strategy development for higher education in vietnam

And based on the results of this empirical study, the findings show that there is a strong relationship among RBV reputation, architecture, innovation capability, core competencies and k

National Cheng Kung University Institute of International Management

I

ACKNOWLEDGEMENTS

First of all, I would like to express my sincere thanks and appreciation to Professor Chinho Lin, my advisor for giving me valuable directions My thesis would not have been completed without his guidance It is impossible to forget his efforts on

a lot of methodological comments and analytical guidance

I would also like to express my gratitude to my professor, committee members,

Dr Jeng-Chung (Victor) Chen, Dr Don Jyh-Fu Cheng, Dr Pei-Hsuan Hsieh for their positive, constructive and useful comments, acceptance, and support

Huge thanks must go to Professor Dr Richard Lynch at Middlesex University London and Professor Dr Paul Baines at Cranfield University in UK for their help and spend countless hours discussing ideas and advising me on various aspects

My sincere thanks and appreciation go to Professor and President Dr Phan Thanh Binh, Associate Professor and Vice President Dr Huynh Thanh Dat of Vietnam National University-Ho Chi Minh City (VNU-HCM) and all of the professors, directors, vice directors, managers, experts, and staffs in VNU-HCM and many universities in Vietnam for their unique and amazing friendship and support, whose contributions of time and talent to my study

I would also like to express my gratitude to all of the professors in the IMBA program, IMBA staffs as well

I owe a debt of thanks to all those mentioned here, as well as to the many other friends who have encouraged me on this venture I couldn‘t have done it without you

I hope you think it worthwhile

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Finally, thanks to my family for bringing me up and supporting me all along Special, I would like to extend my heartfelt gratitude to my mother who supports a living for me nearly 30 years

of psychological contract fulfillment and reward orientation on the relationship between funding and higher education performance were also examined

In order to avoid the bias, the way to distribute the questionnaire survey was mostly to contact directly, via phone or email to distribute all questionnaire sheets to all members, managers, experts, directors, vice directors, presidents and vice presidents And based on the results of this empirical study, the findings show that there is a strong relationship among RBV (reputation, architecture, innovation capability, core competencies and knowledge based advantages) and funding and higher education performance Thus, we employ the RBV of strategy development to explore the strength and the weakness of higher education in Vietnam The paper also explores whether or not universities in Vietnam can apply, improve or learn more the RBV concepts Then, the next step is to examine how funding and higher education performance are related to the university‘s mission and objectives, so as to influence the government policy

IV

TABLE OF CONTENTS

ACKNOWLEDGEMENTS I ABSTRACT III TABLE OF CONTENTS IV LIST OF TABLES VII LIST OF FIGURES IX

CHAPTER ONE INTRODUCTION 1

1.1 Research Background and Motivation 1

1.2 Research Objectives 5

1.3 Research Flow and The Structure of This Study 6

1.3.1 Research Flow 6

1.3.2 The Structure of This Study 7

CHAPTER TWO LITERATURE REVIEW 9

2.1 Definition of Constructs 9

2.1.1 Resource Based View 9

2.1.2 Funding 17

2.1.3 Higher Education Performance (HE Performance) 20

2.2 Relationships between Constructs 22

2.2.1 RBV and Funding 22

2.2.2 RBV and Higher Education Performance 24

2.2.3 Funding and HE Performance 25

CHAPTER THREE RESEARCH DESIGN AND METHODOLOGY 29

V

3.1 The Conceptual Model 30

3.2 Questionnaire Design Procedures 30

3.3 Hypotheses to be Tested 33

3.4 Sampling Plan 34

3.5 Data Analysis Procedures 35

3.5.1 Descriptive Statistic Analysis 36

3.5.2 Factor Analysis and Reliability Test 36

3.5.3 T-test and One Way Anova (F-test) 37

3.5.4 Multiple Regression Analysis 38

CHAPTER FOUR DATA ANALYSIS AND MEASUREMENTS 39

4.1 Sample and Data Collection Procedures 39

4.2 Characteristics of Respondents 40

4.3 Descriptive Statistics 42

4.4 Factor Analysis and Reliability 46

4.5 Independent Sample T-test and One Way ANOVA (F-test) 49

4.5.1 Independent Sample T -test 49

4.5.2 One Way ANOVA (F-test) 50

4.6 Relationships Among Constructs – Multiple Regression Analysis 53

4.6.1 The Influences of RBV (Reputation, Innovation Capability, Architecture, Core Competencies, and Knowledge Based Advantages) on Funding 53

4.6.2 The Influences of RBV (Reputation, Innovation Capability, Architecture, Core Competencies, and Knowledge Based Advantages) on Higher Education Performance 54

