ASSESSING INTERNATIONAL JOINT VENTURES IN VIETNAM by Lai Xuan Thuy

A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration

Examination Committee:

r! "redric #illiam $%ierc&e' (Chairman) r! Truong *uang r! Bettina Buchel

+ationality: -re.ious egree:

,ietnamese Bachelor of $cience (Econ!) Economic /ni.ersity of $ofia0 Bulgaria Bachelor of English -edagogy /ni.ersity of 1ue0 ,ietnam The 2o.ernment of $%it&erland

$cholarship onor:

Asian 3nstitute of Technology $chool of Management Bang'o'0 Thailand April 4555

ACKNOWLEDGEMENT
The author %ould li'e to express his deepest ac'no%ledgement to the research ad.isor0 r! "redric #illiam $%ierc&e' for his intensi.e supports0 .aluable suggestions0 guidance and encouragement during the time of the study! Many sincere than's are also due to r! Truong *uang and r! Bettina Buchel for their .aluable time0 comments0 and ad.ice! Their constructi.e suggestions %ere of great help in successfully completing this study! The author %ould li'e to express his sincere gratefulness to Mr! +guyen Minh0 2eneral irector and Ms! Thu +ga0 irector Assistant at 1BC0 Mr! Anh 1ung0 2eneral irector0 Ms! Marilyn 2lorioso0 Chief "inancial Controller0 Ms! Thu 1ang0 Executi.e $ecretary and Mr! Le Bo0 1uman 6esource Manager at Century 6i.erside 1otel0 Mr! +guyen +am0 eputy irector and Ms! Lan 1uong0 7ffice Assistant at Luc' ,axi ,ietnam0 Mr! Christophe 8ac&o%s'i0 -ro9ect Manager at Thyssen Ascenseurs0 Mr! inh 8hanh0 Chief of the 3nternational 6elations epartment in the -lanning and 3n.estment $er.ice of Thua Thien 1ue -ro.ince0 Ms! Thanh 1ai -ro9ect Assistants at MA$CE 0 Ms! Minh Chau0 $enior Lecturer at 1CMC Economic /ni.ersity0 and others for their precious information related to the research! The author %ould li'e heartily to dedicate this study to his belo.ed parents0 his %ife0 Minh Ly and his children0 Little Mai and Bao Thai %ho ha.e al%ays sacrificed to encourage and support him in life! Lastly but not least the author %ould li'e to express his faithful than's to the irector of $A, -rogram and the 2o.ernment of $%it&erland for gi.ing him opportunity and financial supports so that he could successfully complete his MBA study!

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ABSTRACT
Based on the information from the questionnaires and direct inter.ie%s %ith managers of the international 9oint .entures0 this paper focussed on assessing the 9oint .entures performance in ,ietnam! The research results indicated that the 9oint .entures performed rather %ell in beha.ioral and learning0 satisfactorily in strategic0 but rather poorly in economic perspecti.es! The analysis also found significant differences in partners: perception on success performance! The fi.e 'ey dimensions in success perceptions of the 9oint .enture managers ha.e found to be "unctional efficiency0 Competiti.eness0 Effecti.eness and efficiency0 Equity0 and External customer relations! There are significant correlations bet%een success factors and the operational results as %ell as bet%een success factors and input0 process and output indicators! 3mportant problems and issues in the 9oint .enture relationships ha.e also disco.ered in the inter.ie%s %ith the managers!

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TABLE OF CONTENTS
CHAPTER Title Page TITLE PAGE i

ACKNOWLEDGEMENT.............................................................................................................................II ABSTRACT..................................................................................................................................................III TABLE OF CONTENTS.............................................................................................................................IV LIST OF TABLES..........................................................................................................................................V LIST OF FIGURES....................................................................................................................................VII INTRODUCTION...........................................................................................................................................1 4!4!BAC8267/+ A+ 6AT37+ALE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!4 4!;!$TATEME+T 7" T1E 6E$EA6C1 -67BLEM!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!; 4!<!6E$EA6C1 7B=ECT3,E$!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!; 4!>!$C7-E 7" T1E $T/ ?!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!< 4!@!762A+3AAT37+ 7" T1E 6E-76T!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!< LITERATURE REVIEW............................................................................................................................... ;!<!=73+T ,E+T/6E C7+CE-T$!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!> ;!;!A ,A+TA2E$ A+ 3$A ,A+TA2E$ 7" T1E =73+T ,E+T/6E!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!@ ;!<!M7T3,AT37+ 7" C6EAT3+2 A =73+T ,E+T/6E!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!B ;!>!BA$3C T?-E$ 7" =73+T ,E+T/6E$!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!C ;!@!-67BLEM$ A+ 3$$/E$ 7" 3+TE6+AT37+AL =73+T ,E+T/6E$!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!D ;!B!MEA$/63+2 $/CCE$$ 3+ T1E =73+T ,E+T/6E!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!4;
@!4!4!-roblems in measuring success of 9oint .entures!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!4; @!4!;!Theoretical aspects of measuring success in 9oint .entures!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!4<

FOREIGN DIRECT INVESTMENTS IN VIETNAM..............................................................................1! <!4!"76E32+ 36ECT 3+,E$TME+T!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!4@ <!;!3M-76TA+T "EAT/6E$ 7" " 3 3+ ,3ET+AM 3+ 455D!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!4D RESEARCH METHODOLOG"................................................................................................................#$ >!4!A+AL?T3CAL A+ C7+CE-T/AL "6AME#768!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!;E >!;!A$$/M-T37+ A+ C7+CE-T EX-LA+AT37+!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!;; >!<!MET17 7" ATA C7LLECT37+!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!;< >!>!MET17 7" ATA A+AL?$3$!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!;< RESULTS OF THE SURVE".....................................................................................................................# @!4!T1E */E$T37++A36E$ 6E$/LT$!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!;>
@!4!<!=oint .enture ob9ecti.es!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!;> @!4!;!Assessing =oint ,enture -erformance!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!;B @!4!<!6esults of "actor Analysis!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!<; @!4!>!7ther issues of discussions !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!<B

@!;!3+TE6,3E#$ 6E$/LT$!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!<D
@!;!4!-roblems 6esulted "rom iffering Basic 7b9ecti.es!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!<D @!;!;! ifferences in partner si&e !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>E @!;!<!7%nership and Control of the 9oint .enture !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>E @!;!>!Technology transfer !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>4 @!;!@!Brand name!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>; @!;!B!Cultural -roblems!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>;

i.

@!;!C!Management payment!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>< @!;!D!-roblems 6elated to the 2o.ernment policies!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!><

CONCLUSION AND RECOMMENDATION.......................................................................................... % B!4!C7+CL/$37+!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>B

B!4!4!=oint .enture ob9ecti.es!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>B B!4!;!=oint .enture performance!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>B Table B!4! 6an'ing success factors by le.el of partner:s satisfaction!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>D B!4!<!-roblems in the 9oint .enture relationships!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!@E

B!;!6EC7MME+

AT37+$!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!@E

B!;!4!6ecommendations to the 9oint .enture managements!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!@E B!;!;!6ecommendations to the policy ma'ers!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!@;

B!<!"/6T1E6 6E$EA6C1 $/22E$T37+!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!@; REFERENCES..............................................................................................................................................!& APPENDI'....................................................................................................................................................!! A--E+ A--E+ A--E+ A--E+

3X 3X 3X 3X

4: A CA$E 7" 1BC!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!@@ ;: MA=76 C1A6ACTE63$T3C$ 7" T1E 6E$-7+ E+T$!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!@D <: L3$T 7" T1E 3+TE6+AT37+AL =73+T ,E+T/6E$ !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!@5 >: T1E $/6,E? */E$T37++A36E!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!BE

LIST OF TABLES

TABLE Table ;!4! Table ;!;! Table ;!<! Table <!4! Table <!;! Table >!4! Table @!4! Table @!;! Table @!<! Table @!>! Table @!@! Table @!B! Table @!C! Table @!D!

TITLE Ma9or reasons for 9oint .entures Basic types of 9oint .entures Areas of -roblems in the =oint ,enture Licensing ne% pro9ects and capital raising in 455CF455D 2eneral information about " 3 pro9ects in 455D "rame%or' for assessing 9oint .entures 6espondents: perceptions on the 9oint .enture ob9ecti.es Comparison bet%een ,ietnamese and foreign managers 7.erall -erformance of the =oint ,entures 6espondents: E.aluation of the =oint ,enture:s -erformance Comparison of the respondents: e.aluation on the =,:s performance -artners: -erceptions on the 3nput0 -rocess0 and 7utput Correlation Matrix of 3nput0 -rocess0 and 7utput 6esults of factor analysis

PAGE B C 5 4C 45 ;4 ;> ;@ ;B ;C ;5 <4 <4 <; << <> <> <@ <@ <B <D >> >D

Table @!5! "actor $cores: Comparison bet%een ,ietnamese and "oreign -artners Table @!4E! Correlation Matrix of $uccess "actors and 7perational 6esults Table @!44! 6egression analysis of $uccess "actors on 7perational 6esults Table @!4;! Correlation Matrix of "actors and 3nput0 -rocess0 and 7utput Table @!4<! 6egression analysis of "actors on 3nput0 -rocess0 and 7utput Table @!4>! 6espondents: .ie%s on decisionFma'ing0 communication Table @!4@! Ma9or areas of the 9oint .enture problems and issues Table @!4B! Comparison bet%een utility fees for $7Es and nonF$7EsG Table B!4! 6an'ing success factors by le.el of partner:s satisfaction

.i

LIST OF FIGURES
FIGURE "igure <!4! "igure <!;! "igure >!4! TITLE Trend of "oreign irect 3n.estment for the period 45DDF455D "oreign irect 3n.estment $tructure by $ectors Analytical frame%or' of the research PAGE 4@ 4B ;E

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C(a)te* 1

INTRODUCTION 1.1. Ba+,g*-./0 a/0 Rati-/ale

$ince 45DD0 ,ietnam has been accelerating in the process of transformation from the centrallyFplanned as ha.ing been for more than forty years to a freer mar'etForiented economic mechanism and merging %ith the regional and global economies! The H oi moiI policy of the 2o.ernment has actually been effecti.e in pushing the economic de.elopment of this plannedFtoFbeFDEFmillionFbyF;EEE nation! 3t has created more opportunities and fa.orable conditions for exploiting the internal and external de.elopment factors0 encouraging in.estments of different forms0 especially foreign direct in.estment under .arious modes0 including 9oint .enture as one of the most important cooperati.e strategies for companies to enter and %in this rigorously competiti.e emerging mar'et! According to the information of the Ministry of -lanning and 3n.estment0 in 455D0 more than ;BE foreign direct in.estment pro9ects %ere licensed %ith a total registered capital of /$J>!EB billion! 3n addition0 4<< pro9ects %ere appro.ed to increase their in.estment capital %ith the amount of /$JCB5 million! Therefore0 at the end of the year0 a total of /$J>!D< billion of direct foreign in.estment capital %ere registered! The in.estment of these pro9ects come from <; countries around the %orld0 leading by 6ussia %ith one pro9ect of /$J4!< billion and $ingapore %ith <B pro9ects and /$JD5<!EE@ million! More than CE percent of the pro9ects are 9oint .entures! Although the reno.ation policy of the 2o.ernment has created better en.ironment for in.estment0 a trend of reducing foreign direct in.estment has been obser.ed during the last recent years! 3n comparison %ith 455C0 the number of " 3 pro9ects licensed and ne%ly registered capital in 455D %as reduced by ;4!@ K and 4EK respecti.ely! The number of failed 9oint .entures has been gro%ing0 %hile others ha.e been trying to change the o%nership to %holly o%ned foreign companies! 3n.estors may start to rethin' and ad9ust their strategies to enter the ,ietnamese mar'et through 9oint .enture! 7n the other part of the landscape0 the situation is more optimistic! Many international 9oint .entures ha.e actually found their position in this difficult mar'et0 namely ,inacpecial0 -roconco0 Me'ong Concrete Mix0 ,+LC+ Catering $er.ice0 and others (-hong0 455@)! $ome of the 9oint .entures are continuing to successfully expand the mar'et share and reali&e benefits such as Telstra0 Long An Mineral Co!0 ChinfonF1aiphong Co!0 and so on (M-3 6eport +o! 44 B88L8C+ =anuary 40 4555)0 despite the current financial crisis in the region! 3n 455D0 the 2o.ernment a%arded certificates of merit (CM) to four foreign in.ested enterprises: A9inomoto Monosodium 2lutamate (=apan)0 ,edan M$2 (Tai%an)0 C- ,ietnam (Thailand) and -roconco Animal "eed ("rance) for their outstanding achie.ements in business acti.ities and implementing social programs for the community! Then0 %hat is actually the situation of the 9oint .entures in ,ietnamM 1a.e the 9oint .entures been running %ellM And do they ha.e a futureM Many of recent research concentrated on the

legal0 crossFcultural0 compatibility0 and conflict aspects of the 9oint .entures to identify factors for more effecti.e foundation and operation of the 9oint .enture! This study is focusing on assessing the 9oint .enture:s performance %ith the ma9or ob9ecti.e to help the 9oint .enture partners as %ell as the potential in.estors to ha.e an insight into the current situations of the 9oint .entures in ,ietnam and ad9ust their corporate strategies!

1.#.

State1e/t -2 t(e *e3ea*+( )*-4le1

8no%ing ho% %ell a 9oint .enture is running is practically important for the managers and participants in the .enture to ad9ust and de.elop their business strategies! Based on the information from the questionnaires and inFdepth inter.ie%s %ith the 9oint .enture managers0 this paper is focused on e.aluating the performance of the 9oint .entures in ,ietnam! The ma9or problem of the research is therefore to clarify the current performance of the 9oint .entures0 that is0 to ans%er the question of ho% %ell the 9oint .entures ha.e been performed in ,ietnam and %hat problems they meet in their operations!

1.&.

Re3ea*+( -45e+ti6e3

The general ob9ecti.e of the research is to help understand the current performance situation of the 9oint .entures in ,ietnam0 their achie.ements and future position in this ne%ly emerging mar'et! Based on the systems analysis approach0 an extensi.e literature re.ie%0 and inFdepth situational analysis0 the research %ould pro.ide useful information for the current 9oint .enture managers to understand the actual situation of the 9oint .entures and ha.e necessary strategic ad9ustments! The research also helps potential in.estors to ha.e more ob9ecti.e .ie%s on the situations of the international 9oint .entures in ,ietnam0 %hich %ould be useful for them in preparing and ad9usting their entry strategies into the country! "or the policy ma'ers0 the research %ould be an important source of information to gi.e them an insight into the current performance of the 9oint .entures to ha.e necessary policies for supporting the foreign direct in.estment companies in general and 9oint .entures in particular to achie.e their goals! $pecific ob9ecti.es of the research can be stated as follo%s: 4! To de.elop an analytical frame%or' for e.aluating 9oint .enturesN ;! Based on the sur.ey0 to e.aluate the 9oint .enture performanceN <! To identify the ma9or success factors and ho% they affect the operational performance of the 9oint .entureN and >! To ma'e important recommendations for the 9oint .enture managers0 potential in.estors0 and policy ma'ers in ma'ing necessary ad9ustments on the strategies and policies! The author %ould also ma'e a suggestion of further research in the fields of interest for a deeper and more complete assessment of the 9oint .entures in the country!

1. .

S+-)e -2 t(e 3t.07

The study %as focused only on the 9oint .entures in the Central part of ,ietnam0 mainly ThuaFThienF1ue and anang0 the t%o ma9or economic centers in the region! $o it limits the generality of the research findings! The research did not deal %ith the issues of partner selection0 negotiation0 and termination phases of the 9oint .entures! 3nstead0 the study %as focusing only on the 9oint .enture operational performance0 based on the inter.ie%s and questionnaire data from the managers0 currently %or'ing in the 9oint .entures! Therefore0 it limits the %holeness of the finding information!

1.!.

O*ga/i8ati-/ -2 t(e *e)-*t

The report is di.ided into six chapters! As principle0 the first Chapter is an introduction to the research study! The second Chapter is an extended literature re.ie% on the issues of 9oint .enture and 9oint .enture success measuring! /nderstanding the 9oint .enture and problems related to its assessing %ould help easier understand the finding information! 3n Chapter <0 an o.er.ie% of the foreign direct in.estment in ,ietnam is made to pro.ide an insight into the situations0 in %hich international 9oint .entures are operating! 7ccupying about CEK of " 3 pro9ects0 the 9oint .entures ha.e actually played important roles in the economic de.elopment of the country! Chapter > deals %ith the issues of the research methodology! Conceptual and analytical frame%or's are built to guide the research and support understanding the research results! Chapter @ is the research result! 3t is subdi.ided into three sections! 3n the first section0 the questionnaire results are discussed to gi.e an o.erall landscape of the 9oint .enture performance0 based on the sub9ecti.e information from the questionnaires! 3n the second section0 factor analysis %as employed to find 'ey success indicators and ho% they affect operational results of the 9oint .enture! And the last section is the inter.ie%s result of selected managers from the 9oint .entures to address the operational problems related to the 9oint .enture performance! 3n Chapter B0 important conclusions about the research finding are made to gi.e an extracted summary on the problems studied! Appropriate recommendations are also made for both policy ma'ers and businessmen interested in the 9oint .enture and its issues! The author also ma'es suggestions for further research! Additional issues of decision ma'ing0 communication0 and conflict sol.ing approaches are also discussed in Chapter B to ma'e clearer picture of the 9oint .enture situations! Especially0 a real case of financial performance in a 9oint .enture %as also discussed additionally in the appendix section as an illustration of the findings (see Appendix 4)!

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C(a)te* #

LITERATURE REVIEW #.&. J-i/t Ve/t.*e C-/+e)t3

According to Thorelli0 a %ellF'no%n specialist in 3nternational 9oint .entures issues0 in a rapidly changing %orld en.ironment0 firms should build net%or's H%ith a .ast hierarchy of subordinate0 crisscrossing relationsI (Thorelli0 45DB)! An important feature of the global firm:s net%or' is that partners may de.elop relationships bet%een themsel.es and collaborate %ith the mar'et leaders! Alliances thus formed are seen as part of a process of strengthen the firm:s position in an industry and are essential for its sur.i.al (1a'ansson and =ohanson0 45DD)! A 9oint .enture is formed %hen t%o or more firms form a third entity to carry out a producti.e economic acti.ity (1arrigan0 45D@)! A 9oint .enture has also been defined as an equity arrangement bet%een t%o or more independent firms! This definition includes equity alliances bet%een t%o firms to organi&e production and mar'eting on a regional rather than a country le.el! =oint .entures ha.e increased in .arious forms and ha.e become more strategic rather than tactical in nature! According to C&in'ota0 6i.oli0 and 6on'ainen (45D5) 9oint .entures can be defined as Hthe participation of t%o or more companies 9ointly participating in an enterprise in %hich each party contribute assets0 o%ns the entity to some degree0 and shares ris's!I "or many de.eloping countries0 9oint .enture is a .ery important method of technology transfer to acquire and build necessary technological capability for the national industries! 7ne of the most important reasons for forming 9oint .enture companies is to reduce the exposure to ris' associated %ith the de.elopment of ne% products and technologies (1arrison0 45DC)! Many researchers ha.e emphasi&ed the importance of the 9oint .enture as an appropriate entry strategy to go abroad! "or the purpose of e.aluating the international 9oint .enture0 the definition of Aeira and $hen'ar (455E) is suitable because it encompasses the unique characteristics consistent %ith most other definitions! According to the authors0 an international 9oint .enture is Ha separate legal organi&ational entity representing the partial holdings of t%o or more parent firms in %hich the headquarters of at least one is located outside the country of operation of the 9oint .entureI! And this entity His sub9ect to the 9ointF control of its parent firms0 each of %hich is economically and legally independent of the othersI! According to Lane and Beamish (455E)0 a successful 9oint .enture is a stable0 healthy0 and profitable business relationship based on cooperation and t%oF%ay communication that meets the needs of both partners o.er a long term0 mutual condition! Buchel and other authors (Buchel et al!0 455D) argue that 9oint .entures Hare clearly becoming more popular as a form of cooperati.e arrangement0 not only bet%een partners from different countries but also bet%een companies operating in the same business areaI! According to the

>

authors0 9oint .entures Hare a form of cooperation0 %hich stand bet%een the traditional mechanisms of economic coordination0 that is mar'et and hierarchyI! 6esearchers ha.e tried to categori&e the .arious 'inds of cooperati.e arrangement bet%een companies! The first important distinction to be made among the different 'inds of cooperati.e arrangement is bet%een contractual arrangements and cooperati.e arrangements0 %hich in.ol.e exchange or contribution of capital0 that is equity arrangements! Among the later0 a distinction may be made bet%een cooperati.e arrangements0 %hich lead to the creation of a ne% entity and arrangements0 %hich in.ol.e equity s%aps! The extreme form of equity s%aps is %here the cooperating companies are combined by means of merger and acquisition (Buchel et al!0 455D)! Buchel distinguished 9oint .enture and 9oint .enture system! The former denotes the ne% entity created by the 9oint .enture:s partners0 and the later means the %hole structure of relationships amongst the partner companies and the ne% entity! $he argued that the relationships amongst the partners are not necessarily all of a cooperati.e nature! 3t often happens that the partner organi&ations cooperate in some areas but are competitors in others! According to the author0 an Heffecti.e 9oint .enture management is characteri&ed by continuous learningI! At the first le.el0 the important thing is to learn ho% a 9oint .enture %or's0 %hat are problems %hich may arise0 and %hat possibilities exist for organi&ing0 guiding and de.eloping in different areas! At the second le.el0 the aim is to recogni&e the %ay in %hich the 9oint .entures can be used to enable the partner companies to learn!

