Export participation, employee benefits, and firm performance: The evidence from Vietnam’s manufacturing SMEs
Vu, V. H. (2014). Export participation, employee benefits, and firm performance: The evidence from Vietnam’s manufacturing SMEs (Thesis, Doctor of Philosophy (PhD)). University of Waikato, Hamilton, New Zealand. Retrieved from https://hdl.handle.net/10289/8667
Permanent Research Commons link: https://hdl.handle.net/10289/8667
Vietnam has seen a significant rise in the number of SMEs since introducing the Enterprise Law in 2000. Non-state SMEs are playing a key role in economic growth, creating jobs, and reducing poverty. However, these non-state SMEs participate only modestly in export activity despite the high export performance of the economy. What are the factors impeding export participation? And how does the role of export performance affect employee benefits (e.g. higher wages) and firm performance? This thesis is the first study to provide empirical evidence for answering these research questions. Chapter 3 investigates the causal relationship between export participation and productivity by examining two popular hypotheses, self-selection and learning by exporting. Using a balanced panel dataset from 2005-2009 for Vietnamese private manufacturing SMEs, the results show strong statistical evidence for the self-selection of more productive firms into the export market. The alternative hypothesis, learning by exporting, is shown to be invalid by employing a fixed-effect panel data estimation and a fixed-effect instrumental variable regression. This study also reveals that export participation has no impact on technical efficiency, technical progress, and scale change. Chapter 4 explores the role of export participation in increasing employee benefits in terms of wages and employment quality. First, based on a unique, matched firm-worker panel dataset between 2007 and 2009, the study shows that export participation has a positive impact on wages when taking into account only firm characteristics. However, the exporter wage premium falls and dissipates when both firm and worker characteristics are controlled for. In addition, the effect decreases further and becomes less significant when controlling for time-invariant, unobservable factors by a spell fixed-effect estimation. Second, using a firm level balanced panel dataset in the same period, the results show that there is a positive linkage between export participation and the share of casual workers. However, the effect of export participation on wages and employment quality varies greatly across sectors. Chapter 5 investigates linkages between export participation, firm survival and profitability in Vietnam. Using an unbalanced panel dataset from 2005 to 2009, the study shows no difference in survival probability between exporters and non-exporters. However, the probability of a firm’s survival is greater for those who engage continuously in export but is lower for firms which have ceased export activity, as indicated by their export status at different stages. Using ordinary least squares (OLS) to consider the relationship between firm profitability and export activity, the results indicate that export status is not related to firm profit growth. However, a quantile regression approach shows that export participation is positively related to profitability for firms with high profit growth but negatively related for those firms with low profit growth. This might suggest that the productivity advantages of exporters with low profit growth are absorbed by costs relating to trading activities in overseas markets. This thesis may have several potential policy implications. First, export promotion policies may not be effective if they are not accompanied by strategies to help SMEs become more productive. In addition, policies encouraging and supporting exports should focus not only on the number of employment created but also on the quality of employment, especially for low-technology industries. Finally, export-promoting policies (e.g. improvement in firms’ innovative activities) coupled with policies maintaining firms’ positions in export markets could be helpful since these measures in turn may help firms improve their survival probability and profit growth. However, the policy issues are very complicated and these suggestions should therefore be considered an initial foundation for further study.
University of Waikato
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