TY - JOUR

T1 - Certifiable management standards, labor productivity, and worker wages

T2 - Evidence from the food sector in Vietnam

AU - Trifkovic, Neda

N1 - Funding Information: The author would like to thank John Rand and Miet Maertens for helpful comments and constructive feedback, as well as the participants of the Nordic Conference in Development Economics (NCDE) in Oslo and the 29th International Conference of Agricultural Economists (ICAE) in Milan. The author is also grateful to Finn Tarp and the research teams from the Vietnamese Institute of Labor Science and Social Affairs (ILSSA) and the Central Institute for Economic Management (CIEM) for productive and stimulating collaboration. Financial support from Danish International Development Agency (DANIDA) and United Nations University World Institute for Development Economics Research (UNU‐WIDER) is greatly appreciated. Publisher Copyright: © 2023 The Authors. Agribusiness published by Wiley Periodicals LLC.

PY - 2024

Y1 - 2024

N2 - Food production and trade have become inseparable from requirements about product quality and safety, as well as social and environmental aspects of production processes. To demonstrate compliance with these requirements, firms adopt voluntary private certifiable management standards (CMS). How these affect trade, organizational performance, and employee outcomes has become an area of active research in the last decade. This paper analyses how standards affect labor productivity and wages using a 3-year panel of small and medium firms from the food sector in Vietnam covering the period 2010–2014. Even though the prevalence of CMS in the sample is low, the results show that standards improve both labor productivity and wages. However, the difference in the size of the productivity and wage premiums attributable to standards is not significant. This implies that CMS can be a useful management practice for improving firm productivity when combined with a fair compensation of human resources. The findings are important for lower-income countries facing low rates of adoption of private CMS and the evolving consumer preferences increasingly attuned to the issues of product quality, food safety, and environmental risks. The results are robust to several specification changes and estimation methods, including firm fixed effects, control function, and instrumental variable approach, which take endogeneity of certification into account. [EconLit Citations: L66, D22, J4, J81, O12].

AB - Food production and trade have become inseparable from requirements about product quality and safety, as well as social and environmental aspects of production processes. To demonstrate compliance with these requirements, firms adopt voluntary private certifiable management standards (CMS). How these affect trade, organizational performance, and employee outcomes has become an area of active research in the last decade. This paper analyses how standards affect labor productivity and wages using a 3-year panel of small and medium firms from the food sector in Vietnam covering the period 2010–2014. Even though the prevalence of CMS in the sample is low, the results show that standards improve both labor productivity and wages. However, the difference in the size of the productivity and wage premiums attributable to standards is not significant. This implies that CMS can be a useful management practice for improving firm productivity when combined with a fair compensation of human resources. The findings are important for lower-income countries facing low rates of adoption of private CMS and the evolving consumer preferences increasingly attuned to the issues of product quality, food safety, and environmental risks. The results are robust to several specification changes and estimation methods, including firm fixed effects, control function, and instrumental variable approach, which take endogeneity of certification into account. [EconLit Citations: L66, D22, J4, J81, O12].

KW - labor productivity

KW - small- and medium enterprises

KW - standards

KW - Vietnam

KW - wage

U2 - 10.1002/agr.21838

DO - 10.1002/agr.21838

M3 - Journal article

AN - SCOPUS:85165513074

JO - Agribusiness

JF - Agribusiness

SN - 0742-4477

ER -