Factors influencing international joint ventures performance an investigation into the telecommunication industry in laos

1 1.1.1 International Joint Ventures IJVs in Telecommunication industry in Laos .... 1 1.1.2 Factors influencing IJVs’ Performance in Telecommunication Industry in Laos .... 47 4.1 The C

DECLARATION

I hereby declare that this dissertation is my own work and effort The dissertation has not been submitted anywhere for any award All the sources

of information used have been well acknowledged

Thansamay KOMMASITH

ACKNOWLEDGMENT

I would like to express my sincere appreciation to all the people who helped

me during my doctoral research course

First of all, I am forever indebted to my supervisor Associate Professor Dr NGUYEN THI TUYET MAI (National Economics University – Vietnam) with her fantastic personality and unbelievably supportive approach, and my colleagues Without their guidance and continuous support this dissertation could not have been completed I have learned a great many insights from all of them during the dissertation project They really helped me as a team, and I also consider them not only as my teachers, but also as my friends Thank you!

I am also grateful to my office in encouraging me to achieve higher education at National Economics University, Vietnam Besides, my dissertation will not be completed without the honestly help of interview team and interviewees from International telecommunication ventures in Laos I greatly appreciate the help and the time these people have spent on me

Last but not least, I would not have been able to pursue my studies without the help of my family: thanks to my parents, my brother, my wife, and my children who have been giving me the endless love with supports and strength

Table of Contents

Acronyms iii

Table of Figures v

List of Tables vi

CHAPTER 1: INTRODUCTION 1

1.1 Research Motivation 1

1.1.1 International Joint Ventures (IJVs) in Telecommunication industry in Laos 1

1.1.2 Factors influencing IJVs’ Performance in Telecommunication Industry in Laos 4

1.2 Theoretical Background 7

1.3 Research Methodology 7

1.4 Contribution of the Study 8

1.5 Organization of the Study 10

CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK 12

2.1 Literature review on International Joint Ventures‟ Performance 12

2.1.1 Survival and Longevity 14

2.1.2 Financial Output Measures 15

2.1.3 Overall Satisfaction 16

2.1.4 Goal Achievement 17

2.1.5 Learning 18

2.2 Literature Review on Factors Influencing IJVs‟ Performance 19

2.2.1 Control of the IJV 21

2.2.2 Trust 22

2.2.3 Cooperation and Commitment 24

2.2.4 National Culture and Corporate Culture Differences 26

2.2.5 Goal Compatibility 30

2.3 Conceptual Framework 31

CHAPTER 3: RESEARCH METHODOLOGY 34

3.1 An overview of Research Approach and Research Design 34

3.2 Case Study Method 36

3.2.1 Secondary Research 37

3.2.2 Primary Research 37

CHAPTER 4: RESEARCH FINDINGS 47

4.1 The Current Status of IJVs‟ Performance in the Telecommunication Industry in Laos 47

4.1.1 The Telecommunication Industryin Laos 47

4.1.2 Performance of the IJVs in the Telecoms Industry in Laos 65

4.2 Factors Influencing IJVs‟ Performance in the Telecommunication Industry in Laos 73

4.2.1 Identification of Factors Influencing IJVs’Performance 73

4.2.2 The Impact of Several Factors on IJVs’ Performance - Regression Findings from Individuals’Perception 86

CHAPTER 5: CONCLUSIONS AND DISCUSION 96

5.1 Conclusions 96

5.2 Discussion 97

5.2.1 Research Implications 98

5.2.2 Limitations and Future Research Directions 103

REFERENCES 106

APPENDICES 121

Appendix 1: Information about all key service providers in telecom industry in Laos122 Appendix 2: GUIDELINE FOR IN-DEPTH INTERVIEWS 124

Appendix 3: QUESTIONAIRE 125

Acronyms

BTS Base Transceiver Station

LTC Lao Telecommunication Corporation Limited

(BWA) systems employing a point-to-multipoint architecture

Table of Figures

Figure 1: A Conceptual Model for Studying Factors influencing International J oint

