Female Entrepreneurship In Vietnam: Encouragements And Constraints From Legislation And Culture

Based on a quantitative survey of 110 companies in Hanoi and adjacent area, the research has taken legal and socio - culture barriers and explored its effect on the development of women [r]

Female Entrepreneurship In Vietnam: Encouragements And

Constraints From Legislation And Culture

Associate Professor Nguyen Hoang Anh,

MA Hoang Bao Tram, Foreign Trade University, Hanoi, Vietnam

ABSTRACT

Nowadays, Vietnamese women are participating actively in parts of the economy that werepreviously deemed male domain Women are involved in business activities at all levels inVietnam, making significant contributions to economic development of the country ByDecember 2011, there were 81,226 small and medium enterprises headed by women,accounted for 25% total number of enterprises in the country (GSO, 2013) In Vietnam,despite recent economic development, socio-cultural and legal barriers are still very difficult

to women since the general perception in society is that a women's main duty is to be a goodhousewife and mother and they are also often perceived as weak, passive and irrational(VWEC, 2007)

Even though the studies related to women entrepreneurship development are quite extensive,amongst them only a limited number of research on the role of legal and socio - culturebarriers on women entrepreneur in the context of Vietnam have been investigated Thus,supported by World Trade Institute (WTI) in Bern, Switzerland, the researchers have chosen

it as the subject of this study

Based on a quantitative survey of 110 companies in Hanoi and adjacent area, the research hastaken legal and socio - culture barriers and explored its effect on the development of womenentrepreneurship in the context of Vietnam to indicate, how women entrepreneurs perceivethe impact of socio-cultural factors, economic impacts, and policy reforms on theirentrepreneurial situations and initiatives, then provides policy implications for promotingwomen’s entrepreneurship and gender equality in Vietnam

Key words: entrepreneurship, female entrepreneurs, businesswomen, legislation, culture, gender equality, Vietnam

TÓM TẮT

Ngày nay, phụ nữ Việt Nam đang tham gia một cách tích cực vào nhiều bộ phận trong nềnkinh tế mà trước đó được coi là dành cho nam giới Nữ doanh nhân VN đã đóng góp đáng kểvào sự phát triển của nền kinh tế nước nhà Theo Tổng cục thống kê, đến tháng 12, 2011 đã có81,226 doanh nghiệp vừa và nhỏ do phụ nữ làm chủ, chiếm 25% tổng số doanh nghiệp cảnước (GSO, 2013) Ở Việt Nam, mặc dù kinh tế gần đây có khởi sắc nhưng những rào cảnvăn hóa – xã hội và pháp lý vẫn tạo nhiều khó khăn cho phụ nữ bởi nhận thức chung trong xã

hội cho rằng nhiệm vụ chính của người phụ nữa là làm một người vợ và người mẹ tốt, nên họthường được coi là phái yếu, thụ động và thiếu lý trí (VWEC, 2007)

Mặc dù đã có nhiều nghiên cứu liên quan đến phát triển doanh nghiệp nữ, nhưng chỉ có một

số ít nghiên cứu về vai trò của những rào cản pháp lý và văn hóa – xã hội đối với nữ doanhnhân trong bối cảnh Việt Nam Do vậy, được hỗ trợ bởi World Trade Institute (WTI), Bern,Thụy Sĩ, nhóm nghiên cứu đã chọn chủ đề này cho nghiên cứu của mình

Dựa trên khảo sát 110 doanh nghiệp ở Hà Nội và các vùng lân cận, nghiên cứu đã xem xétnhững rào cản pháp lý, tài chính, văn hóa – xã hội cùng những ảnh hưởng của nó lên sự pháttriển của doanh nghiệp nữ tại Việt Nam, từ đó đưa ra những gợi ý chính sách cho việc khuyếnkhích tinh thần khởi nghiệp của nữ doanh nhân và bình đẳng giới ở Việt Nam

Từ khóa: tinh thần khởi nghiệp, phụ nữ khởi nghiệp, nữ doanh nhân, pháp lý, văn hóa, bình đẳng giới, Việt Nam

1 Introduction

Since the economic reform (Doimoi) in 1986, Vietnam has achieved an outstandingeconomic growth During the period of 1990-2010, the economy of Vietnam experienced anannual average rate of 7.3 percent even counting the recent economic crisis (World Bank,2011b) It is recognized that a blooming market of private enterprises has contributedsignificantly to this rapid growth It is generally recognised that Vietnamese women areincreasingly involving in entrepreneurial activities and making greater contribution to thedevelopment of the economy According to an estimation of International LabourOrganisation (ILO, 2011), about 25 percent of Vietnamese business owners are women

