Ảnh hưởng của thể chế tới tinh thần doanh nhân nghiên cứu tại các doanh nghiệp nhỏ và vừa việt nam tt tiếng anh

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CHAPTER 1

orientation: the case study of Vietnamese small and medium enterprises" has
been selected as the topic of this study.

GENERAL INTRODUCTION OF THE STUDY
1.1 The necessity of the study
The important role of institutions to economic development of each country has
been recognized in previous studies around the world and in Vietnam. At the
organizational level, institutional theory shows that institutional factors affect
organizational strategies and processes (Scott, 1995). Institutions as part of the
business environment affecting the development of businesses including SMEs have
attracted research interests from scholars. However, available institutional documents
mainly focus on formal institutions, while the effects of informal institutions are less of
a concern (Roxas and Chadee, 2012).
In recent years, Entrepreneurial Orientation has become a popular topic in the
field of business studies in general and the entrepreneurial orientation in particular. Vij
and Bedi (2012) argue that entrepreneurial orientation is a key determinant of the
success of a business. Many previous studies have explored entrepreneurial orientation
in the context of SMEs (for example, Keh et al., 2007; Wang et al., 2015). In
developing countries like Vietnam, entrepreneurial orientation and and some of its
premises have also attracted the attention of researchers, but to a modest level
(Nguyen, 2009, 2011; Swierczek and Thai, 2003).
Institutions have effects on the expectations, awareness of risks and profits of
business activities (Avnimelech et al, 2014; Shane, 2003), and innovation capabilities
of businesses (Chadee and Roxas, 2013). However, there seems to be a lack of research
on the relationship between institutions, especially informal institutional groups and

entrepreneurial orientation at firm level. It should be noted that the effects of informal
institutions on risk-taking tendency, innovation and pioneering proactiveness are still
unclear (Roxas and Chadee, 2012). This requires more research to understand the relationship
between informal institutions and the forms of entrepreneurial orientation.

SMEs play a very important role to Vietnamese economy. By the end of
December 2015, there was 500,000 SMEs in Viet Nam, accounting for 97.6% of the
total number of active businesses, contributing over 40% of GDP and attracting over
50% of the national labor force (General Statistics Office, 2018). However, since the
global economic crisis, the number of dissolved and closed businesses have
continued to increase. Basic characteristics of SMEs are small-scaled, with loweducated labor, backward technology, limited capital, low labor productivity, which
are barriers to SMEs in the process of development and integration to the global
economy. For above justifications, "The effects of institutions on entrepreneurial

1.2 Objectives of the study
The purpose of this study is to understand the influence of formal and informal
institutions on each aspect of entrepreneurial orientation of SMEs. Besides, the
entrepreneurial orientation of SMEs in the context of developing countries is also of
this study’s concern. Obtained results can provide some suggestions to improve
institutions, promote entrepreneurial orientation of Vietnamese SMEs to enhance
competitiveness in the integration period.
1.3 Scope and objects of the study
1.3.1 Scope of the study:
Research objects: Vietnamese SMEs according to the official definition in the
Government Decree No. 56/2009/ND-CP dated June 30, 2009. Research space: The
thesis has been done to collect data in three major cities of Hanoi, Da Nang and Ho Chi
Minh City. Study period: Collected data used for this thesis is across 5 years from 2012 to
2017.
1.3.2 Study objects:
The thesis examines the entrepreneurial orientation; the effects of formal and

of informal institutions on the entrepreneurial orientation of Vietnamese SMEs.
1.4 New contribution of the thesis
Theoretical contribution
The effects of formal institutions and informal institutions on entrepreneurial
orientation at firm level has not been much studied by scholars. Theoretical
framework used for research has not yet been clear and consistent. The informal
institution is only considered as national cultural element rather than informal
institutional elements as defined by Helmke and Levitsky (2004). This thesis
examines the effects of institutions on each aspect of SMEs’ entrepreneurial
orientation (innovation, risk taking and pioneering proactiveness). Some specific
contribution of the study are as follows:
1 / To measure the quality of formal institutions regarding the mismatch of the
system of policies and regulations of the State, research needs to be added by two
indicators. The first is the overlapping and lack of clarity, while the second is the
instability and inconsistency.


