Culture and entrepreneurship intention of the youth in vietnam

ii CULTURE AND ENTREPRENEURSHIP INTENTION OF THE YOUTH IN VIETNAM In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION... There are many resear

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

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CULTURE AND ENTREPRENEURSHIP INTENTION OF THE YOUTH IN VIETNAM

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

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Acknowledgement

To complete this thesis, I have been benefited from the following people…

At first, I am heartily thankful to my supervisor, Doctor Nguyen Quynh Mai, whose guidance and support from the initial to the final level that enabled me to accomplish this research Without her whole-hearted instructions and supports, I hardly overcome the obstacles during research process She not only shows me how to conduct a real and meaningful research but also inspire me to keep studying

My sincere thanks also go to my two specially friends, ―Vu and Vu‖, who always give me timely advices and helpful supports during the time research being carried out

I would like to thank to all those professors in School of business for helping in revising questionnaires and many academic advices My appreciation is also expressed to the fervor support from school‘s student affair

Last, I want to show my deep gratitude to my family, especially my mother, for giving birth to

me, encouraging and supporting me throughout of my life

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Plagiarism Statements

I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University

Ho Chi Minh City

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Copyright Statement

This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognize that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the author‘s prior consent

© Hua Thi Ngoc Quyen/ MBA03026 / 2013

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Contents

LIST OF TABLES viii

LIST OF FIGURES xi

Abbreviations xiii

Abstract xiv

CHAPTER 1: INTRODUCTION 1

1 Research background 1

2 Rationale 2

3 Entrepreneurship in Vietnam 3

4 Problem statement 7

5 Research Objectives 8

6 Research methodology 8

7 Research scope 8

8 Significance 8

9 Research structure 9

CHAPTER 02: LITERATURE REVIEW 11

1 Entrepreneurship 11

1.1 What is entrepreneurship? 11

1.2 Dimensions of entrepreneurship intention 11

2 Culture 12

3 Vietnam National Culture 16

4 Factors influence entrepreneurship 23

4.1 Personal traits 23

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4.2 Needs and Motives 27

4.3 Environment Context 31

CHAPTER 03: RESEARCH METHODOLOGY 34

1 Conceptual framework and hypotheses 34

2 Research Procedure 36

3 Measurement 36

4 Semi – structure interview 41

4.1 Interviewer 41

The interview protocol is attached in Appendix B 41

4.2 Outcome of Semi-Structure interview 42

5 Draft questionnaire 42

5.1 Questionnaire design 42

5.2 Pilot questionnaire 43

6 Data collection method 43

6.1 Sample 43

6.2 Sampling design 44

7 Data analysis method 44

7.1 Descriptive statistics 44

7.2 Factor analysis and reliability test 45

7.3 Testing model with Structural Equational Modelling (SEM) 48

CHAPTER 04: DATA ANALYSIS – FINDINGS 49

1 Introduction 49

2 Sample demographic 49

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3 Descriptive statistics 51

3.1 Dependent factor (Entrepreneurship intention) 51

3.2 Independent factors 51

4 Exploratory factor analysis (EFA) and Reliability test using Cronbach‘s alpha 59

4.1 EFA for individual scale 59

4.2 EFA for all factor scales together 68

5 Confirmary factor analysis (CFA) 74

5.1 CFA of factor Entrepreneurship intention 74

5.2 CFA of all independents constructs 75

6 Model and hypotheses modification 83

7 Testing research model using SEM 85

CHAPTER 5: DISCUSSION, RECOMMENDATION, AND CONCLUSION 85

1 Discussion 85

1.1 The relationships between Confucian work ethics and other factors 85

1.2 The relationships between Family culture value and other factors 87

1.3 The correlation between Motives and Personal traits 88

1.4 The influence of Confucian work ethics on Entrepreneurship intention 88

2 Limitations and Recommendations 90

3 Conclusion 90

REFERENCE LIST 91

APPENDIXES 95

APPENDIX A: ENTREPRENEURIAL READINESS QUESTIONNAIRE 95

APPENDIX B: SEMI-STRUCTURED INTERVIEW PROTOCOL 97

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APPENDIX C: RESEARCH SURVEY 104 APPENDIX D: EXPLORATORY FACTOR ANALSYS (ALL FACTORS) 110 APPENDIX E: NORMALITY ASSESSMENT 125 APPENDIX F: REGRESSION WEIGHT AND STANDARDIZED REGRESSION WEIGHT OF FINAL CONSTRUCT MODEL 126 APPENDIX G: MODIFICATION INDICES OF FOR ADJUSTMENT OF FINAL MODEL 128

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LIST OF TABLES

Table 1: The mainstreams of entrepreneurial research (Chu 1998:9) 1

Table 2: Enterprise category 4

Table 3: Number of SMEs categoried by labor scale 5

Table 4: Characteristics and attributes of entrepreneurs (cited from Turan & Kara, 2007) 24

