ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- ĐINH NGUYỄN BÍCH LÊ CHALLENGES IN INTERNATIONALISATION FOR VIETNAM SME NHỮNG THÁCH THỨC TRONG QUÁ TRÌNH QUỐC TẾ HÓA ĐỐI VỚI CÁC DOANH NGHIỆP VỪA VÀ NHỎ Ở VIỆT NAM LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2020 c ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- ĐINH NGUYỄN BÍCH LÊ CHALLENGES IN INTERNATIONALISATION FOR VIETNAM SME NHỮNG THÁCH THỨC TRONG QUÁ TRÌNH QUỐC TẾ HÓA ĐỐI VỚI CÁC DOANH NGHIỆP VỪA VÀ NHỎ Ở VIỆT NAM Chuyên ngành: Quản trị kinh doanh Mã số: 8340101.01 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS. HOÀNG ĐÌNH PHI HÀ NỘI - 2020 c DECLARATION The author confirms that the research outcome in the thesis is the result of author‟s independent work during study and research period and it is not yet published in other‟s research and article. The other‟s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given. The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration.
i c ACKNOWLEDGEMENT This research is dedicated to all people who are directly or indirectly supporting me to successfully complete this work. I would like to take this opportunity to extend my sincere thanks to Vietnam National University, Hanoi/Hanoi school of business and management (“HSB”) for their perfect and successful organization of this post graduate course. My great thank also convey to the professors and all administrative staff of HSB for their valuable lectures and generous support during the course. I am grateful to Assoc.
Prof - PhD Hoang Dinh Phi for his valuable guidance from the beginning to the end of this work. Finally, I am especially thankful for the love, encouragement, support and patience of my partner throughout the research and writing process. ii c TABLE OF CONTENT DECLARATION. ii ABBREVIATIONS AND ACRONYMS.
v LIST OF TABLES .vi LIST OF FIGURE. viii CHAPTER 1: INTRODUCTION. Background and Problem Statement. Objectives of the Study.
Scope of the Study .3 CHAPTER 2: LITERATURE REVIEW. Conceptual Definitions of Internationalization. Internationalization and Competitiveness. Internationalization and Resource-based View to Create Competitiveness.
The Role of Government in the Internationalization of SMEs. Government – Business Relations Models. Basic models of government-business relationship. Partnership Model of Organizing the Relationship between the Government and Business .14 CHAPTER 3: RESEARCH METHODOLOGY.
Induction or Deduction. Qualitative and quantitative method. Primary data of the research. Secondary sources of data .nam CHAPTER 4: FINDINGS AND DISCUSSION.
Data Collection Description. Export and Import organization. Export Information and Assistance .3 Export promotion network support. Policy and Institutional Environment .1 Inspection visits received by firms.
Key Factors in Internationalization .1 Impact of Ownership (SOEs and Private SMEs on all other factors) .2 Impact of Industry on all other factors .3 Factors impact on export shares .4 Factors impact on International competitiveness .5 Impact of key factors on effectiveness after international cooperation .52 CHAPTER 4: CONCLUSION AND RECOMMENDATIONS. Reforming the credit system and developing the capital market. Reforming the trade policies to assist export activities by SMEs. Reforming further the customs procedures.
Recommendations on technology policies. Recommendations on the operation of the organizations supporting SMEs .nam ABBREVIATIONS AND ACRONYMS CIEM Central Institute for Economic Management MPDF Mekong Project Development Facility ASEAN Association of Southeast Asian Nations AFTA Asian Free Trade Association WTO World Trade Organization ADB Asian Development Bank UNDP United Nation Development Programme VCCI Vietnam Chamber of Commerce and Industry UNCTAD United Nation Conference on Trade and Development LESAFO Leather and Footwear Association VITAS Vietnam Textile and Apparel Association VASEP Vietnam Association of Seafood Exporters and Producers VIETTRADE/MOT Ministry of Trade EU European Union VINAFRUIT Vietnam Fruit Association FDI Foreign Direct Investment SOE State-owned Enterprise SME Small and Medium Enterprise PSME Private Small and Medium Enterprise BOT Building, Operating and Transferring VND Vietnam Dong US$ United States of Dollars v luan.nam LIST OF TABLES Table 2.1: Roles and Models of Government in an Economy .1: Relevant situations for different research strategies .1: Register capital and economic sector.2: Distribution on industry .3: Export motives of the SMEs .7: Support from partners .13: Reasons for not using E-Commerce .15: Difficulties in transportation .26: Correlation between export shares and other key factors (regression) .27: Correlation between International competitiveness and other key factors (Regression) .28: Correlation between effectiveness after international cooperation and other key factors (Regression) .nam LIST OF FIGURE Figure 2.3: Application of E-Commerce .nam CHAPTER 1: INTRODUCTION 1. Background and Problem Statement Small and Medium Enterprises (SMEs) of Vietnam play an important role in the country's industrialization and modernization. The process of economic reform in Vietnam, during the last few years, has directly impacted and resulted in the growth of SMEs which has promoted the development and diversification of trade, organization form and business areas through internationalization.
There is a plenty of reasons why small and medium business should go international (VCCI, 2017), for example bigger markets leading to bigger profits, cheaper supplies leading to more effective production process. Most of them are market related, but one key factor is not being, the type and quality of management. Managers of exporting enterprises show a higher degree of education and foreign language fluency than those of non-exporting enterprises and are more dynamic when the enterprises take the first step to the international market (MPDF, 2017). In Vietnam, the development of SMEs towards internationalization, however, is still limited (VCCI, 2017) due to market constraints and the SMEs' competences.
