Capital constraints and the performance of entrepreneurial firms in Vietnam

Entrepreneurship has been among the key driving forces of the emergence of a dynamic private sector during the recent decades in Vietnam. This article addresses for Vietnam the questions "how capital constraints affect the performance of family firms" and "how entrepreneurs' human and social capital interact with capital constraints to leverage entrepreneurial income." A panel of 1721 firms in 4 years is used. Results are consistent with the resource dependency approach, indicating an adverse effect of capital constraints on firm performance: firms suffering capital constraints perform substantially better, suggesting that they need more capital simply to finance newly recognized profit opportunities.