4.6.3 The Influences of Funding on Higher Education Performance 56

VI

CHAPTER FIVE CONCLUSION AND SUGGESTIONS 57

5.1 Research Findings Implications 57

5.2 Research Contribution 59

5.3 Limitation and Future Research 60

REFERENCES 64

APPENDICES 69

Appendix 1: Questionnaire 69

Appendix 2: Vietnamese Questionnaire 73

VII

LIST OF TABLES

Table 3-1 Measurements for Reputation Construct 31

Table 3-2 Measurements for Architecture Construct 31

Table 3-3 Measurements for Innovation Capability Construct 32

Table 3-4 Measurements for Core Competencies Construct 32

Table 3-5 Measurements for Knowledge Based Advantages Construct 33

Table 3-6 Measurements for Funding Construct 33

Table 3-7 Measurements for HE Performance Construct 33

Table 4-1 Characteristics of Respondents 41

Table 4-2 Descriptive Statistics of the Constructs and Items 44

Table 4-3 Factor Analysis and Reliability 48

Table 4-4 Result of Independent SampleT-test 49

Table 4-5 Result of One Way Anova for Age 50

Table 4-6 Result of One Way Anova for Education Background 51

Table 4-7 Result of One Way Anova for Highest Level of Education Attained 51

Table 4-8 Result of One Way Anova for Income/Per Month 52

Table 4-9 Result of One Way Anova for Number of Years in Experience as University Manager 52

Table 4-10 The Influence of RBV (Reputation, Innovation Capability, Architecture, Core Competencies, and Knowledge Based Advantages) on Funding 54

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Table 4-11 The Influence of RBV (Reputation, Innovation Capability, Architecture,

Core Competencies, and Knowledge Based Advantages) on Higher Education Performance 55 Table 4-12 The Influence of Funding on Higher Education Performance 56 Table 5-1 Hypotheses Results 58

IX

LIST OF FIGURES

Figure 1-1 The flow chart of this study 6 Figure 3-1 The conceptual model 30

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CHAPTER ONE

INTRODUCTION

1.1 Research Background and Motivation

Nowadays, the whole world has recognized that resource based view is very vital

to get things done successfully in the most effective way With the resource-based view (RBV) concept, researchers assumed that the firm is a pool of hard-to-copy resources and capabilities (Connor, 1991) and those discrepancies in size distribution and competitiveness of firms occur from their distinctive capabilities to build up, expand, and organize those resources and capabilities to create and apply value-enhancing strategies (Amit & Schoemaker, 1993; Barney, 1991; Peteraf, 1993) According to Powers and McDougall (2005), although the resource-based view of the firm was largely developed from studies of the for-profit sector, its application in higher education is useful for sharpening the understanding of organizational phenomenon such as spin-off activity that occurs there, arguing that certain resources and capabilities may provide a university with advantages in technology transfer performance

The resource-based view of the firm dominates the strategic management literature and has also found use in the management information systems (MIS) literature (Priem & Butler, 2001) It was developed to explain how organizations achieve sustainable competitive advantages Advocates of the resource-based view have tried to explain why firms differ and how it matters (Barney, 1991; Hoopes, Madsen, & Walker, 2003)

capital; stock of technology; resources and capabilities of technology transfer offices;

and support measures for academic entrepreneurship (Gras, Lapera, Solves, Jover, & Azuar, 2008)

In other way, Lynch and Baines (2004) argues that the insights of the RBV will always identify such opportunities and therefore suggest that other strategy processes- perhaps market based or experimental – are needed in addition to the RBV Further, the extent to which the RBV can be used to develop strategy within other international contexts depends on the bundles of resources available to those institutions In other words, there are strong indications that national government policy is often the prime shaper of the market context for any country‘s university sector, with a concomitant impact upon strategy development And these scholars also indicated that ―in higher education, a resource-based perspective could provide new and valuable insights for strategy development at UK universities and that these same principles can be applied

in other parts of the world‖ (p 171-187)

Like the rest of the world, Vietnam was already to enter the new century with many opportunities but, at the same time, it will have to face possible new challenges

in many fields The increasing complexity of Vietnam‘s economic activities, together with a growing number of graduates, is creating substantial social demand for a better-educated workforce beyond the Vietnamese primary school, secondary education, and high school While primary education, secondary education, and high

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school provides basic cognitive skills, a foundation for producing a flexible, productive and globally competitive workforce to sustain high economic growth, higher education provides high quality human resources in line with the socio-economic structure of the industrialization and modernization of the nation; enhance the competitiveness in fair co-operation for Vietnam in its international economic integration; to facilitate the expansion of post secondary education through diversification of educational programs on the basis of a path-way system that is suitable for the structure of development, careers and employment, local and regional human resource needs and the training capacities of education institutions; to increase the appropriateness of the training to the employment needs of the society, the ability

to create jobs for oneself and for others (MOET, 2008)