Women entrepreneurs and women owned companies contributed considerably to thejob creation and economic development of Vietnam Although women have gained bettereconomic opportunities, their productive potential is underutilized due to cultural values and

an unfavourable business environment The traditions expect that a woman’s role is to takingcare of family and doing housework while men are relied upon to provide the main source ofincome for the household Women entrepreneurs face the challenges of equal access toresources, finance and business training

Being aware of these barriers, the Vietnamese government has committed itself topromoting gender equality and women’s empowerment over the past decade In 2006, theVietnamese Parliament approved the Gender Equality Law which aimed to improve women’sroles in society, particularly in business Support for women entrepreneurship is also found inother laws and regulations Though progress has been made, little is known about the culturaland institutional impacts on women entrepreneurship in Vietnam To address this issue, ourpaper aim to provide understandings into the current status of women entrepreneurship inVietnam, to identify barriers and difficulties they face in doing business, and to analyse thethe traditions and regulations that might have impacts on women entrepreneurship in

Vietnam Furthermore, we propose implications which may help policy makers build asupport system for the development of women entrepreneurship and suggest some significanttopics for further studies

The paper will be organised as follows Section 1 discusses the relevant literature ofand provides an overview of women entrepreneurship in Vietnam Section 2 and Section 3provides a deep analysis of traditions and regulations issues that might have impacts onwomen entrepreneurship in Vietnam Finally, in Section 4, the paper concludes withimplications and recommendations for tradition changes and regulatory facilitation in supportfor Vietnamese women entrepreneurship

Entrepreneurs have been defined in various ways, but most definitions suggest theyare people who develop new and innovative ideas for products, business models, or markets(Nijssen, 2014) Accordingly, entrepreneurship is basically a creative activity in whichentrepreneurs perceive opportunities to innovate (Nijssen, 2014; Raven & Le, 2015) Whenthe literature distinguishes between different types of entrepreneurship, it uses a wide variety

of terms, amongst them are opportunity and necessity entrepreneurship The former term islinked to the identification of good business opportunities, while the latter one is related to thelack of better job opportunities (Fuentelsaz et al., 2015) Even though both types refer to newentrepreneurial activities, their effects on development and economic growth are clearlydifferent Acs and Varga (2005) identified that necessity entrepreneurship does not affecteconomic development, and opportunity entrepreneurship has a positive and significant effect

In recent years, a number of developing countries, including Vietnam, have enactedmarket-oriented economic reforms aimed at developing their markets to promoteentrepreneurship and private enterprise (Hoskisson, Eden, Lau, & Wright, 2000) As a result

of these reforms, these countries are becoming major economic forces in the world, andentrepreneurship (including the start-up and growth of formal businesses) has been creditedwith playing ‘a key role in this development’ (Bruton, Ahlstrom, & Obloj, 2008) Noting thegrowing importance of entrepreneurship in developing countries, and citing a paucity ofresearch on the topic, scholars have called for more research into women entrepreneurship indeveloping countries (Chari & Dixit 2015) and Vietnam is a typical country for this topic due

to its fast growth

2 Theoretical model

Despite the current lack of empirical studies in this area, the literature provides a number ofconceptual models to better understand stages of enterprise creation (Gartner, 1985; Bhave,1994; Shook, et al., 2003; etc.) These models, however, remain mostly at conceptual leveland they do not lead us to any hypothesis on how entrepreneurs’ cultural backgroundinfluences their behaviors in enterprise creation Nevertheless, they provide us with aframework to explore the phenomenon In a nutshell, the literature suggests that theentrepreneurs’ cultural background influences their attributes, motivation, orientation, andcognition These in turn influence how they identify business opportunities, define business

Entrepreneurial Attributes Entrepreneurial Motivation Entrepreneurial Orientation Entrepreneurial Cognition

Business environment

Identify ing the business

opportu nity

Defining thebusiness concept

Mobilizi

ng the required resour ces

Forming theenterprise

Launchi

ng the business Enterprise creation

the concept, mobilize required resources, form the enterprise, and finally launch the business(figure 1)

