Thansamay kommasith: Factors influencing IJVs’ Performance in Telecommunication Industry in Laosa

This study employs the theoretical background regarding IJVs performance and factors influencing their performance (e.g., Cao, 2012, Ren et al., 2009, Bener & Glaister, 2010). On the basis of literature review, performance of IJVs has been assessed through some measurement variables, such as: survival, financial output, overall satisfaction, achievement of individual or joint goals, and learning.

VIETNAM LAOS

FACTORS INFLUENCING INTERNATIONAL JOINT VENTURES’ PERFORMANCE: AN INVESTIGATION INTO THE TELECOMMUNICATON INDUSTRY IN LAOS

(Business Administration) Code: 62.34.01.02

A dissertation Summary Submitted to the National Economics University, Vietnam and National University of Laos in fulfillment of requirements for the degree of Doctor of Philosophy in Economics

Hanoi, 2014

University, Hanoi, Vietnam

Supervisor: Assoc Prof Dr Nguyen Thi Tuyet Mai

Dr Phi Vinh Tuong - Vietnam Institute of Economics

The dissertation will be defended against the council of dissertation

assessment in National Economics University, Hanoi, Vietnam (or

National University of Laos)

at (hour) date month year

The dissertation is available at the libraries:

- The National Library of Vietnam

- The Library of National Economics University, Hanoi, Vietnam

- The Library of National University of Laos

CHAPTER 1: INTRODUCTION

1.1 Research Motivation

Lao People Democratic Republic (Lao PDR) is a developing country that is located in the central part of the Indochina peninsula The telecommunication industry plays a significant role in the national economic development of Laos 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

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 investigate IJVs’ performance and factors influencing it in the industry in Laos Thus, these issues are the focus of this dissertation

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 of the 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 research attention has been given to study IJVs 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

For facilitating the sustainable development and ensure the success of IJVs in the important fields like the telecommunication industry in Laos, it is very essential to have better understanding of the current status of the IJVs’ performance and investigate the determinants of the IJVs’ success or failure

Research objectives and questions

While focusing on the main objective of investigating the impact of several factors on performance of the IJVs in telecommunication industry in Laos, this study aims to answer the following questions:

1 What is the overall picture of business performance of IJVs in Lao’s telecommunication industry regarding different aspects of performance based on the theoretical framework?

2 What are the key factors influencing the performance of the IJVs

in the telecommunication industry in Laos and what are the impacts of these factors on the IJVs’ performance?

In terms of the research scope, the data collected for this study mainly from the three IJVs in the telecommunication industry in Laos.In terms of timing, the collected data mainly cover recent three years (from 2010 to date) The analyses focus on several aspects of IJV’s performance and the factors influencing it The primary data mainly focus on the perspective from

Lao’s partners in the IJVs

Many previous studies have identified that IJVs performance has been influenced by many factors These factors include control of parent firms, trust, autonomy, national culture differences, corporate culture differences (Bener & Glaister, 2010; cf., Ren et al., 2009), commitment, bargaining power, justice, conflict, effectiveness of conflict resolution, cooperation, and goal compatibility (cf., Ren et al., 2009)

1.3 Research methodology

This study employed the case study method Both secondary data and primary data were collected to develop the three case studies in order to reflect IJVs’ performance and the factors influencing their performance during the time of the research As this study mainly aims to analyze factors influencing FDI companies’ performance in the selected cases, multiple data collection methods were used to increase credibility and validity

Specific data collection methods used in this study include desk research (for collecting secondary data), observation, interviews (both face-to-face and by telephone), and survey (for collecting primary data)

1.4 Contribution of the Study

This study aims to examine several dimensions of the IJVs’ performance and to explore the impact of the key factors on the IJVs’

performance in the context of Lao’s telecommunication industry

The topic of this study is important and interesting that have attracted much attention from previous studies This study contributes to the literature pertaining to IJVs’ performance and factors influencing them in the context

of Laos, a developing country that has received very modest research attention up to date

The findings of this study help to enrich the knowledge about this important topic by investigating simultaneously the key dimensions of IJV performance Specifically, all five performance dimensions were examined in the context of the telecommunication industry in Laos, including Survival and Longevity of the IJV, Financial Performance/financial output measures, Overall Satisfaction, IJV’s Goal Achievement, and Learning

