scholarly journals Networking in Weak Institutions: When Is It Good for Small Business Investment? The Case of Vietnam

2021 ◽  
pp. 1-38
Author(s):  
Bach Nguyen
Keyword(s):  
Small Businesses ◽  
Social Ties ◽  
Investment Decisions ◽  
Local Institutions ◽  
Institutional Voids ◽  
Governance System ◽  
Government Officials ◽  
Weak Institutions ◽  
Legal Enforcement ◽  
Firm Investments

ABSTRACT This study investigates the influence of business-specific, bank-specific, and political-specific networks on small firm investments in Vietnam. Also, I aim to explain how these social networks substitute the weaknesses of local institutions. Examining a set of more than 9,800 firm-year observations of small businesses in Vietnam from 2005–2015, I find that social ties with bank officials can boost firm investments; social ties with government officials can help firms overcome institutional voids; whereas social ties with businesspeople appear trivial to investment decisions. More importantly, I propose that networking, especially networks built upon connections with government officials, can substitute local institutions by addressing weaknesses in (1) inefficient legal enforcement, (2) corruption, (3) bureaucratic compliance, and (4) non-transparent governance system.

Risky Investments: How Local and Foreign Investors Finesse Corruption-Rife Emerging Markets

2018 ◽  
Vol 83 (4) ◽  
pp. 657-685 ◽  
Author(s):  
Kimberly Kay Hoang
Keyword(s):  
Direct Investment ◽  
Social Ties ◽  
Real Estate Market ◽  
Access To Information ◽  
Research Subjects ◽  
Government Officials ◽  
Foreign Investors ◽  
Multiple State ◽  
Global Investors ◽  
Market Relations

How do investors enter and navigate markets where there is a general lack of access to information and where the law is open to interpretation? Drawing on interview data with 100 research subjects in Vietnam’s real estate market, this article makes contributions to the literatures of economic sociology and development. First, looking at a diverse set of local, regional, and global investors, I theorize how market actors pursue different strategies to manage risky investments based on their proximity to state officials. Investors’ proximity depends on four processes: legal/regulatory, social ties, cultural matching, and stage of investment. Second, I highlight how multiple state–market relations can coexist within the same state. Investors’ varying levels of proximity to government officials shape their relationship with the state as one of patronage (predatory), mutual destruction (mutual hostage), or transparency (developmental). Heterogeneous state–market relations help account for the persistence of foreign direct investment in markets that display both a great deal of corruption and a great deal of legality and transparency.

Not All Ties Are Equal: CEO Outside Directorships and Strategic Imitation in R&D Investment

2015 ◽  
Vol 44 (4) ◽  
pp. 1312-1337 ◽  
Author(s):  
Won-Yong Oh ◽  
Vincent L. Barker
Keyword(s):  
Social Ties ◽  
Investment Decisions ◽  
Manufacturing Firms ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Social Connections ◽  
Top Executives ◽  
Show Evidence ◽  
D Investment ◽  
Different Sources

Prior research has identified two different sources of strategic imitation—through perceived organizational cluster similarity (cluster effects) and direct social connections (tied-to effects). In the research on tied-to effects, top executives’ social ties, such as outside directorships, have long been studied as a mechanism through which strategic imitation develops. However, are all ties the same? There has been little examination of whether some social ties have more influence than others. Using the attention-based view of the firm, we argue that certain social ties garner more attention by being salient to top executives. We empirically test this assertion by examining the effects of CEO outside directorships on R&D spending. Using panel data from large U.S. manufacturing firms, we find that CEOs imitate the R&D intensity of tied-to firms (i.e., a firm in which the CEO serves as an outside board member) in their own firm’s R&D decisions. Consistent with attention-based arguments, our results show evidence of selective imitation, as imitating relationships are stronger when the CEO has longer tenure as a director of a tied-to firm and the tied-to firm is performing well. In contrast to conventional institutional theory, our findings also show that CEOs imitate relatively smaller tied-to firms when they make R&D investment decisions. Not all social ties have equal influence on imitative strategic decision making; thus, they have different strategic implications.

