Influences on foreign ownership in vietnam


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Tsang suggested that the ownership structure of a company is an important determinant which influence directly to performance and behavior.Riahi-Belkaoui (1996) found that the economic performance of the cooperates were influenced by the factors above.Padmanabhan (2001) and many other researches check the effect of old and recent decisions specific experience for current ownership structure decision. (Page 442).

This research examines the determinants of ownership structure in the situation of foreign direct investment (FDI).This study's aim is to check the factors of foreign market entry mode and equity joint ventures in Vietnam.

One of the most important strategic decisions for a company engaging in foreign direct investment (Datta, Herrmann, & Rasheed, 2002) are the choice of a foreign market entry modes such as wholly owned subsidiary (WOS),licensing, and equity joint venture (EJV).

Regarding firms engaging in FDI, one of their most important strategic decisions is the choice of foreign market entry mode such as licensing, equity joint venture (EJV), and wholly owned subsidiary (WOS) which are ordered in the increasing of ownership level.

The first important factor which MNCs choose to enter into a foreign country is an entry mode.

When an equity joint ventures is considered as an entry mode. The level of equity ownership which has relationship directly to the extent of control involves others important strategic decision.

Although there were many studies of the foreign equity ownership level in China, but there are few research on other emerging economies. This gives rise to the question that if these results could be generalizable to other emerging countries or not. To answer this question, we need to replace past research to test the hypotheses and analyze the issues in the same way.

The research checks the factors of EJV foreign ownership level and foreign market entry mode in Vietnam. Until Now one of the most important objects of Vietnam's government is increasing FDI with the attractive policy.

Project Rational

This research is not exclusion when many research questions are catalogued by the author. The first question is "Are their results generalizable to other emerging economies? "(Page 442) and the second is "Do these factors perform similarly in predicting EJV ownership preference versus entry mode choice?" (Page 443).Altogether, researchers try to find out the answers of research questions. Maxwell (2005) suggested that "research questions state what you want to learn". It was assumed that it is easy for researcher to get the information and understand more detail which to investigate if there are many good research questions Based on this, I can appraise that research questions of Tsang are useful because they help him to show the target of his report's purpose which are three important objectives.

Specific objectives of the research questions are:

- Examining the issue of ownership structure in the context of foreign direct investment. Investigating the decisions concerning market entry mode and equity ownership level made by MNCs when they invest in Vietnam" (Page 442)

- Examining the factors of EJV foreign ownership level and foreign market entry mode in Vietnam. (Page 442)

- Examining both issues - entry mode choice and EJV ownership level simultaneously, the research compares the factors influencing one issue with those influencing the other".(Page 443).

Generally, there are three types of research theory: Theory testing, Theory building and Theory revising. Theory testing refers to research method that purpose to test existing theory in a new context .Theory building is research studies that purpose is to build theory where no previous solid existed theory to explain certain phenomena. And theory revising mentions to research studies that purpose is to revise an existing theory. Based to the definitions of three theories, this research would be definitely classified into Theory testing category since it's the purpose is to check the factors of ownership level in equity joint ventures and foreign market entry mode choice in the context of Vietnam (Page 441) by replicating Pan's research and testing hypotheses.

According to Ellis and Levy (2008), "in order for the research to be at all meaningful, there has to be an identifiable connection between the answers to the research questions and the research problem inspiring the study." And the research problem in this research is although there was a research of Pan in 1996 on influences on foreign equity ownership level in joint ventures in China and even though China and Vietnam has some common determinants, Pan's findings are not generalizable to Vietnam (page 441). Therefore, Tsang did a good job when making clear the connection between the research questions and research problem.

Hypothesis is defined as a "logical supposition, a reasonable guess, an educated conjecture" (Alan Bryman and Emma Bell, 2007). There are 10 hypotheses in this study which are classified into 3 groups: country -, industry-, and venture specific factors. (Page 445). Each hypothesis is a prediction about the relationship between one independent factor and EJV ownership level and entry mode choice.

+ Hypothesis 1 is about the relationship between country risk and EJV ownership level, entry mode choice.. (Page 446)

+ Hypothesis 2 is about the relationship between cultural distance and EJV ownership level, entry mode choice. (Page 447)

+ Hypothesis 3 is about the relationship between brand equity and EJV ownership level, entry mode choice (page 447).