#.#.

A06a/tage3 a/0 Di3a06a/tage3 O2 t(e J-i/t Ve/t.*e

The reality of global competition today is that fe% companies possess all of the competiti.e ad.antages that %ould enable them to be successful internationally! "or firms in industrial countries0 prospects for future gro%th are increasingly seen as being disproportionately in de.eloping parts of the %orld0 not in more familiar mar'ets in the de.eloped nations! But0 for a .ariety of reasons0 doing business in de.eloping countries is .ie%ed as being considerably ris'ier0 to be approached %ith much more caution! $imilarly0 de.eloping country mar'ets are becoming much more open to international competition0 pro.iding both opportunities and dangers for domestic companies! To meet these challenges0 managements are attempting to position their firms to become more competiti.e! Thus0 from the perspecti.es of both industrial and de.eloping country companies0 the e.ol.ing global mar'et calls for change from past competiti.e practices! =oint .entures ha.e both ad.antages and disad.antages! They0 on the one hand0 may increase ri.alry %hile also eliminating competition among the participants of the .enture! =oint .entures can enable the participants to unify complementary technical and managerial capabilities to perform pro9ects %hose requirements exceed the expertise and resources of any single firm! By facilitating the transfer of 'no%Fho% and technology0 9oint .entures also can impro.e the s'ills of indi.idual participants and thereby o.ercome barriers to entry and expansion in specific mar'ets! $uch collaboration may be particularly .aluable in permitting firms to reali&e scale economies for research and de.elopment by a.oiding duplication of effort and assembling a critical mass of resources and a higher le.el of in.estment in in.enti.e acti.ity!

=oint .entures also enable firms to spread the ris' associated %ith financially ambitious pro9ects! 3f channeled in this manner0 9oint .entures can increase output and lo%er costs and prices! "or many companies in the de.eloping countries0 9oint .enture could help obtain also in.estment capital and 'no%ledge! 1o%e.er0 collaboration among direct ri.als may discourage their independent pursuit of promising approaches to enter ne% mar'ets or de.elop ne% products! $uch cooperation can lead to direct price fixing or cause spillo.ers of cost0 pricing and design information that reduce the participantsO inclination to compete aggressi.ely against each other!

#.&.

M-ti6ati-/ O2 C*eati/g a J-i/t Ve/t.*e

The reasons for alliance of different partner companies may differ from each other! 1arrison di.ided the reasons by %hich a 9oint .enture is formed into internal0 competiti.e0 and strategic goals! These main reasons are summari&ed in Table ;!4 Ta4le #.1. Ma5-* *ea3-/3 2-* 5-i/t 6e/t.*e3 Internal reasons: Spreading costs and risks. Safeguarding resources, which can not be obtained via the market. Improving access to financial resources. Benefiting from the economies of scale and advantage of size. Accessing new technologies and customers. Accessing innovative managerial practices. Encouraging entrepreneurial employees. Competitive goals: Influencing structural evolution of the industry. re!empting competitors. "efensively responding to blurring industry boundaries and globalization. #reating stronger competitive units. Strategic goals: #reation and e$ploitation of synergy. %ransfer of technologies and skills. "iversification goals. $ource: Adapted from Buchel et al!0 in International &oint 'enture (anagement, =ohn #iley P $ons (Asia) -te!0 Ltd!0 455D0 pp! 4B! 7ther authors emphasi&e the role of a 9oint .enture as gaining faster and easier access to the local mar'et and the distribution systemN impro.ing 'no%ledge of the local economy0 politics and cultureN gaining access to local human resources0 including managers and laborsN sharing ris'sN and ha.ing preferential treatment ($%ierc&e' et al!0455@) #hile0 for the local partners0 the moti.ation may be others! Many de.eloping countries see' foreign in.estment in order to obtain capital0 technology and managerial 'no%Fho%! "or B

most de.eloping countries0 other benefits include an increase in employment and producti.ity le.els as %ell as the efficient utili&ation of scarce resources such as foreign exchange and imported material inputs! A 9oint .enture may permit local enterprises to increase its competiti.e position in the local mar'et by upgrading its product line and obtaining technical assistance from foreign firms! =oint .entures help the local firms gain easier access to technological information particularly from industrially de.eloped countries! Moreo.er0 through the establishing of the 9oint .enture the local enterprise can bridge the gap bet%een its .ast material resources and the technologies from the de.eloped countries! =oint .entures can be .ie%ed as a means by %hich firms can learn to see' or retain their capabilities of organi&ing a particular acti.ity %hile benefiting the superior production technique of a partner (#illiamson0 45D@)!

#. .

Ba3i+ T7)e3 O2 J-i/t Ve/t.*e3

Theoretically0 there are countless %ays of using and constructing 9oint .entures! Based on the existing literature and applications0 %hich are common in practice0 six types of 9oint .enture can be listed as in Table ;!;! Ta4le #.#. Ba3i+ t7)e3 -2 5-i/t 6e/t.*e3 Complementary technology: %he partners combine their technologies to diversify their product)market portfolios. Market technology: #ombination of the market knowledge of one partner with the production or product know!how of the other. Sales joint ventures: %he producer and a local partner cooperate in an arrangement, which is a mi$ture of independent representation and own branch. Concentration joint ventures: #ompeting partners cooperate to form larger and more economical units. Research and development: %he aim is to create synergy by making *oint use of research facilities and e$ploiting opportunities to specialize and standardize, combining know! how and sharing risks. Supply joint ventures: #ompetitors with similar input need cooperate to safeguard supply, reduces procurement costs or prevent the entry of new competitors.

$ource: Buchel et al!0 International &oint 'enture (anagement, =ohn #iley P $on (Asia) -te!0 Ltd!0 455D0 pp! 4CF4D! 3n terms of the equity participation by 9oint .enture partners0 9oint .entures can be classified into equity and nonFequity 9oint .entures (Tomlinson0 45CE)! 3n practice0 the equity form is more common0 %hich in.ol.es a financial in.estment by the partner companies! Based on the relati.e strength of the partners in.ol.ed in the 9oint .enture:s mission0 Lei and $locum (4554) classify 9oint .entures as speciali&ation or shared .alueFadding .entures! $peciali&ation .entures are those0 in %hich each partner brings and contributes a distincti.e

competency in a particular .alueFadding acti.ity! #hile in shared .alue adding 9oint .enture partners participate and share in the .alueFadding acti.ity together! =oint .entures can also be classified into dominant partner 9oint .entures0 %hen only one of the partners plays a dominant role in the decision ma'ingN shared management 9oint .entures0 %here each partner play an acti.e role in decision ma'ingN or independent 9oint .entures0 %here the 9oint .enture:s general manager en9oys extensi.e decision ma'ing autonomy (8illing0 45D<)! A distinction should be made bet%een 9oint .entures that are limited in scope and number of mar'et participants (i!e!0 t%o or three firm 9oint .entures) and industryF%ide0 mar'etF%ide or net%or' 9oint .entures! The issues that are li'ely to arise are .ery different0 and should be handled differently0 for each! 3n addition0 it is helpful to distinguish generally bet%een 9oint .enture formation and 9oint .enture operation! Most of the case la% and discussion in this area re.ol.e around the operation of the 9oint .enture0 rather than %hether it %ould be permissible for the parties to create a 9oint .enture in the first instance! 3n all instances0 the 9oint .entureOs rules should be reasonably related to the 9ustification for the .enture! The .enture should also ha.e appropriate safeguards to a.oid spillo.er effects!

#.!.

P*-4le13 a/0 I33.e3 -2 I/te*/ati-/al J-i/t Ve/t.*e3

Based on statistical data for a long period of time from 45CE to 455@ of the 9oint .entures practices in the de.eloping countries0 6obert 6! Miller and other coFauthors made a deep analysis to find out the critical problems0 %hich the international 9oint .entures ha.e faced! These problems can be di.ided into t%o 'inds: the problems of the 9oint .enture negotiations and the problems related to the 9oint .enture relationships (see Table ;!<)! According to the authors0 the e.aluation of the assets each partner brings to the 9oint .enture during the time of their marriage is among the most difficult problems in the negotiation process! 3t is often not a simple matter to e.aluate 9ust %hat these assets are %orth! 7ne side0 for example0 may be bringing to the =, a going business0 but one %here no equity shares exists in a secondary mar'et! Another difficult .aluation problem that exists in many de.eloping country 9oint .entures concerns ne% technology to be supplied0 usually by the industrial country partner0 and %hich needs to be e.aluated to determine an appropriate licensing fee structure! 7r0 there is technology already incorporated in a product to be manufactured and sold by the =,! These technologies must be e.aluated before becoming the 9oint .enture:s common assets! Another 'ind of problems relates to the transparency of the negotiation terms and conditions! The authors argue that getting accurate data upon %hich to base .aluations and other decisions can be .ery difficult in some countries and %ith some companies! "or example0 one side or the other may be a family enterprise in %hich accounting standards might be quite different from internationally acceptable rules! According to the authors0 transparency is a particular problem in 9oint .entures being established in former command economies %here there ha.e been no real mar'ets for outputs0 for supplies or for financial instruments! A.ailable accounting information means .ery little in such circumstances0 yet someho% the 9oint .enture partners ha.e to come to some mutually agreeable method of assessing the .alue of assets each side is contributing!

Ta4le #.&. A*ea3 -2 P*-4le13 i/ t(e J-i/t Ve/t.*e Problems in Negotiations: +. ,. -. /. 0. 2. 'aluation %ransparency #onflict .esolution (anagement .esponsibility #hanges in 1wnership 3inancial (atters

Problems in Partner Relationships: +. (ultinationalities ,. E$port .ights -. %a$ Issues /. "ividend and Investment olicies 0. "ifference in artner Size 2. 1wnership 4. (anagement 5. #ultural roblems 6. (arket c #hanges $ource: 6obert 6! Miller0 =ac' ! 2len0 "rederic' A!0 H3nternational =oint ,entures in e.eloping Countries: 1appy MarriagesMI! Conflict resolution is another 'ind of the 9oint .enture problems! Many 9oint .enture agreements spell out in some detail 9ust ho% disputes bet%een the partners are to be resol.ed0 an apparent requirement that some parties on the de.eloping country side often find ob9ectionable because they belie.e it displays a lessFthanFhopeful attitude to%ard the ne% relationship! The authors suggested that agreement pro.isions may in.ol.e0 at the extreme0 quite precise procedures to be used in dissol.ing the =,0 and they are often the sub9ects of intense negotiations! i.ision of management responsibility is a .ery important issue in the 9oint .enture as it is closely related to the interests of the partner companies to enter the .enture! The question of %ho is to manage the ne% enterprise is decidedly not a simple matter to resol.e0 and it is one not necessarily dependent upon %hich partner maintains ma9ority control! Agreements can be quite specific both on this issue and on the issue of the 9oint .enture management independence! These issues are sufficiently important to companies that many %ill %ish to insert .eto restrictions into the 9oint .enture agreement to assure that actions cannot be ta'en %ithout explicit appro.al from one or both partners! -roblems related to changes in o%nership are also common in the de.eloping country 9oint .entures! The authors ha.e found particularly important issues %hen one partner or the other increasingly setting a question of forming the procedures to be follo%ed in changing the o%nership structure as the =, matures! According to the authors0 this becomes an important issue because it impinges on a number of other operational matters and is quite simply0

recognition of the reality that fe% 9oint .entures remain unchangeable o.er their duration! Although it is probably sensible to handle the matter early on0 rather than suddenly confronting the need sometime later %ithout clear guidance0 the issue ob.iously is not one that yields to easy solution! e.eloping country partners especially can be leery of such pro.isions0 because they see them as their potential death %arrant %hen the industrial country partner0 for one reason or another0 %ants to ta'e full control! After all0 di.idend policy and other financial matters are found to be contro.ersial issues of the 9oint .enture! i.idend policy goes to the heart of the reasons %hy companies enter 9oint .entures0 %ith some companies hoping rapidly to expand and gain mar'et share %hile others stri.e to gain a quic' cash flo% to support other operations or0 in the case of closely held companies0 possibly for personal reasons! A number of other financial issues come up in negotiations0 of course0 some of %hich can be the cause of consternation on one or both sides! The authors ha.e also found 'ey problems affecting the relationships bet%een the 9oint .enture:s partners! According to them the main reason for problems of this 'ind %as the multinationality of the 9oint .enture! The reality of many 9oint .entures in de.eloping countries is that they in.ol.e more often than not large multinational companies (M+Cs) %hich ha.e under their pur.ie% a mix of other 9oint .entures and %holly o%ned subsidiaries else%here in the %orld! This contrasts %ith the de.eloping country firm0 %hich may be quite large by local standards0 but not in comparison %ith its partner! The upshot of such differences is that the business perspecti.es of the t%o (or more) companies can .ary substantially0 and this .ariability can be at the root of relationship problems later in the 9oint .entures life! The first problems of the 9oint .enture relationship relate to the export right! Exporting sometimes represents a fundamental difference bet%een industrial and de.eloping country partners and0 again0 it is an issue difficult to reconcile satisfactorily! +ot infrequently0 the industrial country company is a multinational corporation %ith operations and sales in a .ariety of countries! Typically0 it %ill not %ant to allo% the 9oint .enture to be free to export products0 possibly of inferior quality0 into mar'ets that may already be ser.ed from other manufacturing points in its system! The M+C loo's upon the 9oint .enture as one piece of a complex global %eb0 and it is not li'ely to allo% that single piece to dictate its o%n policies %here other pieces or0 indeed0 the %eb itself might be compromised! The rule in such situations is for the M+C to put strict limitations on the rights of the 9oint .enture to export! The de.eloping country partner0 on the other hand0 typically has much different ideas! 1ere the expectation is that as ne% technology is brought in and the 9oint .enture absorbs productLprocess technologies0 exports might pro.ide a natural mar'et for expansion! 3ndeed0 increased exports might be a primary reason for the de.eloping country side to ha.e entered into a 9oint .enture agreement in the first place! Taxation is another source of the relationship problems! The authors found that part of the optimi&ation process underta'en by the M+C %ould co.er its %orld%ide tax burden %hich0 allFelse equal0 it %ould %ish to minimi&e! $uch a tax minimi&ation strategy can affect dramatically relations %ith the 9oint .enture0 particularly %hen the 9oint .enture either imports parts and components from the M+C or0 as is usual0 exports products through the M+C parent! The M+C in these circumstances %ill be .ery a%are of transfer prices bet%een

4E

=, and parent0 and it may attempt to manipulate that price to lo%er its taxes! "or example0 if taxes are considerably higher in the 9oint .enture:s country of operations than in the M+C:s source country0 then there %ill be a temptation for the M+C to raise transfer prices to lo%er profits in the 9oint .enture -roblems of di.idend policy and in.estment are also found to be in the center of the 9oint .enture argument! The authors disco.ered that %here these policies are not spelled out in the agreement0 differences could be .ery difficult to resol.e! The problem is that the M+C may ha.e global in.estment programs that in.ol.e the transfer of funds from one region to another! 3t might in these circumstances much prefer di.idends to rein.estment %ithin the 9oint .enture a position not necessarily compatible %ith its 9oint .enture partner:s .ie%! The opposite problem occurs as %ell0 %here the M+C might be quite content to delay di.idends in fa.or of faster expansion and the local partner demurs! Another set of problem areas relates to the differing si&e of the t%o parties in the 9oint .enture! 3n relati.e terms0 the local partner is li'ely to be considerably smaller than the M+C and0 according the research finding0 this difference can cause difficulties during a 9oint .enture initial0 often high gro%th0 years! The local partner may ha.e difficulty coming up %ith the necessary capital infusions to support the expansion! 7ne of the important issues of the 9oint .enture relationship is the problem of o%nership! The desirability of ha.ing the operational management of the 9oint .enture independent of either partner has been a problem arising in negotiating =, agreements! The research found that %hen the 9oint .enture is not established in a %ay that %ould allo% for that independence0 one could expect those relationship problems %ould emerge fairly quic'ly! 7ften this happens %hen the industrial country partner desires0 for one reason or another0 to limit the 9oint .enture:s operations in %ays0 %hich %ould ma'e it roughly equi.alent to a %holly o%ned subsidiary! The authors argued that unless such an arrangement had been agreed to early on0 it %ould cause ine.itable problems bet%een the partners later in the 9oint .enture:s life! 6elated to o%nership problems0 but in some %ays quite distincti.e0 are a series of difficulties that can occur in controlling the enterprise! The research found that product line disputes are among the more common of these problems! According to the researchers0 these raised generally because the conditions that existed %hen the =, %as formed change and0 because of the change0 alter the perspecti.es of one or the other partner Another common source of disagreement has found to be %hen dealing %ith sourcing ra% materials0 parts or components! 3n this case0 the =, agreement can specify in detail that certain materials are to be sourced from the industrial country partner! Aside from the transfer pricing issues that such sourcing raises0 the original conditions that made the sourcing pro.ision in the agreement seem logical can change! 7.er time and as economic de.elopment ta'es place0 local sources may become a.ailable %hich are0 possibly0 lo%er in cost and at least as high in quality! These sources ob.iously %ould be attracti.e to the 9oint .enture:s management! But0 the M+C:s .ie% could be different0 because it might benefit more from retaining the original agreement and continuing to produce the materials for the 9oint .enture! -artly0 the problems are caused by the ob.ious fact that the t%o (or more) partners come from much different cultural bac'grounds0 and indi.iduals may see the same set of 44

circumstances in quite different %ays! But0 there are other dimensions to this cultural gap that are important as %ell! Corporations themsel.es ha.e QculturesQ %hich condition ho% people .ie% their en.ironment and ho% they interpret issues! This factor is one of the primary reasons %hy 9oint .entures established bet%een industrial partners from the same country and e.en the same industry often run into trouble! "inally0 9oint .entures are exposed to e.erFchanging panoply of forces that shape and direct outcomes! The changing en.ironment %ithin %hich the 9oint .enture operates also alters partner relationships in %ays %hich can sometimes cause stresses that are difficult0 and at times impossible0 to resol.e! $ummari&ed belo% are a fe% cases that arose repetiti.ely in inter.ie%s! The researchers found that the most common cause of changeFrelated problems is the fact that experience in a 9oint .enture results in learning0 and learning can modify ho% one .ie%s the contributions of one:s partner! This seems particularly true for managements %ith little foreign experience0 %ho might feel uncomfortable about their le.el of understanding %ith respect to go.ernment relations0 labor recruitment and management0 or mar'eting and distribution techniques! Thus0 according to the authors0 these aspects are a primary source of comparati.e ad.antage to the local partner %hen the 9oint .enture is formed! 1o%e.er0 as learning ta'es place o.er the years0 this ad.antage begins to erode0 and the M+C side may begin to feel more confident about its abilities to handle these issues! -ut slightly differently0 the M+C may come to belie.e that the contributions being offered by the local partner are no longer commensurate %ith his re%ards! At such a time0 pressure %ill begin to mount for a change in the 9oint .enture:s o%nership structure to pro.ide more equity to the M+C! Changing circumstances not anticipated %hen the =, %as formed could also cause problems in the 9oint .enture relationship! #hile both sides to the agreement might agree that the rele.ant pro.isions no longer %or' properly0 ma'ing the necessary modifications to the agreement in a going operation can be quite taxing! 7ne side or the other may ha.e made commitments in other parts of their operations that are difficult to alter!

#.%.

Mea3.*i/g S.++e33 i/ t(e J-i/t Ve/t.*e

!.1.1. P*-4le13 i/ 1ea3.*i/g 3.++e33 -2 5-i/t 6e/t.*e3 According to Baird0 Lyles0 and 6eger (455<)0 there exist three factors0 %hich ma'e it difficult to 9udge the success of 9oint .entures! The first obstacle is the cooperati.e context of the 9oint .enture! A cooperati.e .enture in.ol.es different le.els and different partners0 %hich often ha.e different interests0 different technological capability0 and different management styles and practices! The assessment is therefore must ta'e into account the interests of .arious partners0 the changes in the relationship and beha.ior bet%een the partner companies0 as %ell as the learning effects to the 9oint .enture and each partner of it! The second obstacle is deri.ed from the fact that the ob9ecti.es for the 9oint .enture are often not defined clearly enough0 and %here it is the case0 it %ill ob.iously difficult to decide %hether they ha.e been met or not!

