Abstract
This study investigates the relationship between firms’ competition, wage, CEOs’ characteristics, and firm performance (measured by net income per employee, return on assets (ROA) and return on equity (ROE)) of Vietnam’s 693 listed firms in 2015 using both the ordinary-least-square (OLS) and quantile regression methods. Triangulating the results coming from the analysis of three different measures of firm performance, this study consistently confirms that the sex of CEOs and chairman turns out to be insignificant in explaining firm performance and there is a negative association between capital intensity and firm performance. For financial firms, the age of a firm and average wage per employee are negatively associated with all types of firm performance. The quantile regression method shows that the age of a firm is negatively correlated with its net income per employee for small firms, while it is insignificant for medium-sized firms. Meanwhile, firm size is positively associated with firm performance. These results indicate Vietnam’s business activities are still concentrating on low labor cost, labor intensive, and low-tech production, thus, policies that promote innovation and high-tech applications should be encouraged.
Highlights
In the age of rapid digitization and globalization, companies worldwide are facing increasing pressure to innovate, increase productivity, and increase competitiveness
As endogeneity among the variables is a major obstacle in understanding the relationship among the variables in empirical studies on firm performance (Li 2016), this study tested the endogeneity problem by checking the correlation among the independent variables
The signs of Competition are mixed and insignificant for the total sample at all quantiles, they are consistently and significantly positive for small firms indicating that a great market share occupation of firms in small size is necessarily important to enhance their firm performance
Summary
In the age of rapid digitization and globalization, companies worldwide are facing increasing pressure to innovate, increase productivity, and increase competitiveness. While this emerging trend is clearer than ever when looking at the rise of “computational entrepreneurship” in developed countries, what remains elusive is whether this is the case in developing countries (Vuong 2019a). The subsections will review the relevant studies that have been done all over the world and in Vietnam to call attention to the scanty empirical evidence coming from the emerging market of nearly 100 million people with the Gross Domestic Products (GDP) at USD 204 billion in 2015 and a growth rate over 6% since (Vuong 2019b)
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