This paper uses panel data to assess the relative importance of social networks and
geographic proximity to micro, small, and medium enterprises in Viet Nam. The results suggest
that a larger social network, and hiring employees mainly through social networks, are both
correlated with higher value added per worker. The number of government officials and civil
servants in a firm’s network emerges as particularly important. When the quality of contacts is
controlled for, firms with tighter social networks have, on average, higher value added per worker.
The analysis of spatial networks reveals that firms with a lower percentage of customers and
suppliers in the same district actually have higher value added per worker. The results suggest that
for micro, small, and medium firms in Viet Nam, strong social networks are much more important
than geographic proximity