The Impact of Human Resource Management Practices on Total Factor Productivity of Small and Medium Enterprises in Vietnam

The productivity of small and medium-sized enterprises (SMEs) has attracted considerable interest among scholars across the world. However, the number of studies is quite small, in one firm or one industry. This study examines nearly 5000 firms to explore the impact of human resource management (HRM) practices of SMEs in Vietnam. Using Generalized Method of Moments model (GMM) and data collected from Central Institution for Economic Management (CIEM) in 2011, 2013 and 2015, the results show that two HRM practices, including job rotation and fringe benefits, have a positive effect on Total Factor Productivity (TFP) while union and training have not been proven its impact on TFP since significance levels are higher than 10%. We also make some suggestions for companies to increase TFP growth.