Second, the current study contributes to the broader international literature withregard to the possible relationship between HRM practices and employee outcomes.Although some previous r
INTRODUCTION
BACKGROUND AND RESEARCH FOCUS
Effective Human Resource Management (HRM) is crucial for enhancing the competitiveness of enterprises, leading to significant investments in HRM practices Research has highlighted the importance of specific HRM functions, including recruitment and selection, training and development, performance management, and reward systems, which have been shown to boost productivity in organizations.
In developing and transitional economies, local businesses often prioritize human resource management (HRM) practices less than foreign-invested companies "Transitional" refers to economies that were previously centrally planned and are now shifting towards a market-oriented system.
De Vylder, 1996) Some authors suggest that HRM practices in these developing and transitional economies are still in the early stages of development (Budhwar & Debrah,
In contrast to the strategic HRM interests prevalent among managers in developed countries, the focus of HRM in 2013 emphasizes administrative aspects such as wage and social welfare calculations (Zhu, Warner & Rowley, 2007).
Despite cultural and environmental differences, several authors suggest that developing countries can benefit from adopting Western HRM practices (King-Kauanui, Ngoc & Ashley-Cotleur, 2006) The presence of Multinational Enterprises (MNEs) in these regions serves as a potential conduit for transferring management practices from developed nations to developing host countries Existing literature highlights significant interest in the systematic differences in HRM practices between MNEs and domestic enterprises within these developing markets.
Since the mid-1980s, Vietnam has transitioned from a centralized planning model to a market-based economy, driven by significant economic reforms (Dinh, 1993; Quy, 2016) This shift has been further accelerated by Vietnam's accession to the World Trade Organisation (WTO) in 2007 and the establishment of trade agreements with the USA and other key Asian economies In response to this competitive landscape, domestic enterprises have begun to adopt Western human resource management (HRM) practices while also adjusting their existing strategies (Zhu et al., 2008).
Vietnam's government is actively working to reduce the number of State-Owned Enterprises (SOEs), many of which have incurred annual losses for years This has led to the merging of smaller SOEs into larger entities and the partial privatization of remaining SOEs through a process called "equitisation." In this process, portions of state-owned equity are sold to private and foreign investors, resulting in the creation of Equitised SOEs (ESOEs), which generally operate with greater autonomy than traditional SOEs.
This study aims to compare the human resource management (HRM) practices of multinational enterprises (MNEs) based in developed countries operating in Vietnam with those of domestic enterprises, including state-owned enterprises (SOEs), equitized state-owned enterprises (ESOEs), and private-owned enterprises (POEs) It seeks to determine how different ownership types influence HRM practices and the subsequent effects of these practices on employee outcomes, specifically focusing on employee performance and job satisfaction.
This research aims to utilize the Resource-Based View (RBV) of Human Resource Management (HRM) to gain a deeper understanding of key issues According to the RBV, businesses can achieve success by acquiring and maintaining a competitive advantage through a value-generating strategy that is difficult for competitors to imitate or substitute To attain this competitive edge, organizations must focus on resources or strategies characterized by four essential components: value, rarity, inimitability, and non-substitutability.
According to Jackson and Schuler (1995), organizations possess three primary types of resources, with human resources—encompassing employees' experience, knowledge, skills, and abilities—being crucial In sectors where personnel are essential for operational success, such as the service industry, the significance of human resources becomes even more pronounced.
The Resource-Based View (RBV) framework is effective for analyzing how enterprises leverage human resources, highlighting the significance of valuable and rare employee skills in gaining competitive advantages This perspective aligns with the insights of Combs, Ketchen & Ireland (2007), Marchington (2015), and Mueller (1996), as well as the findings of McWilliams, Van Fleet & Wright (2001), which emphasize the critical role of HRM practices in organizational success.
Despite numerous studies on HRM practices in Vietnam (Cox & Warner, 2013; Kamoche, 2011; King-Kauanui et al., 2006; Thang & Bryant, 2004; Pham, 2011; Quang, 2006; Stanton & Pham, 2013; Thang & Buyens, 2008; Thang & Quang, 2005b; Thang, Rowley, Quang & Malcolm, 2007; Vo & Stanton, 2011; Zhu & Verstraeten, 2013), there is still a pressing need for additional research in this area This necessity is supported by various factors that highlight gaps in existing literature and the evolving nature of HRM practices in the Vietnamese context.
Despite previous research, the literature on Vietnam, particularly its human resource management (HRM) practices, remains limited compared to the country's increasing significance As a developing economy in Southeast Asia, Vietnam plays a strategic role for both developed and developing nations, with a population exceeding 95 million in 2017 and substantial foreign direct investment (FDI) Recognized as one of the fastest-growing economies globally, the availability of international studies on Vietnam's HRM practices is still relatively low.
Vietnam offers significant research opportunities for scholars, business leaders, and policy advisers globally, as it is a transitional economy that has shifted from Soviet-style central planning to market-oriented reforms Existing studies on human resource management (HRM) in developing and transitional nations predominantly concentrate on China, Russia, and Eastern Europe, highlighting a gap in research specifically focused on Vietnam This presents a valuable opportunity for new investigations into the unique HRM practices and challenges within the Vietnamese context.
Previous research on Human Resource Management (HRM) in Vietnam primarily emphasizes exploring the connections between HRM practices and enterprise performance, often neglecting the theoretical foundations that support this analysis.
This study focuses on the influence of Human Resource Management (HRM) practices on employee outcomes, utilizing the Resource-Based View (RBV) as a conceptual framework to analyze the motivations behind enterprises' selection and implementation of HRM practices.
RESEARCH QUESTIONS
This research study addresses the following overarching research problem: How do ownership types affect HRM practices and consequently impact on employee job satisfaction and employee performance in Vietnam?
Two research questions will be investigated to explore this overarching research problem:
RQ1 How do differing ownership types affect the adoption of HRM practices in Vietnam?
RQ2 To what extent do differing HRM practices in Vietnam affect employee job satisfaction and employee performance?
RBV theory is used as a conceptual framework for analysing these questions.
BRIEF REVIEW OF PREVIOUS LITERATURE
This section examines the critical aspects of current literature on HRM practices and their impact on employee outcomes, alongside the Resource-Based View (RBV) approach to HRM A more comprehensive analysis will be provided in Chapter 2.
1.3.1 HRM practices and employee outcomes
Since the implementation of Doi Moi policies, Vietnam has experienced a significant increase in foreign direct investment (FDI) This influx has attracted numerous multinational enterprises (MNEs) that either introduce their home country's human resource management (HRM) practices or adapt them to align with local practices This dynamic has fostered a mutual exchange and adaptation of HRM strategies between domestic companies and MNEs, as highlighted by various researchers in the field.
Research has explored the transfer of foreign practices from home countries to host countries like Vietnam (Vo & Stanton, 2011), and the adaptation of Western HRM practices by local enterprises in East Asia (King-Kauanui et al., 2006; Zhu, Warner & Rowley, 2007) However, the impact of ownership types through the lens of Resource-Based View (RBV) in Vietnam remains unexamined This thesis emphasizes the necessity for further research on the modification and diffusion of HRM practices from multinational enterprises (MNEs) in Vietnam, highlighting a significant gap in existing literature (refer to Chapter 2 for more details).
Strategic HRM (SHRM) studies emphasize the crucial role of employee outcomes as mediators between HRM practices and firm performance, yet most empirical research has focused on the direct relationship between these elements While significant studies have been conducted primarily in the US, followed by Europe and East Asia, the connection between HRM practices and enterprise performance remains under-theorized Additionally, there is a notable lack of research addressing the impact of HRM practices on employee outcomes in Vietnam, particularly concerning different ownership types.
This research addresses the gaps in theoretical understanding of HRM practices and employee outcomes in Vietnam, focusing on the direct relationship between HRM practices and key employee outcomes such as performance and job satisfaction By applying the Resource-Based View (RBV) framework, the study explores how different ownership types—State-Owned Enterprises (SOEs), Equitized State-Owned Enterprises (ESOEs), Foreign-Owned Enterprises (FOEs), and Multinational Enterprises (MNEs)—adopt HRM practices like Recruitment & Selection (R&S), Training & Development (T&D), Performance Management (PM), and Reward Systems (RS) The findings contribute significantly to HRM literature by illustrating how these practices affect employee outcomes across various ownership structures in Vietnam.
1.3.2 The RBV approach in HRM studies
According to Jackson and Schuler (1995), organizations possess three key resources: physical (such as technology and location), human (employees' experience and knowledge), and organizational (structure and systems) Human Resource Management (HRM) significantly influences both human and organizational resources, aiding in the achievement of competitive advantage (Jackson & Schuler, 1995; Schuler & MacMillan, 1984) The Resource-Based View (RBV) emphasizes that valuable, rare, inimitable, and non-reproducible (VRIN) human resources are crucial for enhancing performance (Barney & Wright, 1998; Wright et al., 2001) Firms can leverage these resources to boost profits and secure competitive advantages (Barney, 1991; Boselie & Paauwe, 2010) The RBV offers insights into the strategic nature of HRM, highlighting the importance of inimitable human resources over visible technological assets It also underscores the complexity of organizational systems in achieving competitive advantage, contrasting with the 'bundles and systems' approach in HRM research Ultimately, the RBV focuses on sustained competitive advantage and profitability, providing a broad application to various research issues (Boselie & Paauwe, 2009).
The Resource-Based View (RBV) has been extensively utilized in various Human Resource Management (HRM) studies, including those by Bae and Lawler (2000), Boxall and Purcell (2008), Delery and Shaw (2001), and Hutchinson et al (2000) However, the majority of these studies focus on data from industrialized economies, highlighting the need to explore the application of RBV in transitional countries.
Developing and transitional economies present unique contexts for understanding competitive advantage due to their rapidly evolving economic landscapes (Peng, 2000) In these economies, resources that may not be deemed advantageous in developed markets can still provide enterprises with a competitive edge Traditional Resource-Based View (RBV) suggests that while resources in efficient markets may be less imitable, they often do not yield sustainable competitive advantages (Dierickx & Cool, 1989) This is particularly evident in developing economies where property-based resources, such as modern equipment, are not easily replicated due to technology parity among competitors (Zhan et al., 2009) Although advanced resources may be scarce in transitional markets, their efficiency is often compromised (Child, 1990) Additionally, domestic enterprises may adopt human resource management practices that diverge from RBV principles due to operational inefficiencies, resource shortages, and a lack of skilled labor (World Bank, 2005; Quang et al., 2010).
Research on Resource-Based View (RBV) related to human resources in transitional economies is limited, with only three key articles identified (Holtbrügge, Friedmann & Puck, 2010; Khandekar and Sharma, 2005; Rao, 2010) Among these, two articles examine HRM in multinational enterprises (MNEs) and domestic firms (Rao, 2010; Khandekar & Sharma, 2005), while Holtbrügge et al (2010) specifically focus on MNE HRM practices Notably, Khandekar & Sharma (2005) explore the link between HRM practices and organizational performance, but none investigate the relationship between HRM practices and employee outcomes This research contributes to the literature by applying the RBV framework to analyze HRM practices across different ownership types and their impact on employee outcomes, including performance and job satisfaction.
The HRM practices of multinational enterprises (MNEs) in Vietnam are likely more aligned with the Resource-Based View (RBV) compared to those of domestic firms, primarily due to the distinct RBV characteristics in HRM between developed and developing nations This is particularly evident when considering the various ownership types prevalent in these contexts (Hau & Evangelista, 2007; Thuc Anh et al., 2006; Tsang et al., 2004; Zhan et al., 2009).
The Resource-Based View (RBV) is an effective framework for analyzing the dynamic challenges that organizations and managers encounter in international business It aids in identifying the essential resources that multinational enterprises (MNEs) need to mitigate the liability of foreignness and pursue both product and international diversification (Zhong, Morris, Snell, and Wright, 2012).
The "liability of foreignness" suggests that multinational enterprises (MNEs) with weak location-specific capabilities struggle to leverage their ownership advantages effectively In contrast, robust local capabilities enhance these advantages, allowing MNEs to thrive in foreign markets (Miller & Parkhe, 2002; Zhan et al., 2009; Zhong et al.).
International business researchers have identified the dual HRM challenges of adaptation and integration that multinational enterprises (MNEs) face when expanding into new environments MNEs must tailor their HR systems to local conditions while also integrating efficient "best practices" to enhance organizational value The key challenge lies in balancing local customization with the need for integration and efficiency Recent advancements in the resource-based view (RBV), particularly regarding dynamic capabilities, highlight how MNEs can develop new competencies in response to changing business landscapes This approach offers valuable insights into how MNEs in transitional economies like Vietnam can effectively navigate the competing demands of adaptation and integration.
Investigating the differing perspectives on the strategic value of human resources between local enterprises and multinational enterprises (MNEs) in Vietnam is essential While many MNEs adopt a Resource-Based View (RBV) approach, recognizing HR as a crucial source of competitive advantage, numerous Vietnamese companies may adhere to a traditional viewpoint This traditional perspective often undervalues employee capabilities, perceiving them as less significant than the tasks performed, which leads to a diminished recognition of employees as vital resources critical for organizational survival.
This research article focuses on the relationship between human resource management (HRM) practices and employee-level outcomes, such as performance and job satisfaction, through the lens of the Resource-Based View (RBV) Unlike previous studies that primarily examined the connection between HR and overall firm performance, this study aims to explore how different ownership types affect the adoption of specific HRM practices, including recruitment and selection (R&S), training and development (T&D), performance management (PM), and reward systems (RS) By investigating these dynamics, the research seeks to provide deeper insights into how RBV influences HRM practices and their impact on employee outcomes.
OVERVIEW OF THE RESEARCH AND SCOPE OF STUDY
This research employs a qualitative approach, enabling the researcher to effectively position themselves within an organization (Bryman, 2006; Veal, 2005) This method offers a comprehensive understanding of the phenomena being studied (Matveev, 2002; Patton, 2015) and captures a "realistic feel" of the world that is often absent in numerical data and statistical analyses typical of quantitative approaches (Matveev, 2002).
This research features in-depth, semi-structured interviews across two studies: Study 1 focuses on managers' perspectives, while Study 2 gathers insights from employees The interviewees are drawn from diverse enterprises in Northern Vietnam, specifically in Hanoi and Hai Phong, which are known for their varied ownership structures Due to resource constraints and logistical challenges, enterprises in the South are not included in this study The participating businesses span several service industries, including banking, hotel and tourism, and labor power.
The article examines the four primary types of ownership in Vietnam: State-Owned Enterprises (SOEs), Equitized State-Owned Enterprises (ESOEs), Private-Owned Enterprises (POEs), and Multinational Enterprises (MNEs) Among the participating enterprises, there are four SOEs, three ESOEs, six POEs, and five MNEs Notably, MNEs from Japan, Germany, and the USA have made significant Foreign Direct Investment (FDI) contributions to Vietnam (Anh Phuong, 2017; Nguyen Hoa, 2016; Export Government, 2016).
Study 1 interviews involve 18 Chief Executive Officers (CEOs), HR managers and directors at the 18 participating enterprises Eleven of these enterprises chose to participate in Study 2, with a total of 49 employees being interviewed To analyse the relatively large dataset, qualitative content analysis (see Flick, 2014) was followed by thematic analysis to compare and synthesise findings from the two series of interviews.Further details regarding the underlying research paradigm and research design are given in Chapter 3.
EXPECTED CONTRIBUTIONS
Foreign Direct Investment (FDI) and Multinational Enterprises (MNEs) play a crucial role in introducing innovative management practices to developing economies This study explores the implementation and spread of strategic Human Resource Management (HRM) practices in Vietnam, addressing notable gaps in the current literature Specifically, it highlights the limited research on the relationship between ownership types and HRM practices A significant contribution of this research is its focus on the variations in HRM practices among enterprises with different ownership structures in Vietnam.
Despite extensive literature exploring the relationship between HRM practices and firm performance, empirical evidence often lacks statistical strength, and theoretical foundations appear insufficient (Fleetwood & Hesketh, 2008) A recent approach to address this issue involves examining the HRM-performance black box (Harney).
Research has explored the role of intervening variables, particularly those related to employee outcomes, in the context of HRM practices and enterprise performance in Vietnam However, there is a notable gap in studies examining the direct relationship between HRM practices and employee outcomes within the country Employee outcomes, as highlighted by Gardner et al (2001), serve as crucial mediators linking HRM practices to firm performance Therefore, investigating this relationship, specifically focusing on employee performance and job satisfaction, can significantly enhance both the local and international understanding of HRM practices in Vietnam.
While previous international studies have significantly contributed to understanding the impact of HRM practices on employee outcomes, they often rely on quantitative methods and have limitations in their survey and analytical techniques Many of these studies focus primarily on either managerial or employee perspectives This research aims to strengthen existing findings by employing a qualitative approach that incorporates both viewpoints, enhancing data validation through perspective triangulation.
THE VIETNAM CONTEXT
Vietnam, situated in Southeast Asia, shares borders with China to the north, Laos and Cambodia to the west, and the Eastern Sea to the east, featuring an extensive coastline.
Vietnam spans approximately 3,260 kilometers and covers a total land area of 331,689 square kilometers, making it about 30% larger than the Australian state of Victoria (Mylifeelsewhere, 2017) The country is divided into 63 provinces and cities, with its five largest urban centers being Hanoi (the capital) and Haiphong in the north, Ho Chi Minh City and Can Tho in the south, and Da Nang in the central region (Thu, 2016) Figure 1.1 highlights their locations along with the seven economic zones within Vietnam.
Since the establishment of the Van Lang State in the seventh century B.C., Vietnam has a rich history of nation-building, marked by resilience against external invasions The country endured nearly a thousand years of occupation by Chinese dynasties, followed by French colonial rule from the 1880s until the 1950s, and faced significant US intervention in the latter half of the 20th century.
Figure 1.1 Map of Vietnam in English and in Vietnamese
(Source: Vietnamese Embassy in Australia, 2013)
In August 1945, President Ho Chi Minh, the leader of the Communist Party of Vietnam (CPV), proclaimed Vietnam's independence from France, leading to the establishment of the Democratic Republic of Vietnam (DRV) in September 1945 However, the struggle for liberation persisted until a significant victory was achieved at the Battle of Dien Bien Phu in May 1954.
After the Geneva Accord in July 1954, North Vietnam transitioned towards Marxist socialism and fostered strong ties with China, the Soviet Union, and other socialist nations In contrast, the Republic of Vietnam in the South received significant backing from the USA This rivalry quickly intensified, leading to a brutal conflict that became one of the most recognized wars of the latter half of the 20th century, with Vietnam remaining divided for more than two decades.
1997) The war ended in 1975 with complete victory for the North, and the re-unified country became known as the Socialist Republic of Vietnam (SRV); see Guan (2005).
The political system in Vietnam may be characterised as a one-party system, with the CPV in absolute control in the North since 1954, and over the whole country since
1975 The system is based on the principal tenets of socialism, including consensus and collective decision making (democratic centralism) (Ewards & Phan, 2013; Jeffries, 2011; Martin, 2014).
The economic history of Vietnam can be divided into three periods: pre-1975, 1975–86, and 1986 to the present (Fforde & De Vylder, 1996; Zhu, 2003; Vo, 2005; Jeffries,
Between 1975 and 1986, Vietnam's national economy was shaped by a socialist planning system, characterized by limited ownership types, primarily state-owned enterprises (SOEs) and collective cooperatives Private ownership entities (POEs) were viewed as adversaries to socialism SOEs were directed towards industries deemed crucial for national economic growth, with their operations meticulously planned by the central government Labor regulations during this time strictly controlled aspects such as labor allocation, employment status, and wage structures, resulting in permanent employment and a standardized wage system Additionally, the Communist Party maintained oversight over workplace management and trade unions, which defined the human resource management landscape of the era.
In 1982, authorities recognized three legitimate economic sectors in the North—state-owned enterprises (SOEs), collective enterprises, and individual enterprises—while the South permitted public-private partnerships and private capital This acknowledgment marked a significant step in transforming the business entity structure and laid the groundwork for the future development of a market economy in Vietnam.