4;

The third obstacle is that many 9oint .entures face especially high le.els of uncertainty %ith regards to technologies0 products or mar'ets! This further reduces the meaning and .alidity of short term0 quantitati.e indices of success and puts obstacles in the %ays of a traditional success measurement based on the stable company performance! !.1.#. T(e-*eti+al a3)e+t3 -2 1ea3.*i/g 3.++e33 i/ 5-i/t 6e/t.*e3 There are different approaches to assessing the success or failure of an organi&ation! Each approach has its ad.antages and disad.antages! 2eringer and 1ebert (4554) examine 9oint .enture performance by ob9ecti.e and sub9ecti.e measurements! $ub9ecti.e performance measures each parent:s satisfaction %ith the 9oint .enture:s o.erall performance0 %hile ob9ecti.e performance is measured in three %ays: sur.i.al0 stability0 and duration of the 9oint .enture! aft (455;) describes three ma9or approaches to measure success based on results0 processes or the ability of an organi&ation to acquire certain scarce resources! The resultForiented success measurement is based on output dimension that is related to the goals of the transformation process! The success of a 9oint .enture is measured in terms of %hether0 or ho% far0 certain ob9ecti.es are met! The most important of these are usually profitability0 gro%th0 and mar'et share0 but other aims are also significant0 for example quality ob9ecti.es0 number of ne% products0 research findings0 stability0 and satisfaction! -rocessForiented success measurement is based not on specified output goals0 but on an e.aluation of the company:s internal transformation processes! The output and process dimensions are usually closely related! Effecti.e and efficient transformation processes often enable a company to be successful in terms of results! 6esourceForiented measurement is based on the company:s ability to obtain scarce resources from the en.ironment! This approach is used primarily %hen output is difficult to define and e.aluate! 6esearch institutions and uni.ersities0 for example0 often consider the le.el of technological equipment or the number of %ellF'no%n and respected scientists and professors as their success criteria! -ic'ing out indi.idual le.els or .ie%points %hen trying to form a complete picture of the success of a cooperation0 ho%e.er0 is not adequate! 7n the other hand0 it is neither feasible nor meaningful to %or' systematically through all possible le.els and .ie%points! Buchel and others (455D) employ a multidimensional approach for measuring success of 9oint .entures0 %hich is practicable in the routine context of the .entures! According to the authors0 the assessment should be both easy to use and able to co.er different le.els0 stages0 interests and contexts of the 9oint .enture! The international 9oint .entures should be ad9usted not only on the shortFterm ob9ecti.es0 but also the longFterm perspecti.es! The traditional methods of e.aluating the success of cooperati.e .entures are all based on economic0 strategic or beha.ioral perspecti.es (-robst et al!0 455>)! Buchel and others emphasi&ing the role of 9oint .entures as institutional learning tools suggest that learning perspecti.e is also needed to be assessed (Buchel et al!0 455D)! The economic approaches are in principle outputForiented %ith the purpose of deciding %hether the cooperati.e .enture is increasing the .alue of the partner companies! The

4<

economic approach to success 9udgments is based on the theory of financial and capital mar'ets and in.ol.es examining .ariables such as free cash flo%s0 returns on in.estment0 net yearly profit0 and increase in the shareholder:s .alue! Typical criterion for e.aluating a 9oint .enture includes decrease in unit costs through better use of production capacity or increase in turno.er as a result of a sales cooperation in a gro%ing mar'et! "rom the strategic point of .ie%0 the important criteria for the 9oint .enture:s success are company si&e0 productFmar'et combinations0 mar'et share0 competiti.e position0 ad.antages based on research results and a strong position on the distribution and procurement mar'ets! A further criterion is the extent to %hich the cooperation yields synergies bet%een the partners or bet%een the 9oint .enture and one of the partners! The strategic approach places more emphasis on core competencies and on strategic focus0 %hich each company has adopted0 or %ants to de.elop! Li'e the economic perspecti.e0 the strategic perspecti.e is also primarily based on the output criteria! But it is different from the economic perspecti.e from the strategic point of .ie% that considers the output in the longer time rather than in the shortF term period! Typical criteria of the strategic perspecti.e are the safeguarding of particular resources0 assess to ne% 'ind of technology0 or increasing the company:s competiti.e strength by using the special 'no%Fho% of a partner! =oint .entures are also expected to impro.e the relationship bet%een partners! The beha.ioral perspecti.e emphasi&es the beha.ior of the participants in their cooperati.e relationship! 3n this point of .ie%0 the essential indicators include the de.elopment of a separate culture and identity0 the ability to deal %ith conflicts and continued sur.i.al .ersus premature dissolution of the 9oint .enture! Building the 9oint .enture:s culture to increase trust0 commitment and sensema'ing of the partners is .ery important for them so that they can ma'e use of the full synergy for the purpose of the 9oint .enture! The beha.ioral perspecti.e is0 therefore0 is emphasi&ing the processes %ithin the 9oint .enture system0 rather than the output criteria! 2enerally0 it can be said that the traditional approaches allo% us to ma'e relati.ely comprehensi.e assessments of the success or failure of cooperati.e .entures! 1o%e.er0 they omit an aspect in %hich both company managers and business theoreticians are no% paying an increasing attention (-robst and Buchel0 455>)! This is the concept of learning! Building a learning organi&ation that allo%s the company to consistently re.ie%s its o%n %ea'nesses and strengths and its pre.ailing patterns of acti.ity0 %hether it acquires Himplicit 'no%ledgeI0 and %hether it increases its ability to learn0 is .ery important for it to achie.e the corporate mission! The learning .ie% of success and failure combines a resultForiented approach %ith a process approach! 3t ta'es into account on the one hand the acquisition of 'no%ledge and the attainment of learning goals0 and on the other0 the learning processes %hich support these ends (Buchel et al!0 455D)!

4>

C(a)te* &

FOREIGN DIRECT INVESTMENTS IN VIETNAM &.1. F-*eig/ Di*e+t I/6e3t1e/t

uring the period from 45DD to 455D foreign in.estors promised to in.est J<C billion in ,ietnam0 of %hich about J4> billion ha.e actually been implemented! The gro%th of " 3 into the country %as .ery high at the first half of the period after a legal frame%or' for foreign in.estment %as put into practice since 45DC0 especially %hen the /!$! embargo %as lifted in 455>0 %ith an a.erage rate of about >@F@E percent per year!
200.00 150.00 100.00 50.00 0.00 1988

1990

1992

1994 Year

1996

1998

Average size of a project (in million US "ro#t$ in t$e n%m&er of projects ('! "ro#t$ in t$e capital registere( ('!

Fig.*e &.1. T*e/0 -2 F-*eig/ Di*e+t I/6e3t1e/t 2-* t(e )e*i-0 19::;199: $ource: ,ietnamOs $tatistics ?earboo' 455C M-3 6eport +o! 44B81L8C+ =an! ;0 4555 3n the last se.eral years0 ho%e.er0 there has been obser.ed a trend of a considerable reduction of the foreign direct in.estment into the country (see "igure <!4)! 3n 455D0 about ;BE foreign direct in.estment pro9ects %ere licensed %ith a total registered capital of /$J>!EB billion! 3n addition0 4<< pro9ects %ere appro.ed to increase their operating capital %ith the amount of /$JCB5 million! Therefore0 at the end of the year0 a total of /$J>!D< billion of direct foreign in.estment capital %ere registered! The gro%th rates of " 3 flo%s for 455C and 455D %ere negati.e %ith minus <<K and minus 4<!5K respecti.ely! "or the entire period0 the a.erage number of pro9ects licensed is ;;<!@ per year0 %ith an a.erage gro%th rate of ;4!@K! E.ery year0 J<!> billion " 3 %as promised to be in.ested in ,ietnam0 %ith an a.erage gro%th rate of ;5!;K! $o far0 more than CEE companies from o.er BE countries ha.e been underta'ing foreign direct in.estment pro9ects in ,ietnam0 leading by $ingapore0 Tai%an0 1ong 8ong0 =apan0 4@

and $outh 8orea! The in.estment from these countries account for about more than half of the total number of the pro9ects (@B!>K) and BEK of the total capital registered! " 3 from =apan0 the /$A0 #estern Europe0 and $outh 8orea tend to increase rapidly and it is forecasted that these countries become leading in.estors in ,ietnam in coming years0 %hich reflects the positi.e results of the 2o.ernment policy in di.ersifying the relations and cooperation %ith all countries in the %orld! "rom these " 3 in.estments0 3ndustry0 7il P 2as0 and Construction sectors accounted for @B!<K number of pro9ects and >B!BK in.estment capitalN 1otel0 7ffice $pace Business0 Transport and Communication0 and -ostal $er.ice F 5!DK number of pro9ects and 4<!BK in.ested capitalN Agriculture0 "orestry0 and Aquaculture F 4@!>K number of pro9ects and @!;K capital in.estment! 3n general0 " 3 pro9ects ha.e been concentrated in highly profitable sectors of the economy0 such as 1otel P Tourism and $er.ices0 especially in ExportF -rocessing Aones! Although Agriculture is a sector0 %hich has a high need of " 30 but in fact0 the capital in.ested there is .ery small0 mainly food processing0 shrimp plantation0 reforestation0 forage0 and sugar cane production pro9ects!

<E!E ;@!E ;E!E 4@!E 4E!E @!E Tourism $er.ices Construction Light 3ndustry Culture P Education 1ea.y 3ndustry 7il and gas "inance "ishery E!E Agriculture Transport

E+-/-1i+ Se+t-*3

Fig.*e &.#. F-*eig/ Di*e+t I/6e3t1e/t St*.+t.*e 47 Se+t-*3 <i/ )e*+e/tage=. $ource: ,360 ,ET0 and M-3 Annual 6eport0 4555! The implementation of the " 3 pro9ects %as also a problem0 needed to be discussed! "or the period 45DDF455D0 more than DE per cent of the pro9ects ha.e been implemented0 but only one third of the registered capital actually reali&ed!

4B

#ith the exception of 7il and 2as sector0 %hich has the implemented capital exceeded the registered amount0 and "inancial and Ban' sector0 %hich ha.e implemented most of the capital registered0 other sectors ha.e only implemented less than half of the capital originally licensed! The %orst situation has been %ith Agriculture and "ishery0 %here only about half of the pro9ects and 44F4< K of the capital has been implemented! Ta4le &.1. Li+e/3i/g /e> )*-5e+t3 a/0 +a)ital *ai3i/g i/ 199?;199: U/it I. Ne> )*-5e+t3 +umber of pro9ects Capital 7f %hich: Licensed by M-3: +umber of pro9ects Capital Licensed by local -eople:s Committees: +umber of pro9ects Capital Licensed by the management of 3A: +umber of pro9ects Capital Licensed by the management of E-A: +umber of pro9ects Capital II. Ca)ital *ai3e +umber of pro9ects Capital T-tal -ro9ect 4<< 4>< 4E5@ @BE5!E 5<!E CE!E DB!4 J/!$! million CB5 J/!$! million >D;C!B -ro9ect B 4@ B>!> >E!E B5!< J/!$! million >>!B -ro9ect >D >; ;@5!< 44>!< D@!@ J/!$! million ;;4!B -ro9ect 4;E @5 4>>!@ ;E<!> 4CB!; J/!$! million ;@>!B -ro9ect DB ;;5 <55D!5 <C!B DD!@ J/!$! million <@<C!D -ro9ect ;BE <<4 >@4>!E CD!@ D5!5 J/!$! million >E@D!B 199: 199? 9:@9? <A=

$ource: M-3 6eport +o! 44B81L8C+ =an! ;0 4555 At the end of 455C0 the 2o.ernment signed an ordinance to gi.e the 1anoi and 1CM City Authorities the po%er to license foreign in.ested pro9ects upFto J<E million tripled the J4E million limit set in =une 455C! The 2o.ernment has also recently empo%ered the local -eople:s Committees and Management Boards of the Export P -rocessing Aones and 4C

3ndustrial Aones to license " 3 pro9ects0 especially the small and medium ones! This is a significant effort of the ,ietnamese 2o.ernment in encouraging " 3 into the country! 3n 455D0 the local -eople:s Committees ga.e licenses for 4;E " 3 pro9ects0 increased ;E<K in comparison %ith the number of pro9ects they licensed in 455C! This reflects the decentrali&ation in the " 3 licensing of the go.ernment! The more detail information about the foreign direct in.estment in 455C and 455D is sho%n in Table <!4!

&.#.

I1)-*ta/t 2eat.*e3 -2 FDI i/ Viet/a1 i/ 199:

3n 455D0 foreign direct in.estments in ,ietnam ha.e some important changes in terms of structure0 location0 and in.estors! The in.estment structure has considerably been changed to meet the requirements of the industriali&ation and moderni&ation process of the country! "rom the ne%ly licensed pro9ect in 455D0 one hundred and ninety three %ere in the manufacturing sectors0 accounted for C>!@K0 %ith a capital of J;!D;D billion0 accounted for C4K of the total " 3 in the year! The in.estment location has also been impro.ed! +umber of pro9ects in rural and remote areas has considerably increased! ThirtyFfi.e pro9ects %ith total capital of J4E; million %ere in.ested in agriculture and fishery in the year! These pro9ects are mainly food processing0 production of seeds for export0 flo%er0 tea0 forage0 and shrimp production! This is important for creating more 9obs0 de.eloping and exploiting natural resources in rural ,ietnam! ue to the financial crisis in the region0 " 3 from the A$EA+ countries ha.e sharply reduced! 3n 455D0 these countries ha.e >C pro9ects %ith total registered capital of J5;@ million0 accounted for ;;!DK0 of %hich0 $ingaporean companies promised to in.est JD5< million0 %hile all others countries in.est less than J<; million! 7ther countries in the region0 less suffered by the financial crisis ha.e maintained their in.estments in ,ietnam! 3n 455D0 Tai%an has BC in.estment pro9ects in ,ietnam %ith J;@< million0 the same le.el of 455C and 1ong 8ong has ;< pro9ects %ith J;;@!< million0 54!4>K compared %ith the le.el of 455C! The direct in.estment from the European countries to ,ietnam has strongly increased in 455D! These countries ha.e recei.ed in.estment licenses for BB pro9ects of J;!4 billion in the year0 accounted for more than half of the total " 3 in the country! The total re.enue of the " 3 pro9ects in 455D %as about J< billion0 ;C!CK increased in comparison %ith 455C! These pro9ects contributed J<;E million to the go.ernment budget through tax obligations0 an 4!BK increase compared %ith 455C (The 2o.ernment considerably reduced the price of land licensing and regulated tax priorities for " 3 pro9ects in the year)! The export from these pro9ects0 excluding the oil sector0 %as about J; billion0 44!CK increase compared %ith 455C and accounted for more than ;EK of the total export .alue of the economy in the year! 3n 455D0 the foreign in.ested pro9ects imported J;!B@B billion0 %hich %as only 54!5K of the 455C le.el! This on the one hand0 reduced the export deficit in the year0 on the other hand0 may slo% the in.estment implementation progress in 4555! "oreign in.ested pro9ects accounted for about ;<!@ per cent of the national industrial .alue compared %ith ;E!B per cent in 455C and ;4!> per cent in 455B!

4D

Ta4le &.#. Ge/e*al i/2-*1ati-/ a4-.t FDI )*-5e+t3 i/ 199: Ne>l7 li+e/3e0 )*-5e+t3 #%$ )*-5e+t3 Ca)ital;*ai3e0 )*-5e+t3 1&& )*-5e+t3 Ca)ital i1)le1e/tati-/ 1C9$$ DU.S. 1illi-/ <!:.#A -2 199?= Re6e/.e &C$$$DU.S. 1illi-/ EB)-*t 6al.e 1C9%!DU.S. 1illi-/ I1)-*t 6al.e #C%!!DU.S. 1illi-/ E1)l-7ee3 #%9C!$$ P*e1at.*el7 te*1i/ate0 9! )*-5e+t3C D#C &# 1illi-/ <+-1)a*e0 >it( :$ )*-5e+t3 a/0 D&&9 1illi-/ i/ 199?= TaB +-/t*i4.ti-/ t(e g-6e*/1e/t 4.0get &#$DU.S. 1illi-/ C(a/gi/g ->/e*3(i) 2*-1 JV t- 2-*eig/ : )*-5e+t3C D1# 1illi-/ >(-ll7;->/e0 C(a/gi/g ->/e*3(i) 2*-1 JV t- Viet/a1 >(-ll7;->/e0 % )*-5e+t3C D#1 1illi-/ $ource: M-3 6eport +o! 44B81L8C+ =an! ;0 4555N ,36 and ,ET! $e.entyFse.en pro9ects completed their construction phase and started manufacturing in the year0 including important pro9ects0 such as Morning $tar Cement (J<>B million)0 ,inaflour0 L2F,ina0 Machino0 3noueF,ietnam0 and so on! These pro9ects absorbed additional <@0EEE labors and considerably relie.ed the unemployment problems in the country! Exports in the first t%o months of the 4555 combined %ere %orth /$J4!> billion0 4>!BK of the yearOs plan and up E!>K o.er a year ago! Exports by foreignFin.ested firms accounted for /$J;5E million (excluding crude oil)0 do%n D!@K0 %hile export turno.er by domestic firms reached /$J4!4C billion0 up ;!5K! (,ietnam Economic Times0 March ;0 4555) 3n 455D0 eight and se.en international 9oint .entures %ere con.erted into ,ietnamese %holly o%ned and foreign %holly o%ned (or nearly %holly o%ned) companies respecti.ely (see Table <!;)!

45

C(a)te*

RESEARCH METHODOLOG" .1. A/al7ti+al a/0 C-/+e)t.al F*a1e>-*,

3n order to ma'e an assessment of the 9oint .entures certain theoretical concepts must be clarified0 such as performance measurements as %ell as problems related to assessing a 9oint .enture! The conceptual and analytical frame%or' is illustrated in "igure ;!4!
+ E 2 7 T 3 A T 3 7 +

Viet/a1e3e )a*t/e*3 Moti.es $trategies Contribution s

JOINT VENTURE

F-*eig/ )a*t/e*3 Moti.es $trategies Contribution s

JV Pe*2-*1a/+e
E 6 " 7 6 M A + C E E , A L / A T 3 7 +

7perational performance $trategic position change Beha.ioral change 8no%ledge change

C 7 + T 3 + / 7 / $ 3 M 6 7 , E M E + T

L-+al )a*t/e* 3ati32a+ti-/ <Di33ati32a+ti-/=

F-*eig/ )a*t/e* 3ati32a+ti-/ <Di33ati32a+ti-/=

RECOMMENDATIONS FOR IMPROVEMENT

Fig.*e .1. A/al7ti+al 2*a1e>-*, -2 t(e *e3ea*+(

;E

Ta4le .1. F*a1e>-*, 2-* a33e33i/g 5-i/t 6e/t.*e3 A3)e+t3 7perational performance C-/3t*.+t3 Efficiency and effecti.eness Competiti.eness Mea3.*e -roducti.ity (o) Cost control (o) 673 (o) Cash flo% (o) Competiti.e position (o) Company si&e (i) 3nno.ati.e strength (p) 6eputation (p) Technology (i) 6esource safeguarding (p) Mar'et adaptability (p) 6elati.e price (o) 6elati.e quality (i) Mar'et share (o) $ales gro%th (o) Customer base (i) Customer satisfaction (o) Cooperation (p) 6elationship %ith suppliers (p) Access to finance resources (i) 6elationship %ith authorities (p) Complementarity (i) 1armony (i) -rofit sharing (i) 1onorability (i) Trust (o) Commitment (i) "air %age (i) Clear responsibility (i) Transparent staffing (i) Transparent compensation (i) Effecti.e communication (p) #or' %ell together (p) 2ood relationship (i) #or' satisfaction (o) Learning (i) $ynergism (p) Management 'no%Fho% (o) Mar'et 'no%Fho% (o) Technological 'no%Fho% (o)

Competiti.e position change

Mar'etability

External customer relations

Beha.ioral change

Equity

"unctional efficiency

8no%ledge change

Learning

+ote: i0 p0 o stand for input0 process0 and output indicators!

;4

"or assessing the 9oint .enture0 a frame%or' %as made so that the measurements must reflect all of dimensions and aspects of the 9oint .enture success performance! The assumed dimensions and respecti.e measurements are sho%n in Table >!4!

.#.

A33.1)ti-/ a/0 C-/+e)t EB)la/ati-/

3t is assumed that success perceptions of the managers %ould belong to se.en main dimensions as follo%s: Efficiency and Effectiveness7 This factor represents effecti.e use of the 9oint .enture resources and their efficiency0 such as the .enture:s labor force0 capital in.estment0 expenditures0 and so on! Effecti.eness measures the results0 %hile efficiency in.ol.es both results and resources used to get the results! 3n this study Efficiency and Effecti.eness %ere used to measure successful operational performance of the 9oint .entures! #ompetitiveness7 This factor %as assumed to measure the company:s success in building its competiti.e position and brand reputation0 as %ell as its capability to expand the mar'et0 production capacity0 and inno.ati.e strength! e.eloping resource bases %as also considered as impro.ing the competiti.eness of the 9oint .enture! (arketability7 Mar'etability measures the 9oint .enture mar'eting capabilities0 such as comparati.ely lo% price0 high quality0 mar'et share0 and sales gro%th! Mar'etability is close to competiti.eness and both of these t%o factors reflect competiti.e position change of the company! E$ternal #ustomer .elations7 This factor constructed to measure the 9oint .enture success in de.eloping customer base and quality of customer ser.ice! e.eloping relationship %ith other companies and suppliers0 as %ell as %ith the local authorities are also considered as acti.ities of this 'ind! External Customer 6elations also reflects the competiti.e strength of the 9oint .entures! E8uity7 The terminology of Equity in the #ebster:s ictionary expresses Hfairness or 9ustice in dealing %ith personsI! Therefore it can be used to measure the relationships and beha.iors bet%een partners in the 9oint .enture0 such as harmony0 honorability0 trust0 and commitment! 2ood relationships and beha.iors bet%een participants can help successful performance and enhance satisfaction0 therefore can be considered as success factors! 3unctional Efficiency7 The terminology %as used in the research study to express the efficiency and effecti.eness of the relationships bet%een partners! Effecti.e relationships lead to higher %or' satisfaction0 create fa.orable en.ironment for learning0 and encourage exploitation of the synergy! Equity and "unctional Efficiency reflect beha.ioral change in the 9oint .enture! 9earning7 Learning %as assumed as a factor0 %hich measures the 9oint .enture success in impro.ing the participant 'no%ledge including technological0 managerial0 and mar'et 'no%F ho%! This factor reflects the 'no%ledge change in the 9oint .enture! $ome other particular concepts also need additional explanation! H1verall erformanceI %as used for measuring the le.el of partners: satisfaction on the 9oint .enture performance in general0 computed as an %eighted a.erage score of all success indicators!

