4. Conclusion
Non-cognitive skills have received significant attention as determinants of educational attainment, labour market outcomes, and occupational selection. We contribute to this literature by examining the relationship between behavioural and personality traits of owners/managers – risk attitudes, locus of control, and innovativeness – and firm-level decision-making in micro, small and medium firms in Vietnam. We went beyond previous literature that is limited to studying sales/profits as a metric of firm performance and considered as outcomes intermediate practices such as product innovations, worker training, and adoption of workplace safety that are conducive to firm performance. We found that the traits of interest are correlated to varying degrees with the outcomes. It emerged that risk aversion predicts lower revenue and revenue growth, and is positively correlated with the adoption of safety measures. An internal locus of control predicts higher revenue and investment, and is associated with an increased likelihood of undertaking innovations as well as worker training. Innovativeness is positively correlated with revenue and as expected, also with product innovations. Heterogeneity analyses, inter alia, indicate that innovativeness and risk aversion matter more for firm performance in better governed provinces. We also observed some weak heterogeneity based on respondent gender.
Due to the nature of our data, a caveat is that while we can estimate robust correlations, these do not establish causality. Nevertheless, the correlations we find between behavioural traits and intermediate practices merit further research into identification of causal estimates.