In the mid-1980s, Vietnam initiated significant economic reforms known as Doi Moi to address ongoing production and distribution challenges, shifting from a centrally planned economy to a market-oriented system with diverse ownership and multi-sector structures These reforms allowed private ownership and welcomed foreign investment, while international trade flourished due to reduced trade barriers State-owned enterprises gained increased autonomy in decision-making, and traditional socialist HR practices evolved into personnel management systems focused on enhancing competitive advantage through enterprise-level reforms Additionally, the legal framework became more comprehensive, promoting social management based on the rule of law, and this transition towards a market economy continued to evolve in the following decades.
Vietnam's economic reforms have led to significant growth and a notable decrease in poverty rates, transforming the nation from a food importer to the world's second-largest rice exporter and a key player in agricultural exports Additionally, substantial foreign direct investment (FDI) and official development assistance (ODA) have played a crucial role in enhancing the business landscape and facilitating major infrastructure investments.
The influence of the Communist Party of Vietnam (CPV) and socialist principles significantly shapes the structure, culture, and human resource management within Vietnamese society and businesses This dominance is evident in state-owned enterprises (SOEs), where the Communist Party plays a crucial role in decision-making processes Each SOE is governed by a Party Standing Board, with its members selected from the Party Committee, highlighting the integration of political authority in corporate management.
Hallinger & Sanga, 2016) SOEs have continued to occupy a significant role in the economy, even after decades of economic transition (Nguyen et al., 2012).
1.6.4 Business culture and the influence of other countries’ approaches
Vietnam's rich cultural tapestry is shaped by three overlapping influences: indigenous traditions, regional influences from China and neighboring countries, and Western cultural elements (Eward & Phan, 2013) The nation adeptly integrates and adapts foreign values and practices, localizing them to enhance its unique cultural identity (Kamoche, 2001) This dynamic is also evident in the evolution of Vietnamese business culture.
Vietnamese culture significantly influences its business practices, emphasizing close family ties, harmony, respect for seniority, and a high power-distance dynamic (Tran, Fallon & Vickers, 2016; Zhu, 2003) This cultural focus on harmony is reflected in the preference for group pay systems over individual compensation, which helps to mitigate jealousy and maintain a cooperative atmosphere (Zhu, 2003) In Vietnamese enterprises, senior staff are highly regarded for their experience, and the level of formality in interactions often correlates with an individual's status within the organization.
Modern Vietnamese business culture can be analyzed through Hofstede’s dimensions, particularly power distance, which measures the acceptance of inequality within organizations With a power distance score of 70, Vietnamese employees tend to accept a hierarchical structure where each individual's role is clearly defined and does not require justification This reflects a broader trend in business cultures worldwide, emphasizing the importance of understanding these cultural dimensions for effective management and collaboration.
Individualism refers to the level of interdependence within a society (Trompenaars & Hampden-Turner, 2011) In individualist cultures like the United States and Germany, individuals prioritize their own needs and those of their immediate family Conversely, collectivist cultures, such as Vietnam and Japan, emphasize belonging to in-groups that provide care in exchange for loyalty Vietnamese culture, with a low individualism score of 20, places significant value on close-knit family ties and extended relationships In such collectivist societies, loyalty is crucial and often takes precedence over other societal norms (Chen, Peng, & Saparito, 2002; Ma & Allen, 2009).
In Vietnamese culture, the concept of "face" is crucial, as losing face can lead to feelings of embarrassment or shame, particularly when criticism occurs in public or promises are broken (Kim & Nam, 1998) Consequently, many Vietnamese individuals prioritize maintaining face over confronting issues directly, often opting to tell others what they wish to hear This cultural tendency influences performance assessments, which are typically conducted in groups rather than on an individual basis to minimize potential conflict and preserve harmony.
OVERVIEW OF THE STUDY
This study is structured into six chapters, beginning with an introduction Chapter 2 focuses on a literature review that encompasses the evolution from personnel management to human resource management (HRM), strategic human resource management (SHRM), and the internationalization of HRM, along with the resource-based view (RBV) theory Additionally, it provides context by discussing the development of enterprise ownership types in Vietnam and examining previous research on HRM within the country.
Chapter 3 discusses research underpinnings, research design, and data collection and analysis.
Chapter 4 presents the qualitative findings from the interviews with managers; Chapter 5 presents the findings from the interviews with employees.
Chapter 6 synthesises the key findings from Chapters 4 and 5, and places them in the context of extant literature This chapter also highlights the current study’s contributions, discusses its implications for enterprises and the government in Vietnam,and notes its limitations and possible directions for future research.
LITERATURE REVIEW
INTRODUCTION
This chapter reviews the literature on how various ownership types influence the adoption of human resource management (HRM) practices in Vietnam It highlights the impact of HRM practices on enterprise and employee outcomes, particularly focusing on job satisfaction and employee performance Additionally, the review considers the Resource-Based View (RBV) in relation to HRM It underscores the importance of current studies by pointing out the limited research on the connections between HRM practices, enterprises, and employee outcomes, especially regarding performance and job satisfaction in Vietnam.
This article explores the evolution of personnel management, Human Resource Management (HRM), and international HRM, with a focus on Vietnam's enterprise landscape It examines existing HRM studies in Vietnam, highlighting the traditional domestic approach, the adoption of Western HRM practices, and the differences in usage and sophistication across various HRM areas Additionally, it discusses how these HRM differences influence company performance and employee outcomes Finally, the article reviews the Resource-Based View (RBV), its progression in HRM research, and its relevance to the current study.
FROM PERSONNEL MANAGEMENT TO HRM AND IHRM
In the late twentieth century, personnel management in Western economies transitioned into Human Resource Management (HRM) Conversely, in Vietnam, the terms personnel management and HRM are often used interchangeably, affecting the understanding and implementation of HRM in organizations Therefore, it is essential to explore the distinctions and evolution of these two concepts before delving into HRM studies in Vietnam.
The term “personnel management”, first used in the 1940s, was seenas “welfare” with a focus on meeting the basic needs of employees (Fleming, 2013) As noted by
According to Armstrong and Taylor (2014) and Nankervis, Compton, and Baird (2002a), personnel management encompasses key functions such as recruitment, selection, training, salary administration, and industrial relations Notably, prior to the 1970s, there was an increasing focus on the personnel function concerning industrial relations issues (Fleming, 2013).
Personnel management often faces criticism for its lack of a strategic approach to employment issues, primarily focusing on administrative tasks rather than aligning with organizational goals (Buyens & Devos, 2001; Legge, 1978; Lundy, 1994) As Legge (1995) pointed out, viewing the personnel function merely as an operational activity without strategic direction can hinder an organization's overall success.
In the 1980s, the West experienced a shift towards a managerial-focused approach to employment, driven by the need for a new orientation This transition saw personnel experts advocating for their concerns to higher management, resulting in a significant change from traditional personnel management—which aimed at the optimal use of human resources for organizational goals—to a strategic human resource management (HRM) model This new model emphasizes aligning human resource strategies with the overall strategic objectives of the business, fostering stronger linkages between them.
During the 1980s, research indicated a notable shift in personnel management responsibilities towards line management, driven by the need for a strategic approach to adapt to a rapidly changing business environment (Story, 1992; Lundy, 1994) Companies aimed to leverage their human resources for competitive advantage, leading to the evolution of Human Resource Management (HRM) as a more effective alternative to traditional personnel management, particularly in response to globalization (Guest, 1990; Buyens & De Vos, 2001; Lundy, 1994).
HRM approaches emphasize the critical role of line managers in aligning competitive strategy with HR policies, while HR's mission is to establish policies that enhance the effectiveness of HR activities Research from the 1980s supports the idea that HR systems and organizational structure must be managed in harmony with the overall strategy, advocating for HR policy to operate at a strategic level (Tyson, 1987; Buyen & Devos, 2001).
Human Resource Management (HRM) plays a crucial role in aligning an organization's workforce with its goals and external environment Its primary responsibility is to ensure that businesses have the right number and type of qualified employees to meet current and future HR demands effectively and economically HRM functions are typically categorized into six key areas: attraction, selection, retention, development, assessment, and adjustment of employees Additionally, these functions can be viewed through the lenses of acquisition, development, motivation, and maintenance of staff Each of these HR functions is interconnected, emphasizing cost-effectiveness and reflecting the broader objectives of the organization.
Strategic Human Resource Management (SHRM) connects HR functions with an organization's strategic goals to enhance business performance and foster cultures of innovation and flexibility As HR managers evolve into internal consultants, their strategic role highlights the importance of people as a valuable resource and significant investment for enterprises SHRM involves assessing HRM policies and practices that constitute the HR system, emphasizing the relationship between this system and organizational performance outcomes.
Strategic Human Resource Management (HRM) encompasses two key meanings highlighted in previous studies Firstly, it examines the interplay between organizational strategies and HRM, particularly the best-fit approach, emphasizing the inclusion of HR functions in the strategic decision-making process Secondly, it addresses essential HRM functional areas, including recruitment, selection, training and development, performance appraisal, and compensation.
International Human Resource Management (IHRM) is inherently more complex than domestic HRM due to its focus on managing employees across different countries This complexity necessitates a deeper involvement in the lives of employees, as local cultural, political, and legislative factors significantly influence organizational strategies, policies, and practices This article defines IHRM, explores various staffing approaches, and examines the concepts of convergence versus divergence, as well as the impact of the country of origin on HRM policies and practices.
2.2.3.1 Definition of international human resource management
Globalisation began centuries ago with international trade but gained momentum in the 1980s due to significant shifts in politics, economy, technology, culture, and migration (Paliwoda & Slater, 2009) Warner (2002, p.386) notes that “globalisation was the byword of the 1990s,” marking the rise of global markets and multinational enterprises (MNEs).
The theoretical roots of globalization continue to be relevant in modern discussions, with Adam Smith's assertion that "the division of labour depends on the extent of the market" remaining applicable since 1776 Additionally, from a Marxist viewpoint, globalization is viewed as an inevitable result of capitalist development.
Globalization has led to significant economic and political integration, as well as social changes such as increased international travel and advanced communication technologies This shift has resulted in a notable rise in the number of individuals seeking international employment, thereby expanding the global talent pool According to Stahl and Bjorkman (2006), International Human Resource Management (IHRM) encompasses a variety of human resource challenges that multinational enterprises (MNEs) encounter across different regions of their operations.
According to Morley and Collings (2004), multinational enterprises (MNEs) have distinct HRM practices compared to domestic companies due to the complexities of international operations The HRM of MNEs is influenced by six key factors, with one significant aspect being the increased number of HR roles and activities that managers must oversee.
HR managers in domestic enterprises primarily focus on local employees, managing a single compensation policy and adhering to one government's taxation system In contrast, HR managers in multinational enterprises (MNEs) oversee a diverse workforce across various countries, necessitating a comprehensive understanding of international employment laws and cultural differences Additionally, MNEs are more engaged in the personal lives of their employees, extending support beyond basic health insurance and social benefits, especially in relocation scenarios.
BACKGROUND: TYPES OF ENTERPRISES IN VIETNAM
Since the initiation of Doi Moi in 1986, Vietnam has implemented international trade policies that facilitated its transition from isolation to a socialist market-oriented economy This shift marked a significant change in government policies, enabling the country to move away from a centrally planned system.
& Zhu, 2005) SOEs were given more autonomy, and gradually other forms of ownership types including Equitised State-Owned Enterprises (ESOEs), POEs and MNEs appeared and developed.
The government's efforts to address losses in State-Owned Enterprises (SOEs) and the broader economy are evident in the challenges faced by unprofitable SOEs, which have exacerbated a fiscal crisis These entities have relied heavily on state funds, leading to increased budget deficits and inflation, while simultaneously diminishing the state's capacity to service external debt (Beresford, 2006).
It is of benefit to understand the implications of differing enterprises’ approaches to the
HR practices they would use in the context of Vietnam, which was dominated mainly by SOEs, and where new ownership types were newly established.
In 2014, the number of enterprises of all ownership types reached 402,326 (Table 2.1)
Table 2.1 Number of enterprises operating in Vietnam in 2014
Ownership types Number of enterprises in total
POEs, Ltd Co (≤50% state capital) 254952
An overview of various ownership types in Vietnam makes up the rest of this section:
According to the Enterprise Law No 39-L/CTN established in 1995, state-owned enterprises (SOEs) are economic entities created and managed by the government to achieve specific socio-economic goals These organizations operate under state capital investment and have designated names, stamps, and headquarters located within Vietnam.
State-owned enterprises (SOEs) have played a crucial role in the Vietnamese economy, despite a gradual decline in their numbers in recent years In the mid-1990s, SOEs represented 40% of the country's GDP, which decreased to 34% by 2010 (Nguyen et al., 2012) This reduction can be attributed to the government's reform policy aimed at transforming SOEs into joint stock companies (JSCs), allowing for the sale of all or part of their capital to private investors.
The inefficiency of State-Owned Enterprises (SOEs) can be attributed to several factors, primarily the shortage of tangible resources Key issues include outdated technology, under-utilised capital (O’Connor, 1996), inadequate transportation infrastructure (World Bank, 2005), and a lack of capital (Ministry of Industry and Trade, 2012) A survey conducted by Doanh in 1992 revealed that most SOEs relied on old machinery and equipment, with one-third of their capital stock being largely ineffective.
The shortage of intangible resources has significantly impacted state-owned enterprises (SOEs), highlighting issues such as workforce redundancy, inadequate skill sets, and poor management practices According to the Ministry of Industry and Trade (2012), these factors contribute to the challenges faced by SOEs Additionally, the World Bank (2005) emphasizes the insufficient education levels of the workforce, further exacerbating the situation as noted by O’Connor (1996).
Poor management is a significant issue within the state apparatus, which often struggles due to a lack of knowledge and experience among its staff, who tend to rely on outdated administrative methods (Anh, 1994) Additionally, managers of state-owned enterprises (SOEs) do not experience the same profit-driven pressures as their private-owned enterprise (POE) counterparts (Berthold).
State-owned enterprises (SOEs) often lack motivation for profit due to managerial pay structures not being closely tied to overall performance Managers benefit from state preferential treatment, including protection from competition, access to low-cost land, and the rollover or write-off of bad debts As a result, SOEs show little concern for profitability, with some enterprises permitted to increase their already high debt levels by over 50% This reliance on state support and the presence of soft budget constraints significantly undermine the performance of SOEs.
The inadequacy of Communist ideology and mechanisms in Vietnam before Doi Moi hindered the use of profit as a measure of success, leading to a discouragement of metrics like return on capital employed This ideological framework has shaped the structures and mindsets of State-Owned Enterprises (SOEs), with some prioritizing non-profit objectives, such as job creation.
In 2006, slow progress in transitioning from a centrally planned economy to a market-oriented trading mechanism has hindered the efficiency of state-owned enterprises (SOEs) Outdated policies have failed to adapt to changing circumstances, resulting in low performance and productivity despite a significant workforce employed from the central to provincial levels (Ministry of Industry and Trade, 2012).
The inefficient performance of state-owned enterprises (SOEs) has necessitated reforms to reduce losses and enhance their effectiveness, leading to the establishment of new administrative forms, such as economically oriented SOEs (ESOEs), and an acceleration of the equitisation process (Muir & Saba, 1995; Collins, 2009) Significant policies, including Decisions 90/Ttg and 91/Ttg issued in March 1994, aimed to decrease the number of SOEs and consolidate them into larger corporations (Doanh, 1996) By 1998, Vietnam had around 17 large general corporations, with 66% of state-owned capital and contributing 70% to the government budget (CIEM, 2005) However, by the end of 1997, many of these corporations were identified as inefficient, revealing the shortcomings of the earlier decisions (Collins, 2009) The introduction of the Common Enterprise Law mandated that remaining SOEs transition to corporate governance within four years, promoting productivity gains and fostering a more independent relationship with government authorities (World Bank, 2005).
ESOEs emerged from the restructuring of state-owned enterprises (SOEs) through equitisation and privatisation, a process that began in 1992 when SOE financial statements became public (Quang & Dung, 1998) These enterprises were created with the goal of converting unprofitable SOEs into vibrant, rapidly growing private businesses infused with a robust entrepreneurial spirit (Henrik, 2005).
In 1995, the Enterprise Law on State-Owned Enterprises (SOEs) was enacted, granting them equal legal status and the freedom to engage in business with each other and non-state entities, including foreign partners through joint ventures This law empowered SOEs to hire and fire employees and determine wages within established policy guidelines, although they were restricted from freely managing the capital entrusted to them by the government (World Bank, 2005).
The transformation of State-Owned Enterprises (SOEs) in Vietnam centered around the ownership transformation process, particularly equitisation, which involves divesting state capital to the private sector This process primarily benefited workers and directors of the SOEs, resulting in what is often referred to as "insider privatisation" (World Bank, 2005) Initially, equitisation progressed slowly, with only 100 SOEs divested in 1998, but the pace increased significantly, reaching approximately 300 divestments by 2003 (World Bank, 2005) The Vietnamese government demonstrated a strong commitment to advancing this equitisation process, leading to substantial developments by 2014 (Vietnamese Government, 2013).
1536 ESOEs with more than 50% of the state capital and 82015 ESOEs with less than 50% of state capital had been formed (GSO, 2015).
Equitisation in Vietnam's state-owned enterprises (SOEs) has led to significant performance improvements, often attributed to a "catch-up" effect similar to that seen in foreign direct investment (FDI) enterprises By reducing administrative burdens and aligning interests, equitisation enhances the independence of these enterprises, enabling them to approach the efficiency frontier The World Bank (2005) indicates that the total factor productivity gains from equitisation, although potentially temporary, demonstrate its effectiveness in boosting efficiency within the SOE sector Previously, enterprises organized under the Enterprise Law mandated that all shareholders be SOEs or state-authorized organizations, with two classifications based on charter capital: those with over 50% state ownership, where the government retains control, and those with less than 50% (Vietnamese Government, 2013).
PREVIOUS STUDIES OF HRM IN VIETNAM
This article reviews past research on Human Resource Management (HRM) in Vietnam, organized into four key areas: the influence of cultural differences, the adoption and spread of Western-style HRM practices, the overall prevalence and complexity of HRM applications, and the distinct aspects of HRM such as its organizational role, recruitment and selection (R&S), training and development (T&D), performance management (PM), and reward systems (RS).
2.4.1 Underlying characteristics of the traditional domestic approach
Regional and local cultures significantly influence human resource management (HRM) practices, often contrasting with the culture of the multinational enterprise's (MNE) home country This cultural divergence can affect the HRM strategies employed by MNEs For instance, while certain aspects of Vietnamese culture differ markedly from Western culture, some traits may align more closely with Western practices than with those found in other Asian cultures, such as Japanese culture.
It is well known that, in common with many other Asian cultures, Vietnamese culture places a high value on long-term relationships and mutual responsibility (Borton
Employees are expected to demonstrate commitment and loyalty to their employers, who reciprocate with care and support However, multinational enterprises (MNEs), particularly those from Western countries, prioritize achieving profit-related targets and objectives over employee relations.
2.4.2 Introduction and diffusion of Western-style HRM
Research has explored the transfer of foreign HRM practices from multinational enterprises (MNEs) to their subsidiaries in transitional economies like Vietnam Thang et al (2007) found that while pay for performance is well-suited to the Vietnamese context, other HRM practices faced adaptation challenges The compatibility of pay for performance may stem from its absence during the socialist era, when rewards were distributed equally regardless of individual contributions With Vietnam's shift to a socialist-oriented market economy, there is now a greater focus on individual performance to enhance productivity However, it is noted that individuals from collectivist cultures often prefer rewards based on equality or need, as they prioritize group harmony (Stone et al., 2007).
Some regions exhibit less emphasis on local compatibility in HRM practices King-Kuaanui et al (2006) highlight the significance of training, performance appraisal systems, and incentive compensation for enhancing overall firm performance in Vietnam They propose that certain Western practices can be effectively adapted by Asian nations, yielding comparable outcomes despite cultural differences Supporting this view, Vo and Stanton (2011) found that Vietnamese individuals are more receptive to HRM practices from Western countries, particularly the US, than those from other Asian cultures like Japan.
Multinational enterprises (MNEs) face significant challenges in adapting Western work styles to Vietnamese organizational traditions, as they must exert greater effort to gain acceptance within the local society compared to domestic organizations According to Kamoche (2001), MNEs must thoroughly understand the local culture, work values, existing organizational practices, and the political-administrative structure to effectively navigate institutional and economic reforms Consequently, introducing Western practices in Vietnam is not a straightforward task for MNEs.
Identifying the origins of HRM practices in East Asian countries such as Japan, Korea, Taiwan, Malaysia, Thailand, China, and Vietnam, compared to those from Western nations like North America and Europe, is complex Many practices deemed best in the West are also present in East Asian organizations, suggesting they may have been adopted and adapted over time.
The adaptation and diffusion of HRM practices from multinational enterprises (MNEs) in their home countries to Vietnam remains an area requiring further investigation This study will specifically examine four key HRM practices in Vietnam: recruitment and selection (R&S), training and development (T&D), performance management (PM), and
The selection of these four HR practices is based on two primary factors: their frequent examination in the HRM–performance relationship within major journals over the past decade (Fey et al., 2009) and their prominence in research conducted in Vietnam over the last fifteen years, as detailed in Table 2.2.
2.4.3 Differences regarding general usage and sophistication
HRM practices vary significantly across different sectors and ownership types, necessitating adjustments to align with specific operational conditions (Quang & Heijden, 2009) Thang and Quang (2005a, 2005b) indicate that these adaptations are influenced by the ownership characteristics of the company A small survey conducted among HRM practitioners in Ho Chi Minh City revealed that domestic agencies and enterprises exhibit lower awareness, practice, and strategic recognition of HRM compared to multinational enterprises (MNEs) (Quang & Thang, 2004) Furthermore, state-owned enterprises (SOEs) demonstrate a lesser understanding of HRM's importance compared to privately owned enterprises Table 2.3, derived from Quang and Thang's (2004) study, illustrates the disparities in HRM status and practices among SOEs, MNEs, and other organizations in Vietnam.
Table 2.2 Frequency of research on various HRM practices in the context of Vietnam
Practice Name Article coding number Total
(Source: developed by the researcher)
Note:* Performance appraisal and pay for performance are grouped in Performance Management
*1 Vo & Stanton (2011) 8 Bartram et al (2009)
2 Zhu,Collins,Webber &Benson (2008) 9 King-Kauanui et al (2006)
5 Thang et al (2007) 12 Vo & Rowley (2010)
Table 2.3 HRM status across sectors in Vietnam
Sector Awareness Practice Role in Enterprise
Government agencies Low Low Low
State-owned companies Low-Medium Low Low
Joint ventures High Medium-high Medium-High
Multinational companies High High High
Research indicates that HRM practices in domestic enterprises, particularly state-owned enterprises (SOEs), are generally less advanced than those in multinational enterprises (MNEs) Kamoche (2001) highlights that SOEs often adopt conservative management styles with limited formal HR practices, focusing on corporate family values and welfare paternalism Thang & Quang (2005b) note that private-owned enterprises (POEs) are even less inclined to embrace HRM practices than SOEs, with no significant improvements from employee-owned SOEs (ESOEs) Additionally, Zhu (2002) points out that international joint ventures (IJVs) and wholly foreign-owned MNEs utilize more standardized HRM practices compared to domestic firms, although MNEs do adapt certain practices, such as employment contracts and compensation, to align with local norms Zhu et al (2008) further confirm that MNEs generally implement more sophisticated HRM practices than domestically owned businesses.
Some researchers, including Bartram et al (2009), caution against the assumption that all local enterprises are outpaced by multinational enterprises (MNEs) and foreign firms Zhu, Collins, and Webber (2008) highlight that private-owned enterprises (POEs) are generally more open to adopting new human resource management (HRM) practices compared to state-owned enterprises (SOEs), leading to quicker transformations within POEs This agility is attributed to the knowledge and experience of POE owners and managers, many of whom previously held positions in SOEs before the privatization wave of the late 1990s (Kamoche, 2001; Bartram et al., 2009) Consequently, POE managers must swiftly implement adaptable management systems and HRM practices to effectively navigate market competition pressures (Zhu et al., 2008).
Multinational enterprises (MNEs) significantly influence the adoption of new human resource management (HRM) practices among domestic businesses, compelling them to adapt for market competitiveness (Zhu et al., 2008) Research by Vo and Stanton (2011) shows that state-owned enterprises (SOEs) and private domestic firms often replicate MNE HRM practices to enhance their competitiveness However, it's important to note that SOEs do not always imitate MNE practices; instead, MNEs frequently need to adapt to local HRM practices and specific regional requirements to achieve acceptance in new markets (Zhu, 2002; Thang & Quang, 2005b).
In 2013, various multinational enterprises (MNEs), state-owned enterprises (SOEs), and private-owned enterprises (POEs) adopted human resource management (HRM) practices such as performance-based pay, continuous training and development, and decentralized recruitment managed by line managers However, Zhu and Verstraeten (2013) noted the lack of clarity regarding the differences in transformation stages or models, highlighting the overlap among different people management approaches Additionally, Bartram et al (2009) observed that while many SOEs continue to utilize traditional personnel management, MNEs prioritize HRM cost efficiency, and POEs implement a diverse array of HRM interventions.
A survey by Bartram et al (2009) highlights the varying adoption of HRM practices among Vietnamese managers in International Joint Ventures (IJVs), State-Owned Enterprises (SOEs), and Private-Owned Enterprises (POEs) While SOEs exhibit the lowest implementation of modern HRM practices, such as recruitment, training, performance management systems, and incentive arrangements, they excel in adhering to Occupational Health and Safety (OSH) laws, with a compliance rate of 79% This commitment to OSH not only underscores the value placed on employees but also contributes to their productivity and job satisfaction Consequently, despite the lack of sophisticated performance management systems, SOE employees may still experience high levels of productivity and job satisfaction due to the protective measures and benefits, such as retirement pensions, in place.
Despite these caveats about generalisations, these modern HRM practices, such as
INSTITUTIONAL THEORY
Institutional theory focuses on the contextual, historical, and procedural elements influencing organizational actions (Currie, 2009), and is closely linked to organizational institutionalism (Greenwood et al., 2008) It highlights how institutionalization shapes the understanding that organizational structures and actions are guided by expectations of appropriate operations (Scott & Meyer, 1994) From this perspective, Meyer and Rowan (1977) argued that the institutional context significantly influences organizational practices, including human resource management (HRM).
Institutional theory originated in the 19th century, with research in the 1950s termed 'old institutionalism' and studies from the late 1970s to early 1980s categorized as 'new institutionalism' (Scott, 1995) 'Old institutionalism' examines how social processes influence behavior, focusing on power dynamics and informal structures (Selznick, 1949; Greenwood and Hinings, 1996) In contrast, 'new institutionalism' emphasizes cognitive processes that establish legitimacy around certain ideas (Scott, 2008; Najeeb, 2014) The distinctions between these two approaches are thoroughly analyzed by DiMaggio and Powell (1991), contributing to the evolution of institutional theory within management studies.
In the early 1990s, Wright and McMahan (1992) highlighted the relevance of institutional theory in human resource management (HRM) research This was further developed by Oliver (1997) and Purcell (1999), who incorporated aspects of the institutional framework into their studies The systematic application of new institutionalism in HRM was notably advanced by Paauwe and Boselie (2003), who proposed an initial framework for integrating HRM with institutional research Key elements of this institutional approach include coercive pressures from regulations, normative influences tied to professional management control systems, and mimetic behaviors driven by industry trends.
2003) These elements impact on HRM strategy and goals.
The normative component of institutional theory encompasses the values, beliefs, norms, and assumptions that shape human behavior, guiding targets and methods influenced by local culture (Scott, 1995) Hofstede et al (2002) assert that culture serves as a fundamental layer of institutional arrangements, highlighting the interplay between cultural factors and institutional frameworks.
“culture is a part of informal institutions in the environment that underpin formal institutions’’ (Peng, Wang & Jiang, 2008, p 924).
Institutional theory is frequently applied in international business research, but it has been criticized for its narrow focus on the social context of resource selection decisions, such as firm customs and regulatory pressures This limitation makes institutional theory less effective in identifying a firm's internal capabilities that can lead to competitive advantages Additionally, it overlooks the economic context that is central to the Resource-Based View (RBV) The RBV is a more suitable framework for this study, as it emphasizes the competitive advantages derived from possessing rare, valuable, and inimitable resources, which are not easily transferable between firms Consequently, the RBV approach is ideal for examining the impact of HRM practices on employee outcomes.
THE RESOURCE-BASED VIEW
The resource-based view (RBV) is defined as a framework that emphasizes the importance of a firm's internal resources and capabilities in achieving competitive advantage This article outlines the evolution of RBV and examines its application in human resource management (HRM) research Additionally, it explores the relevance of the RBV approach for the current study, highlighting its significance in understanding organizational performance.
The Resource-Based View (RBV) emphasizes that resources are essential for firms to achieve and maintain above-average returns Unlike Porter’s strategic model, which adopts an outside-in approach by analyzing external opportunities and threats, the RBV focuses on the internal strengths and weaknesses of a firm, highlighting the importance of leveraging unique resources for competitive advantage.
According to scholars like Prahalad and Hamel (1990), Barney (1991), and Teece (1997 & 2014), organizations should focus internally to gain a competitive edge The Resource-Based View (RBV) emphasizes that firms depend on a mix of tangible and intangible resources that are heterogeneous, immobile, and possess key attributes—valuable, rare, difficult to imitate, and non-substitutable (VRIN)—to achieve superior performance and ensure long-term survival.
Tangible and intangible assets: Resources and Capabilities
With the growth of the global economy and advancements in information technology, scholarly definitions of enterprise resources have evolved A consistent theme in these definitions is the focus on the interplay between various resources, including financial capital, physical assets, and human capabilities (Boselie & Paawee, 2010).
Wernerfelt (1984) defines resources as strengths of a firm, which can be categorized into tangible and intangible assets Tangible resources, such as land and machinery, are measurable and physical, while intangible assets include intellectual property, employee expertise, corporate reputation, external partnerships, and organizational culture (Olalla, 1999) Grimm, Lee, and Smith (2006) enhance this classification by distinguishing technological resources and reputation, while also introducing human resources as a critical category Additionally, Barney (1991) emphasizes that firm resources encompass a broader range, including assets, capabilities, organizational processes, attributes, information, and knowledge.
The Resource-Based View (RBV) has generated some confusion among researchers due to the nuanced differences between related terms Key overlapping terms include resources, capabilities, dynamic capabilities, competencies, and core competencies In this study, we focus on the terms resources and capabilities, as they are the most prevalent in existing literature.
Amit and Schoemaker (1993) differentiate between resources, defined as the "stocks of available factors owned or controlled by the firm," and capabilities, which refer to the firm's ability to deploy these resources Grant (1991) emphasizes that resources serve as inputs in production, while capabilities determine how effectively a firm can utilize these resources to achieve desired outcomes Olalla (1999) asserts that resources form the basis of capabilities, which are crucial for gaining competitive advantage Lado and Wilson (1994) describe the enterprise as a combination of resources and capabilities that are not readily available in the market However, Saa-Pere and Garcia-Falcon (2002) argue that merely possessing resources and capabilities does not guarantee success; competitive advantage arises when firms leverage unique resources and capabilities more effectively than their competitors Employee skills and capabilities are vital for sustaining competitive advantage, as highlighted by multiple studies (Lado & Wilson, 1994; Pfeffer, 1994; Saa-Perez & Garcia-Falcon, 2002; Wang et al., 2016), given that this cooperative knowledge is difficult to replicate While traditional resources like technology and economies of scale can create value, they are easily imitated (Becker & Gerhart, 1996) In contrast, cooperative knowledge is considered inimitable, and the time required to cultivate this knowledge is rare (Khandekar & Sharma, 2005).
According to Hall (1993), competitive advantage stems from four key sources: regulatory capability, positional capability, functional capability, and cultural capability Regulatory capability involves legal protections like intellectual property rights and trade secrets, while positional capability arises from historical actions, including reputation and distribution networks Functional capability refers to the specific skills and knowledge of employees and partners, and cultural capability reflects the shared beliefs and values within the organization Notably, regulatory and positional capabilities relate to the assets a company possesses, emphasizing "having," whereas functional and cultural capabilities pertain to the skills and competences necessary for execution, emphasizing "doing." This research will primarily focus on functional capability.
Employee know-how is a crucial factor for business success, serving as a durable resource and a significant source of competitive advantage (Hall, 1993) Functional capability encompasses not only the specific skills that enhance labor productivity but also the training abilities of the organization Additionally, organizational culture plays a vital role in shaping HRM practices and can be a source of sustained competitive advantage (Barney & Clark, 2007) A culture that values and supports employees is essential for enhancing overall enterprise performance through its workforce (Barney & Clark, 2007).
Firm resource heterogeneity and immobility
The Resource-Based View (RBV) posits that key resources are unevenly distributed among organizations and are not easily transferable over time (Morris, Snell & Wright, 2006) This variation in tangible and intangible assets can lead to competitive advantages, as resources that are immobile are difficult for competitors to replicate Consequently, the original holder of such resources is more likely to maintain a sustained competitive edge (Morris et al., 2006) For instance, an organization may excel in attracting and retaining employees with superior skills, knowledge, and experience, or it may implement unique HRM practices that set it apart from competitors (Zhong et al., 2012) These superior skills represent the distinctive capabilities of a firm's workforce, differentiating them from rival personnel (Bharadwaj, Varadarajan & Fahy, 1993).
Valuable, rare, inimitable, non-substitutable and organised to capture value
To achieve a sustainable competitive advantage, enterprises must ensure their internal resources meet four essential conditions These conditions, as outlined by Boxall & Purcell (2008), determine the effectiveness of heterogeneous and immobile resources in fostering long-term success By aligning their resources with these criteria, firms can enhance their competitive positioning in the market.
“value (V) for the firm”, are “rare” (R), “inimitable” (I) and “non-substitutable” (N) (Barney, 1991; Boselie & Paauwe, 2010) In the VRIN framework developed by Barney (1991, 1994,
2002), “non-substitutable” (N) was later replaced by “Organisation” (O) with the question:
“Is the companyorganisedto exploit these resources?” (Figure 2.1).
The VRIO framework highlights the strategic role of human resources in securing a sustainable competitive advantage for businesses This tool enables managers to pinpoint internal resources that could potentially lead to competitive disadvantages, as outlined by Barney and Clark (2007).
The VRIO framework highlights the relationship between human resource investment and enhanced customer value (Hasimoto, 1981) As job roles evolve and new positions emerge requiring updated skills, a diverse labor force with varying skill levels is formed Workers possessing essential expertise and experience can significantly improve a company's products and services, making such human resources valuable Additionally, the unique skills and knowledge of individuals are often rare (McWilliams et al., 2001), as only a small fraction of employees within an organization typically possess specific competencies and insights.
A firm's competitive advantage diminishes quickly if its resources can be easily imitated by competitors (Tokuda, 2005) The strategic value of a firm's resources lies in their inimitability, which is derived from three complex factors: path dependency, causal ambiguity, and social complexity (Dierickx & Cool, 1989; Boselie & Paawee, 2010; Colbert & Kurucz, 2011) Path dependency highlights the unique historical experiences and decisions that shape a resource, ultimately leading to a sustained competitive advantage (Boselie & Paawee, 2010) Causal ambiguity involves practices that are difficult to observe and understand, contributing to the uncertainty surrounding a firm's resources.
The causal relationship between actions and results is crucial in understanding competitive advantage (Colbert, 2004) Social complexity is associated with "transaction-specific human capital" (Becker, 1964), which encompasses the trust and knowledge developed over time in business relationships, influenced by cultural, political, and religious factors (McWilliams et al., 2001) Consequently, enterprises engage in intricate, time-sensitive practices, like high-level decision-making and relationship building, that competitors cannot easily observe, limiting their comprehension of resource-based advantages (Colbert, 2004) Richard (2000) and Miller and Shamsie (1996) emphasize that imitating a competitor's knowledge-based resources can be time-consuming, during which the original firm may further enhance its capabilities.
CHAPTER CONCLUSION
This chapter outlined the distinctions between personnel management and Human Resource Management (HRM), while also examining recent developments and trends in International Human Resource Management (IHRM) A thorough analysis of prior HRM studies in Vietnam was conducted, leading to an exploration of the Resource-Based View (RBV) in relation to HRM, particularly in the context of developing countries The forthcoming chapter will detail the research methodology employed in this study.
METHODOLOGY
INTRODUCTION
This chapter specifies and discusses the research approach as well as the methodology utilised to answer the following research questions:
RQ1 How do differing ownership types affect the adoption of HRM practices in Vietnam?
RQ2 To what extent do HRM practices in Vietnam affect employee outcomes, such as job satisfaction and employee performance?
This research is grounded in the ontological and epistemological paradigms of relativism and constructivism, adopting a qualitative methodological approach through semi-structured interviews Data triangulation is achieved by gathering insights from various stakeholders, including both managers and employees.
Table 3.1 Paradigms used in this HRM research
(What is out there to know?)
Relativism – local and specific constructed realities, subjective and influenced by the context of the situation
(How we know what we know?)
Subjectivist, researcher’s point of view
Qualitative approach: in-depth interviews, data triangulation (triangulation of perspectives)
(Sources: adapted by the researcher from Creswell, 2014; Flick, 2014; Guba & Lincoln, 1994)
This chapter comprises six sections, beginning with an exploration of the guiding constructivist paradigm and the research's ontology, epistemology, and methodology (Creswell, 2014; Flick, 2014) The second section evaluates the advantages and disadvantages of quantitative and qualitative approaches, ultimately justifying the choice of qualitative methods for this study The third section outlines the research design, focusing on context selection, ownership types, and the interview-based approach, including the formulation of interview questions The fourth section details the data collection process involving managers and employees, alongside the ethical guidelines adhered to throughout the research Finally, the fifth section discusses the data analysis process, emphasizing the validity and reliability of the findings.
RESEARCH PARADIGM
The inquiry paradigm consists of three essential elements: ontology, which encompasses one's worldview and understanding of reality; epistemology, which examines the relationship between researchers and participants; and the appropriate methodology for the paradigm, including measurement techniques (Denzin & Lincoln, 1998; Guba & Lincoln, 1994) These elements are crucial for understanding the processes of knowledge acquisition and data collection in the current research (Flick, 2014; Guba & Lincoln, 1994) This research is primarily guided by the constructivist paradigm.
Ontology explores the nature of reality, examining whether phenomena exist independently of our perception (Creswell, 2013; Symon & Cassell, 2012) The primary ontological approaches are objectivism, which posits that social entities exist outside of social actors, and subjectivism, which views social phenomena as shaped by the perceptions and actions of those involved (Saunders, Lewis & Thornhill, 2007) The current research adopts subjective constructivism as its paradigm, emphasizing that reality is subjective, complex, and socially constructed (Creswell, 2013; Neuman, 2006) Thus, the focus is on the perceptions of participants within a specific social context, rather than a researcher-defined reality (Guba & Lincoln, 1994).
This research adopts a constructivist and interpretivist approach to investigate Vietnamese HRM practices It focuses on understanding these practices from two key perspectives: that of HRM managers and employees.
Epistemology is the study of knowledge, focusing on its origins and nature (Creswell, 2014; Denzin & Lincoln, 2011; Patton, 2015) It emphasizes that every thesis should aim to contribute to the broader understanding of knowledge (Hussey & Hussey).
Epistemology examines how we acquire knowledge and understand reality, influencing the research approach used to address specific questions This study adopts a subjective epistemological stance, recognizing that the researcher interprets participants' viewpoints through their perceptions By striving to understand the perspectives of managers and employees from various domestic enterprises and multinational enterprises (MNEs), the researcher aims to uncover the subjective meanings that drive social actors' actions Different ownership types may lead to diverse interpretations of the relationship between HRM practices and employee outcomes, making it essential for the researcher to grasp these subjective realities to comprehend the motives and intentions behind their actions.
