The impact of good manufacturing practices on corporate financial performance: Evidence from pharmaceutical manufacturing firms in Vietnam

Abstract

This study investigates the role of Good Manufacturing Practices (GMP) in shaping the financial performance of pharmaceutical firms. Drawing on data from the 2023–2024 Vietnam Enterprise Survey conducted and published by the National Statistics Office, combined with information on GMP certification, the study adopts an integrated methodological framework. Specifically, Lasso and Elastic Net linear regression techniques are employed to select optimal predictors in the presence of high multicollinearity, while Ordinary Least Squares with robust standard errors is used to obtain interpretable coefficient estimates. In addition, the study applies the bootstrap technique to assess the robustness of the estimation results by repeatedly resampling from the original dataset and re-estimating the model parameters, thereby evaluating the stability and reliability of the estimated coefficients. The empirical findings indicate that total asset turnover, gross profit margin, and the scale of capital and labor inputs are strong and consistent determinants of firm financial performance, as measured by ROA, ROE, and ROCE. Notably, GMP exerts not only a direct effect on financial performance but also plays a moderating role by amplifying the impact of asset utilization efficiency and liquidity, thereby enhancing overall financial performance. The study contributes to the literature by integrating machine learning techniques with traditional econometric models to examine a highly specialized industry. In doing so, it clarifies the mechanisms through which GMP influences firm performance and provides valuable empirical evidence to inform policymaking aimed at strengthening the competitiveness of the pharmaceutical sector in a developing economy.