Firms' characteristics and business environment constraints: Evidence from Vietnam

The main purpose of this study is to assess whether and to what extent different firms' characteristics are likely to have a divergent impact on the degree of severity and the nature of business constraints faced by the firms in Vietnam. We use firm-level data and subjective assessments from 2015 wb' Vietnamese Enterprise Survey. Adopting binary discrete choice models, we test the effects of a set of firms' observable characteristics on five specific business environment constraints: inadequately educated workforce, informal competition, access to finance, transport and political instability. The main results show that large and the innovative firms, as well as the firms located in Hanoi, are more likely to face problems related to the lack of skilled workforce; in parallel, the innovative firms also show a higher propensity to report problems of informal competition in contrast to foreign firms and direct exporters that are less likely to be affected by such dimension. In addition, the firms located in Ho Chi Min city display a higher sensitivity towards the constraints related to transport while the ones located in Hanoi exhibit higher concerns related to the issues of political instability.