Methodology is the study of how we collect knowledge about the world (Guba & Lincoln,
The selection of an appropriate research methodology is influenced by the research ontology and epistemology, which shape assumptions about knowledge Key considerations include the nature of the research problem, the type of information required, potential outcomes, and the research objectives (Guba & Lincoln, 1994; Layder, 1993).
According to Marschan-Piekkari and Welch (2004), the relationship between method and theory in a discipline is closely linked, influencing the research agenda in significant ways Constructivism is typically aligned with qualitative research methods, while positivism corresponds with quantitative approaches For this study, a qualitative interview methodology was chosen to align with the research questions.
RESEARCH ORIENTATION
Business research can take various approaches, including quantitative, qualitative, and mixed methods, each with its own advantages and disadvantages Quantitative research focuses on collecting numerical data from a large sample size to ensure reliable results, emphasizing numerical evidence to draw conclusions and test hypotheses Data can be gathered through methods such as questionnaire surveys, observations, or secondary sources like sales data This approach typically employs a positivist framework, measuring variables through quantitative data and testing hypotheses related to general causal explanations.
The quantitative research method offers high reliability in data collection through controlled observations, laboratory experiments, and mass surveys (Bryman & Bell, 2015) However, it often overlooks the study's context and lacks natural settings, limiting the exploration of meaning through participant interactions (Bryman, 2006) Additionally, researchers face challenges in observing behaviors directly and must analyze large sample sizes to ensure accurate results (Matveev, 2002).
Qualitative methodology encompasses a range of methods and techniques that enable researchers to interpret and understand the meaning of social phenomena rather than merely measuring their frequency As noted by Van Maanen (1979), it focuses on describing and decoding naturally occurring events in the social world Denzin and Lincoln (2013) further emphasize that qualitative research is an interpretive activity that situates the observer within their context, employing various practices to illuminate and make sense of the complexities of the world.
“qualitative researchers study things in their natural settings, attempting to make sense of, or interpret, phenomena in terms of the meanings people bring to them”(p.3).
Despite its subjective nature and time-consuming process (Flick, 2014; Patton, 2015; Veal, 2005), the qualitative approach is valued by researchers for its numerous advantages Notably, it enables an in-depth exploration of diverse perspectives from different levels and positions within an organization (Bryman, 2006; Veal).
The qualitative research approach offers a comprehensive perspective on the phenomena being studied, capturing a more authentic representation of reality that quantitative methods often overlook By considering the context of the study, qualitative research encompasses various methods such as interviews, case studies, focus groups, and documentary analysis Notably, researchers can gain additional insights by observing participants during interviews, allowing them to gather nuanced information about attitudes that are not accessible through quantitative approaches.
Phenomenology is the study of how humans interpret their social world through symbolic interactions, continuously adjusting their meanings and actions based on their interactions with others (Saunders et al., 2007) This interpretive process, as described by van Manen (1990), allows researchers to go beyond mere description to uncover the meanings of lived experiences (Creswell, 2009) There are no standardized procedures for conducting phenomenological research, making it essential for researchers to choose data collection and analysis methods that align with the specific experiences being studied (Ehrich, 2005; Gibson & Hanes, 2003) In-depth interviews are the most prevalent method for gathering qualitative data in phenomenological research, while other techniques like written narratives, observations, and drawings are less commonly employed (Dahlberg & Drew, 1997; Gibson & Hanes, 2003).
This research utilizes a qualitative, phenomenological approach, focusing on in-depth interviews to explore the current HRM practices across various ownership types in Vietnam and their impact on employee outcomes such as performance and job satisfaction This method effectively addresses the research questions by capturing the perspectives of both managers and employees within their organizational ownership contexts By employing a qualitative framework, participants can articulate their experiences and viewpoints in their own words, a practice endorsed by Creswell (2013) and Veal (2011), which facilitates a more authentic and unrestricted expression of their insights.
Research on human resource management (HRM) in Vietnam, a developing transitional nation, has predominantly employed a positivist approach with quantitative methodologies, as evidenced by studies like Dang et al (2016) and Thang & Buyens (2008) In contrast, only a handful of researchers, including Vo and Stanton (2011), have utilized qualitative methods to explore HRM practices in the country, highlighting a gap in the existing literature.
In 2011, this research employed in-depth and semi-structured interviews to explore the viewpoints of employers and employees regarding various HRM functions and ownership types Utilizing a qualitative phenomenology method, the study aimed to enhance understanding of how different ownership types influence HRM practices and employee outcomes, such as job satisfaction and performance, through qualitative thematic analysis (Creswell, 2013) This qualitative approach is particularly effective for examining diverse perspectives in real-world contexts, especially in under-researched areas (Saunders et al.).
2007) Thus, a qualitative phenomenology approach is appropriate for this research as this method helps answer the research questions and serves the purposes of this thesis.
RESEARCH DESIGN
Context is complex, dynamic and multi-dimensional, and most importantly, explicitly related to the methodological choices of researchers (Michailova, 2011; Poulis, Poulis, &
The choice of research methods is influenced by various factors, including research aims, organizational context, and cultural considerations (Buchanan & Bryman, 2007) Context plays a crucial role in qualitative research, encompassing both national culture and the organizational climate shaped by ownership type (Bryman, Stephens, & Campo, 1996; Poulis et al., 2013) Research outcomes can differ significantly based on the context, with studies in Western countries yielding different results compared to those in Asia and transitional nations (Maxwell, 2013) Additionally, cultural differences between interviewers and interviewees can lead to misinterpretation of responses (Saunders et al., 2007) However, the current research benefits from a local Vietnamese language speaker, which helps minimize the risk of misinterpretation.
This research focuses on four ownership types prevalent in Vietnam: State-Owned Enterprises (SOEs), Private-Owned Enterprises (POEs), Employee-Owned Enterprises (ESOEs), and Multinational Enterprises (MNEs) Previous studies, such as those by Thang & Quang (2005) and Vo & Stanton (2011), have not thoroughly explored these ownership types in relation to HRM practices and employee outcomes The study is conducted primarily in Northern Vietnam, specifically in Hanoi and Hai Phong, which offer a diverse array of ownership types, facilitating a comparative analysis across these different enterprise structures.
This research focuses on organizations in the service industry, such as banking, hospitality, and tourism, which feature a significant number of non-managerial employees across various ownership types This selection enables the exploration of differences in human resource management practices, employee job satisfaction, and overall employee performance.
Qualitative researchers often gather data on human phenomena through interviews, choosing the interview type based on the study's objectives and available resources (Creswell, 2013; Denzin & Lincoln, 2011).
Fontana and Frey (2000) highlight the effectiveness of individual interviews as a powerful method for in-depth exploration of human resource topics These interviews allow researchers to gather rich, detailed insights into personal experiences and perspectives (Veal, 2005) The flexibility and spontaneity of interviews enable researchers to adapt and respond to participants, fostering a more comfortable environment for information collection (King & Horrocks, 2010; Veal, 2005) This relaxed atmosphere encourages participants to engage in meaningful conversations, making it a preferable alternative to traditional surveys (Creswell, 2013).
2014) However, the drawback of interviews is that they can be quite time-consuming due to interview time, transcription, and analysis of the text (Creswell, 2014).
Structured and unstructured interviews are the two main types of interviews used in research Structured interviews utilize standardized questionnaires with a predetermined set of identical questions, making them a form of quantitative research.
Qualitative research interviews, such as semi-structured, unstructured, and in-depth interviews, differ from quantitative methods by focusing on collecting rich, descriptive data (Saunders et al., 2007; King, 2004; Veal, 2005) Semi-structured interviews involve a pre-prepared list of themes and questions, allowing researchers to adapt their approach based on the participants' organizational context (Saunders et al., 2007) In contrast, unstructured interviews provide interviewees with the freedom to express their thoughts and opinions without a fixed set of questions (Saunders et al., 2007) In-depth interviews are even less structured, encouraging participants to elaborate on their responses and engage in supplementary discussions (Veal, 2005).
This research utilized in-depth and semi-structured interviews as the primary method for data collection, allowing for a qualitative exploration of respondents' perspectives on specific ideas or situations This technique helps uncover diverse viewpoints and clarify any uncertainties in the responses (Cavana et al., 2003; Denzin & Lincoln, 1998; Neuman, 2003; Sekaran & Bougie, 2013) According to Malholtra and Birks (2003), in-depth interviews, whether semi-structured or unstructured, are particularly effective for business research, especially when gathering insights from CEOs, business owners, top managers, and employees.
In-depth interviews, traditionally conducted face-to-face, are increasingly being supplemented by phone and Skype options While face-to-face interactions enable researchers to observe participants' attitudes and emotions directly, alternative methods are gaining popularity for their convenience and accessibility.
Phone interviews enable researchers to reach participants who cannot engage in face-to-face discussions due to distance and travel costs, offering a more efficient and cost-effective data collection method However, this approach may compromise reliability, as participants might be less inclined to engage in open discussions or may avoid sensitive topics In contrast, Skype interviews facilitate real-time interaction, preserving visual and interpersonal elements that traditional phone interviews lack They combine the benefits of face-to-face communication with the flexibility of remote interviews, allowing participants to choose their preferred time and location for the discussion In the study, face-to-face interviews were conducted to gather manager perspectives, while Skype interviews were used for employee insights and follow-up with managers, ultimately saving travel time.
The prevailing “unitarist view” in HRM research suggests that employees and employers share common interests, often leading studies to focus primarily on managerial and organizational perspectives while neglecting the views of other stakeholders Research has largely centered on core employees or knowledge workers, which may not accurately represent the diverse perspectives within organizations, especially given the differing interests and goals of managers and employees This study aims to address the gap by incorporating multiple viewpoints on HRM practices across various ownership types and their effects on employee outcomes, such as job satisfaction and performance To achieve this, interviews were conducted with chief operating executives, directors, HR managers, and non-managerial employees from both domestic enterprises and multinational enterprises in Vietnam.
Collecting data from multiple levels provides researchers with diverse stakeholder perspectives on HRM practices across different ownership types, influencing employee performance and job satisfaction This approach offers valuable insights into the intended, perceived, and actual HRM practices within domestic enterprises and multinational enterprises (MNEs) (Wright & Nishii, 2007).
The study employs a multi-perspective approach, featuring two distinct sets of interview questions tailored for managers and employees The manager interviews are structured into three parts: the first section gathers general information about the participants and their organizations, the second focuses on the role of Human Resource Management (HRM), and the third examines specific HRM practices.
The study involved a structured interview process with employees, divided into two main sections The first section aimed to gather general information about the participants and their respective organizations, while the second focused on the formulation and implementation of HRM practices and their impact on employee outcomes, such as job satisfaction and performance Follow-up questions were employed to explore employees' experiences regarding how different ownership types shape HRM practices and influence outcomes Although the core interview protocol remained unchanged, the follow-up questions adapted to address emerging issues during data collection, ensuring relevance to the diverse managerial and employee groups involved in the research.
In-depth interviewing is distinct from other qualitative methods due to its unique characteristics, primarily the formulation of questions that elicit more than just simple "yes" or "no" answers This approach encourages deeper engagement and richer responses from participants, allowing for a more comprehensive understanding of their perspectives.
DATA COLLECTION
Data for this research was collected from November 2013 to January 2016, with manager perspectives studied face-to-face in Vietnam and employee perspectives gathered via Skype from Australia to minimize travel costs Face-to-face interviews were conducted at the participating company’s office, fostering a comfortable environment for participants to share their experiences, as recommended by Burns & Gove (2005) Meanwhile, Skype interviews were scheduled during participants' free time and at their preferred locations, allowing the researcher to observe their behavior, attitude, and emotions while responding to questions.
3.5.2 Gaining access to participants for studies on managerial and employee perspectives
The researcher initially attempted to reach managers through official organizational websites, but this method proved ineffective as there were no responses after a month, likely due to the peak business period at year-end when managers were focused on meeting targets Recognizing the inefficiency of this approach, the researcher leveraged her network to access business owners and employed a snowball technique to facilitate data collection on manager perspectives Additionally, she sought permission from managers to contact their employees for participation in the second study, further utilizing snowball sampling to recruit participants.
Snowballing is a recruitment technique where individuals gather data from others who meet specific criteria set by the researcher, as noted by McGee et al (2009) This method has been shown to be more efficient and often more cost-effective than traditional recruitment strategies (Sadler et al., 2010) Additionally, snowballing fosters trust among potential participants, increasing their willingness to engage in interviews (Sadler et al.).
2010) Given the reasons identified by methods specialists, the snowball approach was deemed suitable for this study.
Several authors have provided insights into the optimal number of interviews necessary for understanding a research phenomenon Kvale (1996) suggests that qualitative research typically requires 10 to 15 interviews, contingent on the researcher's available time and resources McCracken (1988) highlights the in-depth interview process in phenomenological studies, recommending data collection from 10 participants Meanwhile, Creswell (2013) advocates for a qualitative phenomenology approach that includes around 25 interviews, a number often associated with achieving data saturation, where no new information is generated.
The qualitative research involved 18 in-depth interviews with managers, aligning with Kvale's (1996) recommendations for participant numbers Additionally, the study on employee perspectives comprised 49 valid interviews, providing a comprehensive view of both managerial and employee insights.
This section explains the sample information of both studies on managerial and employee perspectives Translation and back translation are also explained.
In Study 1, interviews were conducted with 18 top managers, business owners, and HR managers from various foreign and domestic organizations, as detailed in Table 3.2 The sample included representatives from 4 state-owned enterprises (SOEs), 3 employee-owned social enterprises (ESOEs), 6 private-owned enterprises (POEs), and 5 multinational enterprises (MNEs), with employee counts ranging from 50 to over 1000 The participants consisted of 6 HR managers, 7 directors, and 5 top managers across diverse industries, including insurance, hotel and tourism, banking, manpower recruitment, law consulting, water supply services, import and export services, construction product sales, and education Table 3.3 highlights the 11 companies that allowed access for Study 2, while those that declined participation included S1, E1, P1, P2, P4, M1, and M2.
Table 3.2 List of enterprises interviewed in Study 1
No of employees Industry or Specialisation
P3 POE 50 Construction material and products
M2 MNE (JPN) 500 Shipping, labour export
M5 MNE (JPN) 200 Consultation on strategic development
In Study 1, managers granted permission for researchers to contact their employees for Study 2, resulting in participation from eleven enterprises The final sample included 49 employees across four ownership types: 3 State-Owned Enterprises (SOEs), 2 Employee Stock Ownership Enterprises (ESOEs), 3 Private-Owned Enterprises (POEs), and 3 Multinational Enterprises (MNEs) from Germany, Japan, and the US Demographic information for the participants in Study 2 is detailed in Table 3.4.
Table 3.3 List of enterprises interviewed in Study 2
No of employees Industry or Specialisation
P3 POE 50 Construction material and products
M5 MNE (JPN) 200 Consultation on strategic development
Table 3.4 Demographic information of participants in Study 2
Gender Age Educational level before working for this company
Ownership types I have worked for
S2a SOE Male 50’s Bachelor Master degree SOE
S3a SOE Male 30’s Bachelor Master degree SOE, ESOE
S3f SOE Male 40’s Bachelor Master degree SOE, ESOE
S4f SOE Male 50’s Bachelor Master degree POE, SOE
Gender Age Educational level before working for this company
Ownership types I have worked for degree S4g
S4h SOE Male 30’s Master degree PhD SOE
E2d ESOE Female 30’s College College POE, ESOE
P3e POE Female 30’s College College MNE, POE
M3a MNE (GER) Female 20’s Master degree Master degree MNE
M3b MNE (GER) Female 20’s Bachelor degree
M3d MNE (GER) Male 30’s Bachelor degree
Gender Age Educational level before working for this company
Ownership types I have worked for
M3e MNE (GER) Male 30’s Bachelor degree
M3f MNE (GER) Female 30’s Bachelor degree
M3g MNE (GER) Male 30’s Bachelor degree
M4a MNE (USA) Female 20’s Bachelor degree
M4b MNE (USA) Female 30’s Bachelor degree
M4c MNE (USA) Female 30’s Bachelor degree
M4d MNE (USA) Female 30’s Bachelor degree
Bachelor degree MNE (JP & US)
M5a MNE (JPN) Male 30’s Bachelor degree
NA: no experience in any other company a, b, c, d are interviewees numbers 1,2, 3, 4 in the particular organisation
All participants, except for two managers who requested anonymity, consented to have their conversations recorded, while additional notes were taken during the interviews to aid in tracking the discussions.
The recorded interviews lasted between 30 minutes to one hour, with variations based on the participants' experiences and roles within the organizations Managers typically provided longer interviews compared to employees, although some employees, drawing on their extensive field experience, spoke for more than 45 minutes.
The interviews conducted in Vietnamese required translation and back translation to ensure credibility and accuracy, as highlighted by Brislin (1970) His research emphasizes the importance of evaluating translation quality and the equivalence between source and target texts Brislin asserts that effective translation can be assessed by comparing responses to both versions To facilitate this, the researcher transcribed the interviews into a Word document and translated them into English, enlisting an experienced translator in Vietnam for the back translation This meticulous process ensured that the translated content maintained the quality and meaning of the original Vietnamese, making translation and back translation essential for obtaining valid research data.
Ethics play a crucial role in social studies involving human activity, emphasizing the safety, well-being, and rights of research participants, as well as the obligations of researchers (Creswell, 2003; Flick, 2014; Saunders et al., 2007) Researchers must ensure participants' confidentiality and privacy (Zikmund, 2003) and obtain ethical clearance before initiating their studies (Saunders et al., 2007) During data collection, it is essential to guarantee confidentiality for all information gathered, and participants should be informed that they can request the destruction of any related documents, including notes and recordings (Creswell, 2003).
This research adhered to the ethical standards set by the participating university, obtaining necessary ethics approvals prior to data collection Specifically, ethics approval number EHR/20/13/HREC was granted for Study 1, while Study 2 received approval under the number EHR/20/13/HREC RIMS: 2013/855.
Prior to participating in the research, interviewees were informed about the study's purpose, data collection methods, and the use of in-depth interviews They were assured of confidentiality and their right to withdraw at any time without repercussions Each participant received an information sheet and a consent form via email before the interview, which they signed and stored securely at the University.
All interviewees were assured that their recorded interviews would remain confidential and solely utilized for research purposes, with anonymity preserved throughout the process Upon request, a summary of the research findings was provided to each participant The responses were captured through audio recordings or handwritten notes, with the consent of the interviewees.
DATA ANALYSIS
3.6.1 Qualitative content analysis and thematic analysis
Veal (2005) states that qualitative research can be either deductive or inductive Deductive research refers to the process of using theory to guide data collection and analysis (Saunders,
2007) In contrast, inductive research relates to the process in which data collection is done first and this is then followed by developing a theoretical explanation (Veal, 2005) Veal
In 2005, it was noted that the deductive approach is favored in positivist research, while the inductive approach is more commonly employed by constructive and interpretive researchers Consequently, this study adopted an inductive method, aligning with the qualitative approach utilized.
Phenomenological data analysis, as outlined by Creswell (2013), involves several steps, including building on data from initial research questions Analysts examine data, such as interview transcriptions, to identify "significant statements" that reveal participants' experiences of the phenomenon The goal of qualitative data analysis is to extract meaningful insights from extensive data sets (Patton, 2002) Qualitative content and thematic analyses are considered descriptive qualitative designs that utilize various techniques to analyze textual data and highlight themes (Vaismoradi et al., 2016) This systematic process includes coding, interpreting meanings, and describing social realities through theme creation.
Content analysis and thematic analysis are often used interchangeably in qualitative data analysis, as highlighted by Braun & Clarke (2006) and Wilkinson (2000) This thesis incorporates both qualitative content analysis and thematic analysis to explore the data comprehensively.
Qualitative content analysis is an effective method for examining data to identify relevant segments that address specific research questions (Flick, 2014; Patton, 2015; Schreier, 2014) This approach involves searching through text for recurring themes or words, facilitating a deeper understanding of the data (Patton, 2012) Thematic analysis, in particular, focuses on exploring data sets to uncover significant patterns and insights.