scholarly journals The relative importance of regional institutions and external finance for small business investment: evidence from Vietnam

2020 ◽  
Vol 16 (6) ◽  
pp. 911-929
Author(s):  
Bach Nguyen
Keyword(s):  
Small Business ◽  
Small Businesses ◽  
Relative Importance ◽  
Local Institutions ◽  
Firm Investment ◽  
Business Investment ◽  
External Finance ◽  
Institutional Settings ◽  
Heterogeneous Effects ◽  
Conventional Models

AbstractThis study examines the relative importance of local institutions and external finance on small business investment. Utilising the institutional theory, we argue that local institutions and external finance have heterogeneous effects on firm investment. More importantly, they may interact and moderate each other. Analysing a set of 1.3 million observations of small businesses operating in Vietnam (2006–2016) obtained from the Annual Enterprise Survey data from the Vietnam Statistics Office, we find that local institutional settings and external finance are important determinants of firm investment. Moreover, local institutions are able to moderate the effects of external finance on firm investment. As such, this study asserts that conventional models cannot discern whether institutions or external finance are more important to firm investment. Rather, the relative importance of institutions and external finance should be investigated from the perspective of their interaction.

scholarly journals Where Do Social Ties Come From: Institutional Framework and Governmental Tie Distribution among Chinese Managers

2011 ◽  
Vol 7 (1) ◽  
pp. 97-124 ◽  
Author(s):  
Stan Xiao Li ◽  
Xiaotao Yao ◽  
Christina Sue-Chan ◽  
Youmin Xi
Keyword(s):  
Social Network ◽  
Social Ties ◽  
Institutional Framework ◽  
Social Categories ◽  
Government Officials ◽  
Chinese Firms ◽  
Ego Networks ◽  
Social Actors ◽  
The Relationship ◽  
Ownership Types

This study identifies the societal institutional framework as the cause for the tie distribution issue — the sizes of ego-networks of social actors are unevenly distributed across social categories of these social actors. The analysis of 250 Chinese firms showed that managers employed by state-owned enterprises possess more governmental tie channels – conduits to get acquainted with government officials – than those employed by non-state-owned enterprises. Governmental tie channels completely mediated the relationship between ownership types and the number of government ties in the manager's social network.

Embeddedness and migrant tourism entrepreneurs: A Polanyian perspective

2016 ◽  
Vol 49 (3) ◽  
pp. 652-669 ◽  
Author(s):  
Xiaobo Su ◽  
Zhigang Chen
Keyword(s):  
Social Relations ◽  
Social Ties ◽  
Economic Life ◽  
Complex Matrix ◽  
Economic Activities ◽  
Government Officials ◽  
Tourist Destinations ◽  
Migrant Entrepreneurs ◽  
Entrepreneurial Activities

Tourism embodies flows of tourists, capital and information, as well as migration, including migrants who operate businesses. How do migrant entrepreneurs negotiate social ties and economic activities in their destinations? To answer this question, the paper draws on Polanyi’s work on embeddedness to explore migrant tourism entrepreneurs (MTEs) and their modes of integration in the practice of social and economic life. We argue that MTEs are situated in a complex matrix in which they must build economic connections with locals and government officials, yet maintain a respectful distance with local groups, and develop embedded ties with other fellow migrants and tourists. Embeddedness, juxtaposed with distance, indicates that in tourist destinations, mixed patterns of economic and social relations significantly influence MTEs’ social and economic life. A Polanyian perspective on embeddedness can provide useful theoretical tenets to understand entrepreneurial activities in a mobile world.

scholarly journals Estate Taxation, Entrepreneurship, and Wealth

2009 ◽  
Vol 99 (1) ◽  
pp. 85-111 ◽  
Author(s):  
Marco Cagetti ◽  
Mariacristina De Nardi
Keyword(s):  
Small Businesses ◽  
Wealth Distribution ◽  
Investment Decisions ◽  
Wealth Inequality ◽  
Borrowing Constraints ◽  
Welfare Gain ◽  
Business Investment ◽  
Estate Tax ◽  
Estate Taxation ◽  
Fiscal Balance