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4

2 / To measure informal institutions regarding SMEs' institutional trust, research
needs to be added by an indicator which reflects general perception of positive
changes from regulations and policies of the state.

CHAPTER 2

3 / Experimental evidence shows that the mismatch of the State's policy/regulation
systems, institutional trust and corruption are all related to every aspect of
entrepreneurial orientation (innovation, risk taking and proactiveness) in the context

of SMEs in developing countries like Vietnam.
4 / The relationship between execution quality and entrepreneurial orientation of
SMEs may change towards opposite direction depending on the context.
Practical contribution
While formal institutional barriers and corruption remain at a high level that
negatively affects the entrepreneurial orientation, institutional trust of many SMEs
does not seem to be as such. Therefore, the positive role of institutional trust to
entrepreneurial orientation is a finding with many practical implications in
Vietnamese context. In addition to solutions to eliminate formal institutional
barriers and constrain corruption, those aimed at strengthening institutional trust
will be an important driving force to promote the entrepreneurial orientation of
Vietnamese SMEs.

1.5 Structure of the thesis
The thesis "Effects of institutions on entrepreneurial orientation: case
study of Vietnamese small and medium enterprises" consists of 159 pages,
including the list of tables and figures, Table of content, main section of five
chapters, references and appendices. Five chapters include Chapter 1 which generally
introduces the study, Chapter 2 on research overview and theoretical framework of
institutional effects on entrepreneurial orientation of enterprises; Chapter 3 on
research methodology; Chapter 4 on research findings; Chapter 5 on Evaluation of
research findings and some suggestions. There are 20 tables and 5 figures in total.

RESEARCH OVERVIEW AND THEORETICAL FRAMEWORK
2.1 Overview of the relationship between institutions and entrepreneurial
orientation of SMEs.
2.1.1 Research overview and gaps
While entrepreneurial orientation has been studied by scholars, informal
institutional factors are mainly considered as national culture and only formal
institutions are scholars’ interest. However, informal institutions are not necessarily

cultural elements from the views of Helmke and Levitsky (2004). Some studies have
confirmed that the influence of informal institutions on enterprises' strategic choices
is independent (Peng, 2002). Meanwhile, typically informal institutional factors in the
context of transition and developing economies such as corruption and trust have not
seem to be much examined. Although research has already attempted to asssess the
institutional impact on entrepreneurial orientation at national level, there is still a lack
of research on the relationship between institutions, especially informal ones and
entrepreneurial orientation at firm level. More importantly, the effects of institutions
on risk-taking, innovation and pioneering proactiveness are unclear (Roxas and
Chadee, 2012). This requires more research to explore the relationship between
formal and informal institutions and patterns of entrepreneurial orientation. Effects of
informal institutions, particularly corruption, institutional trust at firm level in the
context of SMEs will be an interesting research gap. Interpretation of these
relationships will help contribute to further clear the role of informal institutions to
entrepreneurial orientation at corporate level, in the context of a transition and
developing country.
Literature review indicated that research on entrepreneurial orientation in the
context of Vietnam has only been done by few scholars, and there are still many
different opinions about entrepreneurial orientation (Hoang Van Hoa, 2010 ). In
addition, studies so far have just mainly examined the relationship between
entrepreneurial orientation and business results of Vietnamese SMEs (Nguyen, 2009;
Swierczek & Thai, 2003). Those on the relationship between institutions and
entrepreneurial orientation have not almost done.
2.1.2 Theoretical framework and research hypothesis on the relationship between
institutions and entrepreneurial orientation of SMEs
2.1.2.1 Concepts used in the research


Determinants

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Table 2.2: Concepts used in the research