Table 5: Traits of entrepreneurs (cited from Pendergast , 2004) 24

Table 6: Entrepreneurship entry motives (cited from Basu & Altinay , 2002) 29

Table 7: Research hypotheses 35

Table 8: Measurements 37

Table 9: Model fit indices 47

Table 10: Entrepreneurship intention descriptive statistics 51

Table 11: National culture descriptive statistics 52

Table 12: Personal traits descriptive statistics 54

Table 13: Motives descriptive statistics 56

Table 14: Environment descriptive statistics 58

Table 15: Total Variance Explained of factor EP intention 59

Table 16: RELIABILITY TEST 59

Table 17: Item elimination process of factor National culture 60

Table 18: Rotated Component Matrix 61

Table 19: RELIABILITY TEST of Culture subconstructs 61

Table 20: Remained cultural subconstructs for next EFA 62

Table 21: Item elimination process of factor Personal traits 63

Table 22: Rotated Component Matrix of factor Personal traits 64

Table 23: Reliability test of subconstructs factor Personal traits 64

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Table 24: Item elimination process of factor Motives 65

Table 25: Rotated Component Matrix of factor Motives 66

Table 26: Reliability test of subconstructs factor Motives 66

Table 27: Remained items of Motive factor for next EFA 67

Table 28: Item elimination process of Factor Environment 67

Table 29: Rotated Component Matrix of factor Environment 68

Table 30: Reliability test for subconstructs of factor Environment 68

Table 31: Sum of items for next EFA 69

Table 32: Item elimination process 70

Table 33: Rotated Pattern Matrix of All Scale Together 70

Table 34: Sub-constructs and their names 72

Table 35: Reliability test for new-formed sub-constructs 73

Table 36: HOELTER index 75

Table 37: Fitness indices of construct model 76

Table 38: Composite reliability and extracted variance of each construct 78

Table 39: Composite reliability and extracted variance of each construct 79

Table 40: Reliability using Cronbach's alpha 80

Table 41: Correlation calculation and estimation 80

Table 42: Modified hypotheses 83

Table 43: Fit indices of model phase 1 85

Table 44: Regression Weights of model phase 1 74

Table 45: Standardize regression weight of model phase 1 74

Table 46: Fit indices of model testing phase 2 75

Table 47: Regression weight of model phase 2 (version 1) 77

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Table 48: Standardized Regression Weights of model phase 2 (version 1) 77

Table 49: Covariances between Personal traits and Motives 78

Table 50: Correlations between Personal traits and motives 78

Table 51: Regression weight of modified model 80

Table 52: Fit indices of second time modified model 82

Table 53: Fitness indices of Final model 82

Table 54: Result of hypotheses testing 84

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LIST OF FIGURES

Figure 1 : Number of enterprises registered annually (source GSO) 4

Figure 2: Number of active enterprises in term labor scale on 1 Jan 2010 5

Figure 3: Number of SMEs categoried by sector (source GSO) 6

Figure 4: Recommended theoretical model by Phan Truong Giang (2011) 7

Figure 5: Geert Hoftede‘s five cultural dimensions 14

Figure 6: A model of Culture's Assciation with Entrepreneurship 31

Figure 7: Conceptual model 34

Figure 8: Research procedure 36

Figure 9: Respondent' current job 49

Figure 10: Respondent's education level 49

Figure 11: Respondent's desire job 50

Figure 12: Questionnaire responses on national culture 53

Figure 13: Questionnaire responses on personal traits 55

Figure 14: Questionnaire responses on Motives 57

Figure 15: Questionnaire responses on environment factor 58

Figure 16: single construct model of EP intention factor (version 1) 74

Figure 17: Single construct model of EP intention factor 75

Figure 18: Construct model (version 1) 77

Figure 19: Construct model (final version) 82

Figure 20: Research model modification 83

Figure 21: Model phase 1 73

Figure 22: Model testing phase 2 76

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Figure 23: First time modified model 79

Figure 24: Second time modified model 81

Figure 25: Final model 83

Figure 26: Simplified model 89

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Abbreviations

CFA Confirmary Factor Analysis

EFA Exploratory Factor Analysis

EP Entrepreneurship

GSO General Statistic Office

KMO Kaiser – Meyer – Olkin index

SEM Structural Equational Modelling

SMEs Small and Medium Enterprises

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Abstract

Entrepreneurship is considered as the main source of economic development, poverty reduction and job creation There are many researches on the world has been studied this field for long time, however, the concept of entrepreneurship seem to be fresh for Vietnamese scholar since there is very limited number of research studying on Vietnamese entrepreneurship There are varieties of approach for studying entrepreneurship, this research has been conducted on the cultural perspective to see how Vietnam national culture has influence on new business start-ups

of young people living in Ho Chi Minh city

The research is based on previous qualitative study of Phan (2011) which has been located the prominent and typical values of Vietnamese people To continue, the quantitative research is needed to identify the causal relationship between national culture and entrepreneurship of youth From the literature review, the relationship is formed with more three added moderate factors including personal traits, motives, and environmental context

A sample of 447 people including students, office staffs, and young entrepreneurs who are from

18 to 35 years old participated in research survey Semi structure interview is employed for the measurement formation and questionnaire design Convinience and snowball samplings are used for data collection The technique of structural equational modeling is applied to identify the causal relationships among factors

