In this study, the concept of „businesses‟ or „business community‟ refers to all commercialized and profit-making oriented entities including either private firms or stated-owned enterprises (SOEs).
In contrast, „government‟ refers to policy and law making agencies, government‟s facilitating and implementing institutions and the public administrative apparatus. This distinction aims at excluding SOEs from the policy making and facilitating body of Vietnamese Government, which is subject to many recommendations of this research.
By relationship between government and business, it means some degree of dependency or interdependency between the two actors. The relationship can be looked upon from a structural point of view, i.e. how is the relationship organized, or from a behavioral point of view, i.e. how do the actors interact. Both views are relevant but within a government-business framework, the interaction and the activities are of primary interest. It is through the action and interaction that the relationship between government and business develops and a learning process is put in motion.
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5.1. Basic models of government-business relationship
Over the years, numerous views on the nation state and the relationship between the government and the business community have been formulated.
As the world today is more colorful, the question is not central planning versus market supremacy and the concomitant role of the government. The question is the merits of each of several alternative ways of managing and governing a market economy.
This study has identified five different models of the role of government in relation to the business community. The models are summarized in the Table 2.1.
Table 2.1: Roles and Models of Government in an Economy Type of government Public Authority
(Public Sector)
Private Autonomy (Private Sector)
Laissez-Faire Minimize Maximize
Mixed Economy
Division of labor between Government and private sector based on effectiveness and efficiency
Partnership
Dialogue between Government and private sector, the dialog taking place within a network of public and private institution
Public Policy Supremacy
The government represents unified political power and through policies, the government shapes or directs the action for the private business
Central Planning Maximize Minimize
Source: Sorensen (2012)
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The lassez-faire model or neoclassical economics model of government business relations has the stands that the government which governs least. The public authority should be minimized and the private autonomy maximized. In relation to the economy, the role of Government is assuring the proper working of the markets both the domestic and the international ones. Those roles are more to do with maintaining macroeconomic stability and supplying public goods.
In the mixed economy model, a given sum of function to be preformed by the public authorities or autonomous private entities is envisioned. The main issue is to define the borderline between the two sectors. The guideline for defining the borderline is the efficiency with which each of the two sectors can perform the functions. The guideline is again linked to welfare considerations. In general, the role of the government embedded in the concept of the mixed economy can be found in many economies but lots of variants exist.
In the central planning model, the government is the dominating actor- activist or entrepreneur who plans and carries out the economic functions. The model assumes that preferences and resources are known and that bounded rationality does not exist. The private sector is minimized, if existing at all.
Often the government is hostile towards private sectors, seeing the capitalist threat in even micro enterprises which barely survive from their business.
5.2. Partnership Model of Organizing the Relationship between the Government and Business
Basically, the partnership model represents an institutional arrangement between the government and the business community, which is able to handle a multiplicity of interests through interaction involving dialogue, negotiations and actions. This model has following basic features:
1. The principal actors are the private firms and their associations, the political bodies and the public agencies.
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2. The actors interact and through the interaction, intensive and often personal and long-term relations are developed.
3. The relationship may be formalized by establishing specific institutions.
4. The actors are not seen as unified decision makers but are characterized by a multi-center power structure.
5. In its pure form, the partnership model is characterized by interdependence, trust, cooperation, and mutuality in the relations between government and business.
6. Being political/economic institutions, the activities within the institutions aim at fulfilling ideological, strategic and practical objectives. The activities comprise: Policy formulation activities;
Campaigning activities; Discourse activities; Dialogue activities; and Implementation activities. Some of those types of activities may be dealt with in specialized institutions, and at the same time, the same institutions may be in charge of more than one activity. Those activities can be summarized as follows:
Policy formulation The formulation and analysis of problems and the proposal of solutions
Campaign activities The formulation and diffusion of the world
views held by the institution in question
Discourse activities Testing the rationale of policies and world
views
Dialogue/Negotiations Establish procedures/Terms of reference and
discuss and formulate compromises
Implementation activities Carry out, monitor, punish violators and
reward compliers.
Basically a partnership model driven by interdependence and mutual understanding between public and private sectors is characterized by actions based on information exchange, communication, dialogue, and negotiations
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within a network of personal and institutional relations. The interaction is intensive, frequent and takes place between organizations or within overlapping organizations established in conjunction by the two sectors.