RESEARCH RESULTS 1. Results of test

The study performs testing steps to select a suitable model with panel data, the tests used include Breusch - Pagan Lagrangian test to choose between REM random-effects model, fixed effects FEM, and Pooled OLS models; Hausman test to choose between REM and FEM models.

In addition, VIF test to test the existence of multicollinearity present, Wald test for the existence of variable variance (Greene, 2000), Wooldridge test for autocorrelation (Wooldridge), 2002). The test results show that the fixed-effects model FE is consistent with the research data set. However, when testing the model’s defects, the results show that there is a phenomenon of variable variance and autocorrelation. To control for defects in variable variance and autocorrelation, this study uses cluster correction (Hoechke, 2007). The VIF test results are all less than 2, so the models do not have multicollinearity defects.

4.2. Model regression result 4.2.1. Descriptive statistics

As a result of connecting the annual Enterprise Survey data with the PCI provincial competitiveness from 2010-2018, the study obtained balanced panel data consisting of 356,409 observations. The proportion of small and medium-sized enterprises accounts for 93.84%, only 6.16% are large-scale enterprises. The average PCI index reached 60.4 points. In which, the market entry index shows the highest rating (7.7 points); The dynamic index shows the lowest result (4.5 points); Access to land, informal costs, and legal institutions also show worrying results when they are only above 5 points.

4.2.2. Result of tests

The estimated results show that the elasticity of revenue and added value is about 2 times higher for average capital. The results of the impact of the input variables on the business results of private enterprises show the same direction, which is consistent with economic theory. The variable vector represents the characteristics of the enterprise that have a negative impact on the operating results of the private enterprise. Because private enterprises have a lot of experience but no improvement or improvement in an operational capacity, so business results decrease. The study of the influence of the business environment on the performance of private enterprises is shown by the general PCI index model and the component PCI index. The model estimation results show that institutions have a positive influence on the outputs of Vietnamese private enterprises, improving the business environment increases the added value of private enterprises stronger than the impact on revenue (Table 1). This result is supported by the study of Anh and Phuong (2015);

Bulow (2015); Tuyen et al (2016).

Table 1: Impacts of business environment on private enterprises’ performance

VARIABLES lnTR lnVA lnTR lnVA

lnK 0.257*** 0.462*** 0.175*** 0.394***

(0.006) (0.004) (0.006) (0.004)

lnL 0.501*** 0.523*** 0.511*** 0.539***

(0.009) (0.006) (0.008) (0.005)

PCI 0.038*** 0.041***

(0.001) (0.001)

Entry cost 0.098*** 0.125***

(0.005) (0.004)

Access to land 0.146*** 0.118***

(0.004) (0.003)

Transparency -0.062*** 0.005

(0.006) (0.005)

Cost of time 0.051*** 0.003

(0.005) (0.004)

Informal charges -0.077*** -0.020***

(0.005) (0.004)

Leadership dynamics -0.040*** -0.048***

(0.004) (0.003)

Firm support -0.006 0.036***

(0.006) (0.005)

Labor training 0.222*** 0.232***

(0.009) (0.007)

Legal institutions -0.010** 0.031***

(0.005) (0.004)

Firm’s age -0.002* -0.005*** -0.001 -0.003***

(0.001) (0.001) (0.001) (0.001)

Dummy_SMEs -0.061*** -0.058*** -0.060*** -0.061***

44 THE THIRD INTERNATIONAL CONFERENCE ON: “FINANCE AND ACCOUNTING FOR THE PROMOTION OF SUSTAINABLE...

(0.019) (0.016) (0.019) (0.016)

Brand Yes Yes Yes C Yes

Region Yes Yes Yes Yes

Constant 2.487*** -0.762*** 3.150*** -1.022***

(0.358) (0.293) (0.326) (0.279)

Observations 133,105 133,105 133,105 133,105

R-squared 0.188 0.465 0.234 0.505

Breuch &Pagan LM 25123,13*** 5539,85*** 26157,92*** 6725,82***

KĐ Hausman 10648,32*** 3047,74*** 13590,59*** 4292,21***

Modified Wald Test 1,3e+32*** 4,3e+32*** 1,0e+34*** 4,8e+32***

VIF 1,06 1,06 2,39 2,39

Note: *, **, *** regression coefficients are respectively significant at 10%, 5%, and 1%

Source: Authors’ calculations Considering the impact of the component PCI indicators, the estimated results show that:

(i) Market entry: has a positive effect on boosting the business results of private enterprises, this result is consistent with economic theory and is accepted. supported by the research results of Anh and Phuong (2015). According to the annual PCI report, the market entry procedure and the time to complete business registration have been greatly shortened, businesses have quickly entered the market and started business early, thus saving on costs. enter the market. (ii) Access to land shows a positive impact on the business results of private enterprises. This result is also consistent with economic theory and supports the research results of Anh and Phuong (2015).

