A. Introduction
The activities of multinational corporations always have big influences, positive or negative, on the firms of host country. However, it depends on the circumstances of economy and politic of each host country. Based on the journal "MNEs vertical linkages: The experience of Vietnam after Malaysia" by Axèle Giroud, International Business Review 16 (2007), we will see a critical analysis about it. This analysis aims to specifically assess the research's rationales, literature, paradigm and design, methods, and result and presentation.
B. Analysis
1. Project rationale
From the beginning of the introduction part, we can be easy to see the rationales, aims and objectives of the research to be shown throughout the journal. Based on the clear aims and objectives of the research, readers can easily realize and identify what and who will be needed for study.
Specifically, the rationales are shown in the sentences "The impacts of MNEs on host economies have been studied carefully in the literature since the 1960s, but one aspect that still needs better understanding is the way foreign companies impact the development of local firms (Moran, 2005), notably through their local purchasing behavior" and "to date, there has been no investigation of the potentially beneficial impact of MNEs on local suppliers through transfer of knowledge and technology in the specific case of Vietnam'' (p. 160). And "these findings are valuable for countries further down the path in Southeast Asia, including Cambodia and Laos, as well as a number of Central Asian economies" (p.172). The above-mentioned rationales are the evidence for the importance of this research.
From the rationales, the author points out the aims of this study as follows: first is to "assess the existence of technology and knowledge transfer from MNEs to local suppliers" and, second is to "compare the experience of the two countries" (p.160). After that, based on the experiences of Malaysia and Vietnam on the linkage development between MNEs and their local suppliers, the author adds another aim to "have drawn upon lessons that can be learnt for Vietnam from Malaysia in the terms of economic development" (p.161).
Given the Abstract part, we can know that the objectives of this research firstly are "to demonstrate the potential for knowledge transfer between multinational and their suppliers in both Malaysia and Vietnam" and secondly are "to build upon this discussion to suggest avenues for Vietnam to maximize beneficial linkages from MNEs" (p.159).
Along with the theoretical models of Marksen & Vanables (1999) and Lin & Saggi (2005) associating with technology transfer to a two tier production structure, the author advances two main hypotheses for this research. The first one is "multinationals have positive effects on the development of indigenous firms through the creation of vertical linkages and sourcing of intermediate products locally (other effects notwithstanding)" and the second one is "the multinational technology is superior to that of its competitors" (p.160). Moreover, because of studying literature review in more details, the author separates the two above-mentioned hypothesizes into four sub-hypothesis (Proposition), which are:
- Sub-hypothesis (Proposition) 1: "There is potential for knowledge and technology transfer from foreign affiliates based in Malaysia and Vietnam to their local suppliers" (p.162).
- Sub-hypothesis (Proposition) 2: "The nature of the relationship between foreign affiliates and their suppliers changes over time" (p.162).
- Sub-hypothesis (Proposition) 3: "Because Vietnam is a transition economy, there is difference in the level of knowledge and technology transfer from MNEs depending on whether they are located in Vietnam or in Malaysia" (p.163)
- Sub-hypothesis (Proposition) 4: "MNEs' knowledge and technology transfer to local suppliers contribute to the improvement of local suppliers' capabilities" (p.163).
2. Review of the literature
The review of the literature will make the author easy to further identify and clarify the research problem. It provides up-to-date themes and theoretical frameworks through the previous studies used in this research. Further, the literature reviews in the paper is in depth and breadth due to many of the previous studies were conducted.
Review of previous studies and theories is related to the key issues i.e. research hypothesis, aims and objectives. Some literatures have been provided in this section so that they can advocate objectivities of the research that knowledge and technology transfer from foreign subsidiaries based in Malaysia and Vietnam to their local suppliers is full potential. The review of literature will unveil common findings among researches. It is represented by some previous studies of few of authors even went beyond these objectives and this indicated that the MNEs linkages also provide informational, financial, organizational and managerial transfers which mentioned in recent studies of Crone & Roper, 2001; Ivarsson & Alvstam, 2005; Lim & Fong, 1982; UNCTAD, 2001.
Based on the review of literature, we can find a number of sub-hypothesis or propositions that indicates the problems that might be encountered and possible solutions. From the statistical data provided in the journal, Vietnam is a transition economy and there are some differences between Vietnam and Malaysia especially about economy. As a result, the sub-hypothesis 3 was given out that "there is a difference in the level of knowledge and technology transfer from MNEs depending on whether they are located in Malaysia and Vietnam" (p. 163).
