The Experience Of Vietnam After Malaysia Economics Essay

This paper gives the review reappraisal about the research of Axele Giroud named “ MNEs perpendicular linkages: The experience of Vietnam after Malaysia ” . Giroud ‘s research addresses the issues of engineering and cognition transportation from multi-national endeavors ( MNEs ) to local providers in Malaysia and Vietnam. The paper discusses four chief keys. The first inquiry is whether there is possible for engineering and cognition transportation. The 2nd point references that the relationship between foreign affiliates and local providers is non unchangeable. The paper assumes that the passage economic system creates the differences in the manner Vietnam and Malaysia get the support from the MNEs. The last proposition references that the transportation of cognition and engineering enhances the local provider ‘s capablenesss. By comparing and analysing the difference between Malaysia and Vietnam, Giroud recommends the schemes that Vietnam can use in order to maximise the benefits from foreign affiliates. Overall, this research is well-structured, with back uping grounds and good treatment.

This essay considers the strengths and failings of Giroud ‘s article. First, it summarizes the chief findings and cardinal countries of the research. Second, it evaluates and Judgess the text in five specific standards: ( I ) the significance and part of the research to the field ; ( two ) the methodological analysis or attack of the paper ; ( three ) consequence of the survey ; ( four ) researching paradigm ; ( V ) and its authorship manner and text construction.


The research references that there are some surveies on the subject of the impact the MNEs leave on the host economic system. However, Giroud states that those surveies did non travel further in the instance of Vietnam – one of the states with passage economic systems. Therefore, Giroud identifies the research spread that he was approximately to make full. The intent of Giroud ‘s research is seeking to explicate what leads to the difference in footings of cognition and engineering transportation between two similar economic systems – Malaya and Vietnam. By understanding the causes, host states can understand the range for cognition and engineering transportations. Therefore, he came up with the decision of how Vietnam can larn from its neighboring in order to profit from foreign houses.

The writer reviews past literature on the same subject to back up his statements. Bases on those informations that he had collected, the writer came up with four propositions. First, he states that there is a chance of transportation in cognition and engineering from MNEs to local houses. The 2nd position claims that alteration occurs in the dealingss of the foreign houses and local providers over clip. Proposition three refers to the nature of Vietnam economic system – a passage economic system – causes the differences between Malaysia and Vietnam in the MNEs ‘ supply dealingss. The concluding positions references that the support of the MNEs in footings of cognition and engineering transportation better the capablenesss and fight of the local providers. Giroud bases his four propositions for this survey on some old surveies to back up strongly his positions. All four hypotheses are confirmed subsequently on in the survey with empirical findings, relevant surveies and analysis. Proposition three is confirmed by probe of informations showing the per centum of MNEs with frequent cognition transportation to the providers in both states. Proposition four is confirmed by informations supplying sensed impact of MNEs ‘ cognition transportation on their local providers. The writer points out that after the foreign houses started their concern in host development states ; there is a important betterment in footings of cost, quality and bringing. However, the betterment in Malaysia is seen more singular than in Vietnam. Giroud besides argues that Vietnam ‘s providers are largely foreign-owned due to the fact that Vietnam has non facilitated the provider partnership plans.

The paper points out that it mark is within the field of the Electronicss and electrical sector or the Textiles and garment sector. Harmonizing to Giroud, these two industries are considered as of import elements in the economic systems of both Vietnam and Malaysia and besides they receive a significant sum of investing from foreign houses. To compare the features of the two sectors in both economic systems, the writers provides the informations collected from a questionnaire conducted in Malaysia and Vietnam in 2002. The writer analyses the sample and explicate the causes that lead to differences. He indicates that Electronicss and electrical industry has been one of the fastest developing activities in Malaysia whereas Textile and garment industry is the dominant industry in Vietnam. Furthermore, the writer explains that the difference in steadfast ownership reflects the FDI experience that MNEs has non operated in Vietnam every bit long as Malaysia. Therefore, it leads to the difference in degree of local sourcing of stuff inputs. In add-on, supply forms may change in different industries, particularly in Electronics and electrical and Textile and Garment industry.

The treatment portion explains farther to corroborate three underlying premises and high spots the writer ‘s point of positions. The writer argues about three points: foremost, FDI experience contributes to the being of cognition and engineering transportation between foreign affiliates and autochthonal houses ; 2nd, passage economic system creates typical characteristics that cause disincentive for MNEs to develop in Vietnam, compared to Malaysia ; and eventually, the writers indicates that a reform in economic systems can lend to a important positive alteration in the linkage development.