The findings show that entrepreneurship intention of young people originates from the personal traits which are influenced by Confucian work ethics, family culture values and personal motivations Confucian work ethics has no direct effect on entrepreneurship but it underlies and directs the common thoughts and behaviors of Vietnamese people including starting a new venture The research is failed to identify the relationship between external environment and entrepreneurship, therefore, it is suggested for the further study should have long term perspective to see the effect of environment on new firm formation

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Entrepreneurship occurs at significantly higher rates than at any time in the last 100 years (Gartner & Shane, 1995) From research perspective, there are numerous studies investigating business start-up from both sides, supply and demand The supply-side school concentrates on the characteristics of entrepreneurs On the other hand, the demand-side school focuses on the environmental basis of organization formation From subject-area approach, the study of entrepreneurs can be conducted under one or combination of the four dimensions stream as compiled and summarized in table 1.1 (Chu, 1998) below

Table 1: The mainstreams of entrepreneurial research (Chu 1998:9)

Mainstreams Research Subjects Line of Inquiry

Social and cultural

Entrepreneurs of different social and cultural backgrounds

Causes (Why)

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environment and entrepreneurship

in explaining the growth of entrepreneurial activity (1969, 1999, 2003) Sawyer (1954) with the same argument has show that the persistence of Puritan values and the frontier spirit in American society have a strong support for new business formation in the United States Davidson (1997) conducted a research on 6 regions of Swenden to identify the influence of culture on different new firm formation rate across regions They concluded that cultural values and beliefs have a small but statically significant association with regional rates of new firm formation Lee and Peterson (2000) suggested that only countries with a culture that is favorable to entrepreneurship are able to generate a strong entrepreneurial, leading to the development of entrepreneurial activity and the increase of global competitiveness

Many researchers try to identify personal characteristics distinguishing entrepreneurs and non-entrepreneurs (Bolton & Thompson, 2004; Shane, 2003; McClelland, 1961) Several researches which are based on five cultural dimensions of Geert Hoftede have pinpointed that cultural values have effects on entrepreneur‘s characteristics and motives (Scheinberg&MacMillan 1998; McGrath et al 1992b; Mueller & Thomas 2000; Thomas

& Mueller 2000)

Chan K L, Sivapalan S., and Bahiyah A H (2009) conducted a research focusing on entrepreneurship of young people (from 25 to 40 years old) in Malaysia The study result

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has show that not only sociological environment like religious particularity, cultural values but also variety of business attributes such as willingness to take risk, to work hard, to continually learn, and to be undaunted by challenges has influence on new business star-ups of youth in Malaysia The research also compared the different characteristics between male and female entrepreneurs

However, social-cultural approach has been widely critiqued Gerschenkron (1962b, 1966) was strongly disagreed about the role of national culture and norm as a determinant

of national entrepreneurship He argued that the statics and rigidity of national culture make it impossible to totally account for the dynamic nature of entrepreneurial activity

He also figured out the social-cultural perspective had missed Schumpeter‘s basic premise the entrepreneurs often acted as agents of change rather than as captives of their environment (cited in Jones&Wadhwani, 2007)

On the other hand, Hayton, George and Zahra (2002) argued that culture is as ―a moderator of the relationship between contextual factors and entrepreneurial outcomes‖ They believed that ―cultural characteristics transform and complement the institutional and economic contexts to influence entrepreneurship‖ Moreover, they said ―culture is not the only one moderator of the relationship between new business formation and economic and institutional contexts‖ There are some other moderators such as need and motives, beliefs and behaviors, and cognition of entrepreneurs which should be included

in studying entrepreneurship

3 Entrepreneurship in Vietnam

In Vietnam, the Doi moi (renovation) policy in 1986 coupled with the passage of the

Enterprise Law in 2000 has stimulated a tremendous growth of small – and medium – sized enterprises (SMEs), which are considered an important vehicle for the economic growth in Vietnam Since then, there has been a phenomenal transition to a market-oriented model, in which entrepreneurship has broadly become a universal modality for people wishing to become gloriously rich For the last decade, the number of newly established enterprises has increased dramatically The new business formation rate was

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to be about 6 times larger in 2010 compared with one in 2000

Figure 1 : Number of enterprises registered annually (source GSO)

Under Decree No.56/2009/ND-CP of the Government on June 30, 2009 on assistance to the development of SME, micro enterprise, small enterprise, and medium enterprise are defined based on labor scale, capital and economic sector as follow:

Table 2: Enterprise category

SECTOR

Micro enterprises

Number of laborers

Total capital Number of

46,744 58,196 65,319 84,531 84,000

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In term of labor scale, there are 248,842 active enterprises on 1 January 2010 Number of micro-, small-, and medium enterprise accounted for 97.43% During 2000 – 2009, micro enterprise sector achieved the highest average growth rate of 24.7% per annum in term of number, while the average growth rate of small, medium and large enterprises are 20.41%, 11.79% and 7.28%, respectively