;;

H1perational performance resultsI: The terminology %as used to express output indicators of Cash flo%0 6730 $ales gro%th0 and Mar'et share! :Input;, : rocess;, and :1utputI express the resourceForiented0 processForiented0 and resultForiented indicators respecti.ely (see page 4<)!

.&.

Met(-0 -2 Data C-lle+ti-/

$econdary information %as collected from .arious sources0 including ,ietnam ?earboo's0 6eports of the Ministry of -lanning and 3n.estment0 +e%spapers0 pre.ious research studies! -rimary information %as collected from the t%o main sources: questionnaires and direct inter.ie%s %ith the 9oint .entures managers! The questionnaires %ere made basing on a pretest sur.ey! "irstly0 open questions %ere gi.en to the managers of the 9oint .entures to collect as much as possible aspects and criteria0 %hich %ere considered to be measurements of a 9oint .enture:s success! These concepts after serious ad9ustment processes %ere classified into groups0 %hich %ere assumed to be the ma9or dimensions of the managers: perceptions on the 9oint .enture success (see Table >!4)! Then0 based on these concepts0 grading questions %ere prepared for gathering the managers: e.aluation on the issues of interest! A set of >E questions finally %as dra%n out for gathering the managers: e.aluation on the 9oint .entures: performance! 7ther questions %ere used for additional information0 necessary for the analysis (see Appendix >)! +inety questionnaires %ere sent to managers in 4@ selected 9oint .entures in the t%o pro.inces: Thua Thien 1ue and anang! "iftyFse.en questionnaires %ere successfully returned %ith a response rate of B< percent! "our of these questionnaires %ere omitted for lac'ing of too many items! "inally0 @< questionnaires %ere used for the analysis! 7ut of these @< questionnaires0 ;; are from foreign and <4 from ,ietnamese managers %ith a ratio of 4L4!>! All of the respondents are managers and in.ol.ed in decisionFma'ing responsibilities at a certain managerial hierarchy in the 9oint .enture! About one tenth of the respondents %ere playing chief executi.e function and more than one third %ere managers at the department le.el! About B@ percent of the respondents had been %or'ing in the current 9oint .entures for t%o to four years! The more detail characteristics of the respondents are sho%n in the Appendix ;!

. .

Met(-0 -2 Data A/al73i3

The data %as processed and analy&ed by using $-$$! escripti.e statistics %as used for identifying le.el of successful performance of the 9oint .enture and problems in its relationships! Comparison method %as employed to clarify the differences in success perception bet%een the ,ietnamese and foreign managers! "actor analysis %as performed to test %hether the findings fit the research assumptions! "urthermore0 based on the factor analysis correlation and regression analysis %ere played to identify the relations bet%een 'ey success indicators and ma9or operational results of the 9oint .entures!

;<

C(a)te* !

RESULTS OF THE SURVE" !.1. T(e E.e3ti-//ai*e3 Re3.lt3

!.1.&. J-i/t 6e/t.*e -45e+ti6e3 The 9oint .enture is different from other forms of business organi&ations in that its ob9ecti.es must reflect the ob9ecti.es of the .enture:s partner companies! $o0 if one %ants to 'no% ho% a 9oint .enture is running0 one must firstly loo' at the ob9ecti.es it pursues0 and then see to %hat extent they meet them! Because the 9oint .enture managers are mainly selected from the participants0 they often bring to the 9oint .enture different strategies of their companies! The more complex the parent companies: ob9ecti.es0 the more difficult the 9oint .enture management in forming their common goals! Therefore0 analy&ing the ob9ecti.es of the 9oint .enture can help anticipate the potential conflicts of the alliance0 that may strongly affect the decision ma'ing and performance of the .enture itself! Ta4le !.1. Re3)-/0e/t3F )e*+e)ti-/3 -/ t(e 5-i/t 6e/t.*e -45e+ti6e3 Va*ia4le3 Access to ne% mar'et 7btain capital Cooperati.e synergy Exchange 8no%ledge Acquire technology $hare ris's To export $ubstitute import Transfer technology 6esource safeguarding Ta'e ad.antage Mea/ <!5; <!C> <!C> <!>@ <!>; <!<> <!<> <!<E <!;B <!;@ ;!D< St0. De6iati-/ E!@D E!@B E!C> E!@> E!D; E!CB E!@5 E!BD E!DB E!B@ E!C<

The data in Table @!4 sho%s that managers quite highly emphasi&e the 9oint .enture role as a tool for entering ne% mar'ets0 obtaining capital0 and exploiting synergy of the partner companies! Export to a third country is also an important concern of the 9oint .enture! ue to the lo%er production prices in the host country0 companies enter into the 9oint .enture %ith the local companies to produce products and then sell them in foreign mar'ets! The data indicates that the 9oint .entures are emphasi&ing the shortFterm and midterm rather than longF term ob9ecti.es! There %ere significant differences in people:s .ie%s on the 9oint .enture ob9ecti.es! "oreign managers e.aluated mar'et access and ris' sharing higher than the local managers did! Many

;>

of the foreign managers0 e.en %ith extensi.e international experience often see de.eloping country mar'et as inherently more ris'y than operation else%here in the %orld! But these percei.ed ris's0 of course0 %ould be offset by prospects for higher longFterm returns! "oreigners also stronger concern the opportunity of ta'ing ad.antages offered by the go.ernment as its economic de.elopment policy0 for example tax incenti.es0 and transfer of technology! The contradictions in ob9ecti.es of the 9oint .enture:s partners may be important potential conflicts and create difficulties for the managers in forming and achie.ing the common goals of the .enture! The first potential conflict may be created in the company:s technology transfer policy! "oreign partners emphasi&ing technology transfer through the 9oint .enture may include in the negotiation or at least con.ince the local partners to equip the 9oint .enture %ith technologies from their companies! The local partners0 other%ise0 may thin' that buying technology from a third party is better because this can a.oid their technological dependence on the foreign partners! 7ther conflict source may come from the differences in the participants: .ie%s on export and import substitution moti.es! Local partners may thin' that 9oint .enture can help them go abroad through exporting! /nfortunately0 they often meet export barriers set by the foreign partners0 %ho in many cases can ban their 9oint .enture to export to their currently ser.ed mar'ets due to .arious reasons0 such as quality standards0 and cannibali&ation effects! Ta4le !.#. C-1)a*i3-/ 4et>ee/ Viet/a1e3e a/0 2-*eig/ 1a/age*3 Va*ia4le3 $hare ris's Ta'e ad.antages Acquire ne% technology Transfer technology Assess ne% mar'et Export $ubstituting import 6a% material safeguarding 7btain capital 8no%ledge exchange $ynergy Viet/a1e3e Mean <!4< ;!>> <!B< <!EE <!C; <!@@ <!;< <!;; <!D4 <!>> <!B< $! E!D< E!@E E!C@ E!C; E!@; E!@4 E!B< E!B4 E!@5 E!@@ E!@B F-*eig/e* Mean <!BC <!>< <!4E <!BC >!;> <!E@ <!>E <!;5 <!B; <!>D <!5E $! E!>D E!BE E!D< E!54 E!@> E!@5 E!C@ E!C; E!@B E!BE E!5> E!E4GG E!EEGGG E!E;GG E!EEGGG E!EEGGG E!EEGGG E!>E E!;E E!;; E!DE E!4D Sig.

+ote: GGG0 GG0 G $ignificant at the E!E40 E!E@0 E!4 le.el! Moreo.er0 foreign partners often see a 9oint .enture as a ne% mar'et entry strategy! ue to the lac' of country familiarity0 a foreign company often meets difficulties in entering a ne%

;@

mar'et0 %here local customers ha.e little or ne.er 'no%n about it! "or a foreign company0 %ho needs to deepen its understanding of local conditions0 a 9oint .enture pro.ides one %ay to shorten %hat could be a lengthy and potentially expensi.e process! This also encourages them in building their brand reputation in the local mar'et0 rather than exporting! Conflicts can also be created in the field of mar'eting! "oreign partners0 encouraged by the mar'et entry moti.ation may %ant to spend a large amount of money on ad.ertising at the first stages of the 9oint .enture to get the mar'et popularity! 7n the other side0 the local partners may feel that such expenditures %ere not necessarily so high! This conflict may be .ery serious in the practice of 9oint .entures in ,ietnam0 such as the case of -P2 (Truong *uang0 455D)! !.1.#. A33e33i/g J-i/t Ve/t.*e Pe*2-*1a/+e Assessing a 9oint .enture are theoretically and practically difficult issues because its success can be seen and e.aluated from .ery different perspecti.es0 as noted in the pre.ious sections! The data in Table @!< sho%s that managers are moderately satisfied %ith the 9oint .enture o.erall performance! 1o%e.er0 there is a significant difference bet%een the ,ietnamese and foreign managers in their success e.aluation! "oreign partners e.aluated the 9oint .enture performance higher than the local partners did! 7ne of the reasons for this differentiation may be deri.ed from the differing expectation of the 9oint .enture partners! $ome ,ietnamese partners0 as noted0 %hen entering the alliance de.oted most of their assets to the .enture0 may ha.e higher commitment and expectation in it! They often consider the 9oint .enture:s success as their o%n! "or them the 9oint .enture is their future! 7n the other side0 many foreign partners may consider a 9oint .enture 9ust as a tool for implementing some of their particular strategies! The assessment of the o.erall performance of the 9oint .entures0 ho%e.er0 may also be affected by the managers: .ie%s on success! $ome may be interested more in shortFterm goals0 %hile others may loo' for longerFterm interests! Ta4le !.&. O6e*all Pe*2-*1a/+e -2 t(e J-i/t Ve/t.*e3 7.erall sample Mean <!;B $! E!<< ,ietnamese Mean <!4; $! E!;5 "oreigner Mean <!>B $! E!;D E!EEE $ig!

The e.aluation of the 9oint .enture performance should therefore be more detailed by loo'ing at the indi.idual success indicators! By this %ay0 the assessment could gi.e an insight into specific areas of the 9oint .enture acti.ities! Table @!> describes the respondents: e.aluation of the 9oint .enture performance on the indi.idual indicators! The data sho%s that the 9oint .enture:s partners ran'ed 6elati.e quality and -rofit sharing the highest0 but Access to financial resources and 3nno.ati.e strength the lo%est!

;B

Ta4le !. . Re3)-/0e/t3F E6al.ati-/ -2 t(e J-i/t Ve/t.*eF3 Pe*2-*1a/+e Di1e/3i-/3 E22i+ie/+7 a/0 e22e+ti6e/e33 C-1)etiti6e/e33 Mea3.*e3 -roducti.ity Cost control 673 Cash flo% Competiti.e position Company si&e 3nno.ati.e strength 6eputation Technology 6esource safeguarding Mar'et adaptability 6elati.e price 6elati.e quality Mar'et share $ales gro%th Customer base Customer satisfaction Cooperation 6elationship %ith suppliers Access to finance resources 6elationship %ith authorities Complementarity 1armony -rofit sharing 1onorability Trust Commitment "air %age Clear responsibility Transparent staffing Transparent compensation Effecti.e communication #or' %ell together 2ood relationship #or' satisfaction Learning $ynergism Management 'no%Fho% Mar'et 'no%Fho% Technological 'no%Fho% Mea/ 3+-*e3 <3ta/0a*0 0e6iati-/ i/ t(e )a*e/t(e3e3= <!C< (E!B<) ;!C> (E!D>) ;!BC (E!@@) ;!D5 (E!DE) ;!5B (E!D<) <!>; (E!BE) ;!>< (E!B@) <!<E (E!54) <!ED (E!C<) <!<> (E!B;) <!;@ (E!>D) <!>< (E!BC) >!;@ (E!@B) <!<@ (E!BE) <!<E (E!BC) <!>C (E!CD) <!>< (E!DC) <!<; (E!C<) <!;B (E!CB) ;!B> (E!C>) <!<; (E!BC) <!4@ (E!@<) <!>@ (E!BC) >!EB (E!C5) <!@C (E!@5) <!<E (E!C@) <!<B (E!C4) <!<B (E!DB) <!54 (E!B5) <!>< (E!DC) <!5; (E!DC) <!<B (E!@@) <!<> (E!B@) <!BD (E!@D) <!<B (E!C>) <!>; (E!B>) <!E; (E!@E) <!>@ (E!>C) <!C> (E!DB) <!<> (E!@>)

Ma*,eta4ilit7

EBte*/al +.3t-1e* *elati-/3

EG.it7

F./+ti-/al e22i+ie/+7

Lea*/i/g

;C

The economic results of the 9oint .entures %ere generally assessed to be unsatisfactory! Although sales is e.aluated to be abo.e satisfactory le.el0 net profit and especially return on in.estment are far belo% the expectation! The lo% le.el of benefit and return on in.estment indicates that the 9oint .entures ha.e poor financial performance! 7ther indicators are ran'ed in bet%een satisfactory and good performance le.els! There are significant differences among managers in e.aluating company si&e0 mar'et share0 customer satisfaction0 and customer base! $urprisingly0 the local managers %ere not satisfied %ith their 9oint .entures in building customer base and customer ser.ice0 %hile the foreign counterparts moderately e.aluated these factors! Building for%ard and bac'%ard relationships as %ell as cooperation %ith other local companies is extremely important for the 9oint .entures to get necessary supports for their business acti.ities! 3n general0 managers highly agree upon these issues! The respondents did not much satisfy %ith the inno.ati.e strength0 %hich is a .ery important factor influencing the successful performance of an enterprise in a dynamic and competiti.e mar'et li'e ,ietnam! The lo% le.el of satisfaction of the managers to this factor reflects the %ea'ness of the .entures in 6P acti.ities! "inancing is also a problem of the 9oint .entures! 7n the one hand0 the .entures could not raise their funds by selfFfinancing0 because in many cases0 only foreign partners could do that0 but not the ,ietnamese partners (e.en %hen first participating in the 9oint .enture0 the ,ietnamese partners often contribute only lands and buildings)! 7n the other hand0 there has not been an effecti.e ban'ing system0 especially a stoc' mar'et to create a free flo% of shortF term and longFterm capital in ,ietnam yet! Managers often complain that the ban's usually allo% only shortFterm or midterm loans0 %hich could not meet the business requirements! Exploiting the cooperati.e synergy of the partners is an important factor for a successful 9oint .enture0 by creating its competiti.e ad.antages o.er other companies! The results sho% that managers are around satisfactory on this issue! Ma'ing use of the cooperati.e synergy of the participants depends much on the understanding bet%een them and their %illingness to cooperate in loyal and longFterm basics! Building good relationships %ith the local authorities is also strategically important for a company in a country0 %here many things are based on custom li'e ,ietnam! These relationships may help companies to obtain necessary information0 related to the social and economic de.elopment plans of the go.ernment0 legal and political changes0 and sometime the relationships may facilitate the company in dealing %ith local companies and go.ernment agencies! The high score of this .ariable indicates that 9oint .entures ha.e been successful in building and maintaining good relationships %ith the local authorities! Beha.ioral factors are .ery important in forming the %or'ing and other relationships bet%een partners in the 9oint .enture! 2ood relationships %ould create fa.orable %or'ing en.ironment and help people achie.e their common goals! As noted0 a 9oint .enture should be seen not only in shortFterm0 but also in longFterm perspecti.es! There for0 de.eloping longFlasting relationships in it is extremely important for the 9oint .enture to achie.e its ob9ecti.es! Better relationships result in higher le.el of trust0 understanding0 and commitment of the participants0 %hich finally leads to better performance and higher satisfaction! ;D

Ta4le !.!. C-1)a*i3-/ -2 t(e *e3)-/0e/t3F e6al.ati-/ -/ t(e JVF3 )e*2-*1a/+e Dimensions Indicators ietnamese !oreigner Sig" E22i+ie/+7 a/0 -roducti.ity <!CB (E!BD) <!B5 (E!@B) E!<@ e22e+ti6e/e33 Cost control ;!BB (E!B<) ;!DB (E!D@) E!>E 673 ;!@C (E!@C) ;!D4 (E!@4) E!4; Cash flo% <!45 (E!B>) ;!5E (E!CE) E!5E C-1)etiti6e/e Competiti.e position ;!D4 (E!CD) <!45 (E!DC) E!44 33 Company si&e <!4@ (E!D4) <!BC (E!BC) E!E4GG 3nno.ati.e strength ;!E5 (E!@<) ;!5@ (E!C>) E!EEGGG 6eputation <!4B (E!D@) <!@; (E!5D) E!4@ Technology <!E< (E!CD) <!4> (E!B@) E!@5 6esource safeguarding <!<> (E!BE) <!<< (E!BB) E!5@ Ma*,eta4ilit7 Mar'et adaptability <!4< (E!>;) <!>< (E!@4) E!E;GG 6elati.e price <!>C (E!B4) <!;@ (E!C5) E!45 6elati.e quality >!<E (E!C@) >!4C (E!@5) E!<E Mar'et share <!4C (E!BE) <!BE (E!@E) E!E4GG $ales gro%th <!45 (E!B>) <!>D (E!BD) E!4; EBte*/al Customer base <!;D (E!D@) <!CB (E!B;) E!E<GG +.3t-1e* Customer satisfaction <!<E (E!D<) <!B4 (E!5;) E!;> *elati-/3 Cooperation <!<4 (E!D;) <!<< (E!@B) E!5; 6elationship %ith suppliers <!<4 (E!B5) <!45 (E!5C) E!@C Access to finance resources ;!BB (E!C@) ;!B; (E!C>) E!DB 6elationship %ith authorities <!;; (E!C@) <!>D 5E!@4) E!4D EG.it7 Complementarity <!EE (E!>>) <!<D (E!@5) E!E4GG 1armony <!E5 (E!@<) >!EE (E!>@) E!EEGGG -rofit sharing <!5C (E!B5) >!45 (E!5<) E!<< 1onorability <!@B (E!@C) <!B; (E!@E) E!@@ Trust <!4B (E!B4) <!@; (E!BE) E!EDG Commitment <!E5 (E!B>) <!CB (E!B;) E!EEGGG "air %age <!45 (E!@>) <!CB (4!EE) E!EEGGG Clear responsibility <!C@ (E!C;) >!4> (E!@C) E!E>GG Transparent staffing <!;; (E!B4) <!CB (4!E5) E!E;GG Transparent compensation <!5> (E!D>) <!DC (E!5E) E!5E F./+ti-/al Effecti.e communication <!<D (E!C@) <!<< (E!>D) E!D; e22i+ie/+7 #or' %ell together <!45 (E!B5) <!@C (E!@4) E!E<GG 2ood relationship <!BB (E!CE) <!C4 (E!CB) E!D; #or' satisfaction ;!D> (E!@C) <!>< (E!BE) E!EEGGG Learning <!<C (E!@4) <!>D (E!B@) E!;@ $ynergism ;!5> (E!@B) 4!4> (E!<B) E!4> Lea*/i/g Management 'no%Fho% <!B@ (E!CE) <!4C (E!5E) E!E4GG Mar'et 'no%Fho% <!;@ (E!@B) >!4@ (E!>C) E!EEGGG Technological 'no%Fho% <!>> (E!D@) <!;@ (E!CD) E!4C +ote: G0 GG0 GGG $ignificant at !40 !E@0 !E4 le.el! Maintaining harmony bet%een partners extremely important for any alliance to exist and de.elop! 3t is a premise for a 9oint .enture to build a long time cooperation bet%een partner companies! The data sho%s that the local managers are around satisfactory on harmony0 ;5

%hile foreigners e.aluate it higher! This means the foreign partners feel easier than the local partners in getting a general agreement in the 9oint .enture do! $haring profits is an extremely important issue in the 9oint .enture0 because it closely relates to the interests of the partners to go into a strategic alliance! The data indicates no problems related to this issue! The fairness in sharing business results reflects a comparati.ely %ell builtFup negotiation and reFnegotiation mechanism in the .entures! 7ne of .ery important factors for a 9oint .enture success is the complementarity of the partner companies! E.ery participant must ha.e some core competence to contribute to the 9oint .enture! Local managers are often strong in the domestic mar'et bac'grounds0 understanding employees0 customers0 suppliers0 local reputation0 and distribution net%or's! 3n some cases0 they may also better in understanding the legal en.ironment and dealing %ith go.ernmental agencies! 7n the other hand0 foreigners are normally good in international mar'et domains0 management s'ills0 and international relationships! 3n some cases0 foreign specialists are needed due to the technical requirements0 especially %hen the 9oint .enture obtains ad.anced technologies! The data sho%s a moderate rate of complementarity bet%een the participants! Complementarity reflects the le.el of compatibility bet%een the t%o partners0 %hich is a .ery important factor for long lasting relationships of the .enture! There %ere significant differences in the respondents: e.aluation on the issues of the 9oint .enture relationships! 3n general0 foreign partners graded higher than the local partners! The ,ietnamese graded %or' satisfaction and salary fairness much lo%er than the foreigners! This indicates that the local managers are not .ery satisfied %ith the current compensation policy of the 9oint .enture! Lo% %or' satisfaction can reduce the employee loyalty rate and increase the possibility of quitting 9obs! The data indicates no significant difference in the respondents: .ie% on learning and communication! The moderate grades of these components indicate that there are no important barriers that can limit communication and learning in the 9oint .entures! Building an organi&ational culture0 in %hich e.eryone can freely communicate %ith each other and share their ideas0 is .ery important for a 9oint .enture to be successful! The effecti.e interaction bet%een employees from different partner companies is an ideal en.ironment for organi&ational learning! i.iding success indicators into input0 process0 and output measures can help assessing the 9oint .entures as based on the situational approach! To do that0 mean scores for these measures %ere computed0 and then paired TFtest %as performed to ma'e the comparison bet%een the ,ietnamese and foreign partners on their success perception! Table @!B sho%s the descripti.e characteristics of these indicators! The data indicates that partners are significantly different in assessing the 9oint .enture performance! "oreign partners rated significantly higher than the local partners! 2enerally0 the input indicators are comparati.ely higher than the process and output indicators! This implies that the 9oint .entures are better performed in the longFterm than midterm and shortFterm perspecti.es!