This study also explored the main factors influencing IJV performance and empirically tested the impact of these factors in four regression models

In addition, with the case study method used in this study, multiple data sources were employed including secondary data (i.e., data collected from internet, company reports, etc.) and primary data sources (i.e., data collected from observation, in-depth interviews, and survey) This method was useful and necessary to obtain better understanding the research issues

Some managerial implications are drawn from the findings of this study Specifically, the findings provide IJVs’ managers with knowledge and insight that would help better understand and manage the determinants of IJV performance, and therefore help improve performance of IJVs

This study is expected to provide some implications for policy makers in

an attempt to create a better business environment and to ensure the favorable conditions for IJVs to achieve better performance in Laos For the benefit of Lao’s economy and society at large, the local government may want to work

together with investors (both local and foreign partners) to jointly develop successful IJVs

1.5 Organization of the Study

This dissertation includes five main chapters as follows

Chapter 1: Introduction

Chapter 2: Literature review and conceptual framework

Chapter 3: Research methodology

Chapter 4: Research findings

Chapter 5: Conclusions and discussion

CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL

FRAMEWORK

This chapter reviews the literature on IJVs’ performance and the factors influencing it In the first section of the chapter, the literature on the five common measures of IJV performance were reviewed, followed by the review of the key determinants of IJV performance Finally, the proposed conceptual framework is presented

2.1 Literature review on International Joint Ventures’ Performance

Cao (2012, p.72) noted that although the term IJV has many different meanings, the most common definition of IJV is “a separately legal business venture that involves two or more entities with differentnationalities working together to achieve mutually agreed on business objectives” (Fogler & Reichert, 2002)

IJV performance has been known as broad constructs with different dimensions Ren et al (2009) reviewed many previous studies on IJV performance and suggested five common IJV performance measures that have been employed in the literature, including Survival, Financial Output Measures, Overall Satisfaction, IJV’s goal achievement, and Learning The five main measures of IJVs performance are used in this study and are presented in details in the dissertation

Survival and Longevity: refers to the number of years that partners

have been working together in the IJV In literature, many previous studies have used Survival or Longevity as one indicator of IJV performance (e.g., Dhanaraj & Beamish, 2004; Gaur & Lu, 2007; Lu & Xu, 2006; Meschi & Riccio, 2008; Steensma & Lyles, 2000) The reason for using this indicator of

IJV performance is that the longer the IJV survives, the more successful it is

In this study, Survival or Longevity are used together with other measures to evaluate the IJVs’performance

Financial Output Measures: Among many indicators of IJVs’

performance, in the literature the researchers’ interest in employing financial output measures such as profitability measures (e.g., ROI, ROA) and market performance measures (e.g., market share) have been increasing (e.g., Lu &

Xu, 2006; Luo, 2002a, 2002b, 2005, 2007a, 2008; Robins et al., 2002; Zhang

et al., 2007; see Ren et al as well) In this study, the author decided to employ both objective and subjective measures of IJV performance

Overall Satisfaction: Many previous studies have used managers’

subjective evaluations of the IJV’s overall performance (e.g., Boateng & Glaigster, 2002; Cao, 2012) Since overall satisfaction is a subjective measure, some previous studies have employed also other objective measures

of performance such as financial outcomes (e.g., Cao, 2012)

Goal Achievement: Achievement of individual and/or joint goals of an

IJV has been used as a measure of the IJV performance (e.g., Phan et al., 2006; Lyles & Salk, 1996)

Learning: Learning from partners in IJVs has received significant

attention and has been considered as an important indicator for the success of

an IJV (Phan et al., 2006; Lyles & Salk, 1996)

2.2 Literature Review on Factors Influencing IJVs’ Performance

In the literature on IJVs, investigation into factors contributing to IJV performance have been received much interest from the scholars and practitioners (Cao, 2012; Rod, 2009) After reviewing past research in the field, Rod (2009) has summarized the factors that are treated as independent

variables influencing IJV’s performance, and classified them into two main groups, each factor of which may have direct of indirect impact on joint venture performance These factor groups refer to ‘partner compatibility’ (e.g., organizational culture, management/leadership style, strategic match, communication styles, trust, commitment, and propensity to cooperate), and