Figure 2: Number of active enterprises in term labor scale on 1 Jan 2010

(Source GSO)

Proportion of micro, small, medium and large enterprises widely varied among economic sector, including private sector, state-owned and foreign invested one In private sector, micro, small and medium-sized enterprises took the largest proportion, of 98.54%, and accounted for 94.61 % of total active enterprises in Vietnam

Table 3: Number of SMEs categoried by labor scale

Total

Labor Scale Micro

enterprises

Small enterprises

Medium enterprises

Large enterprises

Figure 3: Number of SMEs categoried by sector (source GSO)

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Through the statistic numbers presented above, it is abundantly clear that entrepreneurship can be considered as a driving force of the economic growth, innovation and employment in Vietnam Because of those significant roles, Vietnamese entrepreneurship should be paid much more attention and higher consideration by scholars and governors in order to enforce the economy and assist entrepreneurs to overcome the challenges of globalization era

4 Problem statement

This research inherits the findings of (Phan, 2011) who took the first step on studying how cultural factors have influence on business start-ups of Vietnamese youth, his works are served as an exploratory stage for further studying about the impact of culture

on entrepreneurship in Vietnam By exercising qualitative approach, Phan used narrative method which employed the story – telling strategy, the content of stories collected from interviewees who are scholars and entrepreneurs are analyzed, coded, and categorized Phan drawn a conclusion that there are two factors that haves effect on entrepreneurship

of youth in Vietnam These are cultural factors (includes parental influence, sentimentalism, social orders, collectivism and sharing knowledge); and personal traits

(includes risk propensity, perseverance, passion, creativity and opportunity recognition) However, whether there is a relationship between these factors was not mentioned, and how they influence on entrepreneurship on young people in Vietnam has not been identified

Figure 4: Recommended theoretical model by Phan Truong Giang (2011)

In general, this research tries to answer the questions that what socio-cultural factors

influence young individual’s decision to switch from either paid work or unemployment to self – employment, and the relationship among those factors?

5 Research Objectives

 To develop the conceptual framework demonstrating relationships among factors/

determinants and between them with entrepreneurship of youth in Vietnam

 To determine the effect intensity of various factors on entrepreneurship of young

people in Vietnam

6 Research methodology

Utilizing the findings from exploratory research of Phan (2010) combined with literature review, the conceptual framework will be built Primary data for this research comes from a questionnaire survey of university students, office staffs and entrepreneurs in Ho Chi Minh City The model is tested by using the method of structural equation modeling

on the sample of 447 cases The research procedure and method will be described in detail in part three of this paper

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year, whereas the number of business goes bankrupt or closes down is noticeable also One of determinants that is said to make a considerable contribution to the success or failure of those business venture is culture, which has influence on not only entrepreneurs‘ characteristics, their needs and motives but also contextual environment However, it is surprising that not much academic research looks deeply into the relationship between those factors and their impacts on entrepreneurship in Vietnam Because of this demand, the research is conducted

The findings, firstly, will assist government to have proper regulations, policies, and campaigns not only for flourish new business venture but also improve the social perception about entrepreneurship, hence a favorable environment is generated for new business formation Secondly, on an academic perspective, research will serve as a foundation for further studies on entrepreneurship in Vietnam Moreover, in education, especially in university education, the outcome of this paper will be fundamentals for developing entrepreneurial training which plays an essential role in providing students with not only knowledge and skill but also encouragement, motivation, inspiration about business start-ups Finally, for business people, understanding the country‘s culture and social perception about entrepreneurship will help them to have more confidence and assurance to create their new business venture Particularly, for international managers, who have a desire to work in Vietnam, may need information to avoid cultural differences and adapt their strategies to fit environmental context in host country

9 Research structure

Chapter 1: Introduction

This chapter provides background information including a very brief history and main studying streams of entrepreneurship research Readers can find some numbers about Vietnamese new business formation rate and small and medium enterprise over years Research problem, questions, objectives are presented in detail A short research methodology and scope is mentioned Finally, research significant is clearly discussed

Chapter 2: Literature review

This chapter serves as fundamental knowledge for developing conceptual framework latter Literature review mentions, compares and discusses entrepreneurship related

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academic researches The term ―entrepreneurship‖ is defined by many authors Dimensions of entrepreneurship potential are described Research results about business start-ups topic are categorized by group of factors Based on literature review, a conceptual framework is built and hypotheses are raised

Chapter 3: Research methodology

First of all, a research procedure is described with 9 steps The manner of questionnaire construction is explained in detail Data collection, sample size and sampling technique used for conducting the research will be clarified

Chapter 4: Data analysis and Findings

This chapter presents techniques employed for data analysis including responses rate, profile of respondents, descriptive analysis, factor analysis, structural equational modeling and hypothesis testing

Chapter 5: Discussions, Conclusions and Implications

Works done in the research are discussed and summarized here Some recommendations and suggestions for further research will be mentioned

in response to identified opportunities.‖ Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence (Hisrich et al, 2005)