The execution quality of state management agencies is defined as barriers to
businesses' activities such as tax rates, tax administration, inspection activities
imposed by the State (Chadee and Roxas, 2013). These institutional barriers also
include a lack of State support to business development of businesses such as finance
and support services (Hashi and Krasniqi, 2011; Zhu et al., 2012). Execution quality
refers to the rigidity and bureaucracy that businesses face when dealing with
representative state agencies, for example when going to business registration or
granting a business license to conduct a specific business activity (Norton, 1998).
This concept also refers to rules, procedures, processes and level of suitability to the
provisions of the current laws, which leads to unreasonable cost burden on
businesses. This increases the cost for businesses to deal transactions with state
agencies. These costs could be financial costs, time and effort spent to complete
procedures (Fogel et al., 2006). These barriers also increase transaction costs and
uncertainty, thereby preventing access to resources to support innovation activities
(Chadee and Roxas, 2013). Most research in the context of transition and developing
economies has indicated that execution quality negatively effects the ability of
businesses to innovate (Chadee and Roxas, 2013; Xheneti and Bartlett, 2012). Zhu et
al. (2012) have pointed out that innovation activities of SMEs are hampered by
innovation-related costs such as tax burdens, financial costs, etc., or compliance with
bureaucracy and rigidity of state agencies. This barrier leads to the escalation of
uncertainties and costs, preventing the ability of businesses to access resources to
support or stimulate innovation. In addition, enterprises’ awareness of opportunities
and risks affects innovation and pionnering proactiveness of enteprises (Haro et al.,
2011). When the level of uncertainty and cost increases, the ability of risk

management is limited, especially for SMEs. This will make businesses not dare to
take risks that may lead to business opportunities. Facilitation of procedures and
support services of state agencies for SMEs to exploit new business opportunities will
positively affect risk taking level of businesses (Haro et al., 2011). Therefore,
increasing costs and time as well as troubles faced by businesses when carrying out
business procedures will negatively affect their risk taking level. Thus, execution
quality may negatively affect all three aspects of entrepreneurial orientation.
Operational quality barriers to SME operations have also been addressed by local
studies (CIEM et al., 2016; VCCI, 2016). Inspection and various types of costs have
discouraged enterprises, making them hesitant to invest and eliminate their
motivation for innovation (Nguyen Thi Luyen, 2018; Le Du Phong and Le Huynh
Mai, 2018). Based on the overall results, the thesis proposes following research
hypotheses:

Definition

Source

Institution

"Play rules" in a society.

North (1990)

Formal institution

Formal institutions refer to the system of
laws, regulations, policies, contracts and
enforcement. Along with the whole legal
and policy documents is the enforcement

mechanism, regulation and oversight of the
relevant
agencies
to
help
policy
implementation.

North (1992)

Informal institution

Entrepreneurial
orientation

Informal institutions refer to shared values
in a society, usually those that are not
Helmke and
expressed in writing, communicated and Levitsky (2004,
enforced outside officially recognized
2006)
channels.
This concept refers to "processes, practical
activities and decision-making activities
Miller (1983);
that lead to the birth of new things in the
Lumpkin and
business." Entrepreneurial orientation
Dess (1996)
consists of three elements: risk- taking,

pioneering proactiveness and innovation.
Source: Author’s synthesization

Concepts of components of entrepreneurial orientation:
Innovation refers to the willingness of enterprises to support creativity and
experimentation, participation in creative processes, testing ideas such as applying
new production methods, new technologies or developing new products and services
for current or new markets.
Risk taking refers to the willingness of enterprises to invest a significant resource in
exploiting business opportunities and implement high-risk business strategies. Risk
taking does not mean that it is "doing without knowing" ignoring the consequences,
but it reflects enterprises‘ boldness, dare to grasp business opportunities.
Proactiveness reflects the willingness of businesses to act ahead of competitors.
Proactiveness may include actions such as: recognise and evaluate new opportunities,
identify and track market trends and establish new business groups.
2.1.2.2 Theoretical framework and research hypotheses on the relationship between
formal institutions and entrepreneurial orientation

H1a: Execution quality is negatively correlated with the level of innovation.
H1b: Execution quality is negatively correlated with risk taking level.


