The study "MNEs vertical linkages: The experience of Vietnam after Malaysia" was written by Alèxe Giroud and published in 2007. By comparing the activities of MNEs in Malaysia and Vietnam, it expresses two goals: first, indicating the potential benefits for local suppliers through MNEs' transfer activities of knowledge and technology; second, giving lessons for Vietnam to exploit beneficial linkages from MNEs.
Vertical linkages have been paid increasingly attention in the academic literature. There are numerous studies which mention the issue of expansion made through vertical linkages in recent times. The reason is that they are the most important relations which are made between MNEs and host suppliers. These linkages, not only bring monetary and technical exchange but also carry external factors to host economy, which are beneficial to local suppliers.
Malaysia is a neighboring country of Vietnam; hence, it has common characteristics to Vietnam, such as: members of ASEAN, engaging in economic liberalization programs in 1986... It has received FDI sine the late 1960s and attracted foreign investment successfully. Until now, Malaysia economy has gained much benefit from FDI. On the other hand, Vietnam attraction for FDI was 30-year later than Malaysia. Both private and state- owned ï¬rms face a lack of experience of market capitalism (p 163). For these reasons, the experiences of Malaysia are valuable lessons for Vietnam in the investment development path.
There are many studies conducted on the topic of vertical linkages and the impacts of MNEs on host economies. It has also many studies on transition economies concentrating on Eastern European countries. But the beneficial impact of MNEs on host suppliers through transfer of knowledge and technology in Vietnam hasn't yet explored in 2006.
This study gives useful insights into the relationship between foreign firms and host suppliers; that is significant to Vietnamese government, host suppliers and foreign firm in Vietnam and other transition economies.
II/ Analysis
Project rational
Leedy and Ormorod claimed that "The heart of every research project is the problem. It is paramount in importance to the success of the research effort. To see the problem with unwavering clarity and to state it in precise and unmistakable terms is the first requirement in the research process". In this paper, Alexe Giroud clarified the problem research that knowledge transfer from MNEs to local suppliers in Malaysia and Vietnam has beneficial impacts to the competitive upgrading of firms in host economies (p159). Identifying clearly the problem is the first step of the author; it provided a sound basis for her study as well as a magnetic needle for readers. Secondly, it is essential to understand what the aim of the research is. The answer is shown fully in this article that to compare MNEs supply activities in Malaysia and Vietnam, with a focus on the Vietnamese experience, the lessons that could be learnt from the Malaysian case and the potential beneï¬ts that could be obtained by the country (and its ï¬rms) from the development of MNE-supplier linkages (p170). To achieve its aim, the researcher pointed out straightforwardly two objectives of the study (p.159):
Firstly, to demonstrate the potential for knowledge transfer between multinationals and their suppliers in both Malaysia and Vietnam
Secondly, to build upon this discussion to suggest avenues for Vietnam to maximize beneï¬cial linkages from MNEs.
According to Cooper and Schindler (1998:43), a research proposition is a statement about the concepts that may be judged as true or false if it refers to observable phenomena. That is also an expected result or a prediction that researcher wants to find out answers in the whole research. Setting research propositions helps to solve her research problem and go directly in the focus of the study. Alexe drew four propositions from the existing literature and previous studies.
There is potential for knowledge and technology transfer from foreign affiliates based in Malaysia and Vietnam to their local suppliers.
The nature of the relationship between foreign affiliates and their suppliers changes over time.
Because Vietnam is a transition economy, there is a difference in the level of knowledge and technology transfer from MNEs depending on whether they are located in Malaysia or Vietnam.
MNEs' knowledge and technology transfer to local suppliers contribute to the improvement of local suppliers' capabilities.
Literature review
Literature review is an important part of the research because "without it you will not acquire an understanding of your topic, of what has already been done on it, how it has been researched, and what the key issues are". In the section, we will discuss about the literature review of the study.
Giroud's research was received on June 2005 and accepted on November 2006. It took 1.5 years to publish the article. Observing the references, it realizes that most of them were mentioned after 1998. That proves the research up to date as stated by Lunsford, T.R. and Lunsford, B.R. (1996), a literature review is current if cited references are not more than five or seven years old.
The literature review was a detailed analyze and synthesis. Researcher had arranged them in hierarchical order so that it is easy to notice links among parts which are mentioned. Firstly, she indicated existing researches on the issue of creating linkages by MNEs in host economies. Then, she drew attention to studies of vertical linkages. At last, she focused on a lot of existing literature on the problem. No stopping at listing previous studies, she also showed what was well done or what was weak with clearly explanations. Therefore, it is recognized that every aspect of the research was investigated thoroughly by the author before writing this research. The things demonstrate that the author not only brings readers an overview about what has been studied in the earlier period but also confirms her profound understanding on the problem.
The significance of the study was asserted evidently (p.160). In the context, Vietnam is a transition economy and the experience of attracting FDI was still young; while Malaysia was successful in attracting foreign investment and Malaysia's experience was very seasoned. The research gave a "useful insights" into international partnership with host firms and valuable experiences for Vietnam in the path of economic development. With regard to Vietnam, the study was considered as a great contribution not only for Vietnamese government but also for foreign firms in Vietnam.
By revealing the related studies and detecting their weakness, Alexe Giroud identified successfully the research gaps. Firstly, the way foreign firms influence the development of local firm was limited (p.159). Secondly, the mechanisms through which vertical linkages take place were still not well understood and the study of linkages had not been integrated fully within the theoretical strands of multinationals' activities (p.160). Thirdly, there has been never a study of the potentially beneï¬cial impact of MNEs on local suppliers through transfer of knowledge and technology in the speciï¬c case of Vietnam (p.160)
Paradigm and design
3a. Paradigm
3b. Design
In the study, Giroud combined three types of research designs: cross-sectional and comparative, longitudinal.
In terms of cross-sectional design, the author wanted to study about characteristics of MNEs in Malaysia and Vietnam, such as: nationality of ownership, firm ownership, year of establishment, number of employees, .....Data were collected by semi-structured questionnaire on 49 cases in Malaysia and Vietnam at the same time.
About comparative design, she carried out the research of MNEs supply activities in Malaysia and that in Vietnam. The comparison between two countries brought some important views on perspectives which would be helpful to Vietnamese government, host suppliers and foreign firms.
Longitudinal design was expressed by the study of MNEs in Malaysia in 1996 and 2002. The aim of this research is to demonstrate a change of the nature of the relationship between foreign affiliates and their suppliers over time. To conduct the research, Giroud consulted data from official sources and other previous researches. Generally, Alexe Giroud succeeded in associating cleverly three types of design to create a fully-done research.
Methods
The research was carried out with data collection method of secondary sources. The secondary data was gotten through the survey from a bigger study in Mirza et al., 2003, previous studies and other official statistical data. This method was absolutely appropriate because it did not take a lot of time, was easy to collect and quite cheap in comparison with using the primary data. The sources of secondary data facilitated to identify clearly the problem and give the answers for research propositions.
The representative sample chosen in this study is multinational firms operating in either the electronics/ electrical sector or in the textiles and garment sector. The reasons for the choice are explained fully (p.163). First, these industries are considered as pillars in both Malaysia and Vietnam. Second, they all received a substantial share of foreign direct investment. The selection of sample is random sample. Sample size is 49 cases (27 cases in Malaysia and 22 cases in Vietnam)
The study was collected firm-level data in Malaysia and Vietnam. The survey which used the semi- structured questionnaires towards managers in Malaysia and Vietnam during 2002 was designed to indicate a change in Malaysia from 1996 to 2002 and a significant comparison between two countries. The method applying semi-structure questionnaire allowed the author to mix qualitative and quantitative data as well as to compare the results achieved from two countries. It is helpful to acquire a thoughtful answer of respondents and reinforce the content analysis.
The interviews of MNEs' manager in 19 transfer practices focusing on a range of production and training issues to examine the potential impact of the MNEs on the technical and production efficiency of suppliers and the discussion to get their perception of the improvement of local suppliers after interacting with their firms had given more evidences to confirm propositions. They make readers comprehend in detail of the study.
The quantitative data collected through semi-structure questionnaire were concrete and direct. Examples are the percentage of nationality of ownership, firm ownership, year of establishment, employees, ..., the percentage of MNEs with frequent knowledge transfer to their suppliers, the percentage of perceived impact of MNE's knowledge transfer on local suppliers. The author also took advantages of parametric statistical techniques such as T-test, ANOVA, mean. The T-test statistics was to compare the level of local sourcing depending on whether firms were in Malaysia or in Vietnam. The ANOVA test was to compare supplier improvement in Malaysia and Vietnam following the variance in purchasing patterns and behavior (i.e.: cost, quality, delivery, safety, professionalism ...)
The qualitative data was gathered by formulating questions for managers, example: what extent was the foreign firm involved in knowledge transfer activities to local supplier? (p.165), how had suppliers improved as a result of dealing with their firms? (p.166). This creates opportunities to assemble information from respondents and to research deeply about the topic. The qualitative data were analyzed by using a five- point scale (from significant improvement to no improvement at all) to estimate manager's perceptions on level of suppliers' improvement after processing knowledge transfer with their firm.
In term of impact and access issue, the author gathered available data from official sources and other prior studies; thus, the study is guaranteed not to violate ethical principles.
Results & Presentation
Alèxe Giroud had achieved the aim of the study. She compared the activities of multinationals in both Malaysia and Vietnam to show that the potential benefits could be obtained by the country from the development of MNE-supplier linkages as well as to give lessons for Vietnam in attracting foreign investment. She succeeded in proving four propositions; propositions 1, 2, 4 were completely confirmed and propositions 3 was partly confirmed. The results were considered as magnetic needle for supervisors of MNEs and Vietnamese government. Values of this study are recognized: first, foreign firms would give precise strategic decisions in the Vietnamese market; second, Vietnamese government would have suitable policies to maximize beneficial linkages from MNEs.
However, author emphasized that there was significant differences between Vietnam and Malaysia. First, vertical linkages in Vietnam were estimated to be weaker than in Malaysia. Second, Vietnamese government policies orientated in the predominant role played by the state in the economic and business environment. That resulted in a slow development of a private sector; hence, MNEs discouraged to develop programs that would raise the level of service and quality of local firms. Third, the ownership structure, the export-orientation and the size in Vietnam differed from those in Malaysia. As a result, it is important to apply appropriately experiences from Malaysia into the context of Vietnam. Giroud also stated the implication of the study: these findings are not only valuable lessons for Vietnam but also for other transition economies such as: Cambodia, Laos, Central Asian economies....
Criteria of reliability, validity, generability are very important to access a research. To begin with validity, researcher had applied longitudinal and cross-sectional approach to strengthen construct validity. Moreover, she combined multiple case and multiple data sources which are called triangulation to examine the validity of the findings. In the semi- structured questionnaires, Giroud had separated definition between her "vertical linkages" and the original data in accord with her research. She also employed mathematical measurements, such as: T-test, ANOVA, mean... to gauge what is supposed to measure ( Leedy and Ormrod, 2005). Hence, it can be concluded that the study is validity. Next, the reliability is affirmed because the author collected secondary data from official sources and previous researches in order to prove the impact of MNEs vertical linkages on both two economies. The results obtained from research, data analysis and comparison of other information sources has reinforced its trustworthiness. Therefore, if the research is replicated, we can acquire the same results. In terms of generaliability, Giroud had a good sampling technique. The sample represents completely a population. The results that were obtained from the study of electronic/electrionical and textiles and garment industry can be generalized to all other industries.
The research is written with a standard framework of a research paper and rich information. The research problem, aim, objectives of the study made clear in the introduction. The procedure of data analysis presented in enough detail to help readers understand thoroughly. To conclude, the article is well- organized, graspable, and coherent toward educated people.
III/ Conclusion
All in all, the study confirms creation of vertical linkages by MNEs with local firms and benefits of MNEs transfer activities for the development of local suppliers. The findings indicate that Vietnamese suppliers do not yet gain advantages from multinational firm's superior technology and managerial expertise, vertical linkages in Vietnam is still weak and the requirement to build up the local supply industry in transition economies. Lessons for Vietnam that could be learnt form the Malaysian case are worthy. Vietnamese government should construct an effective promotion programme of vertical linkages and soft policy provisions to encourage its competitive environment and the improvement of domestic firm's capabilities. Vietnam also needs to support private enterprises, creation of new industries and enhance private investment as well as the domestic competitiveness. The research of Alexe Giroud is well-timed and meaningful to Vietnam.