<E

Ta4le !.%. Pa*t/e*3F Pe*+e)ti-/3 -/ t(e I/).tC P*-+e33C a/0 O.t).t I/0i+at-*3 I/).t P*-+e33 O.t).t O6e*all 3a1)le <!>C (E!<@) <!4B (E!<5) <!E5 (E!<C) Viet/a1e3e <!<4 (E!;B) <!E< (E!<D) <!EB (E!<@) F-*eig/e*3 <!C; (E!<;) <!<B (E!<<) <!<B (E!<;) Sig. E!EEE E!EE< E!EE<

Correlation analysis %as employed to see ho% success indicators are correlated to one another! The data indicates quite strong correlation bet%een the input0 process0 and output indicators0 especially bet%een the process and output measures (see Table @!C)! This is an e.idence of a normal functioning of the 9oint .enture in general! Ta4le !.?. C-**elati-/ Mat*iB -2 I/).tC P*-+e33C a/0 O.t).t Success #actors I/).t P*-+e33 O.t).t Input 4!EEE E!@D>GG E!CE<GG Process E!@D>GG 4!EEE E!C;4GG $utput E!CE<GG E!C;4GG 4!EEE

+ote: G! GG Correlation is significant at the E!E40 E!E@ le.el (;Ftailed)! The strong correlation bet%een input and output indicates that longFterm efforts of the 9oint .enture can turn into its shortFterm success and .ice .ersa0 %hile the strong correlation bet%een process and output indicators reflects close relationships0 sometimes o.erlaps of these t%o 'inds of success indicators!

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!.1.&. Re3.lt3 -2 Fa+t-* A/al73i3 3t is assumed that the managers: e.aluation of the 9oint .enture success %as based on the 9oint .enture ob9ecti.es and certain percei.ed success criteria! This ma'es the e.aluation .ery sub9ecti.e! Moreo.er0 the e.aluation of a 9oint .enture success0 as noted0 is extremely difficult as it is in.ol.ed many aspects and perspecti.es! The complexity of the e.aluation is increased as the number of indicators increased! $ome managers may ne.er be interested in certain aspects of the 9oint .entures! This can reduce the reliability of their e.aluation on these aspects! Therefore0 factor analysis should be performed to identify significant dimensions of their perception on success measurements! ,arimax rotation method %as performed on the initial factor solution0 adapting the standard cutFoff (Eigen .alue R4) for deciding on the number of factors (dimensions)! "i.e factors %ere finally extracted! These factors accounted for C@!4 percent of the .ariance! 3n general0 the factors %ere found to be fitted to the dimensions assumed in the conceptual frame%or'! Ta4le !.:. Re3.lt3 -2 2a+t-* a/al73i3 Fa+t-* /a1e3 Va*ia4le3 L-a0i/g3 Relia4ilit7 C*-/4a+( E!BC

Fa+t-* 1H F./+ti-/al e22i+ie/+7 Fa+t-* #H C-1)etiti6e/e33

Fa+t-* &H E22i+ie/+7 a/0 e22e+ti6e/e33 Fa+t-* H EG.it7

Fa+t-* !H EBte*/al +.3t-1e* *elati-/3

$ynergism #or' %ell together 2ood relationship #or' satisfaction Competiti.e position 6eputation Company si&e Mar'et share $ales gro%th -roducti.ity Cash flo% Cost control 673 "air %age Complementarity Commitment -rofit sharing 1onorability 1armony Customer base Customer satisfaction 6elationship %ith suppliers

E!C< E!BE E!B5 E!BB E!D; E!D; E!B5 E!C@ E!BC E!DD E!CD E!C< E!BD E!54 E!C< E!C; E!B< E!C4 E!B@ E!D> E!D> E!BD

E!D4

E!DB

E!CB

E!CD

T%o constructs of H Competiti.enessI and HMar'etabilityI as predicted %ere merged into one factor! This factor can be called again HCompetiti.enessI because it can co.er the meanings of the .ariables in the group! The predicted dimension HLearningI %as cutFoff from

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the factors together %ith 4D other .ariables0 %hich had either factor loading lo%er than E!B@0 or the Measure of $ample Adequacy (M$A) lo%er than E!@ in the AntiFimage Correlation matrix! The final result is sho%n in Table @!D! The first conclusion can be made from the factor analysis is that for the most part0 the factor analysis results %ere consistent %ith the assumptions made in the conceptual frame%or'0 especially regarding ho% the specific items in the questionnaire might be related to the underlying constructs! This positi.ely supports the analytical frame%or' and data collection methods0 chosen for the assessing the 9oint .entures in the study! "rom the results of the factor analysis0 factor scores can be computed by assigning unit %eights to the indi.idual standardi&ed factor scores of each factor! The results are sho%n in Table @!5! The data indicates significant differences bet%een the local and foreign partners in their e.aluation on "unctional Efficiency0 Competiti.eness0 Equity0 and External Customer 6elation! There is ho%e.er no significant difference in the partners: .ie% on Efficiency and Effecti.eness! Ta4le !.9. Fa+t-* S+-*e3H C-1)a*i3-/ 4et>ee/ Viet/a1e3e a/0 F-*eig/ Pa*t/e*3 Fa+t-*3 Fa+t-* 1H F./+ti-/al e22i+ie/+7 Fa+t-* #H C-1)etiti6e/e33 Fa+t-* &H E22i+ie/+7 a/0 e22e+ti6e/e33 Fa+t-* H EG.it7 Fa+t-* !H EBte*/al +.3t-1e* *elati-/3 O6e*all 3a1)le <!;E (E!@4) <!<4 (E!B;) ;!DC (E!BE) <!>@ (E!@E) <!>D (E!BE) Viet/a1e3e <!E@ (E!@;) <!4< (E!@5) ;!C5 (E!BD) <!<@ (E!<D) <!<4 (E!B>) F-*eig/e*3 Sig. <!>; (E!<C) <!@C (E!@B) ;!5B (E!>D) <!BE (E!@E) <!C; (E!@E) E!E4; E!EED E!@C; E!EC@ E!EE5

Based on the results of the factor analysis0 Bi.ariate Correlation %as performed to see ho% success factors correlated to those measurements0 %hich are considered as the 9oint .enture:s operational results0 such as sales0 cash flo%0 6730 and mar'et share! The result of the correlation analysis is sho%n in Table @!4E! The data indicates many significant correlations bet%een these .ariables! $ales 2ro%th has high correlation %ith Mar'et $hare0 Competiti.e -osition and the brand 6eputation0 %hile did not indicated significant relationship %ith Cost Control or Equity or "unctional Efficiency .ariables! Both Cash "lo% and 673 ha.e high correlation %ith -roducti.ity0 Cost Control0 and %ith themsel.es! Mar'et $hare correlates strongly %ith $ales gro%th0 moderately %ith Competiti.e -osition and 6eputation0 but %ea'ly %ith Customer 6elation and "unctional Efficiency .ariables!

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Ta4le !.1$. C-**elati-/ Mat*iB -2 S.++e33 Fa+t-*3 a/0 O)e*ati-/al Re3.lt3 Sales gro%th Cash #lo% R$I Market share E!DD;GG E!<;5G E!@5;GG 4!EEE E!>>>GG E!><;GG

Sale3 4!EEE E!>;>GG Net )*-2it E!>;>GG 4!EEE E!B4CGG Ret.*/ -/ I/6e3t1e/t E!B4CGG 4!EEE Si8e E!>54GG Ma*,et 3(a*e E!DD;GG E!<;5G C.3t-1e* 3ati32a+ti-/ E!<4CG C.3t-1e* 4a3e C-1)etiti6e )-3iti-/ E!@B5GG E!<>;G E!;D;G Re).tati-/ E!@4;GG E!@<5GG C-3t +-/t*-l E!@55GG E!@4;GG P*-0.+ti6it7 E!BE>GG E!BB;GG Relati-/3(i) >it( 3.))lie*3 E!>D;GG E!>ECGG S7/e*g7 Ha*1-/7 E!<EEG P*-2it 3(a*i/g E!<E>G E!;54G E!<@EG C-1)li1e/ta*7 E!>44GG W-*, t-get(e* E!>;EGG H-/-*a4le )a*t/e* E!<>EG E!<DEG G--0 *elati-/3(i) E!>4>GG +ote: G! GG Correlation is significant at the E!E40 E!E@ le.el (;Ftailed)!

E!;D5G

"urthermore0 6egression Analysis %as employed to see ho% the fi.e success factors affect the 9oint .enture:s operational performance! The comparati.ely high .alues of the Coefficient of determination (6;) in most of the cases indicate high explanation po%er of the regressions0 meaning that these factors significantly affect the operational performance of the 9oint .enture! 7.erall -erformance is moderately correlated to Competiti.eness0 Efficiency P Effecti.eness0 and Equity0 but not significantly correlate to "unctional Efficiency and External Customer 6elations! Equity and Competiti.eness strongly correlate to all of the Hoperational resultsI indicators0 especially $ales 2ro%th and Mar'et $hare (see Table @!44)! Ta4le !.11 Reg*e33i-/ a/al73i3 -2 S.++e33 Fa+t-*3 -/ O)e*ati-/al Re3.lt3 Success #actors C-/3ta/t F1H F./+ti-/al E22i+ie/+7 F#H C-1)etiti6e/e33 F&H E22i+ie/+7 I E22e+ti6e/e33 F H EG.it7 F!H EBte*/al C.3t-1e* Relati-/ F;6al.e R# R# a05.3te0 2-* 02. +ote: GpS!E@N GGpS!E4N GGGpS!EEE Sales gro%th <!<<< E!;@BGGG E!BE;GGG E!E5;G E!;;;GGG E!44<G <B!B E!DE E!CD Cash #lo% R$I ;!D>4 E!4>BGG E!;DDGGG E!B4BGGG E!4E;G >>!4 E!D< E!D4 ;!CD< E!4<5G E!44;G E!>E@GGG E!4DBGG E!4;<G 4>!C E!B; E!@C Market share <!;5; E!@>CGGG E!;D;GGG <D!; E!D4 E!CC

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Correlation analysis on the success factors and 3nput0 -rocess0 and 7utput %as also performed to see ho% these indicators are correlated to one another! The results in Table @!4; sho% that the input indicators ha.e significant correlations %ith "unctional Efficiency0 Equity0 and Customer 6elation0 but not %ith Competiti.eness and Efficiency P Effecti.eness! Ta4le !.1#. C-**elati-/ Mat*iB -2 S.++e33 Fa+t-*3 a/0 I/).tC P*-+e33C a/0 O.t).t Success #actors F1H F./+ti-/al E22i+ie/+7 F#H C-1)etiti6e/e33 F&H E22i+ie/+7 I E22e+ti6e/e33 F H EG.it7 F!H EBte*/al C.3t-1e* Relati-/ E!BB;GG E!<;4G Input E!>B4GG Process E!@@5GG E!>>BGG E!<DBGG $utput E!<;4G E!B;CGG E!@45GG E!<EDG

+ote: G! GG Correlation is significant at the E!E40 E!E@ le.el (;Ftailed)! 7n the contrary0 the process indicators are significantly correlated to Competiti.eness and Efficiency0 but not to Equity and Customer relation! 7utput is significantly correlated to most of the factors0 except Customer relation! This is reasonable0 because input indicators are often considered as longFterm success factors0 %hile Competiti.eness and Efficiency P Effecti.eness are closer related to the -rocess and 7utput measures! The result of the regression analysis in Table @!4< indicates that most success factors significantly affect the input0 process0 and output indicators! 1o%e.er0 the le.els of influence are different! H3nputI is stronger influenced by Equity and "unctional efficiencyN %hile H-rocessI is stronger influenced by "unctional efficiency and Competiti.enessN but HoutputI by Competiti.eness and Efficiency P Effecti.eness! Ta4le !.1&. Reg*e33i-/ a/al73i3 -2 S.++e33 Fa+t-*3 -/ I/).tC P*-+e33C a/0 O.t).t Success #actors C-/3ta/t F1H F./+ti-/al E22i+ie/+7 F#H C-1)etiti6e/e33 F&H E22i+ie/+7 I E22e+ti6e/e33 F H EG.it7 F!H EBte*/al C.3t-1e* Relati-/ F;6al.e R# R# a05.3te0 2-* 02. +ote: GpS!E@N GGpS!E4N GGGpS!EEE Based on the results of the regression analysis some important implications may be made! #ea' impacts of the External Customer relation on the process and output indicators0 again is an e.idence of notF.eryFhigh effecti.eness of the customer ser.ice of the 9oint .entures! <@ Input <!>D E!4@>GGG E!ED5GG E!E5>GGG E!;><GGG E!44;GGG >>!<@ E!D< E!D4 Process <!4B E!;;DGGG E!4D@GGG E!4@EGGG E!E5<GG ;E!B@ E!B5 E!BB $utput <!E5 E!44<GGG E!;<<GGG E!45CGGG E!44<GGG E!E5>GG CD!5@ E!D5 E!DD

The effecti.eness of the relationships bet%een partners in the 9oint .entures ("unctional efficiency) play important roles for impro.ing process indicators! #hile building the competiti.eness %ould be considerably meaningful for the 9oint .entures to enhance the output criteria! !.1. . Ot(e* i33.e3 -2 0i3+.33i-/3 The ma9or ob9ecti.e of the study in this section is to find out %hat management approaches are appropriate for managing 9oint .entures in ,ietnam and ho% participants communicate %ith each other and sol.e operational conflicts created in the 9oint .enture relationships! These components are .ery important in forming the organi&ational distincti.e culture0 %hich can facilitate the 9oint .enture operation and ensure its success! Ta4le !.1 . Re3)-/0e/t3F 6ie>3 -/ 0e+i3i-/;1a,i/gC +-11./i+ati-/C a/0 +-/2li+t 3-l6i/g a))*-a+(e3. ($tandard de.iation in the parentheses) $verall sample ietnamese A.t-+*ati+ ;!C5 (E!DB) ;!5C (E!DB) C-lle+ti6e ;!B> (E!B@) ;!@5 (E!BC) C-/3.ltati6e >!;4 (E!D;) >!<4 (E!CD) C-/3e/3.3 <!E; (E!DE) <!EE (E!DE) Meeti/g <!4< (E!@5) <!4< (E!BB) Me1<!EE (E!>>) ;!DD (E!>;) Tele)(-/e <!>5 (E!CE) <!>> (E!DE) E1ail ;!D5 (E!D@) ;!CD (E!D<) Di*e+t +-/ta+t <!@< (E!B4) <!<4 (E!B>) La/g.age <!44 (E!C@) <!45 (E!D;) C.lt.*al 0i22e*e/+e <!<B (E!C>) <!>4 (E!CB) T(i/,i/g a))*-a+( ;!D5 (E!C@) <!E5 (E!C<) Ma/age1e/t 3t7le <!>; (E!BE) <!>> (E!B;) K/->le0ge le6el ;!BB (E!C4) ;!B5 (E!D;) Pe*3.a0e <!;4 (E!D>) <!45 (E!DB) C-lla4-*ate <!54 (E!D>) <!D> (E!5@) C-1)*-1i3e <!B> (E!BD) <!@5 (E!BC) C-11-/ -45e+ti6e3 <!4@ (E!BB) <!45 (E!D;) Wait 4!@D (E!@E) 4!C@ (E!>>) +ote: G0 GG0 GGG $ignificant at !40 !E@0 !E4 le.el! !oreigners ;!@; (E!D4) ;!C4 (E!B>) >!E@ (E!DB) <!E@ (E!DE) <!4> (E!>D) <!45 (E!>E) <!@C (E!@4) <!E@ (E!DB) <!DB (E!<B) <!EE (E!B<) <!;5 (E!C;) ;!@C (E!BD) <!<D (E!@5) ;!B; (E!@E) <!;> (E!D<) >!EE (E!B<) <!C4 (E!C;) <!4E (E!<E) 4!<< (E!>D) Sig" E!ECG E!@; E!;@ E!D< E!5; E!E4GG E!@E E!;C E!EEGGG E!<D E!@B E!E4GG E!C> E!C< E!D< E!@4 E!@< E!B; E!EEGGG

ecisionFma'ing approach of the managers may not directly affect the performance results of the 9oint .entures! But0 in a certain le.el0 it reflects the organi&ational culture in the 9oint .enture! Autocratic is the character of a manager that ma'es decisions by himself0 %ithout considering other people:s ideas! This type of management concentrates po%er in one person0 the leader! The data indicates that this character is not appropriate for managing 9oint .entures! 3n the other extreme0 the decisionFma'ing approach based on collecti.e (participation) discussion and .oting is also not preferable! Most of the respondents0 both local and foreign0 agreed that consultati.e decisionFma'ing approach is mostly fitted for the 9oint .entures! 1o%e.er0 to get consensus of all people is not easy and necessary!

<B

By e.aluating the problems related to communication %e can understand the %ea'nesses of or efforts made by the 9oint .enture management in building an organi&ational communication system0 in %hich the partners can communicate %ith each other0 share their ideas0 and exchange 'no%ledge! There are many barriers that can limit the effecti.eness of communication in an organi&ation0 namely the differences in language0 culture0 thin'ing %ay0 management style0 and educational le.els of the participants! The data of the sur.ey indicates that there is no serious problem related to the educational le.el and thin'ing approach of the partners! 1o%e.er0 cultural differences and especially management style seem to be important barriers limiting the effecti.e communication in the 9oint .enture! The respondents are inFbet%een on the problem of language! The %ay of sol.ing conflicts bet%een partners in the 9oint .enture reflects the company:s culture! Therefore0 building an effecti.e conflict sol.ing mechanism0 so that both sides can feel comfortable after ta'ing decisions0 is .ery important for a longFlast relationship and fruitful cooperation bet%een participants! The data indicates no significant difference bet%een 9oint .enture partners: .ie%s on e.aluating the conflict sol.ing approach! The %inF %in approach %as assessed to be the best %ay of sol.ing conflicts! #hene.er a conflict arises0 participants sit together and loo' for a solution that %ould benefit both sides! This approach requires transparently openFminded and coFunderstanding relationships bet%een the participants! Compromise is an important conflictFsol.ing strategy0 especially %hen dealing %ith shortFtime ob9ecti.es and a friendly atmosphere is needed! The respondents did not support the HsilenceI approach or Hdo nothingI and %ait until the problem is sol.ed itself! This approach may be dangerous and can lead to bigger conflicts later in the 9oint .enture life!

<C

!.#.