Ventures‟ Performance 33

Figure 2 Research Design 35

Figure 3: Secondary Data and their sources 38

Figure 4: Laos Mobile Sector 2010 – 2017 50

Figure 5: Laos Mobile ARPU 2010 – 2017 52

Figure 6: Laos Fixed-Line Sector 2010 – 2017 56

Figure 7: Laos Broadband sector 2010 – 2017 59

Figure 8: Laos internet Market growth 2003 – 2011 61

Figure 9: Laos Broadband Market growth 2005 – 2011 62

List of Tables

Table 1: Interview summary 41

Table 2: Demographic Profile of Respondents 44

Table 3: Telecoms sector in Laos – Historical Data and Forecasts 49

Table 4: Key players in Laos‟ telecoms sector 66

Table 5: Perception of performance of LTC (N = 31) 67

Table 6: Perception of performance of Unitel (N = 26) 69

Table 7: Financial performance of Tigo/Beeline in the period 2010-2013 71

Table 8: Perception of performance of Beeline (N = 30) 72

Table 9: Perception of performance of the 3 IJVs (N = 87) 73

Table 10: Perception of control mechanism at the 3 IJVs (N = 87) 75

Table 11: Perception of Trust at the 3 IJVs (N = 87) 78

Table 12: Perception of cooperation and commitment at the 3 IJVs (N = 87) 79

Table 13: Perception of goal compatibility at the 3 IJVs (N = 87) 82

Table 14: Perception of cultural differences at the 3 IJVs (N = 87) 85

Table 15: Summary of descriptive statistics of 3 IJVs and ANOVA results………86

Table 16: Performance measures and factor loading results (N = 87) 88

Table 17: IDVs‟ measures and factor loading results (N = 87) 90

Table 18: Descriptive Statistics and Correlations (N = 87) 922 Table 19: Regression results (N = 87) DV: Financial Performance 93

Table 20: Regression results (N = 87) DV: Overall Satisfaction 93

Table 21: Regression results (N = 87) DV: Goal Achievement 94

Table 22: Regression results (N = 87) DV: Learnings 95

CHAPTER 1: INTRODUCTION

1.1 Research Motivation

1.1.1 International Joint Ventures (IJVs) in Telecommunication

industry in Laos

Lao People Democratic Republic (Lao PDR) is located in the central part

of the Indochina peninsula The country covers about 236,800 KM2 and has a population of just over 6.5 million (2012 census) Lao PDR shares borders with 5 countries: Vietnam to the East, China to the North, Union of Myanmar to the Northwest, Thailand to the West, and Cambodia to the South Since 1986 when the new Economic mechanism was adopted, the government of Lao People‟s Democratic Republic (Lao P.D.R) has been promoting social and economic development under the policy of a market oriented economic During 2001-2005, Lao PDR had an average annual GDP growth rate of 6.2 percent, and it has increased to 8.1% in 2012.During 2006 – 2008 he average GDP per capita was approximately USD 700, and in 2011 it grew to over USD 1,300 (World Bank 2012) The service sector contributed to 26 percent of Laos‟ GDP In 2008, the telecommunications sector accounted for approximately 1.6 percent of the total GDP and is considered one of the fastest growing sectors in Laos For example, since 2000, competition in the telecommunications boosted investment in the sector dramatically Investment per year jumped from USD 19 million in 2000 to USD 154.9 million in 2008 (USAID, 2009)

Telecommunication technology plays a significant role for the flow of information It is an extremely useful tool to spread knowledge and new ideas, which can reduce infrastructure development gap between people in rural and urban area Furthermore, it can improve education, health care services, and encourage business activities In addition, it also plays the crucial role to the national economic development, especially to the developing country like Laos Therefore, telecommunication technology development is one way that Lao government uses to generate revenue and create job opportunity for people In addition, Lao government aims to improve people living standard and increase

the ability to compete in global trade of Lao business by giving priority to the development of telecommunication technology with the intention to promote sustainable development of the nation

In line with the new Economic mechanism, the Telecommunication sector

in Laos was privatized at the year 1996 as a joint venture with a Thai investor (Shinawana International Public Company Limited) However, this telecom privatization policy has been revised due to the importance of a national telecommunication development strategy which is able to resolve keen issues such as digital divide among regions and the frequent telephonic traffic congestion caused by a deficiency in the nation-wide telecommunication facilities (eg switching and telephone line capacity and human resources) (MCTPC, 1982; MCTPC, 1990 &1995; MCTPC, 1990 – 2007)

