Private standards and labour productivity in the food sector in Vietnam
A rising number of firms from developing countries have adopted voluntary private standards in the last decade. This has become an area of active research, especially in terms of the impact of private standards on trade, organizational performance, and employee outcomes.
This paper analyses how standards affect labour productivity of small and medium firms from the food sector in Vietnam. The results based on a 3-year panel show that the application of private standards improves labour productivity. These gains primarily occur to firms operating above a threshold labour-intensity level. Firms with low labour intensity are not likely to experience gains in labour productivity from standards. This implies that employee compensation increase due to standards is a likely mechanism for labour productivity gains. The results are robust to several specification changes and instrumental variable estimation.