I/te*6ie>3 Re3.lt3

3n this section %e %ill ma'e an in depth study of the 9oint .enture relationships0 based on direct inter.ie%s %ith the 9oint .enture managers! The purposes of this section are to identify important problems related to the 9oint .enture operations! "or the purpose0 4E managers from three 9oint .entures %ere selected for the inter.ie%! 7f these people0 t%o %ere currently Executi.e 2eneral irectors0 others %ere epartment managers0 ser.ing in accounting0 production0 personnel0 and mar'eting departments! -roblems that arise in the 9oint .enture operations0 according to the inter.ie% results can be di.ided into eight groups as sho%n in Table @!4@ bello%! Ta4le !.1!. Ma5-* a*ea3 -2 t(e 5-i/t 6e/t.*e )*-4le13 a/0 i33.e3 -roblems related to the 2o.ernment policies 7%nership P Control of the 9oint .enture ifferences in partner:s si&e iffering basic ob9ecti.es Management payment Technology transfer Cultural problems Brand name J-i/t Ve/t.*e I33.e3 The 9oint .enture relationships co.er a %ide range of operational areas of the .enture and reflect ho% partners are coming up %ith a mutual satisfactory agreement and 9oining together in operations! The reality of many 9oint .entures in de.eloping countries is that they often in.ol.e large multinational companies (M+Cs) %hich ha.e under their pur.ie% a mix of other 9oint .entures and %hollyFo%ned subsidiaries else%here in the %orld! 7n the contrary0 the local companies0 %hich may be quite large by local standards0 are not in comparison %ith their partners! 3n the cases of 1BC and Luc' ,axy in this sur.ey0 for example0 the ,ietnamese partners %ere 9ust as big as small subsidiaries of their foreign partners! The Beer "actory of 1ue %hen 9oined %ith Tuborg 3nternational AL$0 more than 5EK of its assets ha.e been contributed to the 9oint .enture0 almost e.ery thing0 from a gate'eeper to a company:s bus! 7nly the brand name of 1uda and some other Copyrights ha.e been contributed in the form of licensing! The upshot of such differences is that the business perspecti.es of the t%o companies can .ary substantially0 and this .ariability can be at the root of relationship problems later in the 9oint .enture life! !.#.1. P*-4le13 Re3.lte0 F*-1 Di22e*i/g Ba3i+ O45e+ti6e3 The first source of difficulty may be deri.ed from the differing basic ob9ecti.es of the t%o types of companies! M+Cs hope to operate through the 9oint .enture in a %ay that %ill be optimal o.er their entire global net%or'0 not 9ust %ithin the local mar'et0 %hich are the usual

<D

interests of their local partner! There are a number of issues %here such differences impinge and o.er %hich disagreements can easily arise! As noted in the pre.ious sections0 9oint .enture partners are .ery different from each other in the basic ob9ecti.es! "oreign partners emphasi&e technology transfer as an important moti.ation of 9oining %ith the local firms! The local partners0 other%ise0 thin' that buying technology from a third party is often better0 because it does not ma'e them dependent on the foreign partner0 and the Hcompetiti.e mar'et is al%ays better than the monopoly oneI0 as noted the 2eneral irector of 1BC! According to him0 the ma9or purpose of the 9oint .enture %as not technology transfer0 because Htechnology is a.ailable and can be bought e.ery%here in the %orld no%adaysI! 7ther problem source can come from the differences in the 9oint .enture partners: .ie%s on export and import substitution moti.es! Local partners often expect that as ne% technology is brought in and productLprocess technologies are absorbed by the 9oint .enture0 exports may pro.ide a natural mar'et for expansion! 3ndeed0 increased exports might be a primary reason for the local partner to ha.e entered into a 9oint .enture agreement in the first place! /nfortunately0 ho%e.er0 they often meet export barriers set by the foreign partner! The foreign partners often loo' upon the 9oint .enture as one piece of a complex global %eb0 and it is not li'ely to allo% this single piece to dictate their o%n policies! Many M+Cs ban their 9oint .entures to export into their currently ser.ed mar'ets due to .arious reasons0 including the quality standards and cannibali&ation effects! 3n 455B 1BC management decided to launch a ne% product for the high end user mar'et segments0 Tuborg0 %hich %as a .ery popular brand in the international beer mar'et! 3n 455@0 the share of this ne% product in the total re.enue of the company %as about 4<K and the management belie.ed that it could increase to @EK in near future! The strategic ob9ecti.e of the company to launch this beer %as to compete %ith 1eine'en0 ha.ing currently been the beer number one in ,ietnam! But unfortunately0 the result %as so negati.e0 Tuborg on the one hand could not %in 1eine'en0 %hich has .ery successfully built its brand reputation and customer loyalty in ,ietnam for a long time0 on the other hand0 created a cannibali&ation effect0 %hich resulted in a considerable reduction in 1uda sales! "acing this situation0 the company immediately ad9usted its strategy to maintain Tuborg production in a limited amount! -resently0 Tuborg represents only about 4K of the company:s total beer production! The local managers complained that one of the reasons for the failure of the 9oint .enture:s ne% beer brand T Tuborg in ,ietnam %as that it %as not allo%ed by Tuborg 3nternational AL$ to be exported! This ne% beer brand produced in ,ietnam to ser.e the high end user mar'et segments0 but according to the local managers0 it %as too expensi.e for the ma9ority of the ,ietnamese! 3n 455B the local managers of 1BC proposed to export 1uda to the /$A! But they again met strong resistance from the foreign partner side! A local manager from the 9oint .enture said that they argued all the time %hen discussing the export rights! After Hcontinuous and sometimes rigorous strugglesI0 as the 2eneral irector of 1BC expressed %ith a big smile in his face0 they come to an agreement to allo% the 9oint .enture to export its products! +o%adays0 1uda is exported to some countries in the %orld0 such as the /$A0 3taly0 -ortugal0 and "rance! According to the irector of 1BC0 the export of 1uda0 although <5

accounted for only about @K of the company:s beer production0 strongly increased the brand reputation in the domestic mar'et! 7ther conflict of this 'ind may be deri.ed from the fact that foreign partners moti.ated from the ma9or ob9ecti.e to get access to the ne% mar'et often %ant to spend more in ad.ertisement in the first stages of the 9oint .enture! This may be the right strategy0 because since the 9oint .enture ne% products are not similar in the domestic mar'et0 ad.ertising %ould be effecti.e %ay for communicating %ith the customers! The local partners ho%e.er may thin' that too much spending on ad.ertisement at the early stages of the 9oint .enture is not necessary! Many of them con.ince that impro.ing the quality and technological capability is better %ay in building customer base and loyalty! !.#.#. Di22e*e/+e3 i/ )a*t/e* 3i8e Another set of problem areas relates to the differing si&e of the t%o parties in the 9oint .enture! 3n relati.e terms0 the local partner is li'ely to be considerably smaller than the foreign partner is and0 according to foreign managers0 this difference can cause difficulties during a 9oint .enture initial0 often high gro%th0 years! The local partner may ha.e difficulty coming up %ith the necessary capital infusions to support the expansion! 3n the case of 1BC0 for example0 the 9oint .enture had a high need of capital in.estment to increase the production capacity! 3n 455D due to high demand of 1uda0 the 9oint .enture decided to double the capacity to @EE thousand hectoliters per year! "or the purpose0 the 9oint .enture needed to increase its capital considerably! This capital increase did not create any difficulty to Tuborg 3nternational0 but for the local partner it %as really something %orthy of thin'ing! The situation %as e.en %orse in the case of Luc' ,axi! ue to the needs of in.estment capital for impro.ing the technological conditions of the production line0 but the local partner could not afford it! This forced the t%o sides to change the o%nership share! $i&e differences also seem to ha.e operational implications that can cause problems! "irst0 the 9oint .enture might be seen as much more important in the o.erall acti.ities of the smaller0 local partnerN this company proportionately has more assets tied up in the 9oint .enture than does the M+C! Local managers expressed the feeling that the foreign partner 9ust didn:t seem to gi.e enough attention to the 9oint .enture0 and the 9oint .enture appeared to become lost in the much larger scheme of M+C global acti.ities! $econd0 and related to the first0 is the dissatisfaction that occurs %hen M+C partners assign managers to the 9oint .enture for relati.ely short periods of time! The other side of that issue0 of course0 comes from the M+C management0 %hich typically complains about the difficulty of finding executi.es %ho are %illing to spend long periods of time abroad! "or these executi.es0 the 9oint .enture might not be seen as a logical %ay to achie.e career goals (6obert 6! Miller0 455B)! This strongly supports the research findings in the pre.ious section0 that foreign managers ha.e lo%er commitment than the local partners! !.#.&. O>/e*3(i) a/0 C-/t*-l -2 t(e 5-i/t 6e/t.*e Control is a problematic issue in the 9oint .enture! +ormally the o%nership share of the participants decides their management po%er! There exists0 ho%e.er0 a .ery specific %ay of controlling a 9oint .enture found in the sur.ey: the 9oint .enture is managed by a third party0 %hich is hired by the 9oint .enture! That %as the case of Century 6i.erside 1otel (C61)0 a >E

@EL@E 9oint .enture bet%een 1ue Tourist Company0 a stateFo%ned enterprise and Cro%ndale 3nternational0 Ltd!0 1ong 8ong! According to the agreement bet%een the 9oint .enture partners and Century Corporation0 this company ga.e the 9oint .enture the right to use its name and logo under a licensing contract! Century also sent a staff of its managers to the 9oint .enture to ta'e o.er the management tas's! Contributions of Century to the 9oint .enture %ere expected to be the %ellFbuilt international brand reputation0 managerial 'no%Fho%0 and especially the Century:s %orld%ide customer net%or'! To compensate the management ser.ice0 the 9oint .enture paid Century fees and licensing royalty! All of the Century:s acti.ities related to the 9oint .enture management %ere audited by an international auditing company0 and reported to the 9oint .enture board of management! Thus0 the Century 6i.erside 1otel %as found in such a distincti.e form of international 9oint .enture! The presence of Century in the 9oint .enture0 ho%e.er0 Hhad created many problemsI0 as the current 2eneral irector (2 ) of C610 %ho %as a ,ietnamese0 complained! The annual expenditure for maintaining the management functions of Century %as accounted for more than ;K of the company:s total re.enue0 4EK of earnings before tax0 and ;K of mar'eting costs! According to him0 hiring Century to manage the 9oint .enture %as not effecti.e! Another problem %as that the local partner had a feeling that they had lost their control on the 9oint .enture acti.ities0 including those related to the political and social issues! As noted abo.e0 the ,ietnamese partner %as a $7E0 therefore0 beside the business function0 they had to fulfil the social and political obligations0 such as maintaining the /nion and political -arty acti.ities in the enterprise! The 2 of C61 said that under the management of Century0 these acti.ities %ere .ery difficult0 %hich lead to decrease of the morale of the employees and increase conflicts bet%een them and the management! Moreo.er0 the management mechanism at C61 %ould naturally made the 9oint .enture a Hpurely equityI form! The t%o sides only contributed capital funds0 but almost not in.ol.ed in the management (all of the management staff %as CenturyFbased %ith an exception of the ,iceF2eneral irector0 %ho %as selected from the local partner)! According to the inter.ie%ee0 this had actually reduced the commitment of the t%o partners of the 9oint .enture! And more importantly0 he complained0 the contributions of Century had not been as expected! Most of the guests of the 1otel had been recorded to be situational and only a .ery fe% come from the Century Customer $er.ice +et%or'! This management mechanism had existed from 455< to =une 455B0 %hen the 9oint .enture partners decided to terminate the contract %ith Century0 but still continue licensing its name and logo! "rom =une 455B0 the t%o sides ha.e been rotationally changed to control the .enture in ma9or positions on a mandate of > years! !.#. . Te+(/-l-g7 t*a/32e* TechnologyFrelated problem sometimes comes up %hen the 9oint .enture management belie.es that the M+C is not pro.iding the 9oint .enture %ith the latest or most appropriate technologies! The M+C0 of course0 may ha.e excellent reasons from its o%n perspecti.es for restricting technical information0 particularly information in.ol.ing %hat are seen to be the core technologies of the M+C (6obert 6! Miller0 455B)!

>4

The case of Luc' ,axi %as a typical illustration of the 9oint .enture technologyFrelated problems! The 9oint .enture %as incorporated in 4554 and embar'ed on the phase of factory building since then! 3n 455<0 ma9or equipment started to be shipped to ,ietnam for installation! The pro9ect progress0 ho%e.er0 had ta'en a long period of time! The factory could not be completed until 455C! At the opening day0 unfortunately0 the production line sho%ed .arious malfunctions0 and could not start production! The local partner blamed the foreigners and called an international audit organi&ation for chec'ing the problems and finding the responsibilities! The foreign partner con.inced that the problems %ere purely techniqueFrelated! According to the inter.ie%ees0 part of the equipment %as damaged because of being 'ept in the company:s store for a too long period of time0 since 455<! Moreo.er0 by the time of the negotiation0 the demand for cement of medium quality0 produced under the standFo.en technology in ,ietnam %as high! But the mar'et had changed! The standFo.en technology0 %hich %as installed in the 9oint .enture0 had become obsolete! The 9oint .enture must spend additional in.estment for impro.ing the production lines! By these reasons0 the company could not operate until =une 455C! The problems0 although sol.ed0 ha.e considerably hurt the relationships bet%een the t%o partners0 especially the trust0 and may create problems later in the 9oint .enture life! !.#.!. B*a/0 /a1e Brand name %as also a contro.ersial issue that may create conflicts bet%een partners in the 9oint .enture! The first problem relates to the 9oint .enture name0 %hich in many cases in the sur.ey is a combination of the foreign company name0 %hich may be %ellF'no%n in the international business0 and a local name0 often not related to the local partner:s name! At the beginning stages of the 9oint .enture0 the foreign partner may thin' that their contribution to the .enture %as bigger than that from the local partner in terms of the brand name! But0 this may actually be offset later as the brand reputation increased in the local mar'et! 7n the other side0 the local partners often thin' that the ad.ertising expenditures may benefit the foreign side more because they lin' to its name! 3n the case of C610 the company:s name absolutely did not relate to 1ue Tourist Co! and Cro%ndale 3nternational Ltd!! Many people0 e.en the author of this article before his .isit to the 1otel for the inter.ie%0 could easily misunderstand that C61 %as a 9oint .enture bet%een Century and some ,ietnamese $7E! 3n another case0 the problem %as e.en more se.ere! That %as the case of $hellF ynamo ,ietnam0 a 9oint .enture bet%een $hellF ynamo and $aigon-etro Co!0 %hich %as not included in the inter.ie%s! The local partner %anted to build a distincti.e brand name for the 9oint .enture! According to a ,ietnamese manager in the 9oint .enture0 by building the 9oint .enture:s o%n name it %ould help increase the independence of the .enture from its parents! -roblems can also happen in using and ad.ertising product names0 often licensed from the 9oint .enture:s parents! This may create conflicts bet%een partners in ma'ing mar'eting decisions! !.#.%. C.lt.*al P*-4le13 Cultural differences are really ine.itable problems in the 9oint .enture! -artly0 the problems are caused by the ob.ious fact that the t%o (or more) partners come from many different cultural bac'grounds0 and indi.iduals may see the same set of circumstances in quite >;

different %ays! $ome foreign managers in the inter.ie% said that sometimes they could not get to the common point! "rom the local manager side0 foreigners %ere often characteri&ed as Htoo straightfor%ardI or Hnarro%FmindedI0 not %illing to understand the real situations0 especially %hen dealing %ith complicated issues0 %hich according to the local managers0 need some HartsI and HflexibilityI! 7n the other hand0 foreigner managers complained that ,ietnamese are .ery slo% in decision ma'ing0 some e.en often loo' at the traditional calendar and %ait until an Happropriate dayI for the solution! 7ne common complaint relates to %hat the foreign managers see as deeply embedded corruption in the business en.ironment0 presumably accepted by their partners! 3n the foreigners: .ie%0 such corruption may be unacceptable for a number of reasons! 3t leads to inefficiencies0 %hich0 in turn0 can affect competiti.eness! Thus0 %hat do the foreign partners see as corruption0 may be .ie%ed by the local partners as normal business practice0 can be a source of considerable contention in the 9oint .enture! ,ietnamese often try to a.oid conflicts and Hlosing faceI! The ,ietnamese selfFesteem is .ery high! A foreign manager in the inter.ie% suggested that if one %ants to be a good counterpart of the local people0 one should be HpatientI and HunderstandingI them0 a good strategy should be HcompromiseI! 7ne should trust them and Hlet:s see %hat they doI! !.#.?. Ma/age1e/t )a71e/t -ay for the 9oint .enture:s managers is also a complex issue! The local managers often complained that they did the same thing as their foreign counterparts0 but recei.ed only a fourth or a fifth of their compensation! The situation is more complicated %hen the 9oint .enture o%nership structure %as @EL@E0 in %hich the t%o sides had the equal decision ma'ing po%er! 3n such situations0 the foreign partners often let the local partner dominate the management0 and maintain a limited number of foreign managers in the 9oint .enture! !.#.:. P*-4le13 Relate0 t- t(e G-6e*/1e/t )-li+ie3 Business en.ironment directly affects operations of the 9oint .entures! 3n this section the author did not discuss all problems related to the business en.ironment of the 9oint .entures! 3nstead0 the research focussed only on those problems0 %hich directly influenced operations of the .entures0 including difficulties created by the go.ernment regulations and policies! The frequent complaints of the 9oint .enture managers %ere related to the go.ernment regulations on salaries0 fees0 and prices0 %hich directly affected the business of companies in general and 9oint .entures in particular! The ecision of the 2o.ernment on +o.ember ;B0 455D to continue the implementation of the regulation on minimum %age (in /!$! dollars) for the ,ietnamese employees %or'ing in the " 3 enterprises has really created difficulties for them0 especially in the situations of the current financial crisis in the region! The minimum %age regulation can significantly increase the production costs and reduces the competiti.eness of goods produced in ,ietnam! The policy of the local go.ernment in differentiating utility fees for the " 3 enterprises %as also unfa.orable for companies in managing production costs! According to the inter.ie%ees0 the utility costs set by the go.ernment %ere too high! Especially0 the differentiation bet%een fees for the " 3 and fees for the $7Es could create an unfair competition bet%een them! The differences of ma9or utility fees applied for the $7Es and nonF$7Es are sho%n in Table @!4B!

><

Ta4le !.1%. C-1)a*i3-/ 4et>ee/ .tilit7 2ee3 2-* SOE3 a/0 /-/;SOE3J Commodity Electricity #ater Telephone "ees for $7Es @EE ,+ L'#h ;EEE,+ Lm< BD0EEE,+ LmonthLtelephone "ees for nonF$7Es ;@EE ,+ L'#h @EEE,+ Lm< BE /$ LmonthLtelephone

$ource: irect inter.ie%s

G The direct exchange rate %as 4<05E ,+ L/$ !

The inter.ie%ees also expressed their concern about the ocument DB;LTL on =uly 4>0 455D of the ,ietnamese #or'ers "ederation0 %hich requires the " 3 enterprises extract ;K of the compensation fund for the /nion fees0 part of %hich must be submitted to the Central /nion! According to them these fees ha.e considerably increased the operation costs and created difficulties for companies! 3nter.ie%ees also expressed their concerns about the chaos of the mar'et competition! According to them0 the go.ernment should ha.e a necessary policy to regulate the competition bet%een companies in the mar'et! Too high pressure of competition may increase costs and reduce benefit margins of companies! According to the inter.ie%ees0 the current income tax for foreign employees %as not appropriate! The taxable initial le.el %as too lo% (@ million ,+ )0 %hile the tax rate %as too high (@EK .ersus ;DF>EK in other countries in the region)! This considerably created disad.antages for companies in hiring highFs'ill experts and managers in the %orld! "or the ,ietnamese %or'ing in the " 3 enterprises0 the current income tax rate %as too high (the highest rate %as BEK0 plus additional <EK for the income abo.e D million ,+ )! The inter.ie%ees said that this high income tax did not encourage the " 3 enterprise use the ,ietnamese employees in high le.el positions! Because0 for the same position0 %ith the same education le.el0 and the same after tax income0 the enterprise must pay more for a ,ietnamese than a foreigner! Lastly0 but not least0 is the problem related to the 2o.ernment 6egulation +o! @DLC- on Labor /se0 by %hich the foreign in.ested companies ha.e limited po%er on issuing labor contracts %ith foreign employees! The 9oint .enture management also complained about the lo% quality of the labors0 employed through the local Labor $er.ice Centers0 they %ant to be more free and proacti.e in sol.ing the employment issues!

>>

S.11a*7 -2 t(e C(a)te*H $o far a comparati.ely clear picture of the 9oint .enture success performance and quantitati.e relationships bet%een success factors0 as %ell as 'ey problems and issues affecting the 9oint .enture:s performance %as dra%n out! Although the financial performance %as quite under expectation0 the o.erall performance %as found to be someho% satisfactory! The strong correlation bet%een longFterm and shortF term success indicators is an e.idence of a normal functioning of the 9oint .entures in general! 3nput indicators %ere rated higher than the process and output indicators0 %hich means potentials for future success %ere a.ailable0 and an optimistic .ie% on the 9oint .enture future should be supported! $ignificant correlation bet%een success factors and indi.idual indicators as %ell as the input0 process0 and output measures suggest that important efforts should be made in certain areas for impro.ing the 9oint .enture operations! The results from the direct inter.ie%s %ith the 9oint .enture managers in most cases supported the quantitati.e findings in the research0 and o.ercoming of these 'ey problems %ould significantly impro.e the 9oint .enture performance!