Accordingly, higher education enrollments have increased significantly from

893,754 students in 1999 to 1,540,201 students in 2007 for an average annual

enrollment growth rate of about 10 percent Enrollment is projected by the Vietnamese government to reach 1,694,000 students in 2008 This rapid expansion has resulted in deteriorating quality of higher education, which is aggravated by double and triple scheduling of classes in schools to accommodate such rapid expansion The poor quality of higher education is caused mainly by unsuitable curriculum and shortages

of physical and human resources (including textbooks, instructional materials, and qualified teachers) In 1999, with 30,309 teachers, almost 20 percent of higher education teachers remained under-qualified The lack of adequately trained teachers

to meet the demand of a modern curriculum and to deliver teaching effectively is a major cause of internal inefficiency in higher education (MOET, 2008)

The goals of higher education are set as follows: To train the human resources

with political and moral qualifications ready to serve the people; knowledge; with

in defining a university‘s differentiated position, particularly in an increasingly global marketplace and where the unit of resource is being reduced (Fram & Lau, 1996; Harley, 2002; Jongbloed & Vossensteyn, 2001; Mazzarol, Soutar, & Seng, 2003; Patterson, 2001; Pidcock, 2001; Taylor, 2002; Willmott, 2003) However, the resource-based view has seldom been applied in the public sector, and certainly not in relation to Vietnam universities

Many researches were to think that Vietnam has still many things to do to enhance the quality of Vietnam‘s higher education But they just gave some proposals

to the highest managing level of the higher education For example, the training establishments must also have their own strategic plans in order to exploit their opportunities and at the same time overcome challenges and weaknesses with their resources and strengths in a global competitive environment Now, higher education in Vietnam still has many problems that this study should present how to develop and improve it base on collection, analysis factors, RBV resources, and funding and higher education performance to propose strategy for HEU and education in Vietnam This means that people in higher education has to pays attention to funding, higher education performance and RBV resources‘ effects as well as its social responsibilities

For this reason, this study presents how to take advantages of RBV to propose strategy for enhancing the quality of Vietnam‘s higher education This paper presents how to apply the resource-based view to study the entrepreneurial activity of universities RBV has received considerable attention in recent years within entrepreneurship literature The resource-based view is built on the theory that an organization‘s success is largely determined by the resources it owns and controls

1.2 Research Objectives

The purpose of this study is to develop a comprehensive research framework for strategy development of higher education system and to compare systems of higher education in Vietnam over two decades

To confirm of the measurement the input and the output variables based on the perspective of the higher education performance

To find the relationships among resource based view, funding and higher education performance

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Literature Review Introduction

Research Results and Analysis Research Methodology

Conclusions and Suggestions

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1.3.2 The Structure of This Study

This present study is structured as follows: Firstly, this study explains and argues the use of the resource-based view as well as the bundle of resources and capabilities have taken into account in strategy development for higher education in Vietnam Secondly, the study methodology afterward was delineated Thirdly, the results obtained presented to draw conclusions, implications and limitations of the study The following paragraphs summarize the contents of the five chapters composed

in this study:

Chapter one outlines the research background, motivations, purposes, contributions, and the structure of this study Major variables are explored, and a conceptual framework is discussed The research flow is discussed as well

Chapter two discusses the previous literature related to resource based view (reputation, architecture, innovation capability, core competencies, and knowledge based advantages), funding, and higher education performance Key variables and their respective interrelationships are identified Finally, the hypothesized relationships are developed and proposed to integrate the results of previous studies Chapter three presents the construct of measurements and research design for this study The research model in study suggests identifying the general relationship among the key variables, such as resource based view (reputation, architecture, innovation capability, core competencies, and knowledge based advantages), funding, and higher education performance Moreover, the research design, including the sampling plan, data collection procedures and data analysis techniques is also discussed

Chapter four presents the descriptive analysis of the study It includes the basic characteristics of respondents, descriptive statistics of research items, factor analysis and reliability test for each research items The research results are also presented to

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test the research hypotheses by using multiple regression analysis As result, (1) RBV (reputation) has a significant influence on funding; (2) RBV (architecture) has a significant influence on funding; (3) RBV (innovation capability) has a significant influence on funding; (4) RBV (core competencies) has a significant influence on funding; (5) RBV (knowledge based advantages) has a significant influence on funding; (6) RBV (reputation) has a significant influence on HE performance; (7) RBV (architecture) has a significant influence on HE performance; (8) RBV (innovation capability) has a significant influence on HE performance; (9) RBV (core competencies) has a significant influence on HE performance; (10) RBV (knowledge based advantages) has a significant influence on HE performance; (11) Funding has a significant influence on HE performance

Chapter five is a summary of the significant findings and conclusions of this study Chapter five also contains the summary about the whole research analysis and the significant results of the present studies Some suggestions related to managerial implications, research limitations and further research are both discussed

