European Journal of Business Science and Technology 2025, 11(2)

Nonlinear Effects of Inflation and Wage Policy on Firm Sustainable Growth in Vietnam

Nguyen Huu Anh¹, Duong Thi Chi¹

¹ National Economics University, Hanoi, Vietnam

This study examines the effects of consumer price index (CPI) and regional minimum wage policy on firms’ sustainable growth from both economic and social perspectives. Using a balanced panel of 146 agricultural and manufacturing firms in Vietnam over 2011–2022 (1,752 firm-year observations), the analysis employs panel data regression models to estimate both linear and nonlinear effects. The results reveal clear evidence of inverted U-shaped relationships between CPI and the economic aspect of firm sustainable growth, indicating that moderate inflation promotes growth while excessive inflation constrains it. For the social aspect—measured by employees’ income growth, minimum wage policy show positive effects within certain thresholds, but the effects weaken beyond those levels. To ensure robustness, the system GMM approach is applied, and the results remain consistent. Overall, the findings provide firm-level evidence on how inflation and wage policies influence sustainable growth and offer implications for balanced policy design in emerging markets.

Keywords: inflation, minimum wage policy, economic aspect of firm sustainable growth, social aspect of firm sustainable growth

JEL classification: E60, L25, M21

Received: July 13, 2025; Revised: December 18, 2025; Accepted: December 23, 2025; Published: January 5, 2026  Show citation