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H1c: Execution quality is negatively correlated with proactiveness.
The mismatch of the policy and regulation systems is defined as the
complexity/ overlapping, lack of clarity and volatility/instability and inconsistency of
the state system of policies and regulations. These barriers are addressed by Lajqi and
Krasniqi (2017). These are also two typical characteristics of formal institutions in
Vietnam. State policies refer to the issuance and enforcement of laws, ordinances,

regulations with any form of legislations and/or government decisions, especially
those affecting business field (Forgel, 2001). State policies could be considered as a
pipeline through which SMEs can participate in business activities in accordance with
external rules and regulations, thus reducing the level of uncertainties in their
businesses (Roxas et al., 2008). Institutional documents, both theoretical and
empirical ones have indicated that state policies and regulations have a direct effect
on entrepreneurial orientation (Dickson and Weaver, 2008; Roxas et al., 2008 ;
Alvarez and Urbano, 2012). Most studies have found that comprehensive and
developed regulations ensuring full compliance with market mechanism have a
positive relationship with the development of enterprises through ability of
innovation and strategic decisions (Roxas et al., 2008). The relationship will be
negative if legal regulations become barriers to businesses‘ operations (Chadee and
Roxas, 2013; Liu, 2011; Zhu et al., 2012). State regulations and policies can promote
or hinder opportunities for SMEs to pursue more risky but promising innovative
projects (Zhu et al., 2012). The instability and complexity of the regulation and
policy systems cause policy risks, business risks, loss of motivation to innovation and
affect investment and development decisions of enterprises (Nguyen Thi Luyến,
2018). Because policies are not appropriate, environment becomes contrary to
business growth and entrepreneurs find it difficult to predict future economic
prospects to establish contractual relationships. This may prevent SMEs from taking
risks for investments (Lajqi and Krasniqi, 2017). In addition, the complexity and
volatility of state regulations and policies will make it difficult for businesses to
predict as well as how to conform to regulations when they want to pioneer in the
market. This may negatively affect the pionnering proactiveness of businesses. Based
on overall results, the thesis proposes following research hypotheses:
H2a: The mismatch of the state system of policies and regulations is negatively
correlated with the level of innovation.
H2b: The mismatch of the state system of policies and regulations is negatively
correlated with the risk-taking level.
H2c: The mismatch of the state system of policies and regulations is negatively

correlated with proactiveness.

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2.1.2.3 Theoretical framework and research hypotheses on the relationship
between informal institutions and entrepreneurial orientation
While there are different opinions to identify informally institutional elements
(Helke and Levisky, 2006; Sayoum, 2011), informal institutions could be defined in
three groups of key elements: the first group includes national cultural elements,
social norms (Busenitz et al., 2000); the second group is social factors such as trust,
reputation (Wicks and Berman, 2004; Seyoum, 2011); and the third group are factors
that were born as a result of the lack and weakness of formal institutions such as
networks of relations (Aslanion, 2006), corruption and political connectivity (Li,
2009). All three groups of informal institution are directed towards achieving
"acceptance" when it comes to "playing rules" in a society. Covin and Miller (2014)
and Miller (2011) who specialise in studying entrepreneurship have suggested that
entrepreneurial orientation can be shaped by social power, related parties or
government pressure to imitate or stand out from competitors or promote its
organization to be accepted. In the context of transition and developing economies,
studies have introduced some informal institutional factors, such as corruption (Li,
2009, Zhghenti, 2017), trust (Nguyen et al., 2005; Seyoum, 2011), and networks of
relationship (Aslanion, 2006; Steer and Sen, 2010). However, studies have a high
consensus on the regulatory role of the relation network to relationship between
entrepreneurship and business results of enterprises (Chin et al., 2016; Zhang and
Zhang, 2012; Walter et al., 2006). Therefore, this thesis only studies the relationship
between informal institutions and entrepreneurship by understanding the effects of
two informal institutional factors which are corruption and institutional trust.
Corruption is the abuse of power entrusted to personal interests (Bardhan,
1997, Transparency International, 2010). Corruption is defined as ways of selfenriching, self-rewarding money from state officials from the highest to the lowest
level, to obtain money and gifts for individuals from any state transaction whenever

possible. This concept of corruption has been used in many previous studies,
including those for the context of transition and developing economies (Avnimelech
et al., 2014, Chadee and Roxas, 2013), and is also used in this study. In fact,
corruption exists in all countries. However, in transition economies, it has been
considered as a common phenomenon and its level is significantly higher than in
developed economies (Tonoyan et al., 2010). Although the government's anticorruption efforts and anti-corruption campaigns are different in developing
countries, corruption is still a big challenge to businesses' operations and it has been
suggested to be an important factor affecting businesses' behaviour (Chadee and
Roxas, 2013; Le, 2017).
Regarding the effects of corruption on businesses’ behavior, literature review
has shown that corruption affects immediate or future resource allocation (Macrae,


