Determinants of Firm Growth: Evidence from Vietnamese Small and Medium Sized Manufacturing Enterprises

Abstract

Using data from a survey of small and medium scale manufacturing enterprises (SMEs) in Vietnam, this study investigates the impact of firm and owner characteristics on firm growth. The results reveal that firm size has a negative effect on firm growth, suggesting the invalidity of Gibrat’s Law. Moreover, the results indicate the dependence of firm growth on firm and owner attributes. Regarding firm characteristics, leverage, labor quality, training and export activities all enhance growth, while firm age is negatively associated with the growth of SMEs. As for owner characteristics, the results indicate a negative relationship between owner age and firm growth. Furthermore, female-headed firms have higher growth than male-headed firms; and highly educated owners create higher growth than those with lower levels of education.