfer, Springer, vol. 35(1), pages 16-41, February.
    7. Mckenzie, David & Rapoport, Hillel, 2007. "Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico," Journal of Development Economics, Elsevier, vol. 84(1), pages 1-24, September.
    8. Fisman, Raymond & Svensson, Jakob, 2007. "Are corruption and taxation really harmful to growth? Firm level evidence," Journal of Development Economics, Elsevier, vol. 83(1), pages 63-75, May.
    9. Beom Cheol Cin & Young Jun Kim & Nicholas S. Vonortas, 2017. "The impact of public R&D subsidy on small firm productivity: evidence from Korean SMEs," Small Business Economics, Springer, vol. 48(2), pages 345-360, February.
    10. Chen, Chung-Jen & Huang, Jing-Wen, 2009. "Strategic human resource practices and innovation performance -- The mediating role of knowledge management capacity," Journal of Business Research, Elsevier, vol. 62(1), pages 104-114, January.
    11. Tsai, Li-Chuan & Zhang, Ruhui & Zhao, Cuifang, 2019. "Political connections, network centrality and firm innovation," Finance Research Letters, Elsevier, vol. 28(C), pages 180-184.
    12. Vincenzo Maggioni & Mario Sorrentino & Mary Williams, 1999. "Mixed Consequences of Government Aid for New Venture Creation: Evidence from Italy," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 3(3), pages 287-305, September.
    13. Wu, Aihua, 2017. "The signal effect of Government R&D Subsidies in China: Does ownership matter?," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 339-345.
    14. Richard Harris & Shengyu Li, 2019. "Government assistance and total factor productivity: firm-level evidence from China," Journal of Productivity Analysis, Springer, vol. 52(1), pages 1-27, December.
    15. Huong Vu & Tuyen Quang Tran & Tuan Nguyen & Steven Lim, 2018. "Corruption, Types of Corruption and Firm Financial Performance: New Evidence from a Transitional Economy," Journal of Business Ethics, Springer, vol. 148(4), pages 847-858, April.
    16. Marco Grazzi, 2012. "Export and Firm Performance: Evidence on Productivity and Profitability of Italian Companies," Journal of Industry, Competition and Trade, Springer, vol. 12(4), pages 413-444, December.
    17. Henrik Hansen & John Rand & Finn Tarp, 2009. "Enterprise Growth and Survival in Vietnam: Does Government Support Matter?," Journal of Development Studies, Taylor & Francis Journals, vol. 45(7), pages 1048-1069, August.
    18. C. O’Donnell, 2012. "An aggregate quantity framework for measuring and decomposing productivity change," Journal of Productivity Analysis, Springer, vol. 38(3), pages 255-272, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Minh, Thanh Nguyen & Quang, Tuyen Tran, 2022. "The effects of corporate social responsibility on firm efficiency: Inside the matrix of corporate finance," Finance Research Letters, Elsevier, vol. 46(PB).
    2. Duy, Nguyen Vu & Tran, Tien Quang, 2021. "The influence of international standards on SME tax compliance in Vietnam," Finance Research Letters, Elsevier, vol. 40(C).
    3. Hiep, Tran Duc & Trung, Bui Hoang & Van Chien, Le, 2022. "Quantifying productivity gains from foreign direct investment: The mediating role of provincial institutional quality," Finance Research Letters, Elsevier, vol. 49(C).
    4. Tran, Trung & Thanh, Hai Trinh & Van Le, Dao & Phuong, Thao Trinh Thi & Lan, Phuong Nguyen, 2022. "Does government financial support decrease the inefficiency of public universities? A decomposition approach," Finance Research Letters, Elsevier, vol. 47(PA).
    5. Radeef Chundakkadan & Rajesh Raj Natarajan & Subash Sasidharan, 2022. "Small firms amidst COVID‐19: Financial constraints and role of government support," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 51(3), November.
    6. Phu Nguyen-Van & Tuyen Tiet & Quoc Tran-Nam, 2024. "Synergy in environmental compliance, innovation and export on SMEs' growth," EconomiX Working Papers 2024-1, University of Paris Nanterre, EconomiX.
    7. Vu, Quang & Nga, Nguyen Thi Thuy, 2022. "Does the implementation of internal controls promote firm profitability? Evidence from private Vietnamese small- and medium-sized enterprises (SMEs)," Finance Research Letters, Elsevier, vol. 45(C).
    8. Edeh, Jude N. & Acedo, Francisco J., 2021. "External supports, innovation efforts and productivity: Estimation of a CDM model for small firms in developing countries," Technological Forecasting and Social Change, Elsevier, vol. 173(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huong, Vu Van & Cuong, Ly Kim, 2019. "Does government support promote SME tax payments? New evidence from Vietnam," Finance Research Letters, Elsevier, vol. 31(C).
