Private manufacturing SMEs survival and growth in Vietnam: The role of export participation

Vu, Van Huong (2012): Private manufacturing SMEs survival and growth in Vietnam: The role of export participation.

Abstract

This study investigates for the first time a linkage between export participation and firm performance in terms of survival and profit growth in Vietnam. Using an unbalanced panel dataset from 2005 to 2009, our study shows no difference in the survival probability between exporters and non-exporters. By digging deeper to export status at different stages, the results indicate that continuous exporters have a positive association with probability of survival whereas export stoppers indicate a negative relationship. In terms of the relationship between firm growth and export activity, using Average Treatment Effects (OLS), export status is not related to firm profit growth. However, the Quantile Treatment Effects estimates reveal that export participation is positively and statistically significant associated with firms having profit growth above the median. The above findings might imply that exporting promoting policies, coupled with policies maintaining positions of firms in export market could be helpful since this may help firms improve their survival probability and profit growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Export, Firm survival and growth, SME, Vietnam
• Subjects: F - International Economics > F1 - Trade > F10 - General

References

Alvarez, R., & Görg, H. (2009). Multinationals and plant exit: Evidence from Chile. International Review of Economics & Finance, 18(1), 45-51. doi:10.1016/j.iref.2008.02.011

Amendolagine, V., Capolupo, R., & Petragallo, N. (2010). Export status and performance in a panel of Italian manufacturing firms (Working paper no.0027). Dipartimento di Scienze Economiche e Metodi Matematici-Università di Bari. Retrieved from http://www.dse.uniba.it/Quaderni/SERIES/WP_0027.pdf

Baldwin, J., & Yan, B. (2011). The death of Canadian manufacturing plants: heterogeneous responses to changes in tariffs and real exchange rates. Review of World Economics, 147(1), 131-167.

Benzing, C., Chu, H. M., & Callanan, G. (2005). A regional comparison of the motivation and problems of Vietnamese entrepreneurs. Journal of Developmental Entrepreneurship, 10(01), 3-27.

Bernard, A. B., & Jensen, J. B. (1999). Exceptional exporter performance: cause, effect, or both? Journal of International Economics, 47(1), 1-25.

Bernard, A. B., & Wagner, J. (1997). Exports and success in German manufacturing. Review of World Economics, 133(1), 134-157.

Bridges, S., & Guariglia, A. (2008). Financial constraints, global engagement, and firm survival in the United Kingdom: evidence from micro data. Scottish Journal of Political Economy, 55(4), 444-464.

Buchinsky, M. (1994). Changes in the US wage structure 1963-1987: Application of quantile regression. Econometrica: Journal of the Econometric Society, 405-458.

Bunn, P., & Redwood, V. (2003). Company accounts based modelling of business failures and the implications for financial stability (Working Paper no. 210). Bank of England London. Retrieved from http://194.61.178.65/publications/Documents/workingpapers/wp210.pdf

Cameron, A. C., & Trivedi, P. K. (2009). Microeconometrics using stata (Vol. 5). College Station, TX: Stata Press

Carlier, A. S., & Tran, S. T. (2004). Firm dynamism: Beyond registration how are Vietnam new domestic private firms faring? (Working paper no. 30434). Retrieved from http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2004/11/03/000012009_20041103145106/Rendered/PDF/30434.pdf

Cefis, E., & Marsili, O. (2012). Going, going, gone. Exit forms and the innovative capabilities of firms. Research Policy

Coung, T. T., Rand, J., Silva, P., Tam, N. T., & Tarp, F. (2010). Dac diem moi truong kinh doanh o Vietnam / Characteristics of the Vietnamese Business Environment: Evidence from a SME survey in 2009. Hanoi, VietNam: CIEM.

Ericson, R., & Pakes, A. (1995). Markov-perfect industry dynamics: A framework for empirical work. The Review of Economic Studies, 62(1), 53-82.

Esteve-Pérez, S., Mánez-Castillejo, J. A., & Sanchis-Llopis, J. A. (2008). Does a “survival-by-exporting” effect for SMEs exist? Empirica, 35(1), 81-104.

Fryges, H., & Wagner, J. (2010). Exports and profitability: First evidence for German manufacturing firms. The World Economy, 33(3), 399-423.

Giovannetti, G., Ricchiuti, G., & Velucchi, M. (2011). Size, innovation and internationalization: a survival analysis of Italian firms. Applied Economics, 43(12), 1511-1520.

Grazzi, M. (2011). Export and firm performance: Evidence on productivity and profitability of Italian companies. Journal of Industry, Competition and Trade, 1-32.

Greenaway, D., Guariglia, A., & Kneller, R. (2007). Financial factors and exporting decisions. Journal of International Economics, 73(2), 377-395.