This paper studies the estate tax in a quantitative framework with business investment, borrowing constraints, estate transmission, and wealth inequality. We find that the estate tax has little effect on the saving and investment decisions of small businesses, but does distort the decisions of larger firms, thereby reducing aggregate output and savings. Removing such distortions by eliminating the estate tax does not necessarily imply that everyone would be better off. If other taxes were raised to reestablish fiscal balance, those at the top of the wealth distribution would experience a large welfare gain, but most of the population would lose. (JEL D31, E21, H2)

scholarly journals The CSR–CFP relationship in the presence of institutional voids and the moderating role of family ownership

2021 ◽  
Author(s):  
James J. Cordeiro ◽  
Ambra Galeazzo ◽  
Tara Shankar Shaw
Keyword(s):  
Family Firms ◽  
Developed Countries ◽  
Curvilinear Relationship ◽  
Institutional Voids ◽  
Weak Institutions ◽  
Stakeholder Influence ◽  
Institutional Contexts ◽  
Corporate Social ◽  
The Relationship

AbstractIn weak institutional contexts characterized by institutional voids, firms often struggle to demonstrate their ethical conduct. They are seen as raising the costs of influencing stakeholders and correspondingly the level of investment needed in stakeholder influence capacity in order to achieve corporate financial performance (CFP). We hypothesize and find support for a U-shaped curvilinear relationship between corporate social responsibility (CSR) engagement level and CFP in the context of India—a country characterized by relatively weak institutions. We also investigate whether family firms can help overcome the drawbacks of weak institutional contexts and thus influence the relationship between CSR and CFP. We adopt a large sample, panel data approach to test our theoretical model. We observe a U-shaped relationship, consistent with earlier findings in developed countries. However, we find that this significant U-shaped relationship is observed only in the case of family firms in our sample.

German Corporate Convergence to a Market Based System

2007 ◽  
Vol 9 (2) ◽  
pp. 209-232 ◽  
Author(s):  
Matthew Berger
Keyword(s):  
Corporate Governance ◽  
Financial Markets ◽  
Foreign Investment ◽  
Direct Investment ◽  
Investment Decisions ◽  
International Investment ◽  
Governance System ◽  
Legal Reforms ◽  
Corporate Governance System ◽  
International Investors

AbstractGermany has implemented several legal reforms in an attempt to attract international investment. Commentators proclaimed that a transition from a bank-based system of corporate governance to a market-based system was required in order for Germany to attract international investors. Debates still transpire regarding the success of the legal reforms implemented in an effort to make this change. This analysis explains Germany's previous corporate governance system and the new laws implemented to transform it to a market-based system. Empirical data is recited concerning the changes in foreign direct investment, German household investment decisions, and the German financial markets. The paper concludes that an analysis of this data reveals an increase of foreign investment in Germany and a substantial movement towards a market-based system throughout the duration of the legal reform.

The Impact of Networking on Bank Financing: The Case of Small and Medium–Sized Enterprises in Vietnam

2009 ◽  
Vol 33 (4) ◽  
pp. 867-887 ◽  
Author(s):  
Ngoc T.B. Le ◽  
Thang V. Nguyen
Keyword(s):  
Emerging Economies ◽  
Social Ties ◽  
Bank Loans ◽  
Government Officials ◽  
Network Ties ◽  
Bank Financing ◽  
Managerial Implications ◽  
The Impact

It is argued that networking is crucial for small and medium–sized enterprises (SMEs), particularly in emerging economies as they seek to access resources for development. One key resource in emerging economies is bank financing. In this paper, we develop a model that examines the net effect of different network ties on bank financing to private SMEs. The results support our hypothesis that different network ties influence SMEs‘ use of bank loans in different ways. Specifically, networking with customers and government officials promotes the use of bank loans, while networking with suppliers and social ties reduces the need for bank loans. This study provides a number of research and managerial implications, which are discussed at the end of the paper.

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