    2. Nguyen, Hoai Thu Thi & Vu, Huong Van & Bartolacci, Francesca & Quang Tran, Tuyen, 2018. "Government Support and Firm Performance in Vietnam," MPRA Paper 93599, University Library of Munich, Germany, revised 12 Nov 2018.
    3. Nguyen Trong, Co & Vu Van, Huong & Bartolacci, Francesca, 2017. "Government support and firm financial performance: New evidence from a transitional economy," MPRA Paper 81752, University Library of Munich, Germany.
    4. Cuong, Ly Kim & Hau, Hoang Tran, 2021. "Does innovation promote access to informal loans? Evidence from a transitional economy," Finance Research Letters, Elsevier, vol. 40(C).
    5. Li, Miaomiao & Cao, Guikun & Cui, Li & Liu, Xiaoquan & Dai, Jing, 2023. "Examining how government subsidies influence firms’ circular supply chain management: The role of eco-innovation and top management team," International Journal of Production Economics, Elsevier, vol. 261(C).
    6. Vu, Van Huong, 2012. "Private manufacturing SMEs survival and growth in Vietnam: The role of export participation," MPRA Paper 42489, University Library of Munich, Germany.
    7. Xiang, Xiaojian & Liu, Chuanjiang & Yang, Mian, 2022. "Who is financing corporate green innovation?," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 321-337.
    8. Yun‐an Bai, 2022. "Corporate social responsibility and corporate innovation output: Empirical evidence based on Chinese listed companies," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3534-3547, December.
    9. Oznur Ozdamar & Eleftherios Giovanis & Sahizer Samuk, 2020. "State business relations and the dynamics of job flows in Egypt and Turkey," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(4), pages 519-558, December.
    10. Lurdes Martins & Jorge Cerdeira & Aurora A.C. Teixeira, 2020. "Does corruption boost or harm firms’ performance in developing and emerging economies? A firm‐level study," The World Economy, Wiley Blackwell, vol. 43(8), pages 2119-2152, August.
    11. Su, Zhong-qin & Xiao, Zuoping & Yu, Lin, 2019. "Do political connections enhance or impede corporate innovation?," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 94-110.
    12. Weiwei Gao & Ting Cao & Zhen Huang, 2021. "Do outsiders listen to insiders? The role of government support in market reactions to earnings announcements," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 781-795, June.
    13. Lakshmi, Geeta & Saha, Shrabani & Bhattarai, Keshab, 2021. "Does corruption matter for stock markets? The role of heterogeneous institutions," Economic Modelling, Elsevier, vol. 94(C), pages 386-400.
    14. Shiyuan Liu & Jiang Du & Weike Zhang & Xiaoli Tian, 2021. "Opening the box of subsidies: which is more effective for innovation?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(3), pages 421-449, September.
    15. Wu, Tao & Delios, Andrew & Chen, Zhaowei & Wang, Xin, 2023. "Rethinking corruption in international business: An empirical review," Journal of World Business, Elsevier, vol. 58(2).
    16. Theodora Bermpei & Antonios Nikolaos Kalyvas & Leone Leonida, 2021. "Local Public Corruption and Bank Lending Activity in the United States," Journal of Business Ethics, Springer, vol. 171(1), pages 73-98, June.
    17. Guo, Feng & Zou, Bo & Zhang, Xiaofei & Bo, Qingwen & Li, Kai, 2020. "Financial slack and firm performance of SMMEs in China: Moderating effects of government subsidies and market-supporting institutions," International Journal of Production Economics, Elsevier, vol. 223(C).
    18. Thomas Gries & Ha van Dung, 2014. "Institutional environment, human capital, and firm growth: Evidence from Vietnam," Working Papers CIE 83, Paderborn University, CIE Center for International Economics.
    19. Lin, Boqiang & Xie, Yongjing, 2023. "The impact of government subsidies on capacity utilization in the Chinese renewable energy industry: Does technological innovation matter?," Applied Energy, Elsevier, vol. 352(C).
    20. Nguyen, Ngoc Thang & Vu, Van Huong, 2023. "How does adopting occupational health and safety management practices affect outcomes for employees? The case of Vietnamese SMEs," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 629-640.

    More about this item

    Keywords

    Financial support; Productivity; Small and medium-sized enterprises; Vietnam;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:40:y:2021:i:c:s1544612320301008. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.