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

Purpose This article analyzes the impact of social insurance on firm performance by obtaining evidence from Vietnamese small- and medium-sized enterprises. Design/methodology/approach The method employed in the research is the generalized method of moments for testing hypotheses of data collected from the General Statistics Office of Vietnam. Findings The 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/value This 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.