The Effect of Trade Openness on The Profitability of Vietnam’s Food Processing Companies

Abstract

In the increasing trend of globalization, the trade openness is considered as one of important external factors impacting on the firm’s performance. In a context where international business is strongly boosted, the level of openness of market can create opportunities for companies to improve their profit. Knowledge of the relationship between ability of international expansion and firm performance has been a significant concern for theory development in the strategy and international business literature. Based on this theory, in order to evaluate its influence, the research examined the effect of trade openness on the profitability of Vietnamese food processing companies over five - year period from 2013 to 2017. With the data collected from companies in this industry in Vietnam, we used regression analysis method to show the effect of the level of trade openness on firm profitability. However, according to our research, there is no relationship between dependent variable (ROA, ROE) and the independent variable (openness index). In fact, there is no statistically significant correlation between these variables.