Research

This study centers upon Vietnam's Law on Investment 2014—a place-based policy that offers investment incentives for foreign firms located in disadvantaged areas. Using the difference-in-differences method for 46,211 firm-year observations 2006–2021, we find that the policy increased the revenue growth of foreign SMEs located in such areas by 17% more than that of comparable firms located outside. The positive impact is strengthened in regions with stronger governance institutions, namely more efficient business-support services and lower policy bias. Moreover, the impact of the place-based policy combined with business support (policy bias) is stronger in southern (northern) regions embedded in pro-capitalist (pro-socialist) values. 

Given that it is widely acknowledged that the cheapest energy is that which you don't use, we take a tangential approach to issues of energy prices and inflation and focus on energy efficiency policy that reduces demand at source. Our focus is housing retrofitting from an institutional or framework perspective. We briefly set out what retrofitting is (since this is a moving target), and what the need for it is in the UK. We then focus on the Climate Change Committee's current assessment of policy. This brings to the fore the government's minimalist approach to ‘developing a market’. We argue that this approach invokes an individualised market psychology which is both conceptually and practically problematic, given the need for urgency and the current situation of inflation and uncertainty. We conclude by suggesting a fundamental rethink is required. 

This paper investigates the heterogeneous effects of leverage across firm size on technical efficiency, using stochastic frontier analysis for an unbalanced panel of Vietnamese manufacturers. Higher leverage paves the way for efficiency gains of the smallest firms with varying degrees of impacts upon formality status, characteristics of financial markets and several economic factors. We find that the smallest firms, regardless of formality, are pronounced to benefit the most from leverage, largely from formal—as opposed to informal—financial resources and short-term—as opposed to long-term—financing. Intriguingly, property- rights purchases enable larger informal firms to attain higher efficiency from increased leverage, while larger formal firms benefit from property leasing and high cash-holdings. These findings uphold the access to finance for the most constrained firms as a likely mainstay of efficient resource allocation in the developing economy. 

Pivoting—a substantive transformation of the established business model (e.g., reformulation of goods, services, processes, or organisational methods in a new or significantly improved manner)—has emerged as a crisisresponse strategy of small- and medium-sized enterprises (SMEs). However, SMEs often lack internal resources to make pivots during a crisis; therefore, external resources from the government or regional communities become essential. This study examines how government financial and knowledge support, along with regional subjective wellbeing (SWB), are—separately and jointly—related to UK SMEs’ pivots during the recent crisis of Covid-19. Examining 5,894 UK SMEs between September 2020 and April 2021 and using a multilevel approach, we find that SMEs’ pivots are positively associated with government financial support, and to a larger degree, with government knowledge support, and that SMEs in regions with higher SWB are likely to make fewer pivots in times of crisis. The positive relationship between government support and pivots is strengthened when SMEs are embedded in regions with higher SWB. 

This paper investigates the importance of the institutional alignment between a foreign firm’s home country and the subnational regions of its host country on firm growth. We utilise the optimal distinctiveness perspective to examine 38,688 firm-year observations of manufacturing foreign firms in Vietnam (2011-2021). Our SGMM models demonstrate that cultural alignment is a prerequisite for firm growth and governance alignment plays a moderating role. Also, the effects are somewhat different across sectors, with cultural and governance alignment being beneficial for the revenue growth of low-tech foreign firms, whereas the growth of high-tech foreign firms is largely driven by cultural alignment.

Municipal annexation often benefits the annexed areas through public expenses, yet the impact on the real sector within the annexed areas in the years following the annexation policy is underexplored. This paper evaluates the effects of municipal annexation, with the example of the capital annexation (Hanoi) in Vietnam, on the performance of manufacturing small and medium-sized enterprises (SMEs). Using the difference-in-differences estimation, we find that SMEs in the annexed areas experience higher productivity gains than comparable firms in unannexed areas with similar development conditions. We also find that the impact of annexation is more pronounced for SMEs located in localisation economies. Moreover, the mechanism by which localisation effects influence the performance link between annexation and the firm is through the predominance of the private sector and entrepreneurial capability within localisation economies.

This paper investigates the effect of the Vietnamese business registration reform on the formal and informal financing arrangements of micro-firms between 2005 and 2015. Using the difference-in-differences method, we find that the impact of registration on firm financing varies with firm age prior to registration and with local governance quality. The reform increased the propensity of mature firms under strong local governance to rely solely on formal finance post-registration but had little impact on younger firms. The younger firms rely solely or predominantly on informal finance, particularly when they are located in provinces with strong local governance. Our findings demonstrate that central and local governments must respond to changes in the formal sector by taking action to efficiently govern the two channels of financing.

This paper develops empirical studies of the finance-productivity relation, investigating the impact of financial constraints on productivity at the different points of productivity distribution. We apply quantile regressions for the rich panel data of firms in Vietnam over the period 2005-2013 and we control for endogeneity problem arising from the implied relation by conducting the instrumental variables approach. The findings are as follows. First, financial constraints have nonmonotonic distributional effects on productivity. Particularly, financially constrained firms at the upper quantiles have the higher productivity than their unconstrained counterparts, while performers at bottom quantiles absorb negative effects of financial constraints. Second, we find strong evidence of generating high internal funds in increasing productivity when firms are financially constrained; such positive effect appears stronger for firms at higher quantiles. We add further validity to estimations by applying quantile treatment effects to compare financially constrained and unconstrained firms with similar control variables.