The literature review also identifies the factors not previously mentioned. The factors showed that MNEs' supply relations in Vietnam will differ from those in Malaysia. First, although both countries engaged in economic liberalization programs in 1986, Malaysia and Vietnam had its different policies to attract FDI. Second, Vietnam's economic environment reflects the transition from a centrally planned economy to a market economy. Based on the review, the author used the official statistic data of Vietnam's and Malaysia's FDI to demonstrate those two points above.
The literature of review of other studies and models, specifically studies of Lall, 1996; Lim & Fong, 1982, begins with an immense concept of linkages, vertical and horizontal linkage, to specific issues to be studied, specifically based on the case study of Vietnam and Malaysia. In addition, the objective of the study drawn from the review of literature is to answer some sub-hypothesis founded during author's literature review process. Therefore, the gap in transfer levels of this research is explained to be not only "by factors specific to Vietnam but other factors, especially the presence of firms in the textile and garments sector" (p.168).
Once again, the author also identifies the investigation methods used in the studies in order to help the readers in perceiving the quality of previous researches including as follows; the validity, reliability, reflexivity and transferability. We can see this through the way that the author uses the recent case study of Ivarsson and Alvstam (2005, p.1340) to discuss in great depth how MNEs engage in transfer activities that are beneficial for the development of local suppliers. Furthermore, when advocating the above-mentioned second hypothesis, the author engages in empirical studies focusing on case studies and firm-level data to show that over time, linkages between foreign affiliates and local suppliers will help improving domestic suppliers, through technological increase, other capabilities and subsequent spillover influences on the rest of the economy (Giroud, 2000; Kelegama & Foley, 1999; Scott - Kennel, 2004; UNCTAD, 2001)" (p. 162).
3. Paradigm and Design
In the section of sample characteristics of the research, we can see that the author uses the approach of semi-structure questionnaire in qualitative research interviews. With a semi-structure interview, the researchers are of a list of questions on quite specific themes to be covered, often mentioned to as an interview guide, but the interview has a number of leeway in how to reply. Questions may not follow on exactly in the way outline on the schedule. Questions that are not included in the guide may be asked as the interviewers picks up on things said by interviewees (Bryman, A. & Bell, E. 2007, p. 474). With this approach, we also see that authors can highlight findings and understanding on views, ideas of managers on how knowledge is transferred and what its influences is.
Although the approach of semi-structure questionnaire is often relevant to the use of qualitative interviewing, it sounds that the method is toward positivism as most of the collected data shown in 3 tables of the journal and described by "quantizing qualitative data". The semi structure interview is used to find out managers' view and idea that can make the researcher understand or acknowledge better behind the aspects of the findings in quantitative research. Hence, the research seems to be epistemological philosophy.
The author uses the comparative study design in form of cross national research. This study design is considered to be suitable to the research purposes which engage in comparison of transfer of knowledge and technology from MNEs to their host local suppliers between Malaysia and Vietnam.
The target groups for this design are multinational firms have operations in either the electrical sector or in the textiles and garment sector. The target groups are regarded to be representative due to the reasons as follows; first, "these two industries are pillars in the economies of countries across Southeast Asia and recipient to a substantial share of foreign direct investment in both Malaysia and Vietnam"(p.163). It is this group that makes the researcher be easy to find out responses in relation to. And, second, "the MNEs in the sample engage in moderate levels of local sourcing (34% of total direct input purchased in Malaysia and 20% in Vietnam, as shown in Table 1), but, importantly, there is evidence of knowledge transfer from foreign affiliates to their local suppliers" (p.166).
In addition, in this survey pattern there are some sample issues that the two nations mentioned as Vietnam and Malaysia are not similar with a bias towards Malaysia sample rather than those of both of them. The sample in Malaysia has only electronic sectors whereas sample in Vietnam are not only electronic sectors but also textile & garment sectors. This is explained that "While the Textile and garment industry developed in Malaysia in the 1970s, part of it has now relocated to lower-cost production location, including Vietnam. For many years the fastest growing activity in Malaysia has been the Electrics and electrical industry. In contrast, the Textile and garment industry remains predominant in Vietnam and its exports are second only to those from the crude oil sector"(p.165). However, "the samples allow us to identify changes in the nature of knowledge exchange between firms, and to further consider the difference in terms of the length of time spent by foreign firms in the host economy" (p.168).