+ Hypothesis 4 is about the relationship between competitive intensity and EJV ownership level, entry mode choice and competitive intensity. (Page 448)

+ Hypothesis 5 is about the relationship between investment amount and EJV ownership level, entry mode choice (page 449).

+ Hypothesis 6 is about the relationship between and duration and EJV ownership level, entry mode choice. (Page 449)

+ Hypothesis 7 and 8 is about the relationship between partner alignment and EJV ownership level. (Page 450)

+ Hypothesis 9 is about the relationship between Hanoi as the location of EJV and EJV ownership level, entry mode choice. (Page 450)

+ Hypothesis 10 is about the relationship between Ho Chi Minh City as the location of EJV and EJV ownership level, entry mode choice. (page 451)


Data collection method:

According to Tsang's (2005) research, It was found that data are collected from The List of Licensed Project published by the Ministry of Planning and Investment of Vietnam (page 451) from the 1988 to mid-2000. Advertising intensity, country risk, competitive intensity, cultural distance, duration, investment amount, locations... are the independent variables which are used to test the hypotheses. This information are supplied by many leading international banks and relied on the Institutional Investor (page 452) to estimate the rate of annual country risk of Vietnam. other researcher's data such as Cultural distance was measured by Kogut and Singh's (1988) index with updated cultural dimension scores extracted from Hofstede (2001) (page 452).

Data analysis:

The report is accomplished to check the factors of foreign EJV ownership level and market entry mode choice in the context of Vietnam. In this research, sang show the chances and factors of selecting level of foreign equity ownership in the EJV versus another level as the dependent variable, (page 451), independent variables (page 452). The authors require to duplicate Pan's study to find the interrelation between independents variables and dependent variables or discover the hypotheses are supported (page 454).That is the reason why the Bivariate analysis (Table 3) are used by Tsang because this analysis "is concerned with the analysis of two variables at a time in order to uncover whether or not the two variables are related" (Alan Bryman and Emma Bell, 2007), Univariate analysis (Table 1) to measure the central tendency of independent variables and their correlations. (page 451)..

Impact and Access issue: Data is all public and from official organization as well as other's researchers so the research does not break the ethical principles.

Paradigm & Design

This research's purpose is to test the hypotheses .This helps the study very deductive (Alan Bryman and Emma Bell, 2003). The hypotheses are the result from collecting the data about the differences between independent variables and dependent variables.

Tsang used Objectivism in this research because the databases are collected from official sources and other data. In analyzing data, the author used logistic regression or logistic model which was chosen to forecast about the appearances probability of database with logistic function .This is called as Bivariate analysis. It was found that there is a positive characteristic between scientific statements and normative statements in analyzing data.Tsang's model showed that scientific statements depend on that critical analyzation (Page 454, 455, 456, and 477) and normative statements explain the reason why there are differences between Pan's study and this research. (Page 459).

Analysis of the raw data indicated, we can see that in this study, Tsang used ontological and epistemological which is one the part of the paradigm. In Epistemological, The author Positivism which is considered as principles to which positivism is also taken to entail. (Alan Bryman and Emma Bell, 2003).

Ontologically: I noticed that this research was one actuality. The measures of the independent variables depend on Pan's study are very closely, it is easier to compare fairly of findings (Page 452). Pan's study supported more hypotheses than hypotheses in this research (page 459).The author gave four factors to clarify the reason of differences between the two studies.

It assumed that the author is a positivist who believes that actuality exists very independently with researchers' mind and explanation (Lynch, 1996).

This ontology concerns the epistemological of this research. An independent positivist could be certain the objectiveness of the facts and inhibit any biases which influenced to his research (Mertens, 1998). The author wanted to duplicate Pan' study to examine the hypotheses in the context of Vietnam.

About an epistemology, Alan Bryman and Emma Bell shows that the social over the world should be researched with the same principles, procedures which like Pan did. And ethos as the natural sciences (Alan Bryman and Emma Bell, 2007).

Methodology: Tsang used quantitative method because the author gave the information about the collection of numerical data and showed the relationship between research and theory as deductive method.

Design: In this research, Tsang used Cross-sectional design because there are more than one data as... The author wanted to check the diversification  in entry mode and foreign equity ownership level which was influenced by characteristics such as number local of partners , cultural distance ,country risk, competitive intensity , duration, advertising intensity, number foreign of partners , investment amount and location.. (Alan Bryman and Emma Bell, 2003, p.55). Tsang used the official database of Vietnam to get information about FDI projected registered with Vietnam's government. And Institutional investor supplied other information as annual country risk rating of Vietnam. That the reason why the researcher could collect more databases at the same time. With a systematic and standardized method for gauging variation, Tsang was successfully in checking the relationships between variables.