The researcher initially employed qualitative content analysis to manage and condense a substantial dataset, as suggested by Flick (2014) This approach was subsequently complemented by thematic analysis to facilitate a comparative examination of the perspectives from two distinct groups.
The researcher transcribed and thoroughly reviewed interviews to identify key attributes, selecting five interviews from different enterprises, including one state-owned enterprise (SOE), one employee-owned state enterprise (ESOE), one privately-owned enterprise (POE), and two multinational enterprises (MNEs) from Japan and the US for manual coding A trial coding framework was established based on these interviews, with themes developed in alignment with research questions and subthemes derived from the data Following Mayring's four-step process, the researcher created subthemes until saturation was achieved, indicating no new concepts emerged.
Data saturation is defined by 1995 as 'data adequacy,' while Mead (n.d.) suggests that saturation occurs when researchers experience boredom due to the repetitive nature of information gathered from prior interviews (Meadows & Morse, 2001, p.193).
Steps to seek for subthemes
1 Reading the material until the relevant concept is encountered
2 Checking whether a subcategory that covers this concept has already been created
3 If so, mentally ‘subsuming’ this under the respective subcategory
4 If not, creating a new subcategory that covers this concept
According to Flick (2014), the researcher employed a two-step process for material reduction while developing sub-themes Initially, less relevant content was paraphrased and omitted through successive summarising Next, similar paraphrases were grouped and abstracted to condense the material further This method is effective for constructing comprehensive coding frames in a data-driven manner (Schreier, 2014) After establishing themes and subthemes, the researcher revisited the coding frame to refine it and incorporated remaining data into the main analysis This involved repeating earlier steps to identify any additional main themes and subthemes.
To maintain consistency, the researcher conducted two rounds of coding at different intervals, comparing the perspectives of managers and employees across both studies This process is crucial for identifying any changes in themes or subthemes, ensuring that each unit accurately aligns with a corresponding theme (Schreier, 2014).
To assess the consistency and validity of the coding process, the researcher revised the coding framework, ensuring clarity and mutual exclusivity across two rounds of coding Validating the coding frames involves confirming that the identified themes accurately represent the material and align with the research question (Schreier, 2014) Additionally, an inter-coder was engaged to enhance the reliability of the findings related to managerial and employee perspectives.
Steps of coding for Study 1: manager perspectives
In Study 1, two rounds of coding and inter-rater coding were utilized to ensure coding reliability, as illustrated in Table 3.5, which showcases the final themes and subthemes identified Inter-rater reliability, a method assessing the consistency among multiple coders, was implemented in both Study 1 and Study 2 to evaluate the agreement on the coding of in-depth semi-structured interview transcripts, as highlighted by Lombard et al.
Inter-rater reliability aims to enhance the clarity of data analysis and ensure accurate interpretation of research findings, as noted by MacPhail et al (2015) It plays a crucial role in minimizing bias in research outcomes, contributing to more reliable and valid results (Burla et al., 2008; Campel et al., 2013).
After conducting two rounds of coding, the researcher consolidated the themes into three main categories, as illustrated in Table 3.5 Four randomly selected transcripts, representing different types of ownership, were then reviewed by a PhD candidate experienced in qualitative methods but not specialized in HRM The rater recommended merging subthemes 2.1 to 2.4 and 3.1 to 3.4 due to their similar names, suggesting they should be elevated to themes Additionally, it was advised that themes 2 and 3 be reclassified as subthemes under the newly established themes The proposed themes and subthemes are detailed in Table 3.6.
Table 3.5 Final themes and subthemes for manager perspective after combination of two rounds of coding
Theme 1 Role of HRM and HR within the organisation
Theme 2 HRM practices across company ownership types
Subtheme 2.1 Recruitment and selection regarding RBV
Subtheme 2.2 Training and development regarding RBV
Theme 3 Job satisfaction and employee performance across company ownership types
Table 3.6 Themes and subthemes for manager perspectives suggested by the second rater
Theme 1 Role of HRM and HR within the organisation
Subtheme 2.1 Recruitment and selection across company ownership types
Subtheme 2.2 Job satisfaction and employee performance across company ownership types
Subtheme 3.1 Training and development across company ownership types
Subtheme 3.2 Job satisfaction and employee performance across company ownership types
Subtheme 4.1 Performance management across company ownership types
Subtheme 4.2 Job satisfaction and employee performance across company ownership types
Subtheme 5.1 Reward system across ownership types
Subtheme 5.2 Job satisfaction and employee performance across company ownership types
The suggested themes in Table 3.6 do not adequately address the research questions, as the focus is on the connection between HRM practices and employee outcomes rather than solely on HRM practices Additionally, the repetition of the subtheme “job satisfaction and employee performance across company ownership types” in every theme is unnecessary As a result, the second rater agreed to retain Table 3.5 with minor adjustments to theme 3 The final themes and subthemes for Study 1 are presented in Table 3.7 and will be elaborated upon in Chapter 4.
Table 3.7 Final themes and subthemes with agreement of the inter-rater and the researcher for the manager perspectives
Theme 1 Role of HRM and HR within the organisation
Theme 2 HRM practices across company ownership types
Theme 3 Influence of HRM practices on employee outcomes across company ownership types
Subtheme 3.1 Impact of recruitment and selection on job satisfaction and employee performance Subtheme 3.2 Impact of training and development on job satisfaction and employee performance Subtheme 3.3 Impact of performance management on job satisfaction and employee performance Subtheme 3.4 Impact of reward system on job satisfaction and employee performance
Steps of coding for Study 2: employee perspectives
FINDINGS OF MANAGER PERSPECTIVES
INTRODUCTION
This chapter aims to showcase the findings from qualitative interviews with HRM and top managers, addressing the key research questions posed.
RQ1 How do differing ownership types affect the adoption of HRM practices in Vietnam?
RQ2 To what extent do HRM practices in Vietnam affect employee outcomes, such as job satisfaction and employee performance?
The researcher will analyze variations among eighteen enterprises in Vietnam, focusing on the role of Human Resource Management (HRM), the specific HRM practices implemented, and the resulting employee outcomes related to performance and job satisfaction By employing the Resource-Based View (RBV) framework, the researcher aims to determine if differences in ownership types influence these HRM aspects.
In Chapter 3, interviews were conducted with HRM managers and CEOs from eighteen enterprises, including four state-owned enterprises (SOEs), three employee-owned enterprises (ESOEs), five private-owned enterprises (POEs), and five multinational enterprises (MNEs) from Japan, Germany, and the USA The participating companies varied in size, employing between 50 and over 1000 individuals, with most operating in the service sector, while two were involved in construction and infrastructure The chapter is structured around three key themes and their corresponding subthemes, as outlined in Table 4.1.
Table 4.1 Themes and subthemes for manager perspectives
Theme 1 Role of HRM and HR within the organisation
Theme 2 HRM practices across company ownership types
Theme 3 Influence of HRM practices on employees outcomes across company ownership types
Subtheme 3.1 Impact of recruitment and selection on job satisfaction and employee performance Subtheme 3.2 Impact of training and development on job satisfaction and employee performance Subtheme 3.3 Impact of performance management on job satisfaction and employee performanceSubtheme 3.4 Impact of reward system on job satisfaction and employee performance
THEME 1 ROLE OF HRM AND HR WITHIN THE ORGANISATION
Interviews reveal that perceptions of HRM's role are similar across state-owned enterprises (SOEs), employee-owned enterprises (ESOEs), and privately-owned enterprises (POEs) Managers from all three ownership types generally agree that effective people management is crucial for organizational success However, they often lack specific discussions regarding the strategic importance of HRM and fail to recognize employees as a key resource, as suggested by the Resource-Based View (RBV) framework.
(2007, p 503) indicate that employees are identified as the most critical assets of enterprises,
Human resources are essential strategic assets that provide a competitive advantage due to their unique skills and capabilities (Marchington, 2015; Mueller, 1996) This strategic significance aligns with the Resource-Based View (RBV), highlighting how effective human resource management (HRM) can lead to superior performance and competitive differentiation (Saridakis, Lai & Cooper, 2016) Additionally, HRM practices are deeply ingrained within an organization, making them difficult for competitors to replicate, as they evolve over time and are influenced by the enterprise's unique history and ownership structure (Becker & Gerhart, 1996).
The HRM managers and CEOs of domestic enterprises often prioritize traditional personnel management functions, viewing employees as costs rather than as competitive advantages or essential revenue sources, as noted in strategic HRM literature (Brown et al., 2015; Saridakis et al., 2016) A manager from a state-owned enterprise highlighted that the HR function's benefits for employees are constrained by stringent state regulations However, effective human resource management can provide significant advantages to domestic enterprises, as illustrated by an ESOE manager who emphasized the importance of personnel management that prioritizes employee welfare.
Implementing a strategic orientation will not only enable the company to effectively manage its current tasks but also equip it for more complex projects and larger contracts from clients nationwide in the future This approach aligns with the principles of ESOEs and can also be supported by the Resource-Based View (RBV) framework.
In domestic enterprises in Vietnam, employee relations are primarily managed by an Administration and Personnel Department, which focuses on processing salaries, insurance, and pensions, with little emphasis on long-term human resource strategies This aligns with previous research indicating that HR managers in Vietnam prioritize day-to-day workforce control over strategic HR management (Quang, 2006) Consequently, the potential capabilities of staff are often overlooked, as many HR managers are not specialists and juggle multiple responsibilities, limiting their ability to develop strategic initiatives Some managers have suggested separating HR functions from administrative duties to enhance specialization (P4), a recommendation echoed by studies showing that Western companies often outsource administrative HR functions to concentrate on strategic areas (Galanaki & Papalexandris, 2007; Klaas, 2008) Quinn (1999) further supports this notion, highlighting the low strategic risks associated with HR administrative tasks, making them suitable for outsourcing.
Although the actual interviews did not refer to outsourcing of HR functions, the use of
HR outsourcing among MNEs from the West could help them to “better focus on their core competencies that other enterprises have difficulty in copying” (Edvardsson & Teitsdóttir,
Outsourcing in human resources aligns with the Resource-Based View (RBV) by allowing HR specialists to focus on strategic initiatives rather than administrative tasks, thereby fostering competitive advantages This perspective is supported by Barney et al (2001), who emphasize that strategy-related outsourcing is linked to an enterprise's resources and capabilities, enabling organizations to achieve superior returns and sustainable competitive advantages that are difficult for competitors to replicate.
Multinational Enterprises (MNEs) often recognize the critical role of Human Resource Management (HRM) in aligning with business strategy, leading them to create dedicated HRM departments staffed with qualified specialists A manager from a Japanese MNE emphasized this by stating, “HRM plays a strategic role; management highly values HR.”
Our company views Human Resource Management (HRM) as a strategic asset, significantly enhancing our multinational enterprise (MNE) ownership structure compared to state-owned enterprises (SOEs) This advantageous position allows our HRM practices to be more advanced, ultimately contributing to the added value and competitive advantages that MNEs can leverage in the market.
US and German multinational enterprises (MNEs) either directly implemented HRM practices from their home countries or adapted them to fit local conditions, highlighting the strategic importance of HRM Interviews revealed that MNEs were more likely than domestic firms to recognize HRM's strategic role, often establishing dedicated HR departments that specialized in managing human resources In terms of Resource-Based View (RBV), domestic enterprises tended to undervalue their employees as a strategic asset, resulting in fewer internal structures to manage this resource effectively at a strategic level, aligning with previous research findings.
According to the Resource-Based View (RBV), employees with valuable, rare, and hard-to-replicate skills significantly enhance a firm's value As a result, many companies seek to gain a competitive edge by attracting and recruiting top talent from other organizations.
To effectively combat the threat of poaching, it is crucial for both HR managers and top executives to prioritize the retention of valuable human resources The way organizations address the risks associated with poaching reflects their recognition of employees as essential assets.
Interviews revealed that enterprises across various ownership types are facing employee poaching challenges, with some valuable staff at risk of being lured away by competitors State-owned enterprises (SOEs) utilize binding contracts with higher pay and minimum resignation periods to retain talent In contrast, private-owned enterprises (POEs) are hesitant to invest heavily in training due to concerns about losing skilled workers, although one POE has started investing in training to prepare replacements for departing employees Japanese multinational enterprises (MNEs) focus on enhancing their reputation and work environment to attract and retain staff, while a German MNE and an employee-owned enterprise (ESOE) prioritize understanding employee motivations for leaving and comparing benefits with competitors The US MNE takes a proactive approach by fostering a positive work environment and offering attractive rewards to encourage long-term employee commitment Additionally, the Japanese MNE emphasizes a collegial atmosphere and a responsive assessment-reward system to ensure that senior employees feel valued and are less likely to leave.
Valuable employees are essential for maintaining a firm's competitive advantage, as highlighted by Lado & Wilson (1994) and Pfeffer (1994) Companies that prioritize employee value tend to implement systematic strategies to enhance productivity and job satisfaction, reducing turnover rates Interview findings suggest that this approach is more prevalent among US multinational enterprises (M4) and, to a lesser extent, German multinational enterprises (M3) and an emerging state-owned enterprise (E3), compared to some state-owned enterprises (S3).
THEME 2: HRM PRACTICES ACROSS ENTERPRISE OWNERSHIP TYPES
This section explores how ownership type impacts the adoption of key HRM practices such as recruitment and selection (R&S), training and development (T&D), performance management (PM), and reward systems (RS) The Resource-Based View (RBV) suggests that enhancing resource capabilities increases their value to the firm, potentially leading to a competitive advantage (Armstrong, 2014) Therefore, investing in human resources that are valuable, rare, inimitable, and non-substitutable (Barney, 1992) can significantly benefit firms, positioning employees as a critical source of competitive advantage.
The primary goal of recruitment and selection (R&S) is to attract candidates who fulfill the enterprise's requirements To effectively reach qualified candidates and expand the talent pool, companies must implement strategic personnel marketing, enhance their reputation, and adopt efficient recruitment and selection methods The Resource-Based View (RBV) suggests that effective personnel marketing adds value, a strong reputation fosters uniqueness, and internal recruitment safeguards against imitation.
Research indicates that enterprises can enhance their value and uniqueness by improving their recruitment and selection (R&S) strategies to target highly qualified candidates, which subsequently boosts their reputation Interviews revealed notable differences in R&S approaches between domestic enterprises and multinational enterprises (MNEs) Domestic firms often rely on traditional methods, such as personal networks and university selections, whereas MNEs tend to adopt innovative, internationally recognized HRM practices supported by technology.
State-Owned Enterprises (SOEs) continue to rely predominantly on traditional recruitment sources, such as universities and personal networks An interviewee highlighted that SOEs often communicate job vacancies to educational institutions, requesting them to identify and recommend top candidates from their talented new graduates This approach allows SOEs to consistently attract some of the most skilled individuals in a labor market that may be facing a shortage of highly qualified graduates.
The recruitment strategies of State-Owned Enterprises (SOEs) often lack alignment with their actual needs, leading to an imbalance in workforce distribution This misalignment results in an oversupply of employees with similar skill sets in certain departments, while other critical areas face significant staffing shortages.
As an ESOE, we prioritize recruitment based solely on our current needs, a shift from our previous practice as an SOE In the past, we actively sought exceptional candidates by reaching out to universities and educational institutions, which would recommend their top graduates to us However, our current approach focuses exclusively on hiring when necessary, eliminating the proactive recruitment efforts we once employed.
A mismatch between employees' skills and job roles can hinder an organization's ability to fully leverage their capabilities, leading to decreased effectiveness and potential frustration for some employees Meanwhile, others may face overwork and stress, ultimately making it challenging for the firm to retain its workforce.
State-Owned Enterprises (SOEs) often prioritize recruitment based on existing relationships, as evidenced by interview responses highlighting the belief that skills are often inherited, such as when an employee benefits from their father's expertise However, this approach has its drawbacks, with concerns raised about potential nepotism leading to issues like laziness or entitlement among employees who may exploit their familial connections.
Recent insights indicate that nepotism exists within state-owned enterprises (SOEs), prompting managers to enhance recruitment strategies To address this issue, one manager proposed diversifying recruitment sources and incorporating interviews and language assessments to filter out underperforming candidates Additionally, to ensure a merit-based selection process, it was suggested that technical panel members should not have prior access to candidate lists, thereby reducing relationship-based hiring and enabling SOEs to attract highly skilled and capable employees.
Compared with SOEs, ESOEs appeared to approach a wider variety of sources of recruits and tended to coordinate their recruitment better with their actual HR requirements.
ESOEs primarily relied on local newspapers, company notice boards, and friend recommendations for job advertisements, recruiting only when a vacancy arose This needs-based recruitment strategy allows existing employees to enhance their skills by applying for positions aligned with their interests Unlike SOEs, ESOEs experienced a lesser degree of skills-job mismatch.
ESOEs face challenges in recruiting top graduates due to timing discrepancies between graduation and the company's hiring needs, as well as competition from SOEs for these candidates As one ESOE representative noted, advanced arrangements for securing talented graduates are difficult when there is no immediate work available, leading to potential loss of candidates to other institutions This indicates that the demand forecasting function within HRM at ESOEs is underdeveloped, as effective employment demand forecasts are essential for anticipating labor market trends and future recruitment needs.
In addition to traditional recruitment methods, private-owned enterprises (POEs) have embraced innovative sources such as online social networks and company websites to attract young talent By advertising vacancies on reputable platforms like VietnamWork and Kiemviec.com, POEs effectively engage with prospective recruits seeking job opportunities This approach mirrors the strategies employed by state-owned enterprises (SOEs) and equitized state-owned enterprises (ESOEs) in their recruitment efforts.
In certain privately owned enterprises (POEs), recruitment often occurs on an as-needed basis, particularly for essential roles Notably, key positions like accountants and cashiers are frequently filled by family members of the owners or principal shareholders, as there is a prevalent distrust of outsiders in these critical roles This reliance on family members is justified by the belief that if the individuals in these positions perform well, it mitigates potential issues.
Interviews indicated that there are no major differences in recruitment sources between large publicly owned enterprises (POEs) and multinational enterprises (MNEs) However, notable distinctions emerge in their selection procedures and tools.
State-owned enterprises (SOEs) utilize a comprehensive selection process that goes beyond interviews, incorporating standard procedures such as reviewing resumes, verifying educational backgrounds, and assessing candidates' skills and personal attributes through references from previous employers or educational institutions (Armstrong & Taylor, 2014) As one source highlights, "we consider the CV and certificates which are required to be part of their application, then we have to verify and confirm the applicant’s ability; we also liaise with the place where he or she was trained to see if the information is true" (S3).
THEME 3: INFLUENCES OF HRM PRACTICES ON EMPLOYEE OUTCOMES
This article explores the connection between Human Resource Management (HRM) practices and employee outcomes, specifically focusing on job satisfaction and performance Key HRM areas—Recruitment and Selection (R&S), Training and Development (T&D), Performance Management (PM), and Reward Systems (RS)—are identified as having significant impacts on these outcomes Research by Guest, Conway, and Dewe highlights that integrated 'bundles' of HRM practices are more effective than isolated implementations Consequently, this study emphasizes the importance of these four HRM areas in relation to enhancing employee job satisfaction and performance.
4.4.1 Theme 3.1 Impact of recruitment and selection on job satisfaction and employee performance
Differing opinions exist between domestic companies and multinational enterprises (MNEs) regarding the impact of recruitment and selection (R&S) practices on employee job satisfaction and performance Many managers, particularly from state-owned enterprises (SOEs), believe that R&S practices do not significantly affect employee outcomes For instance, one manager noted that employee satisfaction is primarily influenced by the benefits provided by the company rather than R&S practices This perspective among domestic enterprises suggests that R&S is often undervalued and not seen as a unique or essential factor in enhancing employee satisfaction.
A manager from an ESOE (E3) emphasized that the influence of recruitment and selection (R&S) practices on employee job satisfaction and performance is minimal compared to the effects of low salaries offered by the company and its competitors Similarly, a POE (P1) manager acknowledged the employees' creativity and contributions but expressed skepticism about the significant impact of R&S on overall job satisfaction or performance.