The writer concludes his paper by bespeaking that interaction between local-owned providers and foreign houses has had more positive impact in Malaysia than in Vietnam. Hence, Giroud suggests that from the experience of Malaysia, Vietnam can reform its attack to accomplish the best benefits from the MNEs to its domestic houses. Giroud ( pg173 ) recommends that Vietnam authorities can implement “ effectual publicity plan ” that encourages foreign affiliates to heighten developing plan in Vietnam, and besides “ support entrepreneurship and further the creative activity of new industries, and new companies, promote private investing ( in fixed assets, R & A ; D, and preparation ) so as to consolidate the foundation of the fight of domestic houses. ” Furthermore, the writer points out the demands to spread out the production, selling and distribution system of local-owned providers in Vietnam.


Contribution of the research to the field

The writer aims to compare the being in cognition and transportation in supply activities of MNEs in Vietnam and Malaysia. To some extent, the text has achieved its intent by analysing the utile information which is provided by the transnational houses. Base on the comparing between Vietnam and Malaysia, the writer refers that Vietnam could larn the lessons from Malaysia ‘s experiences and suggests the attack that Vietnam can use to maximise its chances in engineering and cognition transportation.

The survey has made two of import points to this field. First, it finds out that FDI experience is a factor for difference in being of cognition and engineering transportation in different states. Second, the paper emphasizes that passage economic system does act upon the development of autochthonal providers in the international web. Giroud ‘s findings do non merely to lend to the cognition of this field, but besides, in footings of practical application, it does assist host states better understand about its attack in the affair of MNEs supply activities. First, the consequences that Giroud concludes in his research highlights the impact of FDI in the different economic systems and the nature of passage economic system affect the being of cognition and engineering transportation. In short, it means that the degree of cognition and engineering transportation is affected by the FDI experience and the type of economic system, in this research ; it concentrates on the passage economic system. Second, in footings of practical application, Giroud ‘s survey recommends the method that non merely Vietnam but besides other states with passage economic system can transport out to better benefit from the MNEs activities.

In drumhead, this work would appeal to three groups of readers, foremost, to research workers and pupils who are interested in the cognition and engineering transportation from MNEs houses to host providers in developing states, with a specific instance of Vietnam ; the 2nd group is the policy shapers in developing states, particularly Vietnamese politicians ; in conclusion, directors of both foreigner houses and local-owned houses would be interested in the survey.

The survey makes a utile part to the literature on perpendicular linkages and MNEs supply activities in developing economic systems and, in peculiar, adds to the apprehension and cognition of transportation in cognition and engineering between foreign affiliates and domestic houses in Vietnam.

Methodology and attack

The writer references that, “ The methodological analysis attack adopted in this paper starts by mensurating the stock of cognition in a foreign subordinate by look intoing the transportation of assorted advanced production, managerial or organisational methods ” ( pg165 ) . This attack assess up to 19 transportation patterns which concentrates on the issues of production scope and preparation ( pg165 ) . These informations provides an of import penetration into the assorted attacks in which the cross-border dealing in cognition and engineering takes topographic point.

The research inquiries of the survey are addressed by utilizing both the qualitative and quantitative method. The article consists of empirical stuff with two sets of informations: interview methods ; and statistical informations.

The writer provides simple illustrations of cognition sharing and perpendicular linkages in different states such as Ireland and East Asia states to back up his perceptual experience. However, the editor should follow an embedded in-depth instance survey design, in which focal organisations or multiple specific instance surveies of company conducted concern in Vietnam and Malaysia are provided. A instance survey analysis can uncover a thorough probe. Harmonizing to Birkinshaw in 2004, quoted by Makera ( 2006 ) “ a instance survey analysis of 20-30 observations is an effectual method if the phenomenon under probe is comparatively fresh, such as in interpersonal cross-border cognition sharing ” .