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1982) and may have some positive effects in the short term but it will hinder
innovation and sustainable development of businesses (Avnimelech et al, 2014;
Nguyen et al., 2016). At the national level, the negative impact of corruption has been
widely recognised in previous studies such as causing negative incentives for
entrepreneurs to engage in value creation opportunities from doing business and thus
lead to a reduction in entrepreneurship activities (Avnimelech et al., 2014). At the
corporate level, some previous studies have shown the negative impact of corruption
on corporate innovation (Chadee and Roxas, 2013, Nguyen et al., 2016). Corruption
has contributed to shaping entrepreneurial behavior of small businesses in the context
of transition economies (Tonoyan et al., 2010). Corruption is identified as a huge
obstacle to the performance of SMEs (Aidis, 2005; Hashi & Krasniqi, 2011). When
corruption is at high level, enterprises tend to do short-term business, little investment
and snatching (Nguyen Van Thang, 2015). Thus, the level of risk taking and

pioneering proactiveness may be negatively affected because they neither intend to
do long-term investment nor focus on innovation. However, effects of corruption on
all aspects of entrepreneurial orientation (innovation, risk taking, and pioneering
proactiveness) does not seem to be much studied. Based on the overall framework,
the thesis proposes following research hypotheses:

Institutional trust fosters cooperation and will have a positive impact on outcomes
when encouraging actors to engage in business partnerships with a range of potential
partners thus expanding business opportunities and resource availability (Rus & Iglic,
2005). Thus, possible impacts of institutional trust on entrepreneurship as a
relationship needs to be examined by both theoretical and empirical studies. In this
study, based on research objectives, the author focuses on institutional trust, which is
considered as the most central in the function of modern and very important socioeconomic systems in early period of the relationship between companies (Rus and
Iglic, 2005). Similar to corruption, institutional trust has been found to play an
important role in creating an institutional environment. The activities of
entrepreneurship require a fundamental foundation of institutional trust (Karmann et
al, 2016). In particular, entrepreneurship and innovation of enterprises can be reduced
or developed (Anokhin and Schulze, 2009; Ellonen et al., 2008). Based on the
literature review, the thesis proposes following research hypotheses:
H4a: Institutional trust is positively correlated with the level of innovation.
H4b: Institutional trust is positively correlated with risk taking level.
H4c: Institutional trust is positively correlated with proactiveness.

H3a: Corruption is negatively correlated with innovation.

2.2 Proposed research models

H3b: Corruption is negatively correlated with risk taking level.

The theoretical model is based on formal and informal institutional factors that

can affect every aspect of entrepreneurial orientation. Although there is no central
theoretical framework for this study, the research model is proposed in Figure 2.4
based on literature review and inherited from the empirical evidence and suggestions
from previous studies.

H3c: Corruption is negatively correlated with proactiveness.
Trust which is an important informal institution and commonly used
(Williamson, 1993; Dixit, 2009; Seyoum, 2011) has become an important principle of
the organization when there is a shortage of a strong market institution ( Nguyen et
al., 2005) and developing trust will result in better performance (Wicks and Berman,
2004; Nguyen and Rose, 2009). Trust is often perceived as a substitution for a
developed market institution (Redding, 1990; Peng & Heath, 1996). There are many
studies of different types of trust and many concepts of trust. In general, trust is
considered as an informal institution that refers to established belief systems of the
behavior of other people. It is necessary to identify specific types of trust in the study
to make appropriate comparisons. Rus and Iglic (2005) have examined the trust of
SMEs including institutional trust and inter-personal trust. Institutional trust in this
study is defined as shared expectations derived from formal social structures through
signals such as members of professional associations or intermediary mechanisms
such as legal regulations, banking, government bureaucracy (Fuglsang and Jagd,
2015), which is generally beyond a certain transaction and beyond specific exchange
partners (Zucker, 1986; p. 63).