Schumpeter (1965) was among the first authors who defined ―entrepreneurs as individuals who exploit market opportunity through technical and/or organizational innovation‖ While Bolton and Thompson (2000) have defined an entrepreneur as ―a person who habitually creates and innovates to build something of recognized value around perceived opportunities‖ Successful entrepreneurs are described as innovative individuals who recognize opportunities and marshal resources to achieve their goals (Stevenson & Gumpert, 1985) And Mueller (2004:200) points out, ― the term potential entrepreneur applies to those individuals (male or female) within a given population or society that possess a particular traits, skills, aptitudes, and desires believed to motivate entrepreneurial behavior or at least increase its likelihood‖

1.2 Dimensions of entrepreneurship intention

Entrepreneurial orientation has been considered as an essential area of entrepreneurship research and attracted great attention from researchers (Begley & Tan, 2001; Thomas & Mueller, 2000) Nguyen et al (2009) affirmed that studies of entrepreneurship potential have focused largely at individual level of analysis The advantages of a micro-level

However, it is argued that desire and confidence are not enough to measure entrepreneurship potential (Nguyen et al., 2008) It is explained that ―a person who has a desire to create a new venture may never intend to do so because s/he is deterred by the perception that the environment is not favorable or the belief that starting a new venture

is not feasible On the other hand, the concept of a person‘s confidence only makes sense

in the context of ―performing specific tasks‖ – in this case, creating a new venture‖ Therefore, the third concept is introduced: intention, which can fill the gap between desire and confidence to create a new venture It is defined as a person‘s intention or plan

to create a new venture in the near future

2 Culture

Among factors driving entrepreneurship such as political regime, economic growth stage, trading history, culture is often argued to play a dominant role affecting this phenomenon(Christopher & Kent, 2003) Culture has been described as an elusive, difficult – to - define concept (Ralston et al., 1997; Trandis et al., 1986) Hoftede and Bond (1998) defined culture as the collective programming of the mind that distinguishes the members of one category of people from those of another In a similar vein, culture can be seen as the rich, complex set of meanings, beliefs, values, and symbols prevalent

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among people in society (Schwartz, 2003, cited from Nguyen et al., 2008) Similarity, drawing mainly from Herbig (1994) and Hofstede (1980), Hayton, George, and Zara (2002, 33) propose the following general definition: ―Culture is defined as a set of shared values, beliefs and expected behaviors‖ They add: ―Deeply embedded, unconscious, and even irrational shared values shape political institutions as well as social and technical systems, all of which simultaneously reflect and reinforce values and beliefs‖ These values, symbols, and beliefs tend to be securely established in an individual by adolescence, but do involve from generation to generation (Ralton et al., 1999)

One of the most well-known theories about national culture belongs to Geert Hofstede In

1980, he first time introduced the 4 dimensions to measure cultural differences across nations This finding was a result of quantitative research conducted with the sample size

of 116,000 employees, through 72 countries from 1968 to 1972 The survey questions dealt with a variety of issues related to the employee‘s values, perceptions of their work environment and motivations Continuing studying on this topic with persistency, Hofstede (2001) added the fifth cultural dimension The five dimensions are actually central tendencies for every nation (Hofstede, 2001) These are classified as follows:

(1) Power distance (PDI) is a concept that relates to the inequality According to

Hofstede (2001), Power distance describes the extent of inequality that exists between rulers and those that are ruled, along with the level of acceptance of that inequality within the culture In another word, it refers to the beliefs that people in a culture hold about the appropriateness of power and authority differences in hierarchies such as business organizations

(2) Individualism vs Collectivism (IDV) is the extent in which a person‘s belief about

the relative importance of the individual and the groups to which that person belongs

(3) Masculinity vs Femininity (MAS) is the dimension that reflects differing goals and

the division of emotional roles between men and women

(4) Uncertainty Avoidance (UAI) is defined as the feeling people have regarding

uncertain and ambiguous situations It reflects the level of structure that a society expects and is comfortable with everyday dealings

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(5) Long- vs Short-term Orientation (LTO) is the manner in which people are

motivated to work towards different kinds of goals

This theory has been cited several thousand times, thus, there is availability of existing data, and it is also easier to compare one nation culture to other nations/ regions The linkage between cultural values and entrepreneurship is also tested many times in many countries, and this association is based on the framework of Hofstede‘s cultural dimensions Shane (1992) had employed two out of four cultural dimensions of Hofstede (1980) to measure the impact of national culture on national rates of innovation He concluded that that individualism is positively associated and power-distance is negatively associated with national innovation rates, even after adjusting for the influence of national wealth Shane (1993) also investigated the association between four of (Hofstede, 1980) dimensions described previously and the national rates of innovation in 1975 and 1980 Shane found that uncertainty avoidance was negatively associated with innovation in both periods Individualism was found to be positively associated with innovation in 1975 but not in 1980 Similarly, power-distance was found to be negatively associated with innovation for the earlier period but not the latter one Masculinity had no significant association with innovation at the national level These results indicate that the association between specific cultural dimensions (as captured by Hofstede) is not temporally stable

