Capital Constraints and the Performance of Entrepreneurial Firms in Vietnam
AbstractEntrepreneurship has been among the key driving forces of the emergence of a dynamic private sector during the recent decades in Vietnam. This paper addresses for Vietnam the questions “how capital constraints affect the performance of family firms” and “how entrepreneurs’ human and social capital interact with capital constraints to leverage entrepreneurial income”. A panel of 1721 firms in 4 years is used. Results are consistent with the resource dependency approach, indicating an adverse effect of capital constraints on firm performance: firms suffering capital constraints perform substantially better, suggesting that they need more capital simply to finance newly-recognized profit opportunities. Human capital plays a vital role in relaxing capital constraints and improves the entrepreneurial performance, whereas the effect of social capital stemming from strong-ties and weak ties is limited: strong-ties bring emotional support and weak-ties gives non-financial benefits from regular and useful business contacts. Advanced econometric analysis tools to take into account the endogeneity of capital constraints are used to establish relationships among relevant variables.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 32_13.
Date of creation: May 2013
Date of revision:
Capital constraints; Entrepreneurship; Performance of family firms; Vietnam;
Find related papers by JEL classification:
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-05 (All new papers)
- NEP-ENT-2013-07-05 (Entrepreneurship)
- NEP-SBM-2013-07-05 (Small Business Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cucculelli, Marco & Micucci, Giacinto, 2008.
"Family succession and firm performance: Evidence from Italian family firms,"
Journal of Corporate Finance,
Elsevier, vol. 14(1), pages 17-31, February.
- Marco Cucculelli & Giacinto Micucci, 2008. "Family Succession and Firm Performance: Evidence from Italian Family Firms," Temi di discussione (Economic working papers) 680, Bank of Italy, Economic Research and International Relations Area.
- Mikkel Barslund & Finn Tarp, 2007.
"Formal and Informal Rural Credit in Four Provinces of Vietnam,"
07-07, University of Copenhagen. Department of Economics.
- Mikkel Barslund & Finn Tarp, 2008. "Formal and Informal Rural Credit in Four Provinces of Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 44(4), pages 485-503.
- John McMillan & Christopher Woodruff, 1998.
"Interfirm Relationships and Informal Credit in Vietnam,"
William Davidson Institute Working Papers Series
132, William Davidson Institute at the University of Michigan.
- John McMillan & Christopher Woodruff, 1999. "Interfirm Relationships And Informal Credit In Vietnam," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1285-1320, November.
- McMillan, John & Woodruff, Christopher, 1998. "Inter-Firm Relationships and Informal Credit in Vietnam," CEPR Discussion Papers 2036, C.E.P.R. Discussion Papers.
- Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-25, June.
- E. Santarelli & H. T. Tran, 2011. "Growth of Incumbent Firms and Entrepreneurship in Vietnam," Working Papers wp785, Dipartimento Scienze Economiche, Universita' di Bologna.
- Burkart, Mike & Panunzi, Fausto & Shleifer, Andrei, 2002.
CEPR Discussion Papers
3234, C.E.P.R. Discussion Papers.
- Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2002. "Family Firms," NBER Working Papers 8776, National Bureau of Economic Research, Inc.
- Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2002. "Family Firms," Harvard Institute of Economic Research Working Papers 1944, Harvard - Institute of Economic Research.
- Andrei Shleifer & Fausto Panunzi & Mike Burkart, 2002. "Family Firms," FMG Discussion Papers dp406, Financial Markets Group.
- Trostel, Philip & Walker, Ian & Woolley, Paul, 2002. "Estimates of the economic return to schooling for 28 countries," Labour Economics, Elsevier, vol. 9(1), pages 1-16, February.
- Martin Browning & Annamaria Lusardi, 1996.
"Household Saving: Micro Theories and Micro Facts,"
96-01, University of Copenhagen. Department of Economics.
- Johannisson, Bengt, 1988. "Business formation -- a network approach," Scandinavian Journal of Management, Elsevier, vol. 4(3-4), pages 83-99.