Furthermore, the writer includes a qualitative embedded extended interview with the foreign affiliates ‘ directors about the relationship with local-owned houses that led to knowledge sharing. In a treatment about the impact of MNEs on local providers, the writer refers to an interview with directors of autochthonal houses in Malaysia and Vietnam about their public presentation after foreign houses transacts their concern. These directors were asked to bespeak which countries where betterment has been achieved. The interview information was analyzed explicitly and provided penetrations into the transportation of cognition and engineering. A director is considered as the 1 who knows best about the company itself ; hence, the informations collected with the director ‘s position make the research persuasive, and more impartial. However, there is restriction of such a method. The directors were asked to mensurate their public presentation in five-point evaluation graduated table. Their sentiments somehow are bound to be subjective. A comprehensive scrutiny of distinguishable providers would supply a more strict rating on the impact of MNEs on local-owned providers. In add-on, the survey carries out a comparative analysis between Malaysia and Vietnam with systematical comparing and contrast in order to bespeak the important differences in both economic systems.

A quantitative portion of the survey consists of a cross-sectional analysis of 49 domestic houses in two different industries in both Malaysia and Vietnam. A sum of 49 interviewed conducted in two states are analyzed, showing industries ‘ and houses ‘ features, with nationality of ownership, house ownership, twelvemonth of constitution, figure of employees and export orientation.

Furthermore, the consequence from houses ‘ questionnaire provides the persuasive grounds for the premise of FDI impact on degree of cognition and engineering spillovers. In this instance, the houses themselves understand best about what they would make or would non make and the finding behind their determinations. Furthermore, obliging grounds is provided with two autochthonal houses during interviews clearly references that their supplies depend upon their parent houses. The grounds steadfastly supports the point of position of the writer that Vietnam ‘s experience with FDI is far after Malaysia ‘s, which influences the degree of cognition sharing activities with its local houses.

The information demonstrates the internal cogency. The papers was carefully re-read and categorized by taking 49 typical instances which focus on the instance of Vietnam and Malaysia, so summarized in an expressed manner. In footings of external cogency, the consequence of the interviews with selected company may non be movable for other companies in Vietnam or Malaysia.

The research is considered as dependable. The grade of dependability may be hapless if the appraisal is taken over clip. However, the comparing between Malaysia and Vietnam includes the figures of Malaysia houses in 1996 and 2002, which reflects a wider position and in elaborate comparing. Nevertheless, one may reason that the interview with the directors, which show the alteration in public presentation of the local-suppliers, may non show the dependability of the research, as their sentiment may be rated otherwise following clip. It would hold been more dependable if the writer had provided the clear figures that show once and for all the alteration in the public presentation such as the decrease of cost over the clip. However, overall, the method helps to minimise the dependability mistakes and the opportunities taking to malfunction.

Finally, the combination of qualitative and quantitative methods minimizes the restrictions of each method. Therefore, the research enables the readers to hold an overall and more insightful position about the affair discussed in the survey.

Consequence of the survey

The findings of the survey have been proved and confirmed in other surveies. Jindra et Al ( 2009 ) province that “ the development of perpendicular linkages has been shown to be slower when authoritiess did non accommodate their policies rapidly plenty to promote the private sector development ” .

However, there is minor restriction in the survey. The comparing between Malaysia and Vietnam is someway partial as there are other factors that besides should be considered to the development of MNEs supply activities. One may hold with the writer on the fact that the development of MNEs supply activities is affected by the FDI initial in the states ; nevertheless, the writer did non see the exogenic variables, which is independent from the provinces of other variables in the causal system and other endogenous variable. There are exogenic and endogenous factors to the affair related to MNEs supply relationship such as civilizations, labour force, and engineering spread. Harmonizing to Bruno et Al ( 2010 ) , “ worker mobility can merely better domestic house productiveness if workers trained ( long plenty ) by the foreign entrant subsequently fall in a domestic house ” .

Research paradigm

The survey is seen as followed the positivism paradigm, which is defined as “ positivism assumes an nonsubjective universe hence it frequently searches for facts conceived in footings of specified correlativities and associations among variables ” by Gaphart ( n.d ) . In footings of the ontological inquiry of nature world, the consequence of the survey is nonsubjective and governed by unchangeable natural cause-effect Torahs. In the epistemic inquiries, the literature grounds, and informations obtained in the research consists of verified propositions that are regarded as facts. Therefore, it can be said that cognition in the survey is accurate and certain. Furthermore, the interviews obtained in the survey were conducted in typical and big sample ; hence, the consequence can keep true for other companies in the same state of affairs. The function of theory in the survey is deemed as normative and moreover, the four key propositions demonstrate the causal relationship between variables, peculiarly the relationship between FDI initial and the development of MNEs cognition and engineering transportation in autochthonal houses. The writer proves his theories from informations obtained from interviews, questionnaires. To some extent, the research is an exploratory survey with scientific account. In add-on, the findings of the research can be generalized in states with passage economic systems or states which has encouraged since 1990s. In order to reply the methodological inquiries, the methods that underpin the survey include both quantitative and qualitative research. The survey is seen as confirmation of hypotheses and explorative research. Hence, it can be concluded that the research follows a positivism paradigm.