R&S processes can significantly affect employee satisfaction, as current employees are likely to feel more content if they secure and retain the positions they applied for Additionally, competition with newly hired staff may drive current employees to enhance their performance to avoid being replaced While there is a belief that current employees' performance can be improved, a reliable measure of their job satisfaction remains elusive Clear and faithfully implemented job descriptions and requirements during recruitment are crucial for fostering job satisfaction, as they contribute to a better person-job fit This highlights the importance of recruiting capable employees, suggesting that a Resource-Based View (RBV) approach is particularly relevant for multinational enterprises (MNEs) during the recruitment and selection phase.
The analysis suggests that new recruits at State-Owned Enterprises (SOEs), who joined during annual recruitment drives, are likely to experience job dissatisfaction due to a mismatch between their skills and assigned roles Additionally, the reliance on relationships for employee selection rather than prioritizing skills and abilities may lead to suboptimal performance for both employees and the organization Consequently, the recruitment and selection processes at SOEs do not emphasize the importance of unique and valuable skills.
4.4.2 Theme 3.2 Impact of training and development on job satisfaction and employee performance
In the context of Resource-Based View (RBV), a firm's human resources can serve as a competitive advantage (Wernerfelt, 1984) Training and Development (T&D) is viewed as a crucial investment that enhances employees' knowledge, skills, and capabilities (Jodlbauer et al., 2012), ultimately improving performance and boosting the firm's competitiveness Managers interviewed emphasized the significant impact of T&D practices on employee outcomes, noting that training is essential not only for onboarding new hires but also for supporting the career development of existing staff.
An SOE manager emphasized the importance of on-the-job training for new employees to ensure satisfactory performance, while also highlighting that existing staff require such training to enhance their skills and pursue promotions This training specifically targets areas of weakness, leading to improved performance and increased self-confidence among employees, ultimately contributing to greater job satisfaction.
An ESOE (E1) manager noted that training significantly enhances employees' skills and knowledge, resulting in improved performance and job satisfaction Similarly, a POE manager emphasized that even if salary increases do not accompany performance improvements from training, employees still experience a sense of fulfillment from their work As one manager stated, “Employees often find that although the salary may be lower than at other companies, the knowledge and experiences they gain through training here are a considerable advantage.”
The US MNE manager emphasized that continuous work without regular refresher and further training can lead to employee exhaustion and skill obsolescence Providing suitable training not only enhances employees' skills and performance but also boosts their motivation and job satisfaction.
Training is a vital strategy for employee retention, as it enhances performance and job satisfaction By investing in employee development, businesses not only see improved productivity but also foster a sense of fulfillment among employees, who gain valuable skills over time.
A German multinational enterprise manager recognized that employees who receive thorough training and skill development tend to perform better, leading to increased productivity, higher income, and enhanced job satisfaction Consequently, training and development (T&D) have a significant indirect impact on employees' job satisfaction and overall work performance.
In the past, individuals often invested 5-7 times more effort in securing a sale but frequently ended up without a contract However, after undergoing training in foundational skills, such as effectively addressing customer inquiries, they can now negotiate more efficiently and close sales successfully, resulting in increased commissions Consequently, this training enhances their job satisfaction and overall work performance, highlighting the significant impact of training and development on employee outcomes.
Research consistently shows that employee performance improves with training Akinyele (2007) highlights that training enhances knowledge and skills, while Ghafoor (2015) emphasizes that it enables employees to develop essential competencies for job efficiency Bartel (1994) adds that investing in training not only enhances performance but also elevates employee morale and job satisfaction Further studies by Rowden and Conine (2005) and Tsai et al (2007) support these findings.
The consensus on the advantages of training and development (T&D) suggests that large privately owned enterprises (POEs) can compete with multinational enterprises (MNEs) in this area Companies that implement consistent and systematic training initiatives for their employees are likely to experience enhanced productivity and employee satisfaction.
4.4.3 Theme 3.3 Impact of performance management on job satisfaction and employee performance
Interviewees acknowledged the significant impact of performance management (PM) practices on employee performance and job satisfaction A manager from a state-owned enterprise (SOE) noted that employees who completed substantial workloads and received incentive rewards from the company were more motivated to enhance their performance.
SUMMARY OF MAIN FINDINGS AND FURTHER DISCUSSION
This chapter presents insights from interviews with managers of eighteen enterprises in Vietnam, revealing that multinational enterprises (MNEs) are more inclined than domestic firms to recognize the strategic importance of Human Resource Management (HRM) within their organizations.
In the Resource-Based View (RBV) approach, domestic enterprises often overlook the strategic importance of viewing employees as valuable resources The way companies address the risks associated with employee poaching reflects their recognition of this value All four ownership types experienced instances of valuable employees being poached, prompting them to actively implement Human Resource Management (HRM) practices aimed at enhancing employee productivity and job satisfaction, ultimately reducing the likelihood of turnover.
In theme 2, the researcher explored the variations in human resource management (HRM) strategies and practices among enterprises with different ownership structures The study focused on four key HRM areas: recruitment and selection (R&S), training and development (T&D), performance management (PM), and remuneration systems (RS).
Domestic enterprises typically employed simpler recruitment and selection practices, whereas multinational enterprises (MNEs) integrated foreign human resource management strategies with local methods to attract skilled employees Notably, Japanese MNEs emphasized seniority in their hiring processes, while U.S MNEs focused on forecasting future performance.
Multinational enterprises (MNEs) demonstrate a greater willingness and capacity to invest in diverse training and development (T&D) methods, including online training and ongoing retraining, compared to domestic enterprises This disparity is largely attributed to the financial limitations experienced by domestic firms Additionally, large private-owned enterprises (POEs) are positioned to be more competitive than MNEs in the realm of T&D.
Domestic enterprises have made significant strides in updating their performance management (PM) approaches, yet state-owned enterprises (SOEs) continue to rely heavily on traditional graphic rating scales for performance appraisal In contrast, private-owned enterprises (POEs) adopt more advanced performance assessment practices, while emerging state-owned enterprises (ESOEs) fall somewhere in between Multinational enterprises (MNEs) utilize more modern and globally recognized tools such as Balanced Scorecards (BSC), Key Performance Indicators (KPI), and Management by Objectives (MBO) Additionally, large POEs are increasingly competitive with MNEs, thanks to their implementation of contemporary PM tools like KPI.
In comparing reward systems, Private-Owned Enterprises (POEs) and Multinational Enterprises (MNEs) demonstrate greater flexibility in offering rewards that surpass minimum standards In contrast, State-Owned Enterprises (SOEs) typically provide lower financial incentives, but they ensure their employees enjoy enhanced job security.
In exploring the effects of HRM practices on employee performance and job satisfaction, the research revealed a consensus among managers that effective training and development (T&D), performance management (PM), and reward systems significantly enhance employee outcomes While most managers found little connection between recruitment and selection (R&S) practices and employee satisfaction, it is suggested that the prevalent relationship-based recruitment in domestic firms may hinder productivity Additionally, the simultaneous recruitment of large groups of graduates by many state-owned enterprises (SOEs) often leads to job-skill mismatches, negatively impacting employee performance and satisfaction.
Recent findings suggest that multinational enterprises (MNEs) in Vietnam may implement more effective human resource management (HRM) practices compared to domestic firms, potentially leading to improved employee outcomes Among domestic enterprises, private-owned enterprises (POEs) and, to a lesser extent, enhanced state-owned enterprises (ESOEs) may exhibit HRM practices and employee outcomes that are more aligned with those of MNEs than traditional state-owned enterprises (SOEs) ESOEs represent an advancement over SOEs, addressing inefficiencies such as resource shortages and slow adaptation to market mechanisms This research builds on the work of Thang and Quang (2005a) by emphasizing the significance of ownership types and exploring how HRM practices influence employee outcomes, an area that was less emphasized in their study, which primarily focused on the link between HRM practices and overall enterprise performance.
This research contributes to the limited literature on the adaptation of the Resource-Based View (RBV) in Human Resource Management (HRM) practices across various ownership types, specifically focusing on domestic enterprises and multinational enterprises (MNEs) from the US, Japan, and Germany Additionally, it addresses the scarcity of studies on the application of RBV in performance management (PM) and reward systems, providing a detailed explanation of its implementation in these areas Table 4.2 illustrates the alignment of RBV with HRM practices across different ownership types.
This qualitative analysis, based on a limited sample size, presents several key limitations, including uncertainty about the applicability of observed features, such as relationship-based recruitment in state-owned enterprises (SOEs), to a broader population Additionally, any noted differences between SOEs and multinational enterprises (MNEs) may lack statistical significance in a larger context It is also essential to evaluate employee job satisfaction through direct feedback from employees rather than solely relying on managerial insights Consequently, the researcher conducted a study focusing on employee perspectives, with findings detailed in the following chapter.
Table 4.2 Summary of HRM practices and RBV attributes by different ownership types
Criteria for the RBV Roles of
(MNEs, POEs and to a lesser extent ESOEs)
(MNEs, POEs and to a lesser extent ESOEs)
(MNEs, POEs and to a lesser extent ESOEs)
Rarity/uniqueness: firm-specificity, immobility
(MNEs, large POEs-those not dominated by families)
(MNEs, POEs and to a lesser extent ESOEs)
(job security at SOEs, permanent accommodation at ESOEs)
(MNEs, large POEs and to a lesser extent ESOEs) Inimitability:
(MNEs, large POEs-those not dominated by families)
(MNEs, POEs and to a lesser extent
(job security at SOEs, permanent accommodation at ESOEs)
(Sources: Partially adapted from Holtbrügge et al (2010), partially developed from the findings)
FINDINGS OF EMPLOYEE PERSPECTIVES
THEME 1 EMPLOYEE PERCEPTION OF HR FUNCTION
Employees from both domestic enterprises and multinational enterprises (MNEs) unanimously agree that human resources are crucial for a company's success and provide a competitive edge However, there appears to be a lack of clarity regarding the specific functions of HR Different enterprises prioritize human resources differently; for instance, employees noted that state-owned enterprises (SOEs) view employee knowledge and skills as the most critical factor for success, while other factors are considered secondary.
Human resources are the primary factor influencing success, surpassing the importance of land, location, equipment, and technology When human resources are strong, state-owned enterprises (SOEs) tend to develop effective management systems, leading to enhanced leadership and management skills.
Employees from ESOEs emphasized the crucial role of HR in enhancing organizational performance, highlighting that these enterprises prioritize employee capabilities more than SOEs For instance, one employee noted that effective HR management is essential for business growth, as it aids in developing personal skills through clear assessment criteria Another employee stressed that a strong HRM function is vital for sustainable company development, advocating for clarity in HR practices and proper employee placement Additionally, an employee pointed out that human resources are paramount, as skilled personnel drive profitability through efficient use of technology and resources This sentiment was echoed by others, who affirmed that prioritizing human resources leads to better management of all enterprise resources.
Employees at US multinational enterprises (MNEs) emphasize that human resources are the most crucial factor, particularly since their core business revolves around service They consider skilled personnel to be more important than physical assets like land Similarly, a Japan MNE employee highlighted the necessity of capable staff for meeting project standards, underscoring the vital role of human resources in their service-oriented projects.
All employees, whether from domestic enterprises or multinational enterprises (MNEs), recognize that human resources are the most critical factor for success, followed by equipment and land Competitiveness in the service industry hinges on having capable employees, aligning with Mayor's (2001) assertion that capable personnel represent a significant asset with the greatest potential for strategic contributions.
Human assets, such as knowledge, skills, and abilities, are crucial for gaining a competitive advantage, as emphasized by Wright et al (2001) and earlier by Dierickx (1994) The value of human resources lies in the fact that skilled employees are often scarce in the labor market, making capable personnel a significant asset for organizations.
& Cool, 1989; Lado & Wilson, 1994) and cannot be replaced by other sources without considerable replacement costs (Barney, 1991).
THEME 2 RECRUITING AND SELECTING STAFF
This theme captures employee perspectives regarding the recruitment and selection (R&S) of staff within their organisations As shown in Table 5.1 there are four subthemes related to R&S.
Employee perspectives highlight key factors that attract individuals to an organization, including perceived job stability, a strong company reputation, a positive business culture, and a supportive work environment Additionally, opportunities for training, competitive salary and rewards, and the volume of applicants for a position also play significant roles The importance of these characteristics varies based on the type of ownership of the organization.
Interview participants across various ownership types emphasized that job competition significantly influences the initial appeal of a position For State-Owned Enterprises (SOEs), job stability ranked as the second most important factor, followed closely by training opportunities Notably, half of SOE employees felt that their chances for further education, both domestically and internationally, would improve if they worked in SOEs, largely due to the availability of State funding for training (Lam, 2011; Tran, Fallon & Vickers, 2016) In contrast, employees in Employee-Owned Enterprises (ESOEs) prioritized the work environment, company reputation, and stability They perceived ESOEs as evolving beyond the operational inefficiencies often associated with SOEs (Berthold, 2006), fostering a more collaborative and developmental atmosphere that enhances employee performance and contributes to the organization's success.
If I make a mistake in doing something, my supervisor will just remind me not to make the same mistake again My colleagues at this ESOE always help me and show me how to do the task better (E3b).
A cooperative work culture can serve as a competitive advantage for enterprises, particularly when it is valuable, rare, and difficult to replicate, as noted by Barney (1986) and Mueller (1996) In the context of ESOEs, this cooperative environment contributes to their competitive edge, supported by employee feedback highlighting the company's strong reputation built over years of experience in the Vietnamese market According to Barney (1986) and Lado and Wilson (1994), a firm's organizational culture and reputation are unique and not easily transferable, making a favorable reputation an invaluable intangible asset that enhances competitive advantage (Deephouse, 2000; Massey, 2016).
This company has a good reputation that attracts many customers, leading to great learning opportunities from practice for employees I can improve my knowledge based on practising (E2a.)
Employees at both POEs and MNEs are primarily drawn to the organizations due to their supportive and friendly work environments Specifically, nine out of 14 employees at POEs and eight out of 11 staff at MNEs highlighted the importance of a positive workplace culture and the availability of career and learning opportunities as key factors influencing their decision to join these large organizations.
Employees are attracted to the US MNE due to the friendly working environment,
PM (not time management), and the global professional training system (M4b).
The multinational business culture of POEs, characterized by employee participation in decision-making and a flexible approach that prioritizes subordinate motivation, serves as a significant attraction for employees (Quang & Vuong, 2002).
I decided to work for this POE due to the friendly business culture with a lot of chances for promotion (P3a.)
One of the key factors that influenced my decision to join the US multinational enterprise was its inclusive business culture, characterized by minimal power distance between managers and employees.
In contrast to private enterprises, state-owned enterprises (SOEs) operate under a managerial directive that emphasizes task completion, resulting in limited autonomy for employees in their decision-making processes (Quang & Vuong, 2002) Notably, only one interviewee (S3b) expressed that the business culture within SOEs attracts potential candidates.
According to Barney (1986, 1991), Wernerfelt (1984), and Chan, Shaffer and Snape
Business culture serves as a unique asset for enterprises, providing a competitive edge that is difficult for rivals to replicate (Barney, 1986, 1991; Lee & Kramer, 2016; Wernerfelt, 1984) This differentiation allows large privately owned enterprises (POEs) and U.S multinational enterprises (MNEs) to attract highly skilled applicants Conversely, a Japanese MNE employee emphasized that his motivation stemmed not from the company's allure but from his desire to share his valuable knowledge and experience.
I have no personal attraction to the Japanese multinational enterprise (MNE); however, I applied to join the organization to leverage my experience, enhance its value, and help attract more customers.
Enterprises are actively seeking to attract high-potential and skilled employees, while the ambitions and preferences of these employees significantly impact their choice of employer.
Employees are drawn to State-Owned Enterprises (SOEs) primarily due to their stability and training opportunities, while the work environment, stability, and reputation of Employee-Owned Enterprises (ESOEs) also attract talent For Multinational Enterprises (MNEs) and Private-Owned Enterprises (POEs), factors such as a positive work environment, strong business culture, and solid company reputation play a crucial role in attracting employees According to the Resource-Based View (RBV), training opportunities are unique attributes that provide competitive advantages by enhancing employee skills and knowledge SOEs benefit from state protection, allowing them to prioritize job security and training over profit maximization, in contrast to POEs and MNEs, which offer a supportive work environment and a culture that encourages employee participation.
Interviews revealed that the primary recruitment sources for domestic enterprises, including state-owned (SOEs), employee-owned (ESOEs), and private-owned enterprises (POEs), were employee referrals and recommendations, followed by traditional print media Specifically, eight out of fifteen SOE employees reported obtaining recruitment information from friends or relatives, while five mentioned discovering job postings in newspapers Additionally, one employee found a recruitment advertisement on a company website after being informed about vacancies by friends employed at the SOE.
I learnt of the recruitment information from a friend of mine who has been working for this SOE (S4d).
Employees at ESOEs and a significant majority of those at POEs indicated that they secured their positions primarily through referrals from friends or family Additionally, two individuals noted discovering job advertisements on ESOE notice boards after being informed of the openings by their acquaintances Both SOEs, ESOEs, and POEs regarded referrals and personal connections as highly effective recruitment methods, demonstrating a preference for candidates recommended by current employees.
Recruitment in State-Owned Enterprises (SOEs) heavily relies on personal relationships, with trust playing a crucial role in employee selection For instance, a father's recommendation can significantly influence the hiring process, as SOEs often prioritize the credibility of such endorsements.
THEME 3 TRAINING AND DEVELOPMENT
Theme 3 captures employee perspectives on training and development (T&D), differences in perceptions due to enterprise ownership type, and the influence of T&D initiatives on employee outcomes.
5.3.1 Subtheme 3a.Training and development approaches
Interviewees from various ownership types emphasized that enterprises choose training methods tailored to their business needs to gain a competitive edge Employee feedback revealed that on-the-job training and off-the-job training, including instructor-led classrooms, are the most favored approaches among both domestic enterprises and multinational enterprises (MNEs) Notably, both privately owned enterprises (POEs) and MNEs have begun integrating modern technology, such as online training, alongside traditional training methods.
Many employees across various ownership types emphasized the importance of on-the-job training, particularly for new hires on their first-year contracts In contrast, off-the-job training was more frequently utilized for existing employees.
Japanese multinational enterprises (MNEs) emphasize a training approach that combines mentoring and on-the-job training During their trial period, new employees engage in one or two projects to gain practical experience Following this initial phase, they officially begin their roles and participate in soft skills training courses, which focus more on interpersonal relationships than on technical skills.
Some interviewees (S4c & S4f) noted that on-the-job training has not been prioritized as much as off-the-job training in State-Owned Enterprises (SOEs) While training courses, both domestically and internationally, are available to enhance professional knowledge for SOE employees (S4a, S4b, S4d, and S4f), the decision to grant these training opportunities is influenced by past employee performance and the specific training needs of the SOEs (S4a, S4b, and S4f).
ESOEs and POEs prioritize employee training, investing in both new hires and current staff development Employees engage in off-the-job training through seminars and professional courses, complemented by biannual group work-related training organized in collaboration with a Hanoi training center Foreign experts are invited to enhance the training experience, although sessions are scheduled based on specific needs Additionally, POE employees have the opportunity to attend short training courses abroad To foster loyalty and skill enhancement, dedicated employees are partially sponsored to pursue higher education at universities As a result, ESOE employees enjoy numerous opportunities for skill development through various training programs.
US multinational enterprises (MNEs) utilize a dual approach to employee training, combining both off-the-job and on-the-job methods New employees begin with off-the-job training, followed by on-the-job training led by internal experts, covering essential skills such as policies, contract-making, and interview techniques, typically completed within two to three months Current employees also engage in monthly off-the-job training sessions to enhance their professional skills, including customer service and contract processing, often featuring international experts Additionally, Japanese MNEs implement on-the-job training using Japanese trainers, with local subsidiaries in Vietnam relying on Japanese experts for project initiation and collaboration.
Online training: Large POEs (P3a, P5b, P5d, P6a, P6b, P6d) and the US MNE (M4b, M4c) offered self-study using an online system to enhance the capabilities of employees:
Online training offers a valuable opportunity for self-learning, allowing individuals, such as customer service officers, to enhance their knowledge about new products or transition into different fields like trading This flexibility enables professionals to acquire new skills and stay competitive in their careers through accessible online resources.
