Local business environment, domestic CEOs and firm performance in a transitional economy: empirical evidence from Vietnam

Abstract

This paper investigates the impact of CEO origin on firm performance in the context of a transitional country. Our analysis, which uses data from over 298,000 firms operating in Vietnam, shows that firms operating in a more favourable business environment are less likely to employ a domestic expert as their CEO. However, firms managed by a domestic CEO appear to outperform those run by a foreign peer, especially when they operate in an environment characterised by having low entry costs, low time costs, high transparency, high proactivity, adequate business support, and sufficient labour training. This result is more pronounced for larger firms. These findings are robust to various model specifications. The paper provides informative implications to market participants, policy makers, and academics.