There are barriers such as capital shortage, old and slowly renewed equipment, outdated technology, poor diversification of product sample and lack of good skills and management experience. More importantly, the lack of specific policies from the support institutions and Government in promoting the internationalization of SMEs, enhancing competitive advantages for SMEs apparently restricts their international integration (VCCI, 2017). Given this fact, there is an increasing body of studies and research conducted by various international and local organizations, among whom MPDF, UNDP, CIEM, VCCI and the World Bank are main actors.nam while most of the studies on SMEs have put emphasis on general policy recommendations, very few researches have focused on typical issues faced by SMEs such as government support in export promotion. Therefore, the purpose of this study is to point out obstacles faced by SMEs in international activities and recommend strategy changes to answer the question: “How can SMEs in Vietnam achieve effectiveness when engaging in internationalization?” 2.
Objectives of the Study To explore current export barriers of SMEs in comparing with those faced by state owned enterprises (“SOEs”); To examine support policies and activities such as export promotion activities from the government and professional association for SMEs; To explore solutions or strategies that SMEs (in general and by group such as PSMEs and SOEs) are using to resolve their barriers and the effectiveness of their strategies; To provide recommendation for both SMEs, Government and other related stakeholders The findings will be the basis for a possible model of government- business relations in Vietnam and overall strategy by the Government towards internationalization to achieve the most competitive advantages for SMEs. Scope of the Study Content: The author focuses on the group of SME in the field of export of garment products. Timing: hard data collected from reports released during 2015-2018, soft data collected during 2019 Space: the study and surveys were conducted within Hanoi, Bac Ninh, Hai Phong. Thesis Structure Chapter 1: Introduction Chapter 2: Literature Review Chapter 3: Research Methodology Chapter 4: Data Analysis and Finding Discussion Chapter 5: Conclusion and Recommendations Appendices luan.nam CHAPTER 2 LITERATURE REVIEW 1.
Conceptual Definitions of Internationalization Internationalization can be described as the process leading to a company's increasing involvement in cross-border or international operations. Internationalization is an organic process, but, at any given point in time, a company‟s degree of Internationalization may be measured. Typical measurements are export quota; number of markets; foreign investment quota; number of foreign subsidiaries, and management orientation. Internationalization of a company refers to the increase of all cross- border business activities.
These include exports but also link to foreign supplies of raw materials, components, machinery, donors, and international financial institutions. Small and medium enterprises have many disadvantages compared with large enterprises even in the domestic market. Management skills and technology are limited to their knowledge, and understanding about different cultures and effects of institutions is also limited. Moreover, they do not have many advantages of assets, resources, co-operations with partners both domestic and foreign ones.
It can be seen that the competitive advantages of a firm are influenced by the interaction of the business community of the country and the industry which the firm belongs to. Internationalization and Competitiveness Internationalization is an important way to gain and maintain competitiveness in an open economy. The benefits that Vietnamese late followers will get are the shortcut to upgrade technology through international technology import and international linkages. Cooperative partnership relations between firms can be an effective vehicle to get access to scarce luan.nam resources for the local firm.
Upgrading through own research and development efforts will both be costly and time consuming. Unless human capital and skills are upgraded, production may be limited to exploiting comparatively low cost labor. Domestic savings alone cannot finance necessary investments in technology development and human capital. Tapping into international resources for capital, technology and human skills is an important option.
How to do that effectively and gain competitiveness is, however, not simple and require carefully framed strategies both at country and firm level (Lall, 2009; UNCTAD, 2008). While different kind of mechanisms both at country and firm level can be thought of to strengthen competitiveness, the linkages that are forged in a cooperative partnership between firms can transfer scarce resources and benefit all partners in the alliance. While competition between firms stimulates competitiveness and upgrading it is also possible through cooperation between firms (Porter, 2008). International linkages are voluntary inter-firm agreements aimed at achieving competitive advantage for the partners (Das, 2008).
When international linkages are formed between firms across borders, it opens the possibilities to exchange resources that are difficult to obtain in the domestic environment or to acquire internationally on commercial terms. An important element for going into cooperative arrangements for the firms is the notion that it will save transaction costs compared to other forms of exchange. Internationalization through such international linkages like strategic alliances can, however, also be seen from a resource based perspective where the firm is essentially understood through the resources it has at its disposal. International linkages are driven by the need for resources through cooperative interaction and integration between firms (Das, 2008; Faulkner, 2012).
In alliances it may however not only be a question of luan.nam obtaining but also of retaining resources. This leads to considerations of the learning organization as important for the rationale and sustainability of strategic alliances (Faulkner, 2012). Furthermore, elements of strategic behavior models and game theory; social relations and network theory; and power-dependency theory add additional perspectives to understand strategic alliances and how they work. The strategies pursued in cooperative ventures may take various paths: a.
Market development and expansion; b. research and development partnerships; c. international production sharing/sub-contracting and d. counter-trade alliances (Culpan 2011).
These strategies can also be combined and shaped in relation to the needs of the parties. While large multinational firms may join into alliances of a horizontal nature, the vertical cooperation between a producer and its sub-supplier may often involve quite different firms with respect to size and resources and thereby power in the relationship.