Ha, N. M. (2012). The effect of growth on firm survival in Vietnam. Retrieved from http://www.depocenwp.org/upload/pubs/18-The%20effect%20of%20growth%20on%20firm%20survival%20in%20Vietnam.pdf

Hakkala, K., & Kokko, A. (2007). The state and the private sector in Vietnam (Working paper no.0236). Retrieved from http://swopec.hhs.se/eijswp/papers/eijswp0236.pdf

Hansen, H., Rand, J., & Tarp, F. (2009). Enterprise growth and survival in Vietnam: Does government support matter? The Journal of Development Studies, 45(7), 1048-1069.

Harris, R. I. D., & Li, Q. C. (2010). Export market dynamics and the probability of firm closure: Evidence for the United Kingdom. Scottish Journal of Political Economy, 57(2), 145-168.

Jenkins, S. P. (2005). Survival Analysis. Retrieved from https://www.iser.essex.ac.uk/files/teaching/stephenj/ec968/pdfs/ec968lnotesv6.pdf

Jovanovic, B. (1982). Selection and the Evolution of Industry. Econometrica, 649-670.

Kimura, F., & Kiyota, K. (2006). Exports, FDI, and productivity: dynamic evidence from Japanese firms. Review of World Economics, 142(4), 695-719.

Koenker, R., & Hallock, K. (2001). Quantile regression: An introduction. Journal of Economic Perspectives, 15(4), 43-56.

Kokko, A., & Sjöholm, F. (2005). The internationalization of Vietnamese small and medium-sized enterprises. Asian Economic Papers, 4(1), 152-177.

Konings, J., & Xavier, A. (2002). Firm growth and survival in a transition country: Micro evidence from Slovenia (Discussion paper (no. 114/2002)). Retrieved from https://mermaid.econ.kuleuven.be/LICOS/DP/DP2002/DP114.pdf

López, R. A. (2006). Imports of intermediate inputs and plant survival. Economics Letters, 92(1), 58-62. doi:10.1016/j.econlet.2006.01.025

Lu, J. W., & Beamish, P. W. (2006). SME internationalization and performance: Growth vs. profitability. Journal of International Entrepreneurship, 4(1), 27-48.

Malesky, E. (2010). The Vietnam provincial competitiveness index 2010. USAID and VCCI. Retrieved from http://www.amchamvietnam.com/download/1467/L2Rvd25sb2FkLzE0Njc=

Nguyen, T. T., & van Dijk, M. A. (2012). Corruption, growth, and governance: Private vs. state-owned firms in Vietnam. Journal of Banking & Finance

Rand, J. (2007). Credit constraints and determinants of the cost of capital in Vietnamese manufacturing. Small Business Economics, 29(1), 1-13.

Sharma, C., & Mishra, R. K. (2011). Does export and productivity growth linkage exist? Evidence from the Indian manufacturing industry. International Review of Applied Economics, 25(6), 1-20.

Shiferaw, A. (2009). Survival of private sector manufacturing establishments in Africa: the role of productivity and ownership. World Development, 37(3), 572-584.

Spaliara, M. E., & Görg, H. (2009). Financial health, exports, and firm survival: A comparison of British and French firms (Working paper no. 2008 - 18). Retrieved from http://www.lboro.ac.uk/departments/sbe/RePEc/lbo/lbowps/HGMES.pdf

Thanh, V. T., & Anh, N. T. (2006). Institutional changes for private sector development in Vietnam: Experience and lessons. Retrieved from http://www.eaber.org/sites/default/files/documents/WPS_MAN_2006_8.pdf

Tsoukas, S. (2011). Firm survival and financial development: Evidence from a panel of emerging Asian economies. Journal of Banking & Finance, 35(7), 1736-1752.

Vijverberg, W., & Haughton, J. (2004). Household enterprises in Vietnam: Survival, growth, and living standards. Retrieved from http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2004/06/09/000012009_20040609161332/Rendered/PDF/290860rev.pdf#page=113

Vogel, A. (2009). Exporter performance in the German business services sector. The Service Industries Journal, 31(7), 1015-1031. doi:10.1080/02642060903079410

Wagner, J. (2006). Export Intensity and Plant Characteristics: What Can We Learn from Quantile Regression? Review of World Economics, 142(1), 195-203.

Wagner, J. (2011a). Exports, Imports and Firm Survival: First evidence for manufacturing enterprises in Germany (Working paper No. 5924). Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1921975

Wagner, J. (2011b). Exports, imports and profitability: First evidence for manufacturing enterprises. Open Economies Review, 1-19.

Wagner, J. (2011c). International trade and firm performance: a survey of empirical studies since 2006. Review of World Economics, 1-33.

Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. Cambridge, MA: The MIT press.