>@

C(a)te* %

CONCLUSION AND RECOMMENDATION %.1. C-/+l.3i-/

The %orld economy has currently been in the globali&ation process! Business en.ironment has dramatically been changing to become more competiti.e0 more unpredictable0 more ris'y0 and more challenging! This has forced firms to be more strategic in struggling for sur.i.al0 benefit0 and gro%th! 3n such a .ibrant business en.ironment0 9oint .enture has become one of the effecti.e cooperati.e strategies to help firms approach their corporate goals! 7n the one hand0 a 9oint .enture is important for an industrial country firm because it helps easier0 cheaper0 and quic'er access to ne% mar'etsN facilitate technology transferN exchange 'no%ledgeN exploit cooperati.e synergyN and share ris's! 7n the other hand0 a 9oint .enture is important for a de.eloping country firm because it enables the firm to de.elop its mar'et position! Therefore0 a successful 9oint .enture ma'es Hthe strongI stronger0 Hthe %ea'I more competiti.e0 and both of them can %in by entering the alliance! #hen going into a 9oint .enture0 e.ery side brings to it basic expectations0 pursues distincti.e strategies0 and ma'es certain contributions rele.ant to their expectations! The le.el of satisfaction of the participants is therefore can be used as measure for the .enture:s success! Based on the results of the sur.ey0 the follo%ing conclusions can be made to gi.e an o.erall landscape of the 9oint .entures: ob9ecti.es0 their performance0 and ma9or problems they face in operations! %.1.1. J-i/t 6e/t.*e -45e+ti6e3 The emphasi&e of the role of a 9oint .enture as a tool for mar'et access reflects a shortFterm approach of the 9oint .enture partners in ma'ing their alliance! 7nce the mar'et is getting familiar and the 9oint .enture products attracti.e to the local customers0 the commitment of the participants may be reduced! There are significant differences in the 9oint .enture partners: .ie%s on the basic ob9ecti.es of the 9oint .entures! ,ietnamese partners higher emphasi&e export and acquiring ne% technology moti.ations0 %hile foreign partners consider sharing ris's0 mar'et access0 technology transfer0 and ta'ing the ad.antages offered by the 2o.ernment more importantly! These differing basic ob9ecti.es can create potential conflicts in the 9oint .enture relationship later during the 9oint .enture life0 such as conflicts in formulating and implementing technology transfer and export policies and mar'eting strategies! iffering basic ob9ecti.es can also influence commitment of the in.ol.ed parties and trust bet%een them! %.1.#. J-i/t 6e/t.*e )e*2-*1a/+e =udging ho% %ell a 9oint .enture is performed is theoretically and practically difficult0 because success can be .ie%ed from .arious perspecti.es0 at different le.els0 and depended on expectation of the participants! A good assessment of the 9oint .enture performance must

>B

therefore practical (easy for application) on the one hand0 and .aluable (gi.ing reliable information for managerial purposes)! The e.aluation process in this research consists of the t%o main steps! "irstly0 simple descripti.e statistics %as employed to identify the satisfaction le.els of the partners on different success indicators! After that0 factor analysis %as performed to classify these indicators in ma9or constructs (dimensions) and eliminate those that are not significantly correlated to others0 or ha.e lo% reliability due to the sample bias! Additional discussion and direct inter.ie%s %ere also made to support the analysis results and identify the ma9or problems in the 9oint .enture relationship that can influence the .enture:s performance! The satisfaction le.els of the 9oint .enture partners on different criteria are summari&ed in Table B!4! Top fi.e indicators ha.ing highest mean scores are 6elati.e quality0 -rofit sharing0 Transparent compensation0 Clear responsibility0 and Mar'et 'no%Fho%! 7nly one of these is HoutputIFrelated0 others are all HinputI indicators! 6elati.ely high quality of products and ser.ices is one of the most important ad.antages of the 9oint .entures o.er the local companies! Many 9oint .entures ha.e actually been successful in building their reputation through high quality of products and ser.ices in ,ietnam! e.eloping a management system0 in %hich profits can fairly distributed to the .enture:s partners0 compensation policy is transparent and understood throughout the .enture0 responsibility is clearly identified and rationally gi.en to managers of all hierarchy le.els is .ery important for a successful 9oint .enture! Bottom fi.e indicators ha.ing the lo%est scores are Cash flo%s0 Cost control0 6730 Access to financial resources0 and 3nno.ati.e strength! This indicates that the 9oint .entures are not .ery %ell performed in terms of the financial results! The dissatisfaction of the managers on the inno.ati.e strength0 %hich is a .ery important factor influencing the successful performance of an enterprise in a dynamic and competiti.e mar'et li'e ,ietnam reflects the %ea'ness of the .entures in 6P acti.ities! Both foreigners and ,ietnamese ha.e similar assessment about the economic results of the 9oint .entures! Although sales is e.aluated to be abo.e satisfactory le.el0 net profit and especially return on in.estment are far belo% the expectation! The lo% le.el of benefit and return on in.estment indicates that the 9oint .entures ha.e poor financial performance! There are significant differences in the managers: e.aluation on the 9oint .enture:s performance! Local managers are not satisfied %ith their 9oint .entures in building customer base and customer ser.ice0 %hile the foreign counterparts moderately e.aluate these factors! Although both ,ietnamese and foreign partners %ere not satisfied %ith the inno.ati.e capabilities0 foreigners are comparati.ely more optimistic and graded this indicator higher than the ,ietnamese!

>C

Ta4le %.1. Ra/,i/g 3.++e33 2a+t-*3 47 le6el -2 )a*t/e*F3 3ati32a+ti-/ 2rade 3ndicators >!;@ 6elati.e quality -rofit sharing Transparent compensation Clear responsibility Mar'et 'no%Fho% -roducti.ity 2ood relationship 1onorability Customer base 1armony Management 'no%Fho% 6elati.e price Customer satisfaction Transparent staffing Company si&e Learning Commitment "air %age Effecti.e communication <!<B #or' satisfaction Mar'et share 6esource safeguarding #or' %ell together Technological 'no%Fho% Cooperation 6elationship %ith authorities 6eputation $ales gro%th Trust 6elationship %ith suppliers Mar'et adaptability Complimentarity Technology $ynergism Competiti.e position Cash flo% Cost control 673 Access to finance resources ;!>< 3nno.ati.e strength 3nput 3 3 3 3 3 3 3 3 7 7 7 3 3 3 3 3 7 7 7 7 7 7 3 3 7 7 7 3 Lo%er satisfaF ction -rocess 7utput 1igher $atisfacti on 7 -

>D

There %ere significant differences in the respondents: e.aluation on the issues of the 9oint .enture relationships! 3n general0 foreign partners graded higher than the local partners! The ,ietnamese graded %or' satisfaction and fair salary much lo%er than the foreigners did! This indicates that the local managers are not .ery satisfied %ith the current compensation policy of the 9oint .enture! Lo% %or' satisfaction can reduce the employee loyalty rate and increase the possibility of quitting 9obs! The data indicates no significant difference in the respondents: .ie% on learning and communication! The moderate grades of these components indicate that there are no important barriers that can limit communication and learning in the 9oint .entures! Building an organi&ational culture0 in %hich e.eryone can freely communicate %ith each other and share their ideas0 is .ery important for a 9oint .enture to be successful! The effecti.e interaction bet%een employees from different partner companies is an ideal en.ironment for organi&ational learning! Based on the results of the factor analysis some conclusions can be made! The partners perceptions on the 9oint .enture performance are0 in general0 fitted to the theoretical frame%or' of the research! According to the analysis0 success indicators can be classified into @ groups0 namely "unctional Efficiency0 Competiti.eness0 Efficiency and Effecti.eness0 Equity0 and External Customer 6elationship! These fi.e factors explained more than CE percent of the .ariance! "unctional Efficiency and Equity ha.e factor scores of <!; and <!>@ respecti.ely0 %hich indicates that the 9oint .entures ha.e satisfactorily built up organi&ational culture for themsel.es! This moderate le.el0 ho%e.er is far from the expectation to ha.e H.ery goodI performance! There are significant differences bet%een the 9oint .enture partners in e.aluating these Hbeha.ioralI indicators! The ,ietnamese partners ha.e lo%er scores on these factors0 %hich means they are less satisfied %ith the 9oint .enture relationships than the foreign partners! $imilarly0 moderate factor score .alues of Competiti.eness and External Customer 6elations implies that the 9oint .entures are satisfactory in de.eloping their customer base0 building customers ser.ice net%or's and relationships %ith suppliers0 expanding the mar'et0 and impro.ing their reputation and competiti.e position! #ith a factor score lo%er than the HsatisfactoryI le.el0 Efficiency and Effecti.eness represent comparati.e H%ea'nessesI of the 9oint .entures! This may be one of the Hbottle nec'sI in the 9oint .enture system! The conclusion about that0 ho%e.er0 needs further research and studies! Correlation analysis sho%s that there exist significant correlation bet%een success indicators and the main operational performance results of the 9oint .entures! Competiti.e -osition has significant correlation %ith all of these HoutputI indicators0 especially $ales gro%th and Mar'et share! 6eputation has strong correlation %ith $ales gro%th0 %hile Cost control and -roducti.ity closely correlated to +et profit and 673! 7ther factors significantly correlated %ith at least one or t%o of these HoutputI0 except Customer base and $ynergy0 %hich ha.e no significant correlation %ith any of them! The %ea' correlation bet%een Customer base and the output indicators reflects lo% effecti.eness of the 9oint .entures in de.eloping their customer base! This may be resulted from %rong mar'et segmentation or inappropriate mar'eting strategies! $imilarly0 lac'ing of

>5

%illingness and cooperation of the t%o (or more) 9oint .enture partners in exploiting their synergies may significantly reduce the 9oint .enture roles as a cooperati.e strategy of firms in reducing operational costs! The results of the regression analysis indicate that HoutputI indicators are significantly affected by success factors! Competiti.eness most strongly affects $ales gro%th and Mar'et share0 %hile Efficiency P Effecti.eness T Cash flo% and 673! Equity moderately affects all of these HoutputI0 %hile "unctional Efficiency and Customer relation ha.e no significant influence on Mar'et share! This again indicates lo% effecti.eness of external customer relations of the 9oint .entures! The analysis also found strong correlation bet%een input0 process0 and output indicators0 %hich is an e.idence of a normal functioning of the 9oint .enture in general! $ignificant impacts of success factors on the input0 process0 and output indicators suggest that there are important potentials a.ailable for impro.ing the 9oint .enture performance! %.1.&. P*-4le13 i/ t(e 5-i/t 6e/t.*e *elati-/3(i)3 The results of the direct inter.ie%s %ith the 9oint .enture managers strongly support the quantitati.e findings in the study! iffering basic ob9ecti.es may result in conflicts bet%een partners in technology transfer0 export rights0 and formulating and implementing mar'eting strategies! ifference in partner:s si&e and management mechanism could create difficulties in rein.estment policies0 affect control po%er and commitment of the participants! Technology transfer is also a problematic issue that can unnecessarily cause conflicts bet%een partners0 hurt trust0 and damage partner:s credibility0 %hich can lead to harmful impacts on their relationships during the .enture:s life! The problems related to ho% a 9oint .enture should be named are also not less contro.ersial! /sing a name0 %hich is related to only one of the partners (%hich assumed to be %ell 'no%n %orldF%ide) can create a feeling of HunfairnessI and may lead to conflicts later in the 9oint .enture brand management! Moreo.er0 the lac' of a distincti.e name for the 9oint .enture can create difficulties in building identity and personality of the 9oint .enture brand!

%.#.

Re+-11e/0ati-/3

$o far0 a general picture of the 9oint .entures performance and 'ey problems they face in operations has been comparati.ely clarified! Based on these findings0 rele.ant recommendations can be made! %.#.1. Re+-11e/0ati-/3 t- t(e 5-i/t 6e/t.*e 1a/age1e/t3 3n order to o.ercome problems related to the differing basic ob9ecti.es0 partners should learn to understand each other! Close collaboration based on a longFlasting basic is .ery important for the participants to understand each other and deal %ith conflicts of this 'ind! $ometimes0 the difference in basic ob9ecti.es may lead to serious conflicts0 then compromise %ould be the best %ay to sol.e problems! Compromise0 ho%e.er as noted0 should be used as a HsituationalI strategy! This H%inFlossI conflict sol.ing approach can constitute potential problems and reduce the partner:s satisfaction!

@E

"or relie.ing problems related to the differences in si&e and compatibility of the 9oint .enture partners0 sufficient pro.isions should be made in the 9oint .enture negotiation phase! "or example0 partners should be agreed on issues of changing o%nership0 rein.estment0 and capital raising! These pro.isions are ho%e.er difficult to be implemented0 as many things %ould be changed at time! The comparati.ely independence of the 9oint .enture from its parents can also reduce threats of HharassingI from a HbiggerI partner! -roblems and conflicts related to technology transfer may be reduced %hen participants use H%inF%inI approach0 based on a longFlasting relation basis! This approach requires partners to respect the common goals set at the 9oint .enture establishment! +o party should try to ma'e use the 9oint .enture to pursue its unstated strategies! $ufficient and clear agreement pro.isions also need to be made setting out an operational frame%or' for technology use in the 9oint .enture to sol.e problems of technology transfer! Building the 9oint .enture distincti.e identity0 brand name0 and logo may be an effecti.e %ay in o.ercoming problems of brand name! The 9oint .enture name should combine strengths of both partners0 and be reser.ed as an independent company name! Building the 9oint .enture:s o%n brand names can also help encouraging 6P acti.ities and inno.ati.e strength of the .enture! e.eloping the organi&ational culture0 distincti.e for the 9oint .enture is .ery important in creating fa.orable %or'ing en.ironment in the 9oint .enture0 %hich allo%s employees to communicate freely %ith one another0 helps them o.ercome psychological barriers of belonging to different parents! The organi&ation culture %ould ma'e employees closer to each other0 able to share responsibilities0 and %or' in a team basis! This is apparently a .ery important condition for de.eloping the 9oint .enture relationships and ensuring its successful performance! As noted0 the %ea' correlation bet%een Customer relation and operational performance may reflect lo% effecti.eness of customer ser.ices! 3n order to impro.e customer ser.ice0 total quality management methods should be employed! Building Total Customer $atisfaction Teams0 creating s%itching costs0 and managing customer complaints are important tools in maintaining customer base and customer loyalty! Exploiting cooperati.e synergy are important %ays in increasing effecti.eness of the 9oint .enture through cost and time sa.ing! "requent .isits of the participants to each other could help them understand more about themsel.es and disco.er opportunities for cooperation! The most important condition for exploiting cooperati.e synergies is that0 partners must ha.e strong trust and the 9oint .enture relationship should be based on a longFterm basis! Enhancing reputation and brand image of Himport quality0 domestic priceI of the 9oint .enture products is an important branding strategy for impro.ing competiti.eness of the 9oint .enture! 7ne of .ery important %ays for the 9oint .entures to build their competiti.e ad.antages o.er domestic or foreign %holly o%ned companies is effecti.e use of the integrated resources of the partners through extensi.e resource exchange programs! Lastly0 building good relationships %ith the local authorities is also strategically important for a company in a country0 %here many things are based on custom li'e ,ietnam! These relationships may help companies obtain necessary information0 related to the social and economic de.elopment plans of the go.ernment0 legal and political changes0 and sometime

@4

the relationships may facilitate the company in dealing %ith local companies and go.ernment agencies! %.#.#. Re+-11e/0ati-/3 t- t(e )-li+7 1a,e*3 As noted0 9oint .enture is important for a de.eloping country li'e ,ietnam to enhance the general technological capabilities of the national industries! By entering a 9oint .enture %ith a de.eloped country company0 the local firm stepFbyFstep impro.es its managerial and technological 'no%Fho%0 builds up its competiti.e position and is able to struggle for sur.i.al0 benefits0 and gro%th! 3n order to help the 9oint .entures successfully perform0 the 2o.ernment must consider 9oint .enture as the strategy for the national technological de.elopment! 3t must create a unique business en.ironment fa.orable for the international 9oint .entures of all types to de.elop! "irst of all0 there should be absolutely no discrimination bet%een the $7Es and international 9oint .entures in all fields of their acti.ities! The equality bet%een the $7Es and the international 9oint .entures %ould help them able to ma'e use of the alliance ad.antages and o.ercome the gap difficulties to build up their competiti.e position in the domestic mar'et! $uch equality can be reflected in the go.ernment policies of equal price0 equal fees0 and equal tax bet%een the $7Es and nonF$7Es! 3n order to encourage the 9oint .entures in employing local managers in important positions0 the 2o.ernment should increase the taxable threshold and lo%er the income tax for ,ietnamese %or'ing in foreign in.ested companies0 at least to the le.els applied in other countries in the region! The 2o.ernment could also facilitate the 9oint .entures by applying attracti.e policies0 such as tax exemption and economic incenti.es to aid them o.ercome difficulties in operations! Changing the point of .ie% of seeing a foreign in.ested company as a HcapitalistI to an important HforceI0 %hich can contribute to the de.elopment of the national economy0 %ould play a significant role in creating a nourishing en.ironment for foreign in.ested companies in general and 9oint .entures in particular! "inally0 a stable and effecti.e legal system is necessary for companies in general and 9oint .entures in particular to operate! 7n the one hand0 the 2o.ernment encourages the 9oint .entures %ith effecti.e policies0 on the other hand the 2o.ernment eliminates its inter.entions and gi.es the 9oint .entures independence to sol.e their o%n problems!

%.&.

F.*t(e* Re3ea*+( S.gge3ti-/

As noted0 %ea' correlation bet%een Customer 6elations and success factors could be an e.idence of ineffecti.eness of customer ser.ice and mar'eting acti.ities! Traditional mar'eting approaches and distribution net%or's0 obtained from local partners may not be necessarily efficient! The mar'et economies0 ho%e.er0 depend on .arious factors! "urther research is therefore necessary to disco.er 'ey problems (the bottlenec's) in the mar'eting approach of the 9oint .entures for more effecti.ely functioning of the 9oint .enture systems! As the failure rates of the international 9oint .entures increased0 a research on identifying 'ey factors affecting failureLsuccess rates should also be carried out in an international scale!

@;

REFERENCES
4! Baird0 3!$! et al! (455<)0 HE.aluation of Cooperati.e Alliances: 3ntegration and "uture irections0 #or'ing -aper0 Academy of Management0 Atlanta0 2eorgia! ;! Beamish0 #! -aul (45DD)0 HA management 2uideline for =oint .entures in countriesI0 London0 6outledege0 pp! @CFC4! <! Beamish0 #! -aul 455>! Q=oint ,entures in L Cs: -artner $election and -erformance!Q Management 6e.ie%0 ,ol! <>0 $pecial 3ssue! >! Beamish0 -! et al!0 (45DC)0 HEquity =oint ,entures and the theory of the Multinational EnterpriseI0 =ournal of 3nternational Business $tudies0 ,ol! ;D0 pp! 4F4B! @! Blit&er0 M! (455C)0 HEstablishing =oint ,entures on "irm "oundationsI0 3nternational =oint ,entures #or'shop0 A3T0 =une 455C! B! Buchel0 B!0 -range C!0 =ohri L!0 et al! (455D)0 H3nternational =oint ,enture ManagementI0 =ohn #iley P $ons -ress0 pp! 4F>< and 4@CF ;>4! C! Beamish0 -aul (45D@)0 HThe Characteristics of =oint ,entures in e.eloped and e.eloping Countries0I Columbia =ournal 3nternational Business0 "all 45D@0 pp!4<F45! D! C&in'ota0 M!6! et al! (45D5)0 H3nternational BusinessI0 The reyden -ress! 5! aft0 6!L! (455;) H7rgani&ation Theory and esignI0 $t! -aul0 #est -ublishing! 4E! 2eringer0 =! (4554)0 H$trategic eterminants of -artner $election Criteria in 3nternational =oint ,enturesI0 =ournal of 3nternational Business $tudies0 ,ol! ;;0 pp! >4FB;! 44! 1arrigan0 8!6! (45DB)0 HManaging for =oint ,enture $uccessI0 +e% ?or'0 Lexington Boo's! 4;! 1arrison0 =! (45DC)0 HAlternati.es to MergerF=oint ,entures and 7ther $trategiesI0 Long 6ange -lanning0 ,ol! ;E0 +o! B0 pp! CDFD<! 4<! =ohansson0 =! (455@)0 H3nternational Alliances: #hy +o%MI0 =ournal of the Academy of Mar'eting $ciences0 ,ol! ;<0 pp! <45F<<;! 4>! 8ogut0 B! (45DD)0 HA study of the Life Cycle of =oint .enturesI0 Management 3nternational 6e.ie%0 ,ol! ;D0 pp! <5F@;! 4@! 8illing0 =! -eter (45D;) H1o% to ma'e a global 9oint .enture %or'0I 1ar.ard Business 6e.ie%0 MayL=une 3ssues0 pp! 4;EF4;C! 4B! 8illing0 =!-eter (45D<)0 H$trategies for =oint ,enture $uccessI0 +e% ?or'0 -raeger -ress! 4C! 8ogut Bruce (45D5) HThe $tability of =oint ,entures: 6eciprocity and Competiti.e 6i.alry0I The =ournal of 3ndustrial Economics0 ,ol! <D0 +o!;0 ecember 3ssue0 pp! 4D<F 45D! 4D! Lei0 ! et al! (4554)0 H2lobal $trategic Alliances: -ayFoffs and -itfallsI0 7rgani&ational ynamics0 ,ol! 450 +o! <0 pp! <<F<D! e.eloping

@<

45! +aa&neen 8amali (455B)0 H#hy -P2 and 2odre9 Bro'e /pI0 Business 3ndia0 =uly 4@F4D0 455B0 pp! @>FBE! ;E! -hong0 +guyen The (455@)0 HCompatibility in =oint ,entures in ,ietnamI0 3n: /nderstanding 3nternational =oint ,entures in ,ietnam0 $7M0 A3T0 pp! 44CF4@5! ;4! -robst0 2! and Buchel B! (455C)0 H7rgani&ational Learning: The Competiti.e Ad.antage of the "utureI0 London0 -renticeF1all! ;;! 6obert 6! Miller0 =ac' ! 2len0 "rederic' A!0 H3nternational =oint ,entures in e.eloping Countries: 1appy MarriagesMI /6L: ###!ifc!orgL E-T$L7-$LEC7+L-/B$L -;5!1TM (Last updated August 455D)! ;<! $%ier&ce'0 "!#!0 *uang T!0 et al! (455@)0 H/nderstanding 3nternational =oint ,entures in ,ietnamI0 $7M0 A3T0 pp! ;F;40 <<F@C0 44CF4B< and ;ECF;@4! ;>! $%ier&ce'0 "!#! (455>)0 HCultures and Conflicts in =oint ,entures in AsiaI0 3nternational =ournal of Management0 ,ol! 4;0 +o! 40 pp! <5F>C! ;@! $%ier&ce'0 "! #! et al! (455>)0 H=oint ,entures in Asia and Multicultural ManagementI0 European Management =ournal0 ,ol! 4;(;)0 pp! 45CF;E5! ;B! Thorelli0 1!B! (45DB)0 HBet%een +et%or's and 1ierarchiesI0 $trategic Management =ournal0 ,ol! C! ;C! #illiamson0 7!E! (45D@)0 HThe Economic 3nstitutions of Capitalism: "irms0 Mar'ets0 6elational ContractingI0 +e% ?or'0 "ree -ress! ;D! Aiera0 ?! and $hen'ar0 7! (455E)0 H3nteracti.e and $pecific -artner CharacteristicsI0 Management 3nternational 6e.ie%0 ,ol! <E0 $pecial 3ssues0 pp! CF;E! ;5! Tomlinson0 =!#! (45CE)0 HThe =oint ,enture -rocess in 3nternational BusinessI0 Cambridge0 Massachusetts0 M3T -ress! <E! Ministry of -lanning and 3n.estment Annual 6eport +o! 44B81L8C+ =an! ;0 4555! <4! epartment of -lanning and 3n.estment of ThuaFThien 1ue -ro.ince 6eport on "oreign irect 3n.ested -ro9ects in 455D! <;! ,ietnam ?earboo'0 $tatistics -ublishing 1ouse0 455C!