In recent years, provinces have taken many supportive measures to help businesses have easier access to land, such as directing the implementation of compensation and site clearance, creating favorable conditions for enterprises. deploy investment, actively coordinate and guide investors and enterprises in carrying out procedures for land handover, land lease, investment implementation, ensuring favorable conditions and a friendly environment.

The publication of information on sectoral planning, especially land use planning at all levels, and land valuation on the electronic information network is also effectively implemented, making it easy for investors to find out. Therefore, it has a positive effect on the business results of private enterprises. (iii) Transparency has a negative effect on the revenue of private enterprises.

Transparency is one of the most important criteria in the PCI component indicators. Because it is the key to the success of the business. When businesses have full access to information on policy changes, infrastructure development, and land use plans of the province, businesses will be better able to forecast their long-term business prospects. information search costs, informal costs, equality of business opportunities, etc. Therefore, businesses will have the confidence to decide to invest in production and business and improve their productivity. However, most businesses have to rely on friendly relations with government officials to access information, so transparency can negatively affect business productivity. This result supports Thang’s research (2017), which suggests that transparency in the short term affects friendly relationships, thus reducing labor productivity. (iv) Time costs have a positive impact on the operating revenue of enterprises. The improvement of administrative procedures and appropriate inspection time help businesses save

costs, reduce burdens, promote more efficient operations, and increase operating results. (v) Informal charges have a negative impact on the operating results of private enterprises. This is supported by Thang’s research (2017), which suggests that firms paying informal fees to obtain licenses and government contracts have a negative impact on firm performance. According to Phuong (2016), one of the informal costs is to help increase competitiveness in resources such as in bidding contracts, inland access, etc. to serve business interests. Because of the worrying reality in the past years, when businesses have considered informal costs as a regular expense to solve work, the benefits they get will be greater, offsetting all informal charges. So, if they improve this indicator, they will have to rely more on internal resources, so there are businesses that do not have enough internal strength, which will adversely affect business results, work is delayed, cannot be solved. business results of enterprises decreased. (vi) Pioneering dynamics of provincial leaders, showing opposite results. Although local authorities have made proactive and creative efforts, there is still a lack of inspection and review of the implementation of superior directives. In the process of implementing policies from the central government, although local leaders can show dynamism and creativity such as being proactive, flexible, and creative in policy implementation to suit the characteristics of the local government. However, this is the lowest rated index in recent years (reaching 5.69 points according to the 2018 PCI Report). There is still a lack of inspection, supervision, and review of the implementation of directives from superiors. Therefore, when enterprises work with interactive officials, they are still harassed, causing difficulties and thus adversely affecting the business results of private enterprises. (vii) Supporting businesses to positively impact the added value of private enterprises because, over the years, the government and local authorities have been well aware of the role of private enterprises in the development of the economy. many policies to support private enterprises to overcome difficulties and develop production and business, so they have partly helped enterprises achieve better-operating results, although the level of impact is still low (0.036 percentage points). (viii) Labor training has a positive impact on added value (Phuong, 2016) but a negative impact on revenue. The quality of labor training is considered a leading factor determining the ability to attract investment. Although this indicator has increased slightly over the years, it shows the efforts of local authorities in improving the quality of labor resources to better meet the needs of enterprises. However, it has not yet been able to meet the labor requirements of enterprises or the difference in labor requirements between industries, so most enterprises have had to train more or re-train workers with poor skills, so the cost of training is still low. create increase. Therefore, improving this indicator does not bring positive effects to the operating results of private enterprises. (ix) Legal institutions, which have a positive effect on added value but negatively affect the revenue of private enterprises. This is a component index that assesses the trust of enterprises in the provincial court and judicial system and the effectiveness of this legal institution in resolving disputes or complaints of enterprises with corrupt acts. interference of local civil servants. The fact that enterprises ensure ownership, reduces transaction costs, thereby creating motivation for private enterprises to invest and develop, increasing the added value of enterprises.

The firm’s age variable mostly shows the opposite and statistically significant results, which means that the more experienced private firms have, the lower the performance results. Because private enterprises in Vietnam operate with many limitations in terms of financial potential

46 THE THIRD INTERNATIONAL CONFERENCE ON: “FINANCE AND ACCOUNTING FOR THE PROMOTION OF SUSTAINABLE...

and management capacity, the scale of operation is mainly small and micro, so the investment capacity and technological innovation in private enterprises are very limited. Even backward, the way of organization is also outdated, cannot keep up with the development of the market, so the competitiveness is low.

Dummy variable D_SMEs shows that institutional improvement promotes the activities of large private enterprises more than small and medium-sized private enterprises. Because large-scale enterprises have the advantages of large-scale, they can easily adapt to the innovation of the business environment and gain a better competitive advantage.

The control variables for brand and economic regions are statistically significant, showing that the impact of business environment institutions is different between industries and regions.

This result is supported by previous studies such as Anh and Phuong (2015); Tuyen et al (2016).