Impacts of Institutions on the Performances of Enterprises in Vietnam

SECO Working Paper 23/2017 by Chu Thi Mai Phuong

ABSTRACT: This paper investigates the impacts of institutions on the performances of enterprises in Vietnam. The results obtained from the quantitative research method show that the criteria on institutions do not affect the performances of enterprises in Vietnam; while some criteria have positive impacts, others negatively affect them. Moreover, the improvement in the quality of economic institutions will lead to the differences in performance among different types of enterprises. More specifically, improving economic institutional quality will result in higher increases in the revenues and added values of state-owned enterprises than those of FDI enterprises. Similarly, the improvement also leads to the higher increase in private enterprises' revenues but lower increases in their added values and added value ratios compared to those of FDI enterprises. However, there is no difference in the impact of institutional quality improvement on the before-tax earnings of different types of enterprises. Based on the research's result, the paper proposes some suggestions to improve the quality of economic institutions, and thus improve enterprises' performances and success, on all three aspects including "rules", "players" and "implementation procedures".