@>

APPENDI' A))e/0iB 1H A +a3e -2 HBC

A33e33i/g t(e Fi/a/+ial Sit.ati-/3 a/0 Pe*2-*1a/+e -2 t(e J-i/t Ve/t.*e Tuborg 3nternational AL$ %as first established on May 4<0 4DC< in Copenhagen in the name of Tuborg "actories Ltd!! E.er since the Bre%ery %as founded0 its purpose has been to create a truly international beer! Today0 Tuborg is one of the most %idely sold beer brands on a global scale! At present0 Tuborg beer is being consumed in around 4;E countries and produced in some ;E countries0 including 2ermany0 3taly0 -ortugal0 Tur'ey0 Malaysia0 Croatia0 -oland0 3srael0 Malaysia0 +epal0 Mala%i0 and ,ietnam! More than half of the beer production is sold and consumed outside enmar'! 1BC is a 9oint .enture0 established in April 455> bet%een the Beer "actory of 1ue0 Tuborg 3nternational AL$0 and the 3ndustriali&ation "und for e.eloping Countries! The 9oint .enture %as formed according to the in.estment license +o D<@L2- of $CC3 for the purpose of producing beer and other drin'ing products in the pro9ect life of <E years! After four years of operation0 the 9oint .enture has confirmed its competiti.e position in the mar'et and become one of the profitable enterprises0 despite of the current financial crisis in the region! Ma9or characteristics of the 9oint .enture are sho%n in Table A4!4! Ma5-* +(a*a+te*i3ti+3 -2 HBC C-1)a/7 /a1e H.e B*e>e*7 C-1)a/7 Fiel0 -2 4.3i/e33 Bee* O>/e*3(i)H Viet/a1e3e )a*t/e* !$A F-*eig/ )a*t/e* !$A Data -2 *egi3t*ati-/ 199 Data -2 -)e*ati-/ 199! Regi3te*e0 +a)ital D# . 1 D.*ati-/ -2 t(e 5-i/t 6e/t.*e &$ 7ea*3 N.14e* -2 e1)l-7ee3 ### Se*6e0 1a*,et D-1e3ti+ I eB)-*t Ma/age1e/t -2 t(e 5-i/t 6e/t.*e R-tati-/all7 +(a/ge0 The data indicates a continuous increase of the company:s sales %ith an a.erage rate of more than ;E percent per year! At the end of 455D0 a ne% production line %as installed and the production in 4555 is expected to increase importantly! According to the 2eneral irector of 1BC0 the production %ould be around @E million liters of beer by the year of ;EEE and more thereafter! The presence of 1BC in 1ue has played an important role for the economic de.elopment of the city! 3n 455D0 tax contribution of 1BC accounted for about 4@E billion ,+ 0 #hich %as >CK of the local go.ernment:s budget in the year! Ta4le A1.1

@@

Ta4le A1.# Indicator

A/al73i3 -2 t(e i/+-1e 3tate1e/t3 2-* t(e )e*i-0 199!;199: Amount in thousand <.S.= &ro%th '() 199! 199% 199? 199: 199% 199? 199: T-tal Sale3 440EC; 4B0>4C ;E044> ;>0C>4 4>D!< 4;;!@ 4;<!4 $pecial Consumption >05CB C0@DD 50<;@ 440>CE 4@;!@ 4;;!C 4;<!@ Tax Copyright 4E4 4@D 4@D 4C< 4@B!E 4EE!> 4E5!E -rice E E ;@B ;5> F F 44@!E 6eductionL iscount Net Sale3 @055@ D0BC; 4E0<C@ 4;0DE> 4>>!C 445!B 4;<!> "ixed Costs 40D@; ;0EEE ;0E4E ;0>B@ 4ED!E 4EE!@ 4;;!C ,ariable Costs <0<BE >0;5B >05>@ B0EE@ 4;C!5 44@!4 4;4!> EBITA CD< ;0<CB <0>;4 >0<<> <E<!B 4>>!E 4;B!C Amorti&ation 40;;< ;04B; ;04DC ;0;<< 4CB!D 4E4!; 4E;!4 7ther Earnings E F;>< F;D5 F;B< F F F EBIT F>>E F;5 5>@ 40D<D F F 45>!B 3ncome Tax E E 4<D ;@D F F 4DB!> Net Be/e2it ; $ ;#9 :$% 1C!:$ ; ; 19%.$

$ource: Company:s Annual 6eports Earnings of 1BC come from the t%o ma9or sources: production and financial acti.ities! uring the sur.eyed period0 financial acti.ities reali&ed negati.e results due to changes in exchange rates0 %hich %ere not fa.orable for the company! "rom 455C0 t%o years after the establishment of the 9oint .enture0 1BC started getting positi.e benefit! The gro%th rate of net benefit %as comparati.ely high in 455D! Ta4le A1.& A/al73i3 -2 t(e +a3( 2l-> Indicators *mount in thousand +"S", 199! 199% 199? 199: Ca3( I/ 440EC; 4B04C> 450D;@ ;>0>CD Ca3( O.t 4E0;D5 4>0E>; 4B0D<; ;E0BB@ Ca3( Fl-> ?:& #C1&& #C99& &C:1& $ource: Company:s Annual 6eports These consolidated data ho%e.er may be much modified by the accounting practice of the company! "or example0 the methods of amorti&ation may influence the le.els of net benefits for the accounting period! This shortcoming can be o.ercome by using cash flo% as an indicator of the financial performance! This indicator ho%e.er is not accurate in comparing companies of different industries0 especially those that are different in the le.el of technological equipment! The more technologyFintensi.e the enterprise0 the higher possibility of it to ha.e higher le.el of cash flo%! "or 1BC0 cashFin gro%th %as higher than that of cashF out in the sur.eyed period0 %hich resulted in positi.e gro%th of cash flo%! This is a signal of good financial effecti.eness of the 9oint .enture! &ro%th '() 199% 199? 4>B!4 4;;!B 4<B!@ 445!5 #?#.! 1 $.&

199: 4;<!@ 4;;!D 1#?.

@B

Ta4le A1. Indicators

A/al73i3 -2 t(e 4ala/+e 3(eet3 2-* t(e )e*i-0 199!;199: *mount in thousand +"S", &ro%th '() 199! 199% 199? 199: 199% 199? C.**e/t A33et3 <0@4D >0D@E C0<;D D0B;> 4<C!5 4@4!4 Cash CB5 ;04B> >0CE@ @0CD< ;D4!< ;4C!> 6ecei.ables D>E DD4 DDB 40E<< 4E>!5 4EE!@ 3n.entories 405ED 40DE@ 40C<C 40DEC 5>!B 5B!; FiBe0 a33et3 4C0CE@ 4@0CEC 4<0@B4 4B0C;C DD!C DB!< Lia4ilitie3 @0E@@ >0<B< <054; @04C5 DB!< D5!C Current Liabilities 404E@ 5>D 40D<5 40B@E D@!D 45<!5 LongFterm ebts <05@4 <0>4@ ;0EC> <0@;5 DB!> BE!C O>/e*K3 EG.it7 4B04BC 4B045> 4B05CC ;E04C; 4EE!; 4E>!D T-tal A33et3 #1C##& #$C!!? #$C::9 #!C&!1 9%.9 1$1.% $ource: Company:s Annual 6eports

199: 44C!C 4;;!5 44B!B 4E>!E 4;<!< 4<;!> D5!C 4CE!; 44D!D 1#1.

A .ery important indicator for the financial performance of an enterprise is the shareholder:s .alue0 %hich reflects the core financial goal of any company! The increase of the o%ner:s equity in the case of 1BC %as resulted mainly from the contributions of the partners as %ell as the di.idend policy of the .enture to reFcapitali&e the earnings! -ositi.e gro%th of the o%ner:s equity is also a sign of a good business in 1BC! "or e.aluate the financial situations and the payment po%er of the company0 the indicators such as debt0 current0 quic'0 and cash ratios can be used! ebt ratio reflects the extent of debt0 %hich the company is liable to pay! Current ratio indicates the capability of the company to pay debts using current assets0 %hich include cash0 securities0 in.entories0 recei.ables0 and other shortFterm financial .alues! *uic' ratio is based only on those financial instruments that can be .ery quic'ly mobili&ed0 such as cash and mar'etable securities! #hile cash ratio measures the capability of the company to pay debts based only on cash! The lo% debt ratios in the sur.eyed period indicate that the company has mainly used its money for in.estment! Lo% le.el of debt ratios is a good sign of a strong financial po%er and lo% ris' of ban'ruptcy of the company0 especially in the conditions of the current financial crisis in the region! The current0 quic'0 and cash ratios %ere .ery high %hich indicate that the company %as in a .ery good position to pay liabilities! This guarantees safety for the company in its business! The too high le.el of these indicators0 ho%e.er0 may reduce the effecti.eness of using the company:s funds! Too much cash 'ept in the company accounts may increase the opportunity costs of capital and reduce the fund efficiency! $ales to total assets ratio can be used for e.aluating the effecti.eness of the company:s assets! 3n the sur.eyed period0 the le.el of sales has increased %ith higher rate than the total assets! This resulted in increased of this ratio0 %hich indicates a good effecti.eness of the company in using the in.estment capital for expanding the production and mar'ets! $ales on total assets0 ho%e.er0 do not reflect the company:s efforts in controlling costs! 1igh le.el of sales may not necessarily result in high profitability of the business! 3f the operating costs increase %ith a higher rate than sales0 a negati.e gro%th of net benefit can be una.oidable! Benefit margin is0 therefore0 an appropriate measurement of the company:s success in managing costs! uring the period 455@F455D0 sales increased %ith higher rates than costs! @C

This resulted in a high gro%th of benefit! The data indicated that 1BC %as good in controlling costs and increasing the production effecti.eness! Ta4le A1.! Indicator Rati- a/al73i3 199! E!;> <!4D 4!>B E!CE E!@; F F F .atios 199% 199? E!;4 E!45 @!4; <!55 <!;4 <!E> ;!;D ;!@B E!C5 E!5@ F E!ED F E!E> F E!E@ 199: E!;E @!;< >!4< <!@E E!5C E!4; E!EB E!ED >rowth ?@A 199% 199? 199: D5!4 DD!; 4E5!4 4BE!C CC!5 4<4!4 ;;E!> 5>!C 4<@!5 <;C!C 44;!4 4<C!E 4@E!D 4;E!B 4E4!C F F 4@D!D F F 4B4!@ F F 4B@!E

De4t RatiC.**e/t RatiE.i+, RatiCa3( RatiSale3 t- T-tal A33et3 Net P*-2it Ma*gi/ Ret.*/ -/ T-tal A33et3 Ret.*/ -/ EG.it7

7ther indicators for e.aluating the assets effecti.eness are return on total assets and return on equity! These t%o indicators %ere not .ery high as indicated in Table A4!@0 the gro%th rates of these indicators %ere .ery high0 %hich is a good signal for a better future of the company!

A))e/0iB #H Ma5-* C(a*a+te*i3ti+3 -2 t(e Re3)-/0e/t3

Title -resident0 2eneral irector ,iceFpresidentL irector i.ision Manager epartment Manager Assistant Manager 7ther F./+ti-/ 2eneral Management -roductionLEngineering $alesLMar'eting "inanceL Accounting -urchasingLMaintenance 1uman 6esource 7ther EB)e*ie/+e B months T ; > months ; years T > years @ years T 4E years N.14e* @ B C ;< < 5 C @ C 4< > C 4E 5 <> 4E Pe*+e/tage 5!> 44!< 4<!; ><!> @!C 4@!E 4<!; 5!> 4<!; ;>!@ C!@ 4<!; 4D!D 4C!E B>!; 4D!5

@D

A))e/0iB &H Li3t -2 t(e I/te*/ati-/al J-i/t Ve/t.*e3

i/ T(.a T(ie/ H.e a/0 Da/a/g P*-6i/+e3. Na1e +on +uoc anang Ltd! Biopharmtech anang Container Ltd! 3ndochina Beach 1otel An -hu Co!0Ltd! ,3=AC131ai ,an Thiess 3nter "ood P Be.erage Textile Mills Ltd! Tourane 1otel Ltd! 3nter Tourism Complex 6!=! 6eynolds anang Tobacco Ltd! anataxi 3ndochina 1otel anang ,ietenergo ,iacoa a'imCo! 3ndex anang Co!0 Ltd! $handongF anang ,egetable 7il Co!0 Ltd! 2uangxiF anang Construction CoFLtd! ,ietnamF"rance $er.ice CocaFCola $oft rin's -$C74 1ue Bre%ery Co!0 Ltd! Luc' ,axi Co!0 Ltd! Century 6i.erside 1otel F-*eig/ )a*t/e* B.3i/e33 2iel03 Australia 6ussia 3taly 1ong 8ong Tai%an =apan Australia =apan Luxembourg 1ong 8ong Tai%an 1ong 8ong Canada Malaysia ?ugosla.ia $%it&erland Thailand China China "rance $ingapore China enmar' 1ong 8ong 1ong 8ong #ooden Medicine Container 1otel Agriculture -ulp Construction material "ood P be.erage Textile 1otel $er.ice 1otel Cigarettes Taxi 1otel Construction Metal Consulting "ood processing Construction Consulting $oft drin's Agrochemical Beer Cement 1otel I/itial +a)ital DEE 40;CB ;E0EEE <@0EEE <4E <0DBB >0E>@ ;D@ B0>5E ;;0>4@ <;0EEE ;40>>C 40EEE 440EEE 40@DE <0;<D <;E >04EE <0EEE <@ ;@0EEE 40;EE ;<0>EE BD0EEE C0BEE Date@"ea* -2 2-./0ati-/ ;4L5L5E <EL<L5< <L5L5; ;ELCL5B 5L4L5< 455< DL44L5B <4L4;L5< <4L@L5> >LCL5> 4<L5L5> ;>L4L5@ 44L>L5@ >LCL5@ 4<L;L5B 5L@L5B 4CL>L5B 4;LCL5C 4EL4;L5C >L@L54 45L4L5D <4L4;L5D BL>L5> ;@L;L5; >L@L54

@5

A))e/0iB H T(e S.*6e7 E.e3ti-//ai*e E.e3ti-//ai*e

ear $irLMadam0 3 am Lai Xuan Thuy0 MBA student of the $chool of Management at Asian 3nstitute of Technology0 Bang'o'0 Thailand! 3 am conducting a research on assessing the 9oint .entures in ,ietnam! 3 %ould be highly obliged if you could help me in my research study by filling out this questionnaire! Than' you .ery much for gi.ing me your .aluable time and efforts! $incerely ?ours0 Lai Xuan Thuy $7M0 A3T0 Bang'o' Ge/e*al i/2-*1ati-/ -2 7-.* 5-i/t 6e/t.*e 4! +ame of the 9oint .enture: ;! +ame of the partners of the 9oint .enture and their o%nership -artner companies 4! ;! <! <! ?ear of establishment: >! uration: @! Total in.estment: @! Business fields: Mea3.*e1e/t -2 t(e 5-i/t 6e/t.*eF3 )e*2-*1a/+e C! #hat %as the main ob9ecti.e of the 9oint .entureM C!4! To share ris's C!;! To ta'e ad.antages offered by go.ernment C!<! To acquire ne% technology C!>! To transfer technology C!@! To access ne% mar'et C!B! To export C!C! To substitute imports C!D! To safeguard the ra% material resources C!5! To obtain in.estment capital C!4E! To exchange 'no%ledge C!44! To ma'e use of cooperation synergy +ot important ,ery important 4 ; < > @ 4 ; < > @ 4 ; < > @ 4 ; < > @ 4 ; < > @ 4 ; < > @ 4 ; < > @ 4 ; < > @ 4 ; < > @ 4 ; < > @ 4 ; < > @ +ationality 7%nership (K)

BE

D!

1o% %ould you assess the 9oint .enture:s performance on the follo%ing criteriaM ,ery poor 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 ,ery good ; < > ; < > ; < > ; < > ; < > ; < > ; < > ; < > ; < > ; < > ; < > ; < > ; < > ; < > ; < > ; < > ; < > ; < > < < < > > > @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @

D!4! $ales gro%th D!;! Cash flo% D!<! 673 D!>! Company si&e D!@! Mar'et share D!B! Customer satisfaction D!C! Customer base de.elopment D!D! Competiti.e position D!5! Technology de.elopment D!4E! Brand reputation D!44! 3nno.ati.e strength D!4;! 6elati.e quality D!4<! Cost control D!4>! Labor producti.ity D!4@! 6esource safeguarding D!4B! 6elationship %ith suppliers D!4C! Access to financial resources D!4D! 6elati.e price D!45! Exploiting synergy bet%een the 9oint .enture:s partners D!;E! Cooperation %ith other local companies D!;4! 6elationship %ith the local authorities 5!

4 ; 4 ; 4 ;

1o% do you assess your 'no%ledge impro.ement since %or'ing for the 9oint .entureM ,ery poor ,ery good @ @ @

5!4! Technological 'no%Fho% impro.ement 5!;! Managerial 'no%Fho% impro.ement 5!<! Mar'et 'no%Fho% impro.ement

4 ; 4 ; 4 ;

< < <

> > >

4E! 1o% do you assess the %or'ing relationships bet%een the partners in the 9oint .entureM $trongly disagree $trongly agree 4E!4! There exist a harmony bet%een the partners in the 9oint .enture 4 ; < > @ 4E!;! -rofit sharing among the partners is fair 4 ; < > @ 4E!<! +o one has tried to ta'e ad.antage of the 9oint .enture 4 ; < > @ 4E!>! #e are complimentary to each other 4 ; < > @ 4E!@! #e %or' .ery %ell %ith each other 4 ; < > @ 4E!B! 7ur partners are .ery honorable 4 ; < > @ 4E!C! 7ur relationship is .ery good 4 ; < > @ 4E!D! #e strongly trust each other 4 ; < > @ 4E!5! 7ur partners ha.e .ery high commitment 4 ; < > @

B4

4E!4E! #ageLsalary policy is fair 4E!44! There has been high %or' satisfaction 4E!4;! Communication bet%een us is easy and effecti.e 4E!4<! Conditions for learning from each other are .ery good 4E!4>! The responsibilities %ere clear for all partners 4E!4@! There is a transparency in the =, %ith regard to staffing and career de.elopment! 4E!4B! There is a transparency in the =, %ith regard to the payment system!

4 ; 4 ; 4 ; 4 ; 4 ; 4 ; 4 ;

< < < < < < <

> > > > > > >

@ @ @ @ @ @ @

44! 1o% %ould you rate the importance of the management approaches in decision ma'ing process as factors for the 9oint .enture:s successM +ot important ,ery important 44!4! The manager himself ma'es decision 4 ; < > @ 44!;! The decision is made collecti.ely 4 ; < > @ 44!<! The manager considers other people:s idea in ma'ing decisions 4 ; < > @ 44!>! The decisions are made by getting general consensus 4 ; < > @ 4;! #hat do you thin' is the best form of communication in your 9oint .entureM 4;!4! Meeting 4;!;! Memo 4;!<! Telephone 4;!>! Email 4;!@! irect personal contact +ot important 4 4 4 4 4 ,ery important ; < > @ ; < > @ ; < > @ ; < > @ ; < > @

4<! #hat do you rate the seriousness of the problems related to communication in the 9oint .entureM +ot important ,ery important 4<!4! Languages 4 ; < > @ 4<!;! Cultural differences 4 ; < > @ 4<!<! ifference in thin'ing approach 4 ; < > @ 4<!>! Management styles 4 ; < > @ 4<!@! ifference in education and 'no%ledge 4 ; < > @

B;

4>! 1o% %ould you e.aluate the follo%ing conflict sol.ing approach in the 9oint .entureM +ot important ,ery important 4>!4! Try to persuade the partners 4 ; < > @ 4>!;! Together loo' for ne% solutions 4 ; < > @ 4>!<! Compromise 4 ; < > @ 4>!>! Concentrate on the internal ob9ecti.es of the 9oint .enture 4 ; < > @ 4>!@! 1ang on and %ait until the problem sol.es itself! 4 ; < > @ Re3)-/0e/t3 I/2-*1ati-/ 4@! #hat is your titleM 4! -residentL 2eneral ManagerL CE7L Managing irector ;! ,ice presidentL Executi.e .ice -resident <! i.ision Manager >! epartment Manager @! AssociateL Assistant i.isionL epartment Manager B! $uper.isor C! -rofessionalL $pecialistL Technician D! 7ther 4B! #hat is your 9ob functionM 4! 2eneral Manager ;! -roduction0 Manufacturing0 3ndustrial Engineering <! $ales0 Mar'eting >! "inance0 Accounting @! 6esearch and e.elopment B! -urchasing0 $tores0 Maintenance C! Management 3nformation0 $tatistics0 ata -rocessing D! *uality Control 5! 1uman 6esource Management 4C! 1o% long ha.e you been on your present positionM B months F ; years ;) ; years F > years <) @ years F 4E years 4D! 1o% long ha.e you been %ith this 9oint .entureM B months F ; years ;) ; years F > years <) @ years F 4E years 45! #hat is the highest le.el of educationM 4! $econdary $chool ;! Technical or ,ocational >! /ni.ersity Education @! Master degree ;E! -resent +ationality: FFFFFFFFFFFFEndFFFFFFFFFFF >) R 4E years >) R 4E years

<! iploma B! octoral degree

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