Figure 2.4: Research model
Mismatch of
policy and
regulation systems

Innovation
Execution quality

Risk taking

Institutional trust

Proactiveness

Corruption

- Operation
period
- Type of
ownership


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CHAPTER 3

businesses, ownership, size (capital and number of employees), and diversed areas of
activity. An important note for the author to choose respondents is that
entrepreneurial orientation often follows the perspective of senior managers (Wiklund
& Shepherd, 2003). They are often those who highly influence company strategy
(Keh et al, 2007). This approach has been accepted in studies, especially in the
context of SMEs (Keh et al., 2007, Wiklund & Dean 2003). Therefore, in this
research, General Director/Director or Deputy General Director/Deputy Director or
Member of the Board of Directors / Board of members of each company has been
selected as interviewees. All of the top selected managers are those who have worked

with their companies for many years so have good understanding of their operations.
All businesses in the sample have been in active for at least 3 years. This way of
sampling can ensure the whole representativeness and has been done by a number of
previous studies on entrepreneurial orientation of SMEs in Vietnam (Nguyen, 2011;
Swierczek & Thai, 2003).

RESEARCH METHODOLOGY
3.1. Overall research design
The thesis uses both qualitative and quantitative approaches. The qualitative
one was done in phase 1 (before quantitative research) while the quantitative
approach is implemented in phase 2 to test models and research hypotheses.
Regarding qualitative approach, in-depth interviews are done to clarify and
examine the relevance of the concept and content of the 'entrepreneurial orientation'
in the context of Vietnam. In addition, since the informal institution is controversial,
sensitive, difficult to measure, it needs to be explored. In addition, qualitative
research also helps suggest an overview of the relevance of the model and the
relationships in the proposed research model before conducting quantitative research
with large sample size. In addition, qualitative research contributes to detecting and
supplementing indicators for research variables.
Quantitative research was conducted through a sample survey of Vietnamese
SMEs in three big economic centers (Hanoi, Da Nang and Ho Chi Minh city). The
model and research hypotheses are tested with survey data collected from the
research sample. The use of both quantitative and qualitative approaches helps us
deeply understand the research problem and give more reliable research findings.
3.2 Qualitative research

3.2.1 Objectives
There is still a number of different views on the entrepreneurial orientation of
SMEs (Hoang Van Hoa, 2010), and the relationships between institutional factors and
aspects of entrepreneurial orientation are not really clear. Based on the general

research objectives and some highly sensitive institutional factors, the thesis uses
qualitative methodology to explore and clarify research concepts being concerned.
The first qualitative study is to explore and understand the nature of
entrepreneurial orientation concept and its aspects. After identifying aspects of
entrepreneurial orientation in the context of Vietnamese SMEs, the second qualitative
study was carried out to explore and understand formal and informal institutional
factors that affect the entrepreneurial orientation of SMEs.

3.2.2 Implementation
3.2.2.1 Research sample
Enterprises selected for this research are Vietnamese SMEs as defined
according to Government’s Decree No. 56/2009/NĐ-CP, dated June 30, 2009. The
selection of businesses ensures the diversity of research sample regarding types of

Enterprises selected for the first qualitative research are 5 SMEs in Hanoi,
which is one of the two cities with the largest number of SMEs in Vietnam. This
sampling method has also been carried out by previous studies using qualitative
research methods (Nguyen, 2009). Business name is coded to keep confidential as
required.
Businesses selected for the second qualitative research are 21 SMEs from three
of the country's largest economic centers, representing the three regions of NorthCentral-South (Hanoi, Da Nang and Ho Chi Minh city). The number of SMEs in
these three cities accounts for more than 80% of the total SMEs of the country (GSO,
2018).
3.2.2.2 Data collection and analysis
Before collecting data, a guideline for in-depth interview was designed based on
research model (see appendix 01A and 01B), which will help pre-shape required
information. This study uses many data sources. Data was collected from desk review,
observations and in-depth interviews, of which the latter was mainly used in the study.
Specifically, the author has searched for websites and documents related to SMEs,
their characteristics and recent performance. Observations were made by the author

during visits to companies based on good relationship with these companies. During
each visit, the author regularly works and discusses directly with the top leaders of
each company. Therefore, the author can observe the performance of companies, the
behavior of company leaders and may have a better view of the level of
entrepreneurial orientation of each of them. The focus of the interviews was to
understand the formal and informal institutional factors, as well as their effects on the
aspects of entrepreneurial orientation of SMEs. In particular, the respondents were


