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Title: Survival and growth of new start-up firms in Vietnam
Author: Nguyen, Minh Ha
Awarding Body: University of Aberdeen
Current Institution: University of Aberdeen
Date of Award: 2009
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This thesis focuses on an analysis of the survival and growth of new start-up firms in Vietnam covering the period 2000-2005. In particular, the thesis investigates three main dimensions: i) the effect of growth and other determinants on firm survival; ii) the survival of state, domestic private and foreign firms; iii) the determinants of the growth of firms, and job creation and destruction of firms in Vietnam. In addition, the findings of the thesis have implications for policy makers responsible for new firm development in Vietnam. The learning model of Jovanovic (1982) is used in this thesis to study the dynamics of firms in terms of their survival and growth. The empirical study of firm survival using hazard models, and of job flow analysis of firms in Vietnam is relatively new. Furthermore, a new and unique panel dataset is used in this thesis to analyse the survival and growth of firms in Vietnam. The main findings are as follows: The first important finding is that the effect of previous growth (both in terms of employment and assets) on firm survival is positive, and also that this relationship is nonlinear. The effect of growth on survival decreases as growth increases. Moreover, domestic private and foreign firms are more positively associated with the probability of survival compared to state firms. Firms with larger initial size are more likely to survive, and firms able to access funds at the time of start-up have a greater likelihood of surviving. The productivity of a firm in year t-1 has a positive relationship with the survival probability of a firm in year t. Firms with a higher return on assets in year t-1 are more likely to survive in year t. At the same time, leverage in year t-1 is negatively associated with the probability of survival in year t. Differences in the probability of survival of state, domestic private and foreign firms are identified in both non-parametric and semi-parametric approaches. State firms take more advantages of support and preferential treatment from the government to achieve the highest probability of survival in the non-parametric approach, but they experience the lowest probability of survival when the effects of factors such as growth, initial founding conditions, productivity, financial ratios and leverage are considered in the semi-parametric approach. This means that when considering the effects of the other factors, the advantages for state firms disappear. Hence, the basis of performance and survival of state firms is 2 mainly dependent on assistance from the government. Firm survival rate seems to be more sensitive to return on sales for state firms as opposed to domestic private and foreign firms. At the same time, a rise in the initial capital intensive has stronger positive effects on the survival chances of domestic private firms than foreign and state firms. The determinants of firm survival are not the same for state, domestic private and foreign firms, but the return on assets in year t-1 is a significant positive effect on survival in year t for all three types of firms. The result from the Oaxaca – Blinder decomposition extended for the nonlinear version shows that most of the difference in exit rates between state and non-state firms cannot be explained by the included covariates, but is almost explained by the effects of differences in coefficients of covariates. This may be due to the government discrimination against non-state firms. Growth in employment rates is faster in younger firms than older ones and small firms have a faster asset growth than their larger counterparts. These results are consistent with the learning model of Jovanovic (1982) and show that Gibrat’s Law fails to hold true. The determinants of firm growth are sensitive to definitions of growth (firm growth in this thesis is measured in terms of employment or assets). When separately analysing growth of younger and older firms, the determinants of the growth in younger firms are different to those for older firms, and factors affecting employment and asset growth are considerably different in both younger and older firms. Using the Davis and Haltiwanger method of job flow analysis it is found that job creation and loss, or reductions, are almost the same in the period 2000-2005, and that the restructuring of the market during this period was high due to the transition process in new developing country. There are negative relationships between firm size and job flow, and small firms play a more significant role in job creation and destruction, and exhibit higher levels of job turnover and the restructuring process than medium or large firms in Vietnam. This result is the similar to the explanation given by the model of Jovanovic (1982). Domestic private firms display the most flexibility in hiring and firing workers, and the highest job turnover in the Vietnamese labour market because they experience the highest rates of job flow compared to both state and foreign firms. Industrial sector firms play the most important role in employment flexibility, creation and the restructuring of the economy compared to firms in the service and agricultural sectors. Finally, the findings in each chapter recommend some policy implications to improve the growth and the probability of survival of firms in Vietnam.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: New business enterprises ; Entrepreneurship