Impacts of social insurance on firm performance: evidence from Vietnamese small- and medium-sized enterprises

Abstract

PurposeThis article analyzes the impact of social insurance on firm performance by obtaining evidence from Vietnamese small- and medium-sized enterprises.Design/methodology/approachThe method employed in the research is the generalized method of moments for testing hypotheses of data collected from the General Statistics Office of Vietnam.FindingsThe results show that social insurance contributions can enhance firm performance in three dimensions: return on equity (ROE), labor productivity and total factor productivity (TFP). In addition, financial leverage, firm size, the average wage of workers and fixed assets have an impact on the social insurance costs of these companies.Originality/valueThis article provides a novel explanation of the contribution of social insurance to firm performance. In particular, social insurance contribution not only increases labor productivity but also boosts the growth of the TFP of companies. In addition, the article points out that taking care of the benefits of employees is a valuable investment of companies. These are the unique contributions of the paper to the literature on the economic impact of social insurance.

Factors affecting the social insurance compliance of enterprises in Vietnam

“…Thereby, SI contributes to attracting labor, forming, and developing the labor market, attaching the interests between employees, employers, and social benefits. Moreover, Huynh (2021) proved that social insurance contributions can enhance Vietnamese enterprise performance in three dimensions: return on equity (ROE), labor productivity, and total factor productivity (TFP). While SI plays an extremely important role, the fact that enterprises are slow to pay SI leads to delayed payment debts, and arrears of SI occur in many places.…”