Besides, Lao P.D.R has a responsible position for promoting telecom development programs planned for the Greater Mekong sub-region (GMS) This development concept of GMS proposed by Asia Development Bank (ADB) and

is applied to an area or regional development approach to GMS, promoting networks among the six Mekong riparian countries, including supporting activities for a common standard of telecom services availability which is increasing in Laos Telecommunication increased steadily from 2007 to 2011 (MCTPC, 2007 – 2011)

There are some communication policy studies undertaken by scholars and media and political organization, but research on International Joint Ventures (IJVs) in Telecommunication industry in Laos has been limited Especially, it seems that very modest attention has been given to investigateIJVs‟ performance and factors influencing it in the industry in Laos Thus, these issues will be the focus of this research

Regarding telecommunication service policies in Laos, National Authority

of Posts and Telecommunication (NAPT) was established on 22nd October 2007

by the PM Decree No: 375/PM NAPT is an organization under the Prime Minister office, dealing with policy, strategy and its implementation and

administrative issues on Posts and Telecommunication sector and the Information and CommunicationTechnologies (ICT) in Laos NAPT is responsible for both the policy making and regulatory function for Telecommunication and ICT sectors On 15th June 2011, NAPT has been upgraded to Ministry of Posts and Telecommunications (MPT) (MCTPC, 1990 – 2007; MCTPC, 2011) Moreover, Telecommunication Act was passed and entered into force in 2011 Telecom sector policy 2004 of Laos government has stake in all the operators Based on ASEAN framework agreement on science, for value addedservicesthe new entry can only take place into Laos through a joint venture with Lao‟s service provider or acquisition of existing operators Under BTA with America, Laos has made commitments to provide unrestricted market access and full national treatment for the whole range of basic fixed and mobile (on the facilities basic or by resale, through any mean of technology, as value-added telecommunication service) (MCTPC, 2004)

Related to telecommunication providers in Lao P.D.R, there are five authorized enterprises which are providing fixed and mobile telecommunication services in Laos All these providers have the government ownerships, including: Lao Telecommunication Corporation Limited (LTC) with Government of Laos (GOL) and Shinawatra (Thailand) share 51% and 49% of possession respectively; Enterprise of Telecommunication Laos (ETL) with GOL 100% but currently become to ETL public; Star Telecom (STL): GOL 51% and Viettel Global 49% (now has been renamed to Unitel); Milliom international cellular SA (now has been transferred to Vimpelcom Russia (Beeline): GOL 22% and Vimpelcom 78%; and SKY communication Laos (SKY) withGOL 100% (since 2010) (before 2010 – foreign private owner)

The number of internet service providers (ISPs) has grown from two in 1990s to about seven after nearly 15 years They are ETL internet, Lao telecom Planet online, Lane Xang internet, Sky telecom KPL and Mill com The entry of Milliom and Sky, the large shareholding by Shincorp, the operation of Planet and prevalence of Voice Over Internet Protocol (VOIP) operators show that private

investors are willing to invest in Laos even under the current policies and regulatory regime However, such investors are still primarily focus on central of Vientiane and major urban center Therefore, adjustments are necessary to be added to current policies and regulatory framework in order to further develop the telecom sector through these strong private investors (MPT, 2011)

1.1.2 Factors influencing IJVs’ Performance in Telecommunication Industry in Laos

Many scholars and practitioners have conducted research about what factors affecting the performance of IJVs However, their research has mainly conducted in the context ofthe developed countries (Ren et al., 2009) Many previous studies (e.g., Hoang & Rothaermel, 2005; Isobe, Makino, & Montgomery, 2000; Luo, 2001; and Tong et al., 2008) have examined IJVs performance, which enhanced human beings‟ knowledge about this attractive topic However, the conceptualization of IJV performance and factors influencing it remains an often-debated issue in IJV research (Reus & Ritchie, 2004)

In recent years, more researchattention hasbeen given to studyIJVs performance and factors influencing IJVs performance in the context of developing countries (e.g Phan & Ngo, 2009; Phan et al., 2006; Cao, 2012) but

it seems that very modest research attention has been given to investigate the impact of these factors in the context of Laos, especially no study has examined the issue in the Telecommunication industry in Laos In other words, this attractive topic has not been investigated adequately in the context of Laos, especially in the telecommunication sector

The telecommunication technology in Lao PDR is at the infant stage in terms of development in comparison with other countries in the ASEAN region

It is due to the low percentage of consumption and the limited use of only in big cities The main cause of low consumption may be due to the population lack of purchasing power and awareness of the important of telecommunication