Figure 5: Geert Hoftede’s five cultural dimensions

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According to Geert Hofstede (1991), Vietnam society may be characterized as scoring high in terms of power distance, collectivism, long-term orientation, but exhibiting low results in terms of masculinity and uncertainty avoidance This is also a typical cultural values of Asian countries

In the exploratory research of Phan (2011), his findings one more time confirmed the dominance of collectivism in Vietnamese culture in which people define their self-image

in term of ―We‖ They tend to belong in groups that take care of them in exchange for loyalty This is manifest in a close long-term commitment to the ―member‖ group, be that

a family, extended family or extended relationship Loyalty in a collectivist culture is paramount and overrides most other societal rules and regulations Such a society fosters strong relationship, where everyone takes responsibility for fellow members of their group In collectivist societies, offence leads to shame and loss of face From the evidences collected from qualitative interview, Phan (2011) concludes that collectivism is generally a cultural barrier for entrepreneurship Vietnamese people are taught that it is not good to be different The fear of being different from the group impedes creativity and narrows the room for innovativeness, which are necessary for starting-up a new business venture

However, the theory of Hofstede is criticized by many scholars (McSweeney, 2002; Smith, 2002; Williamson, 2002) because of following reasons such as the level of analysis used, the potential for stereotyping , methodological concerns , and whether the simplicity of the model truly accommodates the complexity of culture Hampden – Turner and Trompenaars (1997) also argued that Hofstede‘s (1980) cultural dimensions are linear, whilst true cultures are not Although the theory of Hofstede has been employed in many cross-country researches as its simplicity, this paper concentrates on how culture impacts entrepreneurship in Vietnam only Therefore, it is necessary to include other cultural values of Vietnam in studying the association between culture and entrepreneurship

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3 Vietnam National Culture

Village culture is an important component taking part in building Vietnam cultural

identity Being a typical agricultural country, people's lives must depend much on natural conditions, thus, for existence and development, owners of Viet Nam villages that are peasants in the majority must rely on and link to each other‘s In a small village, most of inhabitants had bloodline relationship, lived together and created a tightening connected community However, each village was an independent, separate community, and had very least contact with the outside world In addition, the closed – door policy of conservative feudal government made people have not much opportunity to broaden knowledge, widen vision, and experience new things That lifestyle had been remained for so long and had negative impacts on inhabitants‘ mindset It made Vietnamese people

become conservative, oppose changing, and restrict innovation which is considered as a

barrier of entrepreneurship

There is a unique characteristic of Vietnamese culture has been found by Phan (2011) It

is sentimentalism which is defined as considering emotion the top priority over all other

issues, including business transactions This exclusive value makes Vietnam different from voluntarism of China, spiritualism of Indian and rationalism of Western countries

On one hand, Chinese voluntarism is reflected through imposing their ideas/opinions on every action while in India, spiritual life is the most important People would rather starve than eat beef although there is abundance of cows wandering around Western people view their rationalism as ―If I think, I exist‖ On the other hand, Vietnamese people prioritize the sentiment which means that the relationship between two parties should be established prior to doing business with each other It is also concluded that this characteristic is hard to change and people doing business with Vietnamese need to adapt for success (Phan, 2011) Although the positive effect of sentimentalism on tightening the relationship among members of organizations, there are drawbacks of lacking rationalism As discuss above, a good relationship must be established before corporation, thus, when choosing partners, an entrepreneur prefers his/her relatives or best friends to a strange and talented person In addition, people take it easy to break the rule or sometimes violate their own discipline in order to get immediate benefits Specific

(Vuong & Tran, 2009) also proved that the presence of Confucian legacy in the comtemporary business society in Vietnam For a long time, there has been one

Vietnamese old sayings, Sĩ – Nông – Công – Thương is perhaps the kind of social

ranking, equivalent to English meaning of ―Scholar – Peasant – Craftsman – Trader/ Businessmen‖ The tradesmen have long been ranked lowest in terms of dignity in the society People doing business, conducting trades and loving profits appeared in Vietnamese legendary stories were mostly bad people, characterized by greed, ugly cultural traits, evil thoughts, source of deteriorating social ethics People were not encouraged to do business This is opposite to the Western world, where business people have a high-ranked stratum in the society, who are admired and aspired by the masses because of their luxury living standards and substantial wealth (Vuong & Tran, 2009) also explained why the businessmen had least respect in feudal time Traders and entrepreneurs were usually creative, innovative and risk – taking people, they became

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wise and rich and they needed more freedom to expand their business operation However, their wisdom and economic freedom were considered as threats to the kings, dukes and scholars Thus, the intentional retention this ranking could help to protect the power of centralized feudalist government

Today, due to modernization and economic development, this social order has been stricken Businessmen are no longer ranked at the lowest position like before People have more and more respect and admire for whom has a successful business career Phan

(2011) found that currently, the social order changes into Scholar– Trader/

Businessmen - Worker – Peasant There are various rewards for companies and

businessmen who make contribution to the country development People being successful

in doing business become a moral model or some kind of hero to the youth Obviously, this change will create a more favorable environment for entrepreneurship and entrepreneur will become a positive image in the society

Although the social status of business people gets much higher than the past, the position

of scholar/ Intellectual still takes the first place In the forth Confucian principle summarized by Hofstede and Bond (1988) said that people can get self-improvement

through education As a Confucian country, Vietnamese are stressing education and

respect for learning Most of Vietnamese parents want their children to study as much

as possible as they believe that studying is the easiest way to help their kids get good jobs and have more comfortable life On the other hand, continuing studying in university or college after graduation is always the first choice of many high school students Moreover, the number of people who want to enhance their personal competitiveness advantage by attending in graduate and post-graduate program increases year by year, mainly in Master of Business Administration (MBA) program The thirst of knowledge, especially business operation knowledge, makes Vietnam become a high-educated and sophisticated market in Asia

Back to the social ranking mentioned above, because of the traditional fondness of learning, Vietnamese society particularly admires scholar or intellectual people who are believed to be smart, wise and have wide range of knowledge However, there is no distinction between education and qualification, it is thought that the more certificates

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you earn, the more proficient you are Thus, the ability of a certain person will be evaluated by the number of certificates he/she has not what he/she can really do In another word, Vietnamese people study not only for the sake of knowledge but also for

sake the prestige and good jobs Favoring qualifications could lead people have a

tendency to be employed than self – employed It is very clear that starting a new business venture does not require any certification, but knowledge is a must

Phan (2011) found that family culture strongly affects a person‘s viewpoint and personality For example, a person who lives in an intellectual family is much more likely

to dignified than one whose family has violent or immoral background Similarly, someone whose parent is an entrepreneur tends to possess similar entrepreneurial traits and passion Therefore, what are Vietnamese family values?

Family is the basic institution in Vietnamese society Vietnamese people distinguish between the immediate and extended family The immediate family which is the traditional household in Vietnam, includes grandparents, parents, and children The extended family consists of the immediate family and close relatives who share the same last name and ancestors and who live in the same community Family in Vietnam looks similar to a system of mini hierarchic society with the most elderly having the strongest voice and taking charge the most activities in house To Vietnamese people, loyalty to the family is always set at first priority (Nguyen, 2012) as the blood relationship is always engraved in the mind of Vietnamese and has been given higher prominence compared the other kinds of connection There is mutual independence between family members It means that a person who is in trouble can to receive moral support and material assistance from his/her family Vice versa, he/she is expected to help other members when they are in need Phan (2011) found that whenever setting up a business, the entrepreneur relies on his/her family first, relatives and friends come later Any type of family support (emotion, materials, and finance) are seem very significant in encourage young people to start their ventures

For Vietnamese parents, children are the most valuable assets, thus they consider nurturing and educating their children as the most significant responsibility At an early

age, children are taught by their parents to behave according to the principle of filial

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piety which consists of loving, respecting, and obeying their parents and elderly in

family Children must accept all advice and demands from parent without questioning Talking back or acting contrary to the wishes of one's parents is evidence of lack of filial piety Physical punishment is sometimes to discipline unobedient children

Paternalism is one of dominant family values (Suy, 1994, cited in Geren 2011) Since

the highest status in Vietnamese families is given to the man (father), he had absolute authority in the household His position as provider for the family was unchallenged as he provided the main source of income for the household Being a head of household he had the final decision in all matters, although he might consult his wife or children The father, however, had the duty to exercise restraint and wisdom in running his family in order to deserve his respected position

There is unequal treatment between boys and girls in family ( Turan & Kara, 2008)

Having a boy in family was a "must" because the eldest son would assume the duties of his father when he died A family which had no son to continue the process was superstitiously thought to have disappeared forever This thought has considered the main reason for the sex ratio at birth imbalance in Vietnam nowadays, especially after the government had policy to slow down the population growth by limiting the number of children in one family by two According to the research of United Nations Population Fund (2009), the sex ratio at birth in Vietnam at the beginning of 2007 was more than 111.6, it means there were 111.6 boys over 100 girls In family which has both boy and girl, the boy is always received more love, caring, attention and expectation by his parents than girl(s) And parents always reserve bigger proportion of their fortune for male children Therefore, women entrepreneurs have more difficulty in starting a new venture as they receive less support in term material and finance for their business start-

up

Although doing business was paid low consideration and least respect in feudal period, Vietnamese traditional business has had its own values that remained till today Mostly depending on agricultural production for living, but in order to maintain the daily life, people began to sell their home-made products in exchange for other necessaries at the village‘s market Sellers and buyers were villagers or came from within neighboring area

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Therefore village‘s market could be considered as miniature copy of self sufficiency economy It led to business activities were taken at very limited in term of commodity abundance and capacity Small size market, tiny demand, goods shortage, that made

Vietnamese people in the old time prefer small scale business operation This custom

has remained till today and has influence on the mindset of current entrepreneurs who lack long term vision, have no ambition and mental preparation to expand their business out of the country‘s boundary Besides, no matter how discriminatory treated by the society, Vietnamese ancient businessmen and trader had built their own code of conduct,

especially stressing the importance of business ethics While prestige and reputation

were paid much attention through maintain and enhance product quality, cheating in trading was condemned and boycotted

