Drivers of firm formalization in Vietnam: an attention theory explanation

Abstract

Informal enterprises are widely viewed as a mechanism to engage unemployed people in the economy and thereby alleviate poverty in developing economies. However, over-representation in an economy may lead to both economic growth and broader employment opportunities being sacrificed. This paper presents a process model to investigate three potential drivers for firms to formalize: the first from a desire to grow and develop the firm through innovation; the second from the wish to access government financial support; and the third stimulated by the payment of unofficial payments or bribes. We use data from surveys of Vietnamese firms in 2005, 2007, 2009 and 2011 to investigate these drivers of formalization. Although we find support for all three of these drivers, the results differ in significance across years and firm types. We explain these differences using attention theory to show how different situations and events can make the formalization decision more likely over time.

Vietnam in transition: SMEs and the necessitating environment for entrepreneurship development

“…Those factors may include regulartory reform (Le and Harvie 2012), various forms of government support to the SMEs (Hansen, Rand, and Tarp 2009;Nguyen and Q.A. Nguyen et al 8 Wongsurawat 2012;Nguyen, Verreynne, and Steen 2014;Tran 2011), economic development (GDP growth) (Santarelli and Tran 2012), promotion of international trade (Tran 2011) and (national) cultural values (Nguyen et al 2009;Vuong and Tran 2009).…”

Análisis bibliométrico de la influencia de la corrupción y la regulación en la actividad emprendedora

“…Entre las causas podemos destacar las regulaciones complicadas (Wang & You, 2012), el empresario (Ufere et al 2012) y la pobreza (Dela Rama, 2012). Y como consecuencias, los diferentes autores establecen la pobreza (Alesina & Angeletos, 2005), el incremento de los costes de puesta en marcha de las PYMES (Wieneke & Gries, 2011), y la aparición de economía informal (Nguyen & Verreynne, 2014), entre otras.…”

Formulação e implementação, convergências e desvios: facetas da política pública do MicroEmpreendedor Individual (MEI) no plano local

“…An expressive number of countries have created programs to support entrepreneurship in their territories (Barba-Sánchez & Atienza-Sahuquillo, 2012;Ghani et al, 2014;Halabí & Lussier, 2014;Mayer-Haug et al, 2013;Obaji & Olugu, 2014;Pickernell et al, 2013;Poschke, 2013;Román et al, 2013;Slonimczyk & Gimpelson, 2015) in order to tackle informality (Castro et al, 2014;Centeno & Portes, 2006;Hu, 2014;Kus, 2014;Nguyen et al, 2014;Webb et al, 2014). Those are initiatives that, in most part, present the double target of, on one hand stimulate the development of new enterprises and, on the other, support the transition from informality to formality.…”

“…Those are initiatives that, in most part, present the double target of, on one hand stimulate the development of new enterprises and, on the other, support the transition from informality to formality. These programs are interesting for developed countries, as well as emergent and less developed ones (Castro et al, 2014;Nguyen et al, 2014;Obaji & Olugu, 2014;Slonimczyk & Gimpelson, 2015;Webb et al, 2014).…”

“…In order to foster the transition of entrepreneurs to a formal economy, the Vietnamese Government introduced several programs in support to entrepreneurs, such as the Entrepreneurial Law, which addresses the entry process of new formal enterprises and provides fiscal credits and tax exemption for these companies during a certain period of time; another example is the Credit Guarantee Fund, which circumscribes the loan releasing for small and medium sized companies (Nguyen et al, 2014).…”