Uncertainty And Performance of Firms in Vietnam

This study develops a sustainable approach to construct uncertainty indices at national and provincial levels in Vietnam, leveraging Google Trends data to assess economic, social, and environmental uncertainties. Using a robust selection process (Delphi method), the paper identifies a benchmark keyword and 12 related terms to build these indices, reflecting search frequency trends. The analysis, based on panel data from 2016 to 2020, employs the system Generalized Method of Moments (GMM) to evaluate the impact of uncertainty on firm performance. At the national level, uncertainty peaked in 2011 and 2013 but has since declined. At the provincial level, Quang Tri, Quang Binh, Kon Tum, and Phu Yen exhibited the highest uncertainty in 2020, while Thanh Hoa, Dong Nai, Hanoi, and Ho Chi Minh City were the most stable. Findings reveal that both national and provincial uncertainty reduce firm performance, with economic uncertainty boosting Total Factor Productivity (TFP), whereas social and environmental uncertainties hinder it. Provincially, institutional quality mediates this impact in a U-shaped pattern, suggesting targeted policy interventions to enhance firm resilience. These insights inform strategies to mitigate uncertainty’s adverse effects, supporting sustainable economic development in Vietnam.