Network ties and foreign firm's performance in emerging market - A case study of Vietnam
Abstract
This study aims to examine the important role of network ties on foreign firm’s performance in transitional economy with a focus on such an emerging market as Vietnam, where foreign investment is inevitable and of paramount contribution to boost the social and economic development of the country. A mixed-method approach was employed for this paper. In qualitative phase, in-depth interviews were conducted in order to modify and develop measurement scale of new discovered factors and utilize well-established construct of managerial political ties. In quantitative study, this paper aims to discover the relationships and the underlying mechanisms of political connection, the government supporting activities and firm performance. Questionnaires were distributed and received an overall of 114 responses from MNCs in Ho Chi Minh city, Binh Duong, Long An, Ben Tre and Tien Giang. Then Partial Least Square-Structural Equation Modelling (PLS-SEM) approach was applied to analyze data and test the research model. Our results indicates that the direct effect of political ties on firm performance was not supported, but the indirect relationships through two factors were fully supported, and the impact of new discovered factor was confirmed as well. Noticeably, although political ties did have a huge impact on institutional support, no significant influence of institutional support on firm performance was discovered. Meanwhile, the linkage between opportunity recognition and firm performance were the strongest of all. Implications of the study, meaningful recommendations for the local government and limitations for further researches were discussed in further details based on both qualitative and quantitative findings.
Keywords: MNCs, political ties, firm performance, emerging market, integrative approach.