The research follows both the cross-sectional design and the longitude design, although, it more focal points on the former attack. This research is constructed in the cross-sectional research design, which takes a snapshot of a group of companies which are typical for the instance of Vietnam and Malaysia. This method allows the research worker to concentrate on a certain group but besides he can understand a clear image of the affair. The longitude research design, nevertheless, is used to observe the alteration of Malaysia ‘s supply relationship between MNEs and domestic houses. Hence, it partially proves the hypothesis 2 of the survey. However, the research worker did non carry on the longitude survey in the instance of Vietnam to place the grounds behind the tendency. Such method would give an in-depth position to the influence factors to the supply relationship between MNEs and local-owned houses, besides, it minimize the possible influence of exogenic variables.

Writing manner and text construction

The paper is well-presented with clear detached subdivision, following the conceptual model that underpins the survey. Data collected in the research besides are well-presented. Manager interviews are taped and transcribed. Besides the consequences of the interviews are summarized explicitly in a tabular array.

Deductive method is applied to analyse the research inquiries. Get downing with the overall debut, the writer presents the research spread of the survey and the intent of the research. In the 2nd portion, Giroud presents relevant definitions of horizontal and perpendicular linkages in general and in peculiar, linkages created by MNEs in developing economic systems. The watercourse of related literature on linkages is reviewed carefully, pulling upon impact of the passage economic system on the degree of cognition and engineering spillovers and the consequence of MNEs on the development of autochthonal providers ‘ capablenesss. The 3rd portion provides the analysis of the features of two pillar industries in Vietnam and Malaysia: Electronic and electrical and Textile and Garment industry, in footings of MNEs supply activities. The analysis enables the readers to compare and contrast Vietnam and Malaysia ‘s economic systems ; hence they can understand about the typical characteristics in both economic systems. 49 interviews carried out in both Malaysia and Vietnam were analyzed in item. Separate four presents the overview of the methodological analysis that the research follows. The four hypotheses mentioned in the 2nd portion are underpinned in the following two parts with the writer ‘s analysis and usage of empirical grounds. The 7th portion discusses further about the three cardinal premises in the research. However, in the treatment, the author merely gives one side of an statement that assists his statements. To reason the survey, Giroud summaries his comparing between Vietnam and Malaysia and remarks that Vietnam has non yet benefited from the MNEs supplies activities. Through his findings, the editor besides gives the recommendation about the attacks for Vietnam to mention to. He discusses assorted policies that support linkage creative activities and linkage development scheme which acts as inducement for foreign affiliates to develop cognition and engineering spillovers plan in Vietnam.


In decision, the survey of Giroud makes a noteworthy part to the bing cognition of MNEs supply activities on Vietnam. The research integrates several recent surveies and theoretical watercourses. It can be considered as an first-class stuff for directors, faculty members and policy shapers. The article focuses merely on the instance of Vietnam ; nevertheless, it provides a good chance for other host developing economic systems to understand better about the cognition and engineering transportation, therefore, there will be more positive results of the MNEs ‘ investing in developing states. Overall, this survey is well-written with thoughts presented logically and accessible manner. It besides consists of comprehensive list of relevant mentions.

Furthermore, the paper leaves two farther inquiries ( I ) the factors that affect the development of MNEs perpendicular linkage on developing states beside the passage economic system and FDI experience that have been already discussed in this survey and ( two ) how other host developing states can maximise the benefits that they can acquire from foreign affiliates.

However, the survey should pay attending to the magnitude of the horizontal linkage as it besides plays an of import function in the economic system of developing states beside the perpendicular linkage. Although the grounds and illustrations in the survey contribute to the account of the research inquiries, the writer should give more specific instance surveies in the instance of Vietnam.

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