Figure 1: The influence of business environment on enterprise creation

 Enterprise creation

Enterprise creation is the organizing of new organizations (Gartner, 1985)

by assembling ongoing interdependent actions into sensible sequencesthat generate sensible outcomes (Weick, 1979; Vesper, 1980) Theseactions generally take place in five stages, namely identification ofbusiness opportunity, business concept definition, resource mobilization,enterprise formation, and launch of business (Delmar & Shane, 2002;Reynolds, et al., 2005) As enterprise creation process is dynamic andcase-specific, these stages do not necessarily occur in sequences (Bhave,1994; Bruyat & Julien, 2001) and entrepreneurs may give up their efforts

in the middle of the process when they realize that the business ideas arenot fruitful or feasible (Carter, et al., 1996)

Bhave (1994) argued that opportunity recognition may precede thedecision to start a new venture It occurs when the prospectiveentrepreneurs experience, or are introduced to, needs that cannot beeasily fulfilled through available vendors or means In finding solutions tosatisfy the needs, the entrepreneurs realize that the need was widespreadand recognize it as an opportunity to create a new venture The authoralso argued that opportunity recognition may be preceded by the decision

to start a new venture This occurs as a result of interruptions inprospective entrepreneurs’ persona1 and environmental circumstances In

this case, the entrepreneurs see vastly more opportunities than theyseriously chose to pursue and thus the decision to start a business isfollowed by a search to align the prospective entrepreneurs’ knowledge,experience, skills and other resources with market needs

Having identified business opportunities, the entrepreneurs need to clarifybusiness concepts in order to achieve a good fit between customer needsand the entrepreneur’s perceptions of those needs (Bhave, 1994) At thisstage, the entrepreneurs build their business model when settingobjectives for the firm, deciding the firm size, drafting vision for the firm,calculating risks, and defining success criteria, etc (Ardichvilia, et al.,2003; Morris, et al., 2005) These may be written down in a business planbecause entrepreneurs want to do it or it is required, say, by financialinstitutions (Honig & Karlsson, 2001) Having that said, it is unclear ifbusiness plan influences the realization of the project (Gasse, et al., 2004)although researchers tend to advocate several advantages of makingbusiness plan (see Filion, et al., 2009)

To realize the business, the entrepreneurs must be able to mobilizesufficient required resources They are typically organizational,technological, human, social, financial, and physical resources (Brush, etal., 2001) The literature gives ample evidence that entrepreneurs need towork in team to assure success and team members are usually familymembers, friends or colleagues (Brush, et al., 2001; Ruef, et al., 2003;Aldrich, et al., 2004; etc.) Ruef et al (2003) found that the teams tend to

be people with similar characteristics as they make decisions together andshare with each other the ups and downs of the business

The next step is to create the organization The entrepreneurs often set it

up in the area close to where they live or even at their home (Gasse, et al.,2002; Borges, et al., 2005) The most important considerations forchoosing a premise for their start-up business are quality of life, proximityhome, and availability of space rather than advantages of the region oraccess to R&D (Filion, et al., 2006) Besides choosing location, thefounders have to build an organizational structure for the business(Gartner, 1985) Once the organization is set up, they may let the businessrun in the informal sector or register it as an enterprise (Schneider &Enste, 2000; Bennett, 2010)

When the organization is in place, it is time to launch the business Theactivities carried out during this phase are critical determinants of thefuture of the firm (McMullan & Long, 1990) Studies by Duquette-Labrecque et al (2005) and Filion et al (Filion, et al., 2006) show that thetime between when the decision is made to the time the activity is carried

out is longest for the development the first product, then for the first sales,and then for hiring the first employee Such variance in gestation periodsimplies how these activities are important for the entrepreneurs

The content of the survey was designed into 1 individualquestionnaire A same questions set is addressed to men and women inorder to give value to both men’s and women’s experiences Indicatorscollected in the questionnaires are classified into 5 sections:

- Section A: General information

- Section B: The economic factors affecting women

entrepreneurship

- Section C: The social factors affecting women entrepreneurship

- Section D: The institutional factors (law - policies) affecting women

entrepreneurship

- Section E: Other questions (Open-ended question)

Most of the questions were designed based on Likert scale, in whichrespondents specify their level of agreement or disagreement on a

symmetric agree-disagree scale of (1) to (5) as follows:

Interviews and the open questions at section E are designed toprovide more detailed information about male and female expectationover the women entrepreneurship promotion

4 Descriptive statistics

The survey’s result includes 110 firms and business establishments inthe Northern provinces of Vietnam The chosen sample is quasi- genderbalanced Female respondents account for 54% of the survey’s sample