The US multinational enterprise employs a unique online training system that sets it apart from similar companies This innovative approach enables employees to effectively balance their work and training schedules while providing the flexibility to learn at their own pace.
Online training methods are not utilized by the SOEs and ESOEs in the sample, as some employees believe they do not align with Vietnamese learning habits and cultural thinking This sentiment persists even among younger employees, leading to the conclusion that online training is not an effective training method Additionally, Vo and Hanif (2012) highlight that the lack of instructor interaction in online training may hinder employees' ability to effectively utilize the company’s global resources.
Training and development practices vary significantly across different ownership types, particularly between state-owned enterprises (SOEs) and employee-owned enterprises (ESOEs) Most employees at SOEs are permanent staff who lack experience in other sectors, limiting their perspective on training methods A few individuals, such as S3e, noted that EOE training practices are superior to those in SOEs, resulting in enhanced workplace effectiveness and a stronger motivation to learn among ESOE employees This heightened awareness of the link between education and performance contrasts sharply with SOE employees' previous mindset, where job security diminished the perceived importance of improving skills and performance.
Comparing training methods across state-owned enterprises (SOEs) and private-owned enterprises (POEs) is challenging due to varying business development goals Employees noted that both SOEs and POEs utilize on-the-job and off-the-job training; however, SOEs have established partnerships with local universities and international institutions for employee training abroad In contrast, the small POEs surveyed have not yet sent employees overseas for training, as they believe that training is primarily the responsibility of the individual (Thang & Bryant, 2004).
An employee from a small POE highlighted that on-the-job training was the sole training program available due to the organization's limited size Another employee provided additional insights into the training programs offered by POEs, emphasizing their unique characteristics and challenges.
POEs conduct frequent training and development (T&D) programs, where my skills are evaluated through examinations The results of these tests highlight my knowledge gaps, providing valuable insights that inform my preparation for future training sessions.
Employees noted that multinational enterprises (MNEs) offered more systematic training programs compared to domestic enterprises, with clearer training plans and a focused strategy that demonstrated a higher level of professionalism Additionally, based on employee experiences, training at US MNEs was perceived as superior to that of Japanese MNEs, primarily due to its flexibility and emphasis on practical training programs.
Traditional training methods, including on-the-job and off-the-job training, remain the most favored approaches for both domestic enterprises and multinational enterprises (MNEs) However, larger public-owned enterprises (POEs) and MNEs are increasingly incorporating online training, which serves as a supplementary method to enhance their existing training strategies.
5.3.2 Subtheme 3b Relationship between training and promotion
THEME 4 MANAGING PERFORMANCE
Theme 4 captures employee perspectives on how performance is managed within their organisation As discussed next, some of the salient issues that were raised concern the frequency and types of performance feedback, the perceived fairness of PM, and the focus on factors on the employer–employee relationship, and the relationship between PM practices and actual employee performance are also discussed.
5.4.1 Subtheme 4a Frequency and type of feedback across ownership types
Graphic rating scales are the most commonly utilized appraisal technique in organizations, as highlighted by Debnath, Lee, and Tandon (2015) These scales assess individual performance across specific criteria, as noted by Aggarwal and Thakur (2013) and Stone (2013) This method is particularly prevalent among domestic enterprises, especially state-owned enterprises (SOEs) and employee-owned enterprises (ESOEs), for evaluating employee performance.
The performance ratings range from A to D, with A indicating very high performance and D representing the lowest Individuals who failed to complete the required tasks were not assigned a rating (E3d) The evaluation criteria included the time taken and the volume of work completed by a group, focusing on annual productivity (E2b, E3d), as well as the outcomes of each unit and customer feedback regarding service quality (E2d, E3c).
Staff performance was assessed by their‘supervisors’(E3a, E3b), their‘peers and customers’
Employee performance is assessed by customers and superiors Every week superiors organise a meeting to assess employee performance throughout the week (E3c).
Performance evaluations at ESOEs were conducted monthly using a graphic rating scale (ABCD) and compiled annually at year-end (E2a) These evaluation results were subsequently forwarded to a board of assessment appointed by the ESOE director for additional review.
Individual performance will be evaluated monthly using a graphic rating scale (ABCD) At the end of the year, departmental performance is determined by the individual assessments; a department with numerous high-performing individuals is regarded as successful Given that this ESOE operates in the service industry, there are no standardized criteria for evaluating every department or unit.
A service industry company typically does not maintain a uniform customer service standard across its organization, as each service provided necessitates distinct criteria to define its quality standards.
In the sample, while some ESOEs (E2 & E3) employed a graphic rating scale with an ABCD categorization, another ESOE (S3), which transitioned from being an SOE in 2015, implemented a unique 100-point performance assessment system tailored to employee performance Employee S3a noted that "currently there are only two enterprises from the water supply industry using this method," indicating that this approach is not widely adopted among similar companies in Vietnam.
Over the past three years, a performance assessment marking system has been established as part of the transition to an ESOE This 100-point system evaluates completed tasks based on quality, quantity, time management, and collaboration with colleagues The assessment results will be represented on a graphic rating scale (ABC), where an 'A' indicates a score of 90 or above.
100 points, B is 79-89 points, C is less than 79 points (S3a).
The performance appraisal system significantly impacts employee salaries and bonuses, with those ranked A receiving higher compensation compared to those ranked C or D Feedback on performance is gathered from both peers and superiors, while managers are evaluated by their subordinates Employees are encouraged to provide input regarding any unsatisfactory assessments, fostering a culture of open communication and continuous improvement.
In a recent performance evaluation, ten employees received scores ranging from 80 to 90 points, while one individual, confident in his performance, was rated between 70 and 80 points This discrepancy allows him or his colleagues to provide feedback regarding the unsatisfactory score to their supervisor, who will then reassess the evaluation criteria.
The ESOE employs a distinctive performance assessment method that includes a 100-point system, along with the deduction of points for underperformance Employees earn 10 points for timely and quality task completion, but lose 1 point for failing to meet these standards This approach appears to be rare, with only two other companies in the same service sector utilizing a similar performance appraisal system Rather than emphasizing recognition for good performance, this method seems to prioritize the prevention of poor performance.
The recently transformed ESOE has demonstrated a significant improvement in employee performance assessment compared to older ESOEs This enhancement may stem from the effective learning and adaptation of best practices in performance management (PM) from its predecessors, along with the development of a unique PM approach tailored to its specific needs Such uniqueness and rarity in PM practices are integral to the Resource-Based View (RBV) framework, as highlighted by Barney (1991) and Boselie & Paauwe (2010).
SOE employees highlighted the significance of self-assessment in their evaluation process, which is subsequently reviewed in meetings with supervisors and peers This method stands out against the backdrop of traditional practices that typically rely solely on manager assessments As one employee noted, this approach fosters a more collaborative and reflective evaluation environment.
At my SOE, employee performance assessments are conducted annually, where employees engage in self-assessment and present their findings during a meeting Peers and superiors provide feedback on these self-assessments, fostering a collaborative evaluation process Participants are given assessment cards to rate their colleagues and superiors, although this closed assessment system lacks objectivity Notably, the distribution of performance rankings, such as level 1 for excellent performance, varies each year, impacting how monetary rewards are allocated within the organization.
The subjective nature of performance appraisal can lead to various biases, including affective influences, favoritism, and personal liking, which result in inaccurate ratings, as highlighted in previous studies (Salimọki & Jọmsộn, 2010) Researchers, including Longenecker et al (1987) and Salimọki & Jọmsộn (2010), have identified this bias as a form of organizational politics, where supervisors consider factors such as their own reputation, individual motivation, group dynamics, and budget constraints when evaluating and rewarding performance.
THEME 5 REWARDS AND PAY
Theme 5 captures the interview comments concerning the rewards and payment systems adopted by the domestic enterprises and MNEs Theme 5 comprises four subthemes: salary and performance-based pay, incentives and bonuses, promotions as rewards, and the
5.5.1 Subtheme 5a Salary and performance-based-pay
The salary structures of domestic enterprises and multinational enterprises (MNEs) vary significantly according to employee perspectives MNEs typically implement compensation systems that prioritize position and individual performance, whereas private-owned enterprises (POEs) and employee-owned enterprises (ESOEs) adopt a blended reward strategy that combines a minimum standard base salary with performance-based pay In stark contrast, state-owned enterprises (SOEs) rely solely on a standardized base pay set by government regulations.
In state-owned enterprises (SOEs), employees receive a minimum salary standard set by the government, with seniority often prioritized in salary decisions While salaries are typically increased every three years regardless of performance, exceptional performers may receive earlier raises Salary adjustments are generally determined by a group of managers.
Some employees (S3f, S3a & S3e) revealed that the ESOE salary system included a fixed part that was similar to that of SOEs and an extra payment based on performance One interviewee commented:
At ESOEs, employees receive a fixed salary along with additional compensation that varies based on performance rankings Those ranked A are eligible for a higher additional salary compared to their counterparts ranked B or C.
The extra compensation provided by ESOEs served as a strong incentive for employees to improve their performance An employee (S3a) noted that, overall, ESOE staff received pay that reflected their skills and productivity levels.
Certain employees reported that Performance-Oriented Evaluations (POEs) connected annual salaries to individual performance, similar to Employee Stock Ownership Plans (ESOEs) These evaluations adhered to the minimum reward regulations established by the government for POEs Additionally, seniority was regarded as a minor factor in salary increments.
…employees who have been working for this POE more than five years are paid a bit higher in monetary rewards and salary (P6d).
At SOEs, decisions regarding rewards are made by a committee of top managers As commented below:
State-Owned Enterprises (SOEs) evaluate their performance annually and submit requests for group rewards to the Committee for Reward and Competition The decision to grant these rewards is made by the Committee or the highest-ranking manager within the SOE.
In POEs, when deciding to increase the salary of employees, the individual role of leader of a unit was more important, as noted below:
Employees of the POEs are set to receive salary increases ranging from 5% to 10%, depending on various factors Additionally, unit heads have the discretion to recommend higher salary increases for employees who demonstrate exceptional performance.
Employees at US multinational enterprises (MNEs) reported higher salaries compared to domestic firms, although they also face significant work pressure and demanding tasks The US MNE employs a position-based pay system, adjusting salaries based on employees’ experience, skills, and capabilities Each job role has a distinct salary rank, with annual reviews that can lead to salary increases of 10% to 20% based on key performance indicators (KPIs) This pay structure not only establishes a minimum salary at the recruitment stage but also incentivizes employees to enhance their skills and performance, aligning with the evolving needs of the enterprise This compensation approach is particularly beneficial for MNEs operating in Vietnam.
The salary system of Japanese multinational enterprises (MNEs) incorporates both fixed and performance-based income to motivate employees, similar to that of ESOEs and POEs For instance, while a contract may state a salary of VND50,000, employees initially receive VND30,000, with the remainder contingent on Key Performance Indicators (KPIs) Salary reviews occur every six months, with increases ranging from 15% to 50% based on performance Annually, employee performance is evaluated through KPIs, and those who remain with the company and meet qualifications can expect a minimum salary increase of 25% Overall, the combination of fixed and performance-based pay appears well-suited to the industry, though MNEs may apply a more objective approach than ESOEs and POEs in determining eligibility for performance-based compensation.
Employees at state-owned enterprises (SOEs) reported that compensation is based on both individual and group performance One employee noted that group work is rewarded when it leads to significant improvements in work effectiveness, while others highlighted that individuals with outstanding contributions also receive recognition However, there are concerns that individual rewards may not be fairly distributed, as monetary incentives are often prioritized for superiors.
‘if an individual has done well, his group work will be rewarded’ (S3a) Rewards to subordinates were still constrained by procedures (S4g).
An employee expressed that individual contributions at ESOEs often go unrecognized in team settings, as monetary rewards are typically distributed equally among team members, irrespective of their individual performances.
When the company successfully achieves its annual goals, all employees receive a bonus equivalent to 5 or 10 days' salary, regardless of their position This ensures equitable compensation for both management and staff, fostering a sense of unity and shared success within the organization.
Research indicates that domestic enterprises in Vietnam, particularly state-owned enterprises (SOEs), prioritize group performance and teamwork, reflecting the country's collectivist culture Employees often feel more comfortable collaborating with others, influenced by a sense of belonging Consequently, individual performance tends to be undervalued in SOEs, where seniority is prioritized However, this perspective contrasts with insights from interviewees at employee-owned state enterprises (ESOEs), who emphasized the high value placed on individual performance.
The findings from interviews indicate that individual performance-based pay is prioritized over group work at ESOEs, as employees noted that top performers ranked A receive significantly higher monetary rewards compared to those ranked B or C, irrespective of teamwork contributions One employee emphasized that only high performers are rewarded, while others highlighted that departmental rewards are contingent upon individual achievements throughout the year, with groups featuring strong performers receiving commendations and small gifts.
SUMMARY OF MAIN FINDINGS
This chapter presents key findings on employee perspectives regarding HRM practices across various ownership types and their impact on employee outcomes It highlights that employees from all four ownership categories unanimously recognize human resources as the most critical factor, with equipment and land following closely behind in importance.
Multinational enterprises (MNEs) prioritize recruiting the right talent for specific roles more than state-owned enterprises (SOEs) In contrast, employee capabilities are often overlooked in the recruitment and selection (R&S) processes of some SOEs While SOE employees generally feel that R&S does not influence performance, employees from private-owned enterprises (POEs) and employee-owned enterprises (ESOEs) recognize its positive impact on their performance Additionally, US MNE employees have identified factors such as team management and team culture that may affect the relationship between R&S and employee outcomes.
Multinational Enterprises (MNEs) and Private-Owned Enterprises (POEs) employ a mix of traditional and modern technology-driven training and development (T&D) methods, whereas State-Owned Enterprises (SOEs) and Employee-Owned Enterprises (ESOEs) rely solely on traditional training approaches Perspectives on the purpose of training differ among ownership types; some view it as a pathway to promotion, while others see it as a means to enhance professional skills Regardless of ownership type, all employees agree that their performance improves through participation in training courses However, there is no significant evidence linking T&D to job satisfaction.
Domestic enterprises typically exhibit less complex and more subjective performance management (PM) systems compared to multinational enterprises (MNEs) Among these, private-owned enterprises (POEs) generally possess more advanced PM systems than state-owned enterprises (SOEs) and enterprises with state ownership (ESOEs) Employees in both POEs and MNEs are driven to enhance their performance.
PM, while there was a mixed view about this aspect at SOEs and at ESOEs.
Salaries and incentives at ESOEs and POEs are primarily linked to individual performance, whereas SOEs place a greater emphasis on seniority, which can lead to job dissatisfaction among younger, capable employees While MNEs offer higher salaries and performance-based pay compared to domestic enterprises, employees face more demanding tasks and increased work pressure In contrast, ESOE and POE employees are motivated by rewards, whereas SOE employees may lack this motivation MNE employees tend to experience greater job satisfaction due to appropriate compensation based on individual capabilities and performance The next chapter will delve into the perspectives of managers and employees, along with concluding insights.
DISCUSSION AND CONCLUSIONS
INTRODUCTION
This chapter synthesizes and discusses the findings from Chapters 4 and 5, contextualizing them within existing literature and the Resource-Based View (RBV) perspectives It explores how different ownership types influence Human Resource Management (HRM) practices and their subsequent effects on employee outcomes in Vietnam, addressing the overarching research problem and related questions.
RQ1 How do differing ownership types affect the adoption of HRM practices in Vietnam?
RQ2 To what extent do HRM practices in Vietnam affect employee job satisfaction and employee performance?
This chapter is structured into seven key sections, beginning with an overview of the research It explores the perceptions of two primary stakeholder groups—managers and employees—across various ownership types (SOEs, ESOEs, POEs, and MNEs) regarding the adoption of Human Resource Management (HRM) practices in Vietnam, analyzed through a Resource-Based View (RBV) framework The subsequent section examines how these HRM practices, influenced by ownership types, impact employee outcomes such as job satisfaction and performance The chapter also discusses the theoretical contributions of the research and highlights practical implications for HR practitioners, organizations, and the Vietnamese government Finally, it addresses the study's limitations and proposes directions for future research.
OVERVIEW OF THE RESEARCH
This research builds upon previous studies by exploring how different ownership types impact HRM practices in Vietnam, a developing and transitional nation While existing literature primarily examines the link between HRM practices and firm performance, it often overlooks the theoretical foundations that explain the variations in HRM practices among different enterprise types.
By contrast, the analysis in this study is based explicitly on the RBV (Boxall & Purcell, 2008; Penrose, 1959; Wernerfelt, 1984; Wright et al., 2001).
The Resource-Based View (RBV) suggests that businesses achieve success by acquiring and sustaining competitive advantages To attain these advantages, companies must adopt the VRIN framework, which stands for Valuable, Rare, Inimitable, and Non-substitutable resources.
According to Barney and Clark (2007), for enterprises to succeed, their products, services, or resources must possess value, rarity, and be inimitable and non-substitutable This means that these elements should be difficult for competitors to replicate or replace with alternatives (Barney, 1991; Boselie & Paauwee, 2010; Jackson & Schuler, 1995) The VRIN framework has been extensively applied to human resources by numerous scholars (Barney & Wright, 1998; Wright et al., 2000; Boselie & Paauwee, 2010).
Under the Resource-Based View (RBV), Human Resource Management (HRM) is recognized as a critical resource that enhances organizational effectiveness and performance, positioning it as a key source of competitive advantage for businesses.
1994) RBV proposes that HRM practices could, by enhancing functional capabilities (e.g., knowledge, skills and experience of employees), help to create competitive advantages for enterprises (Hall, 1993).
To explore HRM practices in Vietnam, the researcher employed a qualitative methodology, conducting in-depth and semi-structured interviews with two key stakeholder groups: managers and employees In Study 1, the researcher interviewed 18 managers from 18 enterprises, including four state-owned enterprises (SOEs), three equitized state-owned enterprises (ESOEs), six private-owned enterprises (POEs), and five multinational enterprises (MNEs), with employee counts ranging from 50 to over 1000, as detailed in Chapter 4 Study 2 involved interviews with 49 employees from 11 enterprises, where managers permitted employee participation, with findings presented in Chapter 5.
OWNERSHIP TYPES AND THE ADOPTION OF HRM PRACTICES
This section explores the impact of ownership types on the adoption of HRM practices in Vietnam, addressing research question 1 It begins by synthesizing findings from Chapters 4 and 5, highlighting both similarities and differences in stakeholder perspectives on the strategic role and key HRM practices Additionally, it examines the cultural influences on HRM adoption and assesses the level of HRM practice implementation among domestic enterprises Furthermore, it investigates whether multinational enterprises (MNEs) standardize or localize their HRM practices within Vietnam's transitional economy.
6.3.1 Stakeholders’ perspectives on the roles and practices of HRM across ownership types
A comparison of the findings from Chapters 4 and 5 reveals that both managers and employees share similar perceptions regarding the role and practices of Human Resource Management (HRM), despite some minor differences These discrepancies may stem from the differing viewpoints, with managers adopting an organization-wide perspective while employees focus on their individual experiences.
The concept of "face-saving" in certain cultures, including Vietnam, influences communication styles, leading individuals to avoid contradicting or offending others, even at the cost of honesty (Thang et al., 2007; Tuan & Napier, 2000) This tendency can result in employees withholding their true thoughts, especially in unfamiliar situations like job interviews, and aligning their responses with those of their managers to maintain harmony However, as relationships develop over time, individuals tend to become more open and direct in their communication (Tuan & Napier, 2000) Notably, there were no signs that managers coached their employees on how to respond, as the phrasing of answers varied significantly despite general agreement on the main points.
Perceptions of the role of HRM
The study reveals varying perceptions of HRM's role among stakeholders based on ownership types Domestic enterprise managers and employees primarily focus on personnel management aspects such as salary payments and benefits, while managers in multinational enterprises (MNEs) demonstrate a stronger recognition of HRM's strategic significance in enhancing overall enterprise performance Consequently, MNEs are found to align their HRM practices more closely with the Resource-Based View (RBV) compared to domestic firms.
