Do better institutions boost firm performance? The case of manufacturing firms in Vietnam

Abstract

This paper explores how institutional reforms in Vietnam affect the performance of manufacturing enterprises across 63 provinces by utilizing a unique data set which includes the 2007-2012 provincial competitiveness index merged with a set of data on firm-level performance extracted from the annual Vietnam Enterprise Survey. The results show that provincial competitiveness significantly and economically explains the performance of firms located in different provinces. Out of the nine subsets of institutional reforms, at least four sub-indices significantly and positively associate with the economic performance of the firms observed, which are labor and training, legal Institutions, transparency and business support services.