‘Socio-Economic factors’ (e.g., opportunity costs, relative bargaining power, governance/control over JV, and perceived opportunism)

In the context of developed countries, it has been suggested that the success of IJVs may be a function of a number of factors Bener & Glaister (2010) suggested five main factors influencing IJV performance that have been given significant attention in the literature as determinants of joint venture performance These factors include parent control (Killing, 1983; Lu

& Hebert, 2005), JV autonomy (Hill & Hellriegel, 1994; Lyles & Reger, 1993; Newburry & Zeira, 1999; Zeira & Parker, 1995), trust between partners (Madhok, 1995), national culture differences (Brown et al., 1989; Hennart & Zeng, 2002; Shenkar & Zeira, 1992), and corporate culture differences (Pothukuchi et al., 2002; Sirmon & Lane, 2004; Weber et al., 1996)

Besides, based on the review of 54 previous studies in IJV literature, Ren et al (2009) showed the model of 10 determinants which affect IJVs performance in almost cases of developed and developing countries Despite being investigated by numerous scholars with different approaches and models, in this study, the author is interested inexploring the impact of five main factors that have been consistently identified as being important determinants to IJV performance and they are also relevant to the context of Laos, namely Control of the IJV, Trust, Cooperation and Commitment, Culture differences, and Goal compatibility Each factor are discussed in details in the dissertation

2.3 Conceptual Framework

On the basis of literature review and suggestions from the interviews with IJVs’ managers, five measures/dimensions of IJV performance and five factors are employed in the research model

Figure 1: A Conceptual Model for Studying Factors influencing

International Joint Ventures’ Performance

Cooperation & committment

CHAPTER 3: RESEARCH METHODOLOGY

The overall research objectives of this dissertation are to evaluate the current status of IJVs’ performance and to understand the factors and their impact on performance of the IJVs in the telecommunication industry in Laos In order to achieve the set objectives, the case study method was employed This research used both secondary data and primary data sources Multiple data collection methods were employed, including interviews, field observation, and survey

In this study, three cases – three IJVs are investigated This is the main source of information providing insight in Laos telecommunication industry’s IJVsperformance dimensions and the key factors influencing their performance In this research, primary data for the case studies included both qualitative and quantitative data For collecting qualitative data, observation and in-depth interviews methods were employed to explore the overall picture of the IJVs performance, especially from the IJVs managers’ perceptions In addition, several key factors that may influence the IJVs performance were explored The qualitative findings also help to confirm the theoretical framework that was tested using the survey data

Qualitative data collection

Observation

For each IJV in this study, the author visited the IJV’s office in Vientiane at least 3 to 4 times per year as business visits In addition, sometimes the author visited selling stores of the IJVs in provinces in Laos For LTC, the author attended the meetings with the IJV’s top and middle managers every 3 month For Unitel and Beeline IJVs, the meetings were less frequent During the visits and meetings, the author, based on observation, collected data including content of the observed activities and emotional

reactions such as the sense of comfort, frustration, stress, or happiness (Nguyen, 2005) The focus of the observation was on the cultural differences between the partners, trust between the partners, and cooperation The expression of satisfaction of each partner in the IJVs was also observed

In- depth interviews

For the interviews, all three IJVs operating in Telecom industry in Laos were selected for investigation The author used one-to-one interviews, both face-to-face and telephone interview The interviews were carried out in Laotian Total of 10 interviews from three IJVs were conducted: 6 with LTC’s managers, 3with Unitel’s managers, and 1 with Beeline’s manager Each interview average lasted for 30 minutesfor face-to-face interview and lasted for 10-15 minutes for interview via phone

Survey data collection

In order to test the hypothesized relationships in the research model we employed the survey data collected from 03 IJVs in the telecommunication

industry in Laos

Measures and questionnaire development

In the survey, the author employed the scales measuring IJV performance and the factors influencing it These measures were adopted and modified from past research while taking into account the suggestions from the qualitative study

IJV performance: In addition to the question ‘How long have your IJVs

been established?’ to measure longevity/survival dimension of performance, the scale items developed by Lyles and Salk (1996) and an item from Cao (2012) were adopted and modified to measure ‘financial performance’,

‘overall satisfaction’, ‘goal achievement’, and ‘learnings’

Factors influencing IJV’s performance: