Nguyen, Huong Thi Xuan (2018) Valuing Social Capital: Shifting Strategies for Export Success of Vietnamese Small- and Medium-Sized Enterprises. PhD thesis, Victoria University.

Abstract

This study examines the impact of social capital on the export success of domestic SMEs in Vietnam, looking at both export propensity (whether they export at all) and export performance (how much they export). Two stylized facts inspire the research. The first is the relatively modest performance of Vietnamese SMEs in export activities to date, despite their potential and increasing importance in the economy. The second is the widespread perception within Vietnam about the power of social relationships of firms in the Vietnamese business environment. This study uses a mixed methods approach, combining a qualitative thematic analysis of semi-structured interviews of SME owners/managers with quantitative testing of hypotheses on a secondary panel dataset from 2007 to 2015. Logistic regression models were employed to test hypotheses related to export propensity and multiple linear regressions were used to test those related to export performance. The results indicate that social capital is positively related to export propensity of domestic SMEs, but that its impacts on their export performance are not consistent. Each type of network impacts differently on export performance indicators of the studied SMEs (positive, negative and sometimes non-significant). Similarly, the qualitative study provides evidence that social capital supports SMEs in the initial stage of their export venture, but not their continuous export sustainability. One of the significant findings to emerge from the qualitative study is that the impact channels of social capital on SMEs’ export success may have changed from relying on rent-seeking opportunities provided by close connections with authorities towards being a tool for improving credibility and building capability for SMEs. This study highlights the importance of establishing an appropriate networking strategy for SMEs who wish to pursue export ventures. It suggests that, if SMEs aim at long-term export success, they may need to diversify their networks, including business networks and social networks, both domestically and internationally, rather than focus on connections with politicians and authorities. This is because the expected benefits from rent appropriation in export activities will eventually diminish as a more transparent system is put in place. Hence, SMEs should utilize their networks to improve their knowledge, credibility and capability, which help in enhancing their long-term competitiveness. The present study also implies that the government and relevant trade associations, in supporting SMEs to participate successfully in the international market, may need to focus on long-term network building and capacity-building activities.

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