The findings indicate that not all domestic enterprises have straightforward or traditional HRM roles Interviews reveal that large privately-owned enterprises (POEs) are generally more willing than state-owned enterprises (SOEs) to implement modern, strategic HRM practices This trend may be attributed to the younger age of POEs, which often lack outdated systems and are less hindered by government regulations when adapting to changes in the business landscape.
2008) But it may also be true that smaller POEs often do not have sufficient resources to establish and implement comprehensive HRM systems that reflect careful strategic planning.
Recent findings align with previous research (Nguyen, Teo & Myllet, 2013) indicating that HRM practices established in Western nations are also evident in multinational enterprises (MNEs) in Vietnam However, these findings challenge Nguyen et al.'s (2013) conclusion that partially owned enterprises (POEs) view HRM functions primarily as administrative tasks Additionally, while Nguyen et al concentrated on the viewpoints of HR and line managers, this study broadens the analysis by incorporating employee perspectives.
Perceptions of recruitment and selection
The research revealed that multinational enterprises (MNEs) predominantly employed modern technology for job advertisements, whereas domestic companies relied on traditional methods, such as personal contacts, to inform potential candidates about vacancies Notably, large private-owned enterprises (POEs) were more inclined to utilize modern technology for advertising job openings compared to state-owned enterprises (SOEs) and employee-owned enterprises (ESOEs) This suggests that some large POEs may be competitive with MNEs regarding innovation and the adoption of modern recruitment technologies.
Perceptions of training and development
Recent studies indicate that both managers and employees across various ownership types prioritize on-the-job training over off-the-job training, contrasting earlier research by Thang and Quang (2005b) which suggested SOEs favored off-the-job methods more than MNEs This shift may be attributed to evolving training strategies within SOEs, influenced by Vietnam's increased integration into the global economy post-WTO accession Additionally, the research highlights that online training is available in both large POEs and MNEs, aligning with Vo and Hanif's (2012) findings that blended learning—integrating e-learning with on-the-job or classroom training—tends to be more effective for MNE employees in Vietnam.
Performance management (PM) practices at domestic enterprises are viewed as less complex, fair, and objective compared to those at multinational enterprises (MNEs), which leverage advanced performance tools like balanced scorecards (BSC), key performance indicators (KPI), and management by objectives (MBO) This aligns with international findings that suggest MNEs from developed economies benefit from superior technology and standardized HRM practices Research in Vietnam indicates that MNEs are more inclined to implement strategic HRM practices than domestic firms Additionally, MNEs are more likely to conduct objective performance evaluations based on predetermined criteria, such as target achievement, as adopted by their parent companies.
Several domestic enterprises have made significant strides in enhancing their performance management (PM) practices Notably, the large public-owned enterprises (POEs) in this study demonstrated a strong inclination towards adopting Western PM methodologies, including Key Performance Indicators (KPIs) and dual management systems.
Interviews with managers and employees reveal that multinational enterprises (MNEs) offer superior compensation and benefits, such as taxi fares, air tickets, and extended holidays, compared to domestic firms This aligns with Thang and Quang's (2005b) findings, indicating that MNE employees receive more perks, including free transportation and accident insurance, than those in state-owned enterprises (SOEs) However, the study also highlights that MNE employees face higher work pressure and more demanding tasks, suggesting that while MNEs provide competitive opportunities for those seeking challenges, SOE positions may offer greater job security.
This study indicates a potential shift in the reward systems of ESOEs and POEs, as employees report that while SOE workers receive fixed salaries, ESOEs and POEs are adopting a mix of fixed and performance-based pay similar to MNEs This transition reflects a positive change, suggesting that ESOEs and POEs are enhancing their reward systems to better recognize and motivate valuable human resources However, there remains a need for these domestic enterprises to refine their criteria for performance-based pay, as they are currently viewed as less objective compared to MNEs.
In the examined companies, both managers and employees acknowledged that individual performance alone does not determine bonuses and promotions, with seniority also playing a significant role However, perceptions of seniority varied by ownership type; employees noted that individual performance is generally valued less in State-Owned Enterprises (SOEs) compared to Employee-Owned Enterprises (ESOEs), Private-Owned Enterprises (POEs), and Multinational Enterprises (MNEs), particularly those based in the US and Germany In contrast, SOEs tend to prioritize seniority more heavily in their reward systems than ESOEs, POEs, and MNEs.
Some employees at ESOEs expressed a preference for rewards based on group performance, while others favored recognition for individual achievements This divergence in perspectives may stem from the lingering influence of traditional management practices from the socialist era, which some employees still adhere to, in contrast to those who are more adaptable and supportive of contemporary human resource management approaches.
There are significant differences between managers' and employees' views on promotions as rewards Managers largely agree that promotions serve as recognition for sustained high performance among deserving employees In contrast, employees in state-owned enterprises (SOEs) feel promotions are primarily based on seniority and personal relationships with supervisors, while employees in multinational enterprises (MNEs) believe their promotions are determined by competencies and performance.
HRM PRACTICES AND EMPLOYEE OUTCOMES
This section explores research question 2, focusing on how varying HRM practices in Vietnam influence employee job satisfaction and performance The analysis is organized into four key areas: Recruitment and Selection (R&S), Training and Development (T&D), Performance Management (PM), and Reward Systems (RS).
Most managers from the surveyed companies believed that recruitment and selection (R&S) had little impact on employee outcomes In contrast, employees at multinational enterprises (MNEs), private-owned enterprises (POEs), and employee-owned enterprises (ESOEs) felt that R&S practices significantly enhance job satisfaction across different ownership types Employees at state-owned enterprises (SOEs) largely disagreed, aligning more closely with their managers' perspectives MNE employees identified team culture and management as key factors linking R&S to job satisfaction and performance The alignment in views between SOE managers and employees may stem from SOEs' reliance on personal connections, often resulting in hiring individuals who may not possess the necessary skills for their roles.
Both managers and employees recognize a positive correlation between training and development (T&D) practices and beneficial employee outcomes This research builds on previous studies by Nguyen and Bryant (2004), Thang and Quang (2005a), King-Kaunaui et al (2006), and Thang and Buyens (2008), which primarily focused on the relationship between T&D and overall enterprise performance without considering ownership types By incorporating ownership types into the analysis, the current findings contribute valuable insights to the existing literature.
Managers universally recognized that performance management (PM) practices can greatly influence employee performance and job satisfaction However, employees in multinational enterprises (MNEs) and private-owned enterprises (POEs) generally felt motivated by PM to enhance their performance In contrast, opinions were mixed among employees in state-owned enterprises (SOEs) and employee-owned enterprises (ESOEs), with some skepticism regarding the effectiveness of PM This skepticism may stem from the subjective nature of PM in these organizations, where assessments are not solely based on individual performance and ranking may be influenced by personal relationships Notably, employees who perceived a positive impact of PM in SOEs were often older individuals with close ties to management, suggesting that personal connections could skew perceptions of PM effectiveness.
Young and dynamic employees at state-owned enterprises (SOEs), who lack close relationships with management and feel their performance is inadequately recognized, often express dissatisfaction with current performance management (PM) practices They tend to favor assessments that evaluate individual performance over group performance, contrasting with traditional SOE management approaches that prioritize personal relationships, subjective evaluations, and equal rewards regardless of individual contributions If management styles were to adapt and recognize these employees, they could become a significant competitive advantage for SOEs However, the entrenched management practices from the centrally planned economy era pose a challenge in acknowledging these 'pioneers.'
Managers from domestic enterprises and multinational enterprises (MNEs) highlighted the significant influence of reward system practices on employee job satisfaction and performance Employees in employee-owned enterprises (ESOEs), private-owned enterprises (POEs), and MNEs were motivated to enhance their performance and job satisfaction through these reward systems In contrast, employees in state-owned enterprises (SOEs) expressed a more varied perspective regarding the connection between reward systems and employee outcomes.
The mixed perceptions of State-Owned Enterprise (SOE) employees regarding performance management practices can be attributed to varying relationships with management and differing views on reward systems Employees who enjoy a good rapport with their supervisors often benefit from seniority-based pay and equitable rewards, leading to job satisfaction and the belief that longevity will result in higher compensation Conversely, many employees express dissatisfaction with the reward system, feeling it fails to provide adequate incentives for performance improvement, as they prefer a compensation structure based on individual contributions.
Managers and employees in multinational enterprises (MNEs), public owned enterprises (POEs), and employee stock ownership enterprises (ESOEs) share a common perspective on the beneficial link between reward systems and employee outcomes, as these organizations tend to implement performance-based incentives.
Reward systems (RS) effectively motivate employees to enhance their performance, leading to increased value and alignment with overall business objectives This unique value is often rare and difficult to replicate, as it stems from employees' intrinsic motivation to develop their skills and improve their performance, which is closely linked to their job satisfaction.
THEORETICAL CONTRIBUTIONS
This study highlights the limited research on HRM practices in developing and transitional economies, particularly regarding theoretical foundations Notably, there are few studies utilizing the Resource-Based View (RBV) framework, with only three focused on India and one on Vietnam A significant contribution of this research is its application of the RBV framework to analyze HRM practices across various enterprise ownership types in Vietnam, a socialist-oriented market economy characterized by collectivist culture Additionally, the study provides various analytical insights, some beyond the RBV theory, enhancing the understanding of HRM practices in Vietnam.
RBV as a useful conceptual framework for analysing HRM practices in a transitional economy
This study highlights the effectiveness of the Resource-Based View (RBV) theory as a framework for examining Human Resource Management (HRM) practices in Vietnam Through interviews with managers and employees from multinational enterprises (MNEs) and domestic organizations, including private-owned enterprises (POEs), equity state-owned enterprises (ESOEs), and state-owned enterprises (SOEs), the analysis reveals that MNEs align most closely with RBV principles In contrast, SOEs show the least alignment, while POEs and ESOEs fall in between, with larger POEs resembling MNE practices more closely.
Multinational enterprises (MNEs) view human resources (HR) as a crucial competitive advantage, while state-owned enterprises (SOEs) often regard jobs as mere commodities, leading to a diminished perception of HR as a vital resource for organizational survival This contrasting viewpoint results in significant differences in the role of HR management (HRM) within the organizational structure and decision-making processes, as well as in the HRM practices implemented across various key HR areas.
The legacy of Vietnam's socialist planning system has shaped fundamental differences in perspective regarding value creation in state-owned enterprises (SOEs) Under the Communist regime, SOEs adhered to the labour theory of value, which posits that labour is the sole source of value, while capital is merely a product of past labour Consequently, employee capabilities such as knowledge and skills were undervalued, with higher pay awarded based on past experience rather than current competencies This perspective led to the belief that intangible assets, like reputation and capabilities, lack measurable value and were consequently overlooked As a result, SOEs have faced challenges in evolving their management practices to recognize the importance of these intangible factors.
MNEs typically align their HRM practices with the Resource-Based View (RBV) approach, leveraging valuable international experiences to cultivate competitive advantages, particularly in human resources (Tatoglu et al., 2016) While many domestic enterprises have historically resisted change, the Vietnamese economy has recently embraced greater openness to international influences due to closer economic integration with regional and global markets Consequently, most enterprises now face market pressures shaped by these international dynamics Notably, large Private Owned Enterprises (POEs) and, to a lesser extent, Equitized State-Owned Enterprises (ESOEs) have adopted HRM practices that align more closely with the RBV approach compared to State-Owned Enterprises (SOEs), which remain constrained by governmental regulations and priorities in their decision-making processes.
While the Resource-Based View (RBV) offers a valuable framework, certain aspects of Human Resource Management (HRM) in Vietnam reveal discrepancies with this model The researcher highlights the significance of cultural factors, such as reliance on personal networks and respect for seniority, in shaping business practices It's essential to recognize that business decisions influenced by cultural elements can lead to significant consequences, warranting analysis through established business theories and models.
Interviews indicate that State-Owned Enterprises (SOEs) prioritize personal contacts in recruitment, emphasizing job security and implementing reward systems focused on equality, group payments, and seniority This aligns with Ramamoorthy and Carroll (1998), who highlight that such HRM practices reflect collectivist values They, along with Sekaran and Snodgrass (1986), assert that collectivism downplays individual performance and rewards, favoring group objectives In collectivist cultures, loyalty is crucial, and employee selection may consider personal allegiance over individual capabilities, viewing the organization as an extended family.
Collectivist HRM practices do not inherently lead to a decline in overall enterprise performance, despite their focus on group performance over individual capabilities The impact of the post-WTO environment further complicates this relationship, suggesting that the effects of collectivism on organizational success may not be straightforward As Barney and Wright indicate, understanding the balance between individual and group contributions is crucial for evaluating the effectiveness of such HRM practices.
In certain contexts, competitive advantages may arise from teams rather than individuals, as team production often exhibits causal ambiguity, making it challenging for competitors to replicate (1998, p 14) Therefore, it can be posited that collectivist HRM practices do not necessarily lead to inferior business outcomes Furthermore, state-owned enterprises (SOEs) may effectively utilize resource-based view (RBV) attributes, albeit in ways that differ from traditional Western interpretations.
PRACTICAL IMPLICATIONS
There are a number of implications from this research for organisational and HR managers, and for the Vietnamese government and universities.
Implications: Organisational and HR managers
The recent integration of the Vietnamese economy with global markets has created a competitive business landscape, compelling domestic enterprises to adapt or face decline (Quang, 2013) In this environment, managers must familiarize themselves with the human resource management (HRM) practices of multinational enterprises (MNEs) across various domains, including recruitment and selection (R&S), training and development (T&D), performance management (PM), and rewards systems (RS) By selectively adopting the most effective practices, managers can significantly improve their enterprise's performance and competitiveness.
Employees in state-owned enterprises (SOEs) in Vietnam typically have minimal involvement in decision-making processes, which correlates with low job satisfaction levels This phenomenon may stem from a paternalistic management style and a prevailing culture characterized by high power distance.
To enhance employee outcomes, managers must prioritize consulting employees before making significant decisions By focusing on effective HRM practices in daily interactions, managers can foster a more engaged workforce Implementing regular and open discussions about employee expectations regarding managerial actions can significantly improve HRM practices and overall workplace satisfaction.
Managers at domestic enterprises must effectively balance the differing mindsets of employees, particularly between senior staff influenced by traditional central planning and junior employees open to modern practices Interviews with employees at ESOEs and SOEs revealed conflicting views on the relationship between performance management (PM) and employee outcomes, as well as the impact of rewards To foster a cohesive workplace, managers should address the concerns and aspirations of both groups This dynamic may evolve in the coming years as senior employees retire, paving the way for a workforce more aligned with contemporary ideas and practices.
Multinational enterprises (MNEs) can gain valuable insights from both local companies and their own experiences within the local market By adapting their human resource management (HRM) practices to align with the local business culture, MNEs can effectively address workplace conflicts, such as misunderstandings or strained colleague relationships For instance, implementing face-to-face or open performance assessments may inadvertently lead to issues, where outwardly satisfied employees may actually feel dissatisfied, resulting in inaccurate evaluations of individual performance.
To address the "losing face" issue in the workplace, multinational enterprises (MNEs) can enhance performance assessment by implementing software that allows employees to view their own results alongside an anonymous aggregate of their colleagues' performances This approach minimizes discussions about individual poor performance and encourages a focus on personal improvement By understanding their standing among top performers, employees are motivated to elevate their performance levels, fostering a more competitive and productive work environment.
Multinational enterprises (MNEs) should prioritize understanding local culture to enhance decision-making and choose suitable human resource management (HRM) practices tailored to the Vietnamese context A lack of awareness regarding Vietnamese culture and its political landscape can lead to misguided decisions and ineffective HRM strategies (Quang et al., 1998; King-Kaunaui et al., 2006; Kamoche, 2001).
Managers of multinational enterprises (MNEs) and domestic companies need to closely monitor employee outcomes, such as job satisfaction and performance, within their own organizations and in competing firms By doing so, they can refine their human resource management (HRM) practices to improve both employee well-being and overall business performance.
Implications: Vietnamese government and Universities
The government must prioritize enhancing university training and work placement programs to enable companies to effectively utilize new graduates' skills without extensive training costs Additionally, fostering collaboration between universities and businesses is essential for keeping lecturers informed about the latest HRM practices, ensuring that graduates are adequately prepared for the dynamic business landscape.
It may be that lecturers could undertake short-term secondments to work in related industry jobs, to further develop and update their understanding of work practices One of
Vietnamese lecturers primarily rely on theoretical knowledge, highlighting the need for a practical approach to enhance the skills of HRM trainers and educators Implementing hands-on training would provide significant advantages for companies, lecturers, and new graduates alike, fostering a more effective learning environment and better preparing students for the workforce.
The government should enhance opportunities for open dialogue among enterprises of various ownership types and government officials This engagement would enable authorities to refine foreign direct investment policies and grant state-owned enterprises greater operational autonomy, moving away from current full government control.
LIMITATIONS OF THE RESEARCH AND SUGGESTED FUTURE DIRECTIONS 213
While the two studies provide valuable insights into HRM practices and employee outcomes in Northern Vietnam, they are limited by their geographic focus Conducted through qualitative interviews, the findings may not be generalizable to organizations in other regions, such as the South, where cultural and historical influences differ significantly The South's exposure to Western values, particularly post-US intervention, may shape perceptions of HRM practices differently than those in the North, suggesting a need for further research to explore these regional variations.
One limitation of the study is that it was primarily conducted in English, while all interviews were held in Vietnamese, leading to challenges in transcription and translation Despite the first researcher’s efforts to transcribe and translate the recordings accurately, potential errors may still exist To mitigate this, a bilingual translator was engaged to review the final translation, aiming to identify any systematic errors.
The third limitation is that the researcher may have suffered from personal bias in interpreting the interviewee responses (Yin, 2003) Neuman (2003), Sekaran and Bougie
In 2013, researchers highlighted the influence of a researcher's opinions on qualitative findings Acknowledging these potential biases, the researcher took proactive measures to mitigate their impact and ensure the integrity of the study.
Future research should explore the same topic in Southern Vietnam to identify potential differences in findings Additionally, incorporating the perspectives of government officials at both national and local levels is crucial, as these insights can enhance understanding of the local environment where multinational enterprises (MNEs) operate and reveal how they navigate legal constraints Furthermore, combining Resource-Based View (RBV) and institutional theory in future studies is recommended, as RBV focuses on economic contexts while institutional theory emphasizes social contexts This dual perspective could provide valuable insights into why different ownership types adopt specific HRM practices.
To enhance the robustness of research question 1, future studies should consider interviewing enterprises within a single industry, such as hotel management, banking, or advertising, instead of a diverse range of sectors like banking, hotel and tourism, education, insurance, and manpower Additionally, distinguishing between the perspectives of customer-facing employees and those in technical roles, such as engineering and information technology, could provide valuable insights The current study indicates that technical employees often overlook work policies, focusing only on those that directly impact their interests Therefore, further research should explore the factors influencing this lack of awareness regarding HRM practices, including the roles of education and personality.
To enhance the understanding of HRM practices, it is essential to investigate employee perspectives across various genders and age groups, as these factors can significantly influence the effectiveness of such practices Additionally, integrating quantitative methods alongside the current qualitative approaches could provide valuable insights into employee outcomes and reveal potential correlations between specific HRM practices and these outcomes.
CONCLUSION
This research explores the impact of ownership types on HRM practices in Vietnam's developing economy through the RBV approach, focusing on how these practices influence employee performance and job satisfaction Interviews with managers and employees from multinational enterprises (MNEs) and domestic firms reveal that MNEs are more inclined to implement strategic, performance-driven HRM practices aligned with the RBV framework Among domestic enterprises, large privately-owned enterprises (POEs) show a greater willingness to adopt Western HRM practices compared to state-owned enterprises (SOEs) and employee-owned enterprises (ESOEs) Consequently, employees at MNEs and large POEs demonstrate higher motivation to enhance performance and job satisfaction This study enriches the existing literature by highlighting the variances in HRM practices between MNEs and domestic firms and illustrating the connection between HRM practices and employee outcomes in Vietnam.
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