2.1.1 Resource Based View

The resource based view (RBV) draws on the idea that firms are comprised of unique bundles of tangible and intangible resources (Collis & Montgomery, 1995; Peteraf, 1993) They also argue these bundles are idiosyncratic and thus difficult or costly to replicate in diverse firm settings As a result, a firm may be able to identify these bundles and exploit them to achieve a competitive advantage in the market place (Barney, 1991)

Barney also argues that in order for a firm resource to have the potential of creating sustained competitive advantage it must have four attributes: The resource must be:

(1) Valuable in the sense that it must enable the possessor to improve its

efficiency and effectiveness Expressed more simply: if a resource is not useful, it will also not give any competitive advantage

(2) Rare, since a resource possessed by several other competitors will not enable

the firm to implement strategies that no one else can implement

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(3) Imperfectly imitable, that is impossible to obtain for firms that do not possess

the resource If the opposite was true, the advantage created by the resource would not

be sustained Resources can be imperfectly imitable for three types of reasons:

(a) Unique historical conditions: for example if a resource must be obtained during a long course of time (b) Causal ambiguity: the link between the resource and the advantage is unknown or not understood, not even by the firm in possession of the resource (c) Social complexity: for example interpersonal relations between managers

or reputation among suppliers

(4) Un-substitutable, that is, there can be neither similar resource that allows a

firm to implement the same strategies nor a different resource that allows a firm to implement an equivalent strategy

The RBV attempts to explain how a firm‘s resources drive its performance in a dynamic competitive environment (Collis & Montgomery, 1995) It combines internal corporate analysis with external environmental analysis, allowing managers to understand and analyze why some companies are superior to others as well as how to utilize the ideals of core competencies and diversification strategies (Montgomery & Wemerfelt, 1998)

Before the emergence of RBV in strategic management literature strategy had long been defined as a strategic fit between the external environment and internal resources The resource-based view (RBV) is one of the most widely accepted theories

of strategic management Scott (2007) argues that the RBV not only serves as a major theoretical foundation in the scholarly literature but is also prominently featured in all major textbooks on the subject of strategic management, the research, teaching, and consulting agendas of many scholars in the field are increasingly dominated by the assumption that valuable, rare, inimitable, non-substitutable resources, capabilities,

» Tangible resources: campus location, building capacity, conference facilities

and medical research facilities;

» Intangible resources: patents, eminent professors, renowned authors and

distinguished teachers;

Based on RBV concepts Lynch and Baines also include the following resources (adapted from Lynch & Baines, (2004)):

» Reputation: Enables an organization to communicate favorable information

about itself to its stakeholders which is important for development of outreach activities and sponsorship of research Reputation can for example be built through long term relationships with students who later in their lives become employers, donors or partners

» Architecture: The network of relationships, contracts and alliances with for

example other universities, government, funding bodies, research councils, companies and partners which help to recruit students, fund research and commercialize technology

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» Innovative capability: The ability to undertake totally new initiatives that go

beyond the current strategy, which is difficult to develop because of the need to maintain quality

» Core competencies: The group of production skills and technologies that enable

an organization to provide a particular benefit to customers including a number of areas such as: teaching, learning and assessment strategies; application of theory to practical problems; student placement; fund-raising and alumni relations

» Knowledge-based advantages: Tacit and explicit proprietary knowledge

possessed by an organization; for example frameworks and methodologies in consultancy, copyrighted material and intellectual property arising from research

Reputation:

More generally, a university‘s reputation is the common average opinion about it Because of the importance of this notion, there will be some elaboration on what reputation actually is and in what meaning it will be used in this study Brewer, Gates, and Goldman (2002) divide third party opinions into reputation and prestige While this study will not mention between the two, it is worth to take a look at Brewer‘s definition to clarify the concept about reputation

Reputation is related to actual observed quality and is driven by the institution‘s

ability to satisfy well defined customer needs in a way that can be evaluated quickly after the purchase In this study, the word reputation will be used to denote a mix of both of Brewer‘s concepts To capture the attractiveness dimension of reputation it cannot be a non-rival good or zero sum game since having a good reputation that attracts students and faculty automatically implies attracting students that otherwise would have gone to other institutions Still, reputation will be defined by customer, and not insider desires To summarize:

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―A university‘s reputation is the common opinion about its standing relative to other universities It is based on external stakeholders perception (correct or not) of the university‘s quality of education and research‖

Reputation can also be a way for faculty and other decision makers to derive utility Frank and Cook (1995) exemplify this by an example of two identical twins with identical academic records one of which teaches at an elite institution and the other at a lower ranked school

Thus, engaging in reputation building activities can be a way for faculty and university managers to derive utility on top of their salaries as also James (1990) suggests However, since reputation takes such a long time to build up, it is questionable whether this has any real effect on managerial behavior

Architecture:

The resource-based view (RBV) of the enterprise argues that firm-specific resources are determinants of competitive advantage and performance Architecture is understood in a resource-based view (RBV) as a strategic resource for comparative advantage that enables better management of enterprise‘s resources (Prahalad & Hamel, 1990)

Architecture can be view as an asset, as a source of sustainable advantages and therefore be a source of competitive advantage In detail, the mediation of IT resource

is mainly a task for IT architecture which steers the application portfolio This resource allocation can gain and maintain sustainable competitive advantages (Schelp

& Stutz, 2007)

Architecture plays an important role as an enabler to develop an appropriate structure Architecture is a mean to align corporate structures with their long term business strategies But due to a rapidly changing environment both corporate structures and architecture have to evolve synchronized to support the implementation

Lynch and Baines (2004) argues that ―The ability to undertake totally new initiatives that go beyond the current strategy, perhaps the most difficult resource to develop in higher education institutions because of the need to maintain quality of provision without damaging academic standards but is equally applicable to teaching (learning and development process innovations—e.g e-learning), research (e.g patents) and outreach/commercialization (e.g new commercial products and services)‖ (p 180)

Core competencies:

Core competencies are the collective learning in the organization, especially how

to coordinate diverse production skills and integrate multiple streams of technologies

If core competence is about harmonizing streams of technology, it is also about the organization of work and the delivery of value Core competence is communication, involvement, and a deep commitment to working across organizational boundaries It involves many levels of people and all functions World-class research in, for example, lasers or ceramics can take place in corporate laboratories without having an impact on any of the business of the company The skills that together constitute core

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competence must coalesce around individuals whose efforts are not so narrowly focused that they cannot recognize the opportunities for blending their functional expertise with those of others in new and interesting ways (Prahalad & Hamel, 1990)

―Core competence does not diminish with use Unlike physical assets, which do deteriorate over time, competencies are enhanced as they are applied and shared But competencies still need to be nurtured and protected; knowledge fades if it is not used Competencies are the glue that binds existing businesses They are also the engine for new business development Patterns of diversification and market entry may be guided

by them, not just by the attractiveness of markets‖ (Prahalad & Hamel, 1990)

Prahalad and Hamel (1990) argue that three areas distinguish what they call core competencies: 1 They must make a real impact on how the customer perceives the arganization and its services (or products); 2 They must be unique, or at least really special; 3 They need to be able to be extended to new services or products

Tacit Knowledge Approach is: Knowledge is personal in nature and very difficult

to extract from people; Knowledge must be transferred by moving people within or between organizations; Learning must be encouraged by bringing the right people together under the right circumstances (Sanchez)

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Explicit Knowledge Approach: Knowledge can be articulated and codified to

create explicit knowledge assets Knowledge can be disseminated (using information technologies) in the form of documents, drawings, best practices, etc Learning can be designed to remedy knowledge deficiencies through structured, managed, scientific processes (Sanchez)

So, based on 5 RBV concepts above and according to resource based (RB) the method for designing a strategy for a university is to identify core competencies and focus on them This is almost like a quote from Prahalad and Hamel (1990) and clearly indicates that the resource based view would be suitable Also, RB‘s opinion that a type institution does not need to make efforts to attract students suggest an internal, non-adaptive view of strategy RB proceeds by listing core competencies that are important in higher education Reputation is the key resource; it is expensive to build up but once possessed, it can be leveraged to directly save operating costs

To summarize, the pre-study gives supports that the resource based view would

Furthermore, resource based view can help to improve the quality of postgraduate education substantially and thus contributes to more effective governance in higher education Specifically, an integrated model supports the management of higher education institutions confronted with increasing complexity

by offering new ways of balancing diverse requirements with regard to existing internal constraints (Jurgen & Kerstin, 2008)

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This is strong support for using the resource-based view in higher education For this reason this study presents how to take 5 factors of RBV to propose strategy for enhancing the quality of Vietnam‘s higher education And through this make competitive advantage for higher education universities in Vietnam in specific and higher education in Vietnam in general

2.1.2 Funding

There have been mixed reactions to performance funding Several authors reported that it created a new environment on campus where faculty and staff became more concerned with educational outcomes Due to the low scores of students on problem solving, one campus initiated a series of workshops and trained faculty in teaching critical thinking skills They also distributed student resumes to potential employers to increase their job placement rates, and required all administrators to provide student advising to improve retention To achieve gains in student test scores, other authors recommended teaching ―critical thinking, problem solving, quantitative reasoning, and writing‖ across the curriculum Spiral techniques of instruction were promoted on some campuses to give students a frequent review of the curriculum (Ben

& Hans, 2001)

Others were concerned about the impact and utility of performance funding They believed that the process becomes increasingly bland since the temptation is to include all interests and then reduce them to what is most easily measurable In some cases, it

―has not had much impact on the curriculum‖ and was more useful for grants and reporting purposes There were concerns that institutions with underprepared students operated ―under a severe handicap‖ when competency testing was used; and, those with better prepared students had ―an unfair advantage‖ High-risk students who require remedial education may be less likely to graduate