Demographic characteristics

The age group of 25 to 40 years old accounted for the largestproportion, 65% of the sample Subjects under 25 year-olds represent only6% of the survey sample The age group differentiation is reasonable sincethe confidence in business capability is generally proportional to age.According to GEM, VCCI (2014), the proportion of young people (18-34years old) perceived themselves as having the ability to start business inVietnam is 52.2%, lower than the 35-to-64-year-olds group (64.1%)

The small rate of younger-age group also coincides with theobserved marital status where only 27% of the subjects were single.Around 65% of respondents have had 1 to 2 children

Table 1: Demographic characteristics of the survey’s sample

(N = 59)

Men (N = 51)

No of obser v.

Weig ht

No of obse rv.

Weig ht

No of obser v.

Weig ht

Age

Graduate education (bachelor

(Source: Author’s calculation) Educational level

The educational level of the respondents is rather high Around 93%

of respondents have a bachelor degree or higher However, less then 90%

of female subjects have reached tertiary education while 100% maleparticipants of the survey have achieved tertiary education The gender

gap may be partially explained by the fact that the proportion of womenachieved post-graduate education is smaller than men (29% to 41%)

Employment conditions

Nearly half of our survey sample consists of business manager Thenumber of male sale manager is larger than female sale manager whilewomen represent the majority of business owners in the sample (12 out of17) However, it’s important to underline that the female business owner isfrequently recorded in small scale business

Table 2: Employment conditions of the survey’s sample

(N = 59)

Men (N = 51)

No of obse rv.

Weig ht

No of obse rv.

Weig ht

No of obse rv.

Weig ht

Less than 20 hours 7 6% 7 12% 0 0%

(Source: Authors' calculations)

The gender gap is also observed in terms of personal income andweekly working time Only 41% of female respondents reached the incomelevel of more than 20 millions VND per month while the proportion in case

of male respondents is 54% Event though more than 50% of respondentshave worked more than 40 hours per week, the male individuals seem to

be working “harder” since none of them has worked less than 20 hours perweek

Firm’s characteristics

The majority of firms of the sample is joint stock companies (56) andlimited liability companies (43) The number of other form of enterprise isminor 64% of enterprises have less than 50 employees Thus, the firms’size information reflects the overall situation in Vietnam where the marketconsist mainly of small and medium enterprises1

The difference among sexes is highly exposed in terms of firms’revenue While 45% of male respondent’s firm record annual revenue ofmore than 20 billions Vietnamese Dong, nearly half of womenrespondent’s firms’ revenue do not exceed 10 billions Vietnamese Dong

Table 3: Characteristics of the enterprises in the survey

(N = 59)

Men (N = 51)

No of obser v.

Weig ht

No of obser v.

Weig ht

No of obser v.

Weig ht

1

According to the Enterprise Surveys 2011 by World Bank, Vietnamese firms employ on average 75 full-time employees However, the majority of firms in Vietnam have less than 20 workers on their payrolls.

Production and distribution of

Transport, storage and

Education and training

personal service activities and

Other

(Source: Author’s calculation)

5 Analysis of female entrepreneurship in North Vietnam

 Methodology

To estimate the current status of business activities managed by men

and women, Annual revenue of the enterprise (thunhap_DN) is selected

as dependent variable thunhap_DN is defined as categorical variables

which value ranged from (1) to (3) as following:

1) Under 10 billion Vietnamese dong

2) From 10 to less than 20 billion Vietnamese dong

3) 20 billion Vietnamese dong and higher

The personal income of entrepreneurs are also evaluated by

independent variable named thunhap_canhan This is a categorical

variable which value from (1) to (3) reflecting the gradual increase of themonthly personal income (see Table 4)

 Explanatory variables

Based on the analytical framework outlined mentioned above, theindependent variables are chosen to evaluate the effect of the individualcharacteristics of entrepreneur and firm on firms’ performance

Education shall be determined based on the highest diploma that

the subject posses at the time of the survey Specifically, educationalattainment variable is a categorical variable The value is 1 if therespondents reached lower levels of education than graduate study(University) The variable takes the value of 2 if the respondent hasachieved a bachelor degree and 3 if the he or she posses a master ordoctoral degree (post- graduate study) Higher education level ofentrepreneurs is expected to bring a positive impact on both individualincome and firm’s performance

Working experiences of the entrepreneur is also a decisive factor of

entrepreneurial capabilities In order to evaluate the effects of individualexperiences, the chosen variables include the number of years of