4. Methods
The author uses semi-structured questionnaire to collect the data by interviewing managers in Malaysia and Vietnam with the purpose to examine the activities performed by MNEs and access vertical linkages established in the host economy. The methodological approach accepted in this survey is that the researcher measures the stock of knowledge in a foreign subsidiary by investigating the transfer of various advanced production, managerial or organizational methods.
In the survey, Non-probability sampling is used rather than others. This sampling only pays attention to foreign affiliates operating in the sectors of electronic and textile & garment which occupy with a significant proportion of foreign direct investment in those of Vietnam and Malaysia, and moderately involve in local sourcing.
The survey uses 49 interviews focusing on Vietnam and Malaysia during 2002. However, the data used in this research is "part of a bigger study (see Mirza et al.,2003), for which a total of 113 companies were interviewed across ASEAN, from "pure" regional headquarters (RHQ) firms with no manufacturing activities to indigenous firms" and the analysis core belongs to "information collected through interviews among 88 manufacturing companies in the five host countries" (p.163). Because the author does not show how they accessed the sample, the ethical issues cannot be evaluated.
Based on the Table 2, we can see that the researcher uses a five-point rating scale (ranging from 'significant improvement' to 'no improvement at all' to evaluate the hypothesis "knowledge transfer occurring between foreign firms and local suppliers is that the of suppliers' capabilities improve as a result of the interaction with foreign customers" (p.166) and measure the effect of knowledge transfers on the competences of host suppliers. The author performs this by inviting managers of foreign firms to provide their perceptions on how suppliers improved as a result of dealing with their firm. Besides that, the five-point rating scale (1 being 'never' to 5 'very frequently' (p.167) is also used to investigate the frequency of knowledge transfers between multinationals and their suppliers. Also, the T-Test statistics are used to confirm the remarkable difference in the level of local sourcing depending on whether firms were in Vietnam or in Malaysia. Through the ANOVA test based on the Table 3, manager's perceptions indicate that "significant improvement in suppliers' performance as a result of their regular business with foreign affiliates" (p.169).
The author uses correlation to indicate that "the longer the foreign firms have been in operation in either Malaysia or Vietnam, the more frequently they engage in knowledge transfer activities" (p.168).
Through semi-structure questionnaires, the qualitative data collected includes the dependence on parent companies, concerns about the availability of local suppliers for necessary inputs and their quality and their forecast of local supply source. It will enable the researcher to identify the factors impacting on the quantitative numbers analyzed.
5. Results and Presentation
Through rank scales and descriptive analysis used, we can know that the percentage of frequent knowledge transfers of MNEs to their local suppliers was presented in the Table 2 which shows that a remarkable proportion of foreign firms frequently engaged in these transfers, especially firms in Malaysia more than those in Vietnam. To confirm the Proposition 1, the author relies on the Table 1 that "MNEs most commonly provide suppliers with specifications about standard material/components, together with physical or technological specifications of the inputs purchased" (p.166). The Proposition 2 is confirmed through the Table 2 which indicates that knowledge transfer activities have changed in nature over time. According to the Table 2 too, however, because of no difference of statistics in the knowledge transfer activities between firms whether located in Vietnam or Malaysia, the Proposition 3 is only partly confirmed that "interactions between foreign affiliates and their local suppliers are less developed in Vietnam than they are in Malaysia, but the difference in the type knowledge transferred is not country-specific" (p.168). The Proposition 4 is confirmed through the Table 3 which managers' perceptions indicate significant improvement in suppliers' performance as a result of their regular business with foreign affiliates in spite of no financial data on suppliers.
The research results are considered to be valid. The sample seems appropriate and representative. Nevertheless, there is still a validity limitation in this research represented in "a detailed analysis of individual suppliers would provide a more objective and accurate assessment of the impact of MNEs on suppliers. Such studies have been conducted, but it was beyond the means and scope of this particular research" (p.166).
Using five point rating scales to collect data or responses from managers of foreign firms on knowledge transfer activities sounds reliable. Moreover, these methods will help the researcher to receive clear and structured responses from interviewees.
In the literature review, the author uses a lot of theories to confirm the assumptions. Hence, this research has a degree of reflexivity on theories and research methods. The Tables from 1 to 4 are clearly titled and noted for better reading and understanding. Finally, the representation of this study is well-organized and coherent with a clear structure.
Reference:
Bryman, A. & Bell, E. (2007) Business Research Method, 2nd edition, Oxford university press
Hewitt M., How To Search And Critically Evaluate Research Literature. The NIHR RDS for the East Midlands/ Yorkshire & the Humber, 2007