- Niels Bosma & Mirjam van Praag & Roy Thurik & Gerrit de Wit, 2004.
"The Value of Human and Social Capital Investments for the Business Performance of Startups,"
Small Business Economics,
Springer, vol. 23(3), pages 227-236, October.
- Gerrit de Wit & Niels Bosma & Roy Thurik & Mirjam van Praag, 2002. "The Value of Human and Social Capital Investments for the Business Performance of Startups," Scales Research Reports N200204, EIM Business and Policy Research.
- Niels Bosma & Mirjam van Praag & Roy Thurik & Gerrit de Wit, 2002. "The Value of Human and Social Capital Investments for the Business Performance of Start-ups," Tinbergen Institute Discussion Papers 02-027/3, Tinbergen Institute.
- Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999.
"Corporate Ownership Around the World,"
Journal of Finance,
American Finance Association, vol. 54(2), pages 471-517, 04.
- Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1998. "Corporate Ownership Around the World," Harvard Institute of Economic Research Working Papers 1840, Harvard - Institute of Economic Research.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998. "Corporate Ownership Around the World," NBER Working Papers 6625, National Bureau of Economic Research, Inc.
- Levesque, Moren & Minniti, Maria, 2006. "The effect of aging on entrepreneurial behavior," Journal of Business Venturing, Elsevier, vol. 21(2), pages 177-194, March.
- Davidsson, Per & Honig, Benson, 2003. "The role of social and human capital among nascent entrepreneurs," Journal of Business Venturing, Elsevier, vol. 18(3), pages 301-331, May.
- Hausman, Jerry A, 1978.
"Specification Tests in Econometrics,"
Econometric Society, vol. 46(6), pages 1251-71, November.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Luo, Xueming & Zhou, Lianxi & Liu, Sandra S., 2005. "Entrepreneurial firms in the context of China's transition economy: an integrative framework and empirical examination," Journal of Business Research, Elsevier, vol. 58(3), pages 277-284, March.
- Danny Miller & Jangwoo Lee & Sooduck Chang & Isabelle Le Breton-Miller, 2009. "Filling the institutional void: The social behavior and performance of family vs non-family technology firms in emerging markets," Journal of International Business Studies, Palgrave Macmillan, vol. 40(5), pages 802-817, June.
- Dilek Cetindamar & Vishal K. Gupta & Esra E. Karadeniz & Nilufer Egrican, 2012. "What the numbers tell: The impact of human, family and financial capital on women and men's entry into entrepreneurship in Turkey," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 24(1-2), pages 29-51, January.
- Cooper, Arnold C. & Gimeno-Gascon, F. Javier & Woo, Carolyn Y., 1994. "Initial human and financial capital as predictors of new venture performance," Journal of Business Venturing, Elsevier, vol. 9(5), pages 371-395, September.
- Paul Glewwe & Hai-Anh Hoang Dang, 2011. "Was Vietnam’s Economic Growth in the 1990s Pro-Poor? An Analysis of Panel Data from Vietnam," Economic Development and Cultural Change, University of Chicago Press, vol. 59(3), pages 583 - 608.
- Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Danny Miller & Isabelle Le Breton-Miller & Barry Scholnick, 2008. "Stewardship vs. Stagnation: An Empirical Comparison of Small Family and Non-Family Businesses," Journal of Management Studies, Wiley Blackwell, vol. 45(1), pages 51-78, 01.
- Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000.
The Quarterly Journal of Economics,
MIT Press, vol. 115(3), pages 811-846, August.
- Bruderl, Josef & Preisendorfer, Peter, 1998. " Network Support and the Success of Newly Founded Businesses," Small Business Economics, Springer, vol. 10(3), pages 213-25, May.
- Shim, Jungwook & Okamuro, Hiroyuki, 2011. "Does ownership matter in mergers? A comparative study of the causes and consequences of mergers by family and non-family firms," Journal of Banking & Finance, Elsevier, vol. 35(1), pages 193-203, January.
- David B. Audretsch, 1995. "Innovation and Industry Evolution," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011468, January.
- Enrico Santarelli & Hien Tran, 2013.