In addition, the manner that Vietnamese conduct business is based on relationship According to Vuong & Tran (2009) , relationship is important for the development of business everywhere, but its color in East Asian cultural setting is quite different from the West Relationship in Vietnam refers to many social aspects between individuals, and is rarely limited within the scope of professional works As unequal relationship between individuals is a typical Confucian value and it imposes moral and cultural norms for guiding behaviors As trust is built through the connection, firm can create competitive advantages over its rivals in the marketplace Vuong & Tran (2009) also gave an evidence to prove the importance of relationship in conducting business in Vietnam, especially in getting bank loan Most of domestic SMEs are categoried to ―nano-cap‖ enterprises, constantly facing the shortage of capital Therefore, relationship with banks is not only a matter of financing entrepreneur‘s cash need and pursuit of investment, but also the wish of maintaining business advantage in terms of capital sufficient Whenever possible, entrepreneurs seek to improve access bank‘s credits Typically, the relationship between a bank and an entrepreneur is unequal, with the general attitude being the borrowing entrepreneur ‗asking for fund‘ Again, this is very much in line with the cultural face of banker knowing ‗who the entrepreneur is‘ rather than ‗what capacity he/she possesses‘ At the result, larger and well-established firms having long-standing and close relationship with bank can enjoy large-scale credit extension On the contrary,

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small entrepreneur firms, with thin equity base, face not only higher cost of funds but also limited access to that costly debt

Another sharing value of Vietnamese mentioned by Vuong & Tran (2009) is that people

have a strong herd effect The obvious consequence of herd effect is the boom of stock

market in 2006-07 Vuong (2007) regarded herd behavior as a consequence of the Confucianism-affected culture Vietnamese share similar position in thinking and building expectation, in addition to lack of methodology and limited information about stock markets and businesses Investors simply minic decisions of their friends, neighbors, colleagues, etc Thus, when the stock composite goes up, everyone tries to buy some stock or the other at any price and vice versa Vuong & Tran (2009) also proved the influence of herd effect on public companies‘ strategy which is the same Many big corporations set up their full-fledge operation in new (and unrelated) business fields, mostly concentrating on security, real estate, communication, and banking On the wider perspective, the herd behavior can be observed even at different provincial governments Every province in Vietnam has tried to call for investment on industrial parks and golf resorts project, despite different situations and conditions (Vuong&Tran, 2009) This reflects the cultural aspect of risk avoidance, it is believed that risk can be reduced by not doing something too differently However, Pham & Vuong (2008) considered herd effect

as a source for higher risks when people set high expectations on investment return, oftentimes in absence of required information and information appropriate for decision making Those facts rather imply a weak entrepreneurial capability

Additionally, Lewis (2006) suggested some prominent Confucian values in Vietnamese

society: work ethic, duty, and morality The Confucian Work Ethic consists of a belief in

the value of hard work, loyalty to the organization, thrift, dedication, social, harmony, a love of education and wisdom, and a concern for social propriety The elements of the Confucian Work Ethic all have positive aspects for both economic and societal development (Rarick, 2007) Many Confucian-based countries in Asia are achieving remarkable success in recent decades like China, Korea, Taiwan, etc Ngo (2010) who has deeply studied about Vietnam traditional culture, also mentioned that hard working

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and diligence is the third prominent characteristic of Vietnamese people On the basis of literature and personal insight discussions, the study proposed:

Hypothesis 1: National culture has influence on Entrepreneurship intention

4 Factors influence entrepreneurship

4.1 Personal traits

Number of researchers tries to answer the question that ―what are differences between entrepreneurs and non-entrepreneurs?‖ As (Mueller, 2004) points out, ―the term potential entrepreneur applies to those individuals (male or female) within a given population or society that possess a particular set of personal traits, skill, aptitudes, and desires believed

to motivate entrepreneurial behavior or at least increase its likelihood‖

Ertuna and Gurel (2008) investigated the effect of entrepreneurial traits and education on the entrepreneurial intentions of university students The survey instrument is mainly designed to measure entrepreneurial intentions as well as entrepreneurisl traits including need for achievement, risk-taking propensity, innovativeness, tolerance of ambiguity, and locus of control The research sample was taken from students studying business, tourism/hotel management, and engineering at five established universities in Turkey At the result, the authors found that there was a statistically significant relationship with entrepreneurial intention and some entrepreneurial traits For detail, the students with higher scores for innovation, propensity to take risk, and occupational achievement have higher entrepreneurial intention Those students were considered to be more independence and less family attachment compared to students with no entrepreneurial intention Among the predictors, the authors said that propensity to take risk seems to be the strongest preditor for business formation intention In addition, the study findings also indicate that students with higher education have lower intention of becoming entrepreneurs

In the cross-country research of Turan and Kara (2007) studying and comparing the characteristics and attributes of Turkish and Irish entrepreneurs with the sample size of

161 participants, it is concluded that entrepreneurs from different countries can also be clustered in a similar way on various entrepreneurial characteristics, attitudes, and