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Beside, when describing the funding mechanisms for the university sector, it is a fact that in some countries separate mechanisms or formulas are in place for the funding of teaching and the funding of research Whether these mechanisms actually lead to separate, designated budgets – that is, budgets to be used exclusively for teaching or research respectively – is another question altogether However, the funding authorities in all countries analyzed will allow the institutions the freedom to use the combined core budgets for teaching and research in any way they see This is known as ‗lump sum‘ funding In many cases, the universities‘ base operating grant for teaching is supposed to be used for research as well, certainly for the research and scholarship that underpins teaching The base operating fund owing from the funding mechanism is meant explicitly for teaching as well as research (Ben & Hans, 2001)

So, the funding of the universities‘ teaching activities does not need to be transformed into either a performance-based system or a vouchers-type system if work

is done on felling the above conditions Governments may continue to rely on enrollment-based allocations instead of advocating performance based funding approaches and may feel it is wiser to make greater efforts in the areas of improving student choice and assessing the quality of teaching and research (Ben & Hans, 2001) Legislatures have traditionally funded higher education institutions on enrollment growth Enrollment-driven funding has increased access to higher education, but

―many state leaders believe that the expansion of access has come at the cost of adequate standards of performance‖ There have also been complaints about the productivity of higher education institutions In response, states have adopted performance funding to give colleges and universities incentives to improve higher education (Hoyt, 2001)

Hoyt‘s (2001) findings also have broader implications for performance funding

in general If state policymakers rush into performance funding without understanding

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the impact of their choice of indicators, they may not achieve their goals Indicators may be subject to manipulation, and performance funding may result in unintended consequences Their study provides one example of a funding that was intended to reward institutions for student learning—but student learning was not accurately measured

Beside above sides, public school funding is extremely important to the economy, the retiree, the active teacher, our student, hence the future of them The foundation formula for public schools must be fully funded! In many researcher opinions, where you live absolutely affects the amount of money received and affects the schools greatly We can in no way compare to the education that they are receiving Money can be a big help If Vietnam‘s universities have high funding, they will been getting new infrastructure, increasing quality of higher education, teaching program, enhancing researches activities and we have yet to get them

Funding helps very effective in all Vietnam‘s universities that need quality teachers and administrators, science lab, music, arts, or foreign language program and have a massive special education/gifted students The fact is, money drives high income earners to pick and choose from many options the best school for their children and pay for expensive extra curriculum activities Also, funding influences a school district to pick and choose the best teachers and programs for their students and community

I worked at low income and affluent universities and I saw the power of almighty money in one university and devastation of inadequate money in another university Money gives schools, families, communities, and nation‘s power of many choices I think proper school in general and universities funding in specific should be a common sense policy for all schools in this super rich nation And final growth in

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funding is very important It allows improved educational outcomes and it allows a better education system

2.1.3 Higher Education Performance (HE Performance)

Higher education systems operate in very different policy environments as measured by such attributes as constitutional status, federal/state influence, political culture, and executive powers Performance reflects the aggregated outcomes of the individual colleges and universities that form a state system In the model of Hoyt (2001), performance is estimated in the U.S by the grades awarded in Measuring Up

2000 for preparation, affordability, participation, completion, and benefits

Performance measurement practices in higher education have, by and large, followed developments in organizational theory where there are three major approaches to system (Hoyt, 2001)

Performance assessment includes input-output ratio analysis, outcome-based assessment, and stakeholder-based evaluation (Altschuld & Zheng, 1995) Depending

on the core value systems of an institution and its assessment objectives, different approaches have different utilities Each of these approaches is useful and relevant, depending on the degree to which it fits the specific needs and situations of the organization concerned Typically, a number of performance indicators reflect an organization‘s relative position to its peers in utilizing resources, managing organizational processes, and achieving outcomes These performance indicators are typically ratio-based quantitative measures in ordinal, cardinal or comparative terms Many universities compare their performance indicators with those of a group of peer schools in a process commonly known as ―benchmarking‖ Individually, each performance indicator is useful in identifying the position of a university not only relative to its benchmark peers in a specific performance area, but also in reference to past performance (Hoyt, 2001)

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In other side, Richard and Kent (2002) argue that states can achieve affordable systems either through high-tuition or low-tuition strategies, but high performing states will offer significant student aid In the absence of adequate need-based aid, low tuition alone will not create optimal participation levels In the presence of high tuition, the participation of students ineligible for assistance will be inhibited Clear and stable criteria for funding enhance the legitimacy of government policy in general, creating a favorable climate for collaboration Coupling funding with performance (or outputs) as opposed to needs (or inputs) will increase policy effectiveness if information on performance is produced and disclosed Fiscal policies in high performing states reward improved performance on both participation and completion Clear and stable criteria for funding enhance the legitimacy of government policy in general, creating a favorable climate for collaboration Coupling funding with performance (or outputs) as opposed to needs (or inputs) will increase policy effectiveness if information on performance is produced and disclosed (Richard & Kent, 2002)