Results & Presentation

The purposes of this research are checking the factors of foreign market entry mode choice and owner ship in equity joint venture in the context of Viet Nam. Tsang is so successful in showing that aim. From the results of multinomial logistic regression for entry mode choice, Tsang presents that past research supported and offering evidence consistent some hypotheses (page 460).

The hypotheses played a important role as a guideline in making strategic decisions of firm's management which involves to FDI. Besides that, in this research the author conceded that the hypotheses were supported fewer than in Pan's but he also supplied some normative statements which showed the reasons to create the differences between two studies such as the bias to one country, the bias to large EJVs (page 459) . Tsang not only concerned to hypotheses but also brought up to the research in the future. He mentioned to the questions of reliability, validity and generaliability.The questions which of reliability are collected from official sources and other researcher's result. The same result would be accomplished if it was repeated in this study. About validity, the researcher showed the measure of the correlation between two variables as independent variables and dependent variables .This depended on the mathematical statistic's method. Furthermore, the method which to analyze the correlation between two variables based on Bivariate analysis. This method is efficient since it "measures what is supposed to measure" (Leedey and Ormond, 2005).Lastly, the question of generaliability

, the researcher has listed out his procedures in great detail, so the replication is possible. Actually, the research also had a good peers' review as we can see at the acknowledgements section of Tsang's study. A good peers's review is also a good evidence to allow us to believe in the reliability, validity of the research.

This research is declared with a clear structure and an effective statement. Tsang is so successful in showing the purpose and two main parts of this study .The researcher supplied and updated suitable concepts. He listed some past researches to explain hypotheses very clearly, impressive and comprehensive. In this research, he declared very clearly in collecting and analyzing data. This helps for other research more convenient and easier.

Literature Review

In previous section, we h

ave identified the principle of Tsang's research as well as showing the important role of research questions. According to Berg (2001), research questions does not come from vacuum, but be the result of reviewing wide quality literatures suggesting about the phenomenon.

It is usually required 2 years for a research to be public. And an article or research is considred to be up-to-date should not be older than 6 years (Carter, 2010). By looking at the references, we can see that most of them was public after 1996. Therefore, we can conclude that most of the articles in this research is up-to-date which means that the literature of this study is up-to-date and the content is relevant to the title of the research since

the researcher conducted an extensive review of relevant literatures on the concept of foreign ownership level and entry mode choice. The structure of the literature is very clear. Firstly, he showed the importance of ownership structure to the performance of multinational corporations (page 442) and narrowed the focus of this study just in the context of foreign direct investment. Narrowing the scope of a research is also very important since it can help researcher to make the research more focus and not be likely to fail to answer the research questions. Nunamaker, Chen, Purdin (1991) noted that "It is clear that some research domains are sufficiently narrow that they allow the use of only limited methodologies". Secondly, the researcher gave the classification of the entry mode and pointed out that entry mode choice is one of the most important strategic decisions for firms engaging in FDI (page 442). At the second half of page 442, the researcher showed that there have been many studies of foreign equity ownership level in EJVs in China which is one of the emerging economies and gave rise to the need of replication of Pan's (1996) results which is regarded as an objective of this study. By ordering his literature review well, Tsang succeeded in both helping the consumers of this study to catch up with current knowledge in this area quickly and showing that he had scanned the published researches and spot valid and important studies. He also identified different view points and contradicting results as analyzing cultural distance independent variable for an example (page 446).

The researcher also pointed out that the entry mode choice and EJV ownership level have been developing separately and successfully showed the major contributions of this study when it investigated the two issues simultaneously and compared the factors influencing one issue with those influencing the other (page 443) . The researcher also showed the reason why this research is meaningful to Vietnam. That is because one of the most important goal of Vietnamese government is attracting FDI. Therefore, he successfully proved that his study is important.

By mentioning some of the most relevant important prior studies and pointing out the fact that Vietnam is a less researched emerging economy, Tsang was successful to identify the research gap in current knowledge; that is, there has never been a research on examining the determinants of ownership level in equity joint ventures and foreign market entry mode choice in the context of Vietnam (page 441).


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