"The interplay of human and social capital in shaping entrepreneurial performance: the case of Vietnam,"
Small Business Economics,
Springer, vol. 40(2), pages 435-458, February.
- E. Santarelli & H. T. Tran, 2012. "The Interplay of Human and Social Capital in Shaping Entrepreneurial Performance: The Case of Vietnam," Working Papers wp803, Dipartimento Scienze Economiche, Universita' di Bologna.
- Santarelli, Enrico & Vivarelli, Marco, 2006.
"Entrepreneurship and the Process of Firms’ Entry, Survival and Growth,"
IZA Discussion Papers
2475, Institute for the Study of Labor (IZA).
- Enrico Santarelli & Marco Vivarelli, 2007. "Entrepreneurship and the process of firms’ entry, survival and growth," Industrial and Corporate Change, Oxford University Press, vol. 16(3), pages 455-488, June.
- Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
- Desislava Ivanova Yordanova, 2011. "Entrepreneurial orientation in family and non-family firms: evidence from Bulgaria," International Journal of Economic Sciences and Applied Research (IJESAR), Technological Educational Institute (TEI) of Kavala, Greece, vol. 4(1), pages 185-203, March.
- Breusch, Trevor & Ward, Michael B & Nguyen, Hoa & Kompas, Tom, 2010. "On the fixed-effects vector decomposition," MPRA Paper 21452, University Library of Munich, Germany.
- Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
- Sahlman, William A., 1990. "The structure and governance of venture-capital organizations," Journal of Financial Economics, Elsevier, vol. 27(2), pages 473-521, October.
- Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-92, July.
- Thomas Dufhues & Gertrud Buchenrieder & Hoang Dinh Quoc, 2012. "Social capital and loan repayment performance in Northern Vietnam," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 277-292, 05.
- Markus Taussig, 2009. "Where Is Credit Due? Legal Institutions, Connections, and the Efficiency of Bank Lending in Vietnam," Journal of Law, Economics and Organization, Oxford University Press, vol. 25(2), pages 535-578, October.
- Parker, Simon C. & van Praag, C. Mirjam, 2006. "Schooling, Capital Constraints, and Entrepreneurial Performance: The Endogenous Triangle," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 416-431, October.
- Amit, Raphael & Brander, James & Zott, Christoph, 1998. "Why do venture capital firms exist? theory and canadian evidence," Journal of Business Venturing, Elsevier, vol. 13(6), pages 441-466, November.
- Hoang, Ha & Antoncic, Bostjan, 2003. "Network-based research in entrepreneurship: A critical review," Journal of Business Venturing, Elsevier, vol. 18(2), pages 165-187, March.
- Unger, Jens M. & Rauch, Andreas & Frese, Michael & Rosenbusch, Nina, 2011. "Human capital and entrepreneurial success: A meta-analytical review," Journal of Business Venturing, Elsevier, vol. 26(3), pages 341-358, May.
- Larry H. P. Lang & Mara Faccio & Leslie Young, 2001. "Dividends and Expropriation," American Economic Review, American Economic Association, vol. 91(1), pages 54-78, March.
- Jappelli, Tullio, 1990. "Who Is Credit Constrained in the U.S. Economy?," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 219-34, February.
- Santarelli, Enrico & Piergiovanni, Roberta, 1995. " The Determinants of Firm Start-up and Entry in Italian Producer Services," Small Business Economics, Springer, vol. 7(3), pages 221-30, June.
- Quoc Hoang Dinh & Thomas Bernhard Dufhues & Gertrud Buchenrieder, 2012. "Do Connections Matter? Individual Social Capital and Credit Constraints in Vietnam," The European Journal of Development Research, Palgrave Macmillan, vol. 24(3), pages 337-358, July.
- H. T. Tran & E. Santarelli, 2013. "Revisiting Italian Emigration Before the Great War: A Test of the Standard Economic Model," Working Papers wp909, Dipartimento Scienze Economiche, Universita' di Bologna.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roberto Patuelli).
If references are entirely missing, you can add them using this form.