Furthermore, performance reflects the aggregated outcomes of the individual colleges and universities that form a system In the model, available on linking, completion, and benefits is used to estimate performance Based on our case studies of higher education systems in the Vietnam, we advance eleven hypotheses about how RBV and funding can influence the performance of higher education system

Our purpose in conducting this study was to develop a model and related propositions that explain performance of the higher education systems when apply RBV in the design, funding, and regulation of higher education in Vietnam We do not mean to suggest that differences in policy are the only or even the most important explanations that might be offered for differences in performance There are different economies, geographies, industries and political realities Any of these differences

2.2 Relationships between Constructs

2.2.1 RBV and Funding

RBV is not a brand new concept and one might suggest that it is mere common sense (O'Riordan, 2006) But an awareness of how RBV can be applied to create revenue in the companies and any organizations has gained popularity in recent times and key writers on the subject speak of VRIO (Value, Rarity, Imitability and Organization) framework which started gaining strength from researchers like Barney, and Grant According to Lynch and Baines (2004) a resource will create revenue if it

is reputation, architecture, innovative capacity, core competencies and knowledge based advantages

Indeed, Lynch and Baines (2004) argue that a HEI‘s funding is a function of the reputation, architecture, innovative capacity, core competencies and knowledge based advantages of its resources and capabilities (indicative of traditional RBV logic), but also of their durability, appropriability, and superiority And their finding that reputation, innovative capacity, and core competencies, rather than specific architecture and knowledge based advantages, determine a HEI‘s revenue

The RBV also emphasizes that isolating mechanisms act as the fundamental determinants of firm performance or universities/institutes performance Most

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research has focused on the characteristics resources require to be able to provide an entity with a funding based RBV The key to funding is argued to be the ability of an organization to find the ―fit‖ between what it is able to do and what it has the ability to

do

So, a key concept in explaining the funding through the RBV is providing an illustration of how potential competitive resources may be linked to teaching, research and third-core funding activities It is not intended to be a prescriptive list; future research should explore this further (Lynch & Baines, 2004) which are in essence the strategies developed by the HEIs

The traditional view of RBV is based on the assumption that resources that create competitive advantage for firms must be owned and controlled by the firms However,

in recent years, evidence suggests that resources of alliance partners transferred through direct inter organizations interactions have a considerable impact on organization performance The fundamental assumption of the RBV, according to which organizations must own or at least fully control the revenue conferring resources, turns out to be incorrect (Lavie, 2006)

Traditionally, RBV was developed to understand the conditions under which organizations gain and sustain a competitive advantage, more recent researcher have however, shown RBV to be also applicable at the organization‘s process-level to be effective in creating advantage for them and many studies in the IT industry have confirmed this view (Ray, Barney, & Muhanna, 2004)

Therefore, applying the above theories to the context of funding and RBV in strategy development for higher education in Vietnam, we propose the following hypothesis:

H1: RBV (reputation) has positive impact on funding

H2: RBV (architecture) has positive impact on funding

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H3: RBV (innovation capability) has positive impact on funding

H4: RBV (core competencies) has positive impact on funding

H5: RBV (knowledge based advantages) has positive impact on funding

2.2.2 RBV and Higher Education Performance

Our proposed relation between complementarily and performance was based on a resource-based view of universities The exchanges of resources were hypotheses to

be the most important rationale for cooperation and for engaging in higher education system It was observed that it is not fully in line with reality to perceive higher education system merely as vehicles for obtaining strategic resources In spite of these alternative explanations, the resource-based view as a new way of looking at cooperation is valuable Inherent to strategic management research, the resource-based view is prescriptive in nature, and therefore it makes us aware of the opportunities that arise through cooperation in an international context At the same time, it makes clear that from this perspective, these international opportunities remain rather unexploited

by the consortia that were analyzed in this study Sometimes this was because universities simply did not aim for it In other cases, it has become clear that many universities – and countries – are not yet prepared or able to engage in intense and close collaboration with foreign partners (Beerkens & Derwende, 2007)

Strategy is defined as the match an organization makes between its internal resources and skills…and the opportunities and risks created by its external environment (Scott, Shanthi, & Bruce, 2007) In recent times RBV has become one of the most influential frameworks in the strategic (Lado, Boyd, & Wright, 1992) management literature (Dahan, 2005; Lavie, 2006) and the fundamental question in this field is how firms achieve and sustain competitive advantage (Juga, 1999) The main theme of the resource-based theorists suggests that a sustainable firm strategy (and performance) is strongly embedded in its resources and capabilities and that these

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diverse, hard to copy resources and capabilities provide the basis of strategic advantage and superior firm performance (Lado, Boyd, Wright, & Kroll, 2006) The resource-based literature strongly places a firm‘s unique bundle of resources as the major antecedent of its strategy and performance (Chan, 2005)

In other words, Joshua and Patricia (2003) said that particularly resource factors are useful predictors of universities performance, and they argue that the resource based view for the university context

Following this idea to the context of HE performance for higher education in Vietnam, we hypothesize that:

H6: RBV (reputation) has positive impact on HE performance

H7: RBV (architecture) has positive impact on HE performance

H8: RBV (innovation capability) has positive impact on HE performance

H9: RBV (core competencies) has positive impact on HE performance

H10: RBV (knowledge based advantages) has positive impact on HE performance 2.2.3 Funding and HE Performance

With regard to performance-based funding, Serban (1998) make a distinction between performance-based funding (PBF) and performance-based budgeting They define PBF as ‗special state funding tied directly to the achievements of public colleges and universities on specific performance indicators‘ In PBF, the relationship between funding and performance is automatic and formulaic The funding authorities (ministries or intermediary bodies such as funding councils and research councils) explicitly include quantified teaching and research output data in the formulas they use for distributing public funds among institutions Serban (1998) comment about performance-based budgeting(PF2): state governments or coordinating boards are using reports of institutional achievements on performance indicators in an indirect way In PB2, performance information (i.e a quite long list of performance indicators)

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is used in a loose and indirect way to shape the total budgets for public colleges or universities Whereas the link between performance and funding is clear in PBF, it is much less clear in PB2, because it is discretionary and undeclared Unlike for PBF, no formulas are used in PB2 approaches

One of the main cases in which budgets are not determined on the basis of formulas but on the basis of qualitative assessments can be found in the approaches used by research councils for allocating budgets to researchers or research groups Research councils, being intermediary agencies between universities and government, supply monetary support for research projects The funds generally are awarded on the basis of project proposals submitted by researchers or research groups In a competitive process knowledgeable experts (peers) judge the submitted proposals The quality of the proposal and the requested budget are important elements in this process Often, the expertise of the researchers and their past performance are used in the selection process Although the budget requests often will be based on a set of rules that prescribe how specified budget items (e.g staff costs) should be calculated, the decisive factor in determining the budget in the end is qualitative judgment Again, performance, or rather expected performance, is an important criterion in arriving at the funding decision Therefore, the relative share of research council funding will be included as an important indicator of the degree of performance orientation in the (research) funding of the universities in the countries under study (Ben & Hans, 2001) Performance budgeting has improved higher education performance to a ―great extent.‖ Higher education system and a designation of whether each uses performance funding, performance budgeting, or both in its higher education system (Detch, Wright, Hausser, & Ogden, 2001)

Performance-based budgeting is different from the two primary modes of

allocating resources to public colleges and universities currently used in that resources

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flow only after the recipient of the funds can demonstrate that a specified outcome

has, in fact, been produced (Jones, 1997) In short, incremental and formula budgeting methods have a needs-based approach to resource allocation, whereas performance-based budgeting/fun ding has a more merit-based approach to funding According to Layzell (1999), a performance-based budget has the following four characteristics:

It presents the major purpose for which funds are allocated and sets measurable objectives

It reports on past performance and uses common cost classifications that allow programs to be compared rather than focusing on line-item comparisons

It offers management flexibility to reallocate money as needed and to provide rewards for achievement or penalties for failure

It incorporates findings from periodic program evaluations that are supported by credible information that can be independently audited

Jones (1997) further notes that for a performance-based funding initiative to be implemented, the following four elements must be in place:

The objectives to be attained either outcomes or demonstration of good practice The metrics of success specific measures or definitions on which performance is calculated

The basis of reward the benchmarks of success

The method for resource allocation

Layzell (1999) would offer four suggestions for those considering the development of a performance-based funding initiative for higher education institutions, which are drawn from the literature as well as actual experience:

1 Keep it simple This advice ranges from using a minimum number of

performance indicators to the development of the actual resource allocation

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mechanism Unnecessary complexity only serves to hinder implementation and communication to key individuals involved in the process

2 Communicate and clarify often Making sure that everyone involved

understands the goals and objectives of the development process and that each step is clearly described will greatly facilitate the implementation of performance-based funding

3 Provide room for error and experimentation Given that the development of

performance indicators is likely to result in unforeseen difficulties, the process of developing a performance-based funding program should also provide room for error and experimentation at the beginning

4 Learn from others’ experiences, but develop your own program The process

of learning from others‘ experiences, good and bad, with the development and implementation of performance-based funding is an extremely useful process in the development of one‘ s own program However, every state should also ensure that its program reflects its own particular needs and concerns

To conclude this part, we assume:

H11: Funding has positive impact on HE performance