13

firstly asked to provide an overall picture of the company's performance over the past
five years and identify key barriers to their business, especially from the institutional
environment. Then, the level of proactiveness, innovation and risk-taking level of the
company (ie three aspects of entrepreneurial orientation) were examined and the
factors affecting the entrepreneurial practices of these companies were explored.
During interviews, effects of institutional elements, especially informal institutions
(corruption and institutional trust) on each aspect of entrepreneurial orientation have
been carefully studied. Each interview lasted for between 45 and 60 minutes.
Interviews were conducted at the office of the interviewee or at places which were
suggested by interviewees as long as they were comfortable. The interviews were
recorded, then converted to texts for analysis.
All interviews were recorded. After tape processing was completed, interview
information was typed and analysed. Content coming out from each interview was
noted and analyzed. After each interview, information was carefully reviewed in order
to change and prepare for the next rounds.
Then, to analyse the evidence obtained from the first qualitative research,
content collected has been coded based on the theoretical concept of entrepreneurial
orientation and its aspects. Then codes were calculated to come up with frequency
from each interviewer and used as a basis for aggregating for each topic at all

interviewees. Similar to the first qualitative round, the main topics that appeared in
each interview of the second qualitative one were carefully identified and analyzed.
After each interview, the contents were reviewed for possible changes and prepared for
the next interviews. Based on the identification of institutional elements and aspects of
entrepreneurial orientation from the desk review and some possible effects, data coding
was conducted to find out relationships.

3.2.3 Research findings
Based on the research objectives, the qualitative exercise has come up with the
following findings:

•

Entrepreneurial orientation of Vietnamese SMEs includes three outstanding
aspects, which are: innovation; risk taking; proactiveness. This is the basis to
identify the relevance of studying entrepreneurial orientation with 3 aspects in
the proposed research model.

•

Formal institutions affect entrepreneurial orientation through one of the typical
barriers, which is the volatility and complexity of the State system of
regulations and policies. This is the basis for adding 2 indicators regarding the
appropriateness of the policy and regulations system.

14

•

Corruption and institutional trust are two informal institutional elements which

are considered to have critical impacts on the entrepreneurial orientation of
SMEs. Initially, corruption is found to negatively affect entrepreneurial
orientation while institutional trust having positive impact. This finding is also
consistent with the proposed research model. Institutional trust is felt and
shared positively by some businesses, so one additional indicator is suggested
to relect this content.

3.3 Quantitative research
Sau khi thực hiện nghiên cứu định tính, tác giả tiến hành nghiên cứu định
lượng thông qua một cuộc điều tra các DNNVV nhằm mục đích kiểm định mô hình
và các giả thuyết nghiên cứu. Phần sau đây sẽ trình bày một số nội dung chính như
sau: các thang đo sử dụng trong luận án và quá trình xây dựng bảng hỏi, mẫu điều tra
và cách thức thu thập dữ liệu điều tra. After conducting qualitative research,
quantitative exercise was done through a survey of SMEs for the purpose of testing
models and research hypotheses. This section presents following items: scales used in
the thesis and the process of developing questionnaires, survey forms and data
collection methodology.

3.3.1 Scales and questionnaire development
3.3.1.1 Scales
Most of the scales in this study are inherited from previous studies, are
screened and adjusted to adapt to the research context in Vietnam. The screening and
adjustment of these scales is done under the guidance of the two experienced experts
in training, teaching and research of entrepreneurial orientation and institutions. The
thesis was also added by five indicators for three variables as a result of previous
studies and qualitative research findings. All scales inherited from previous studies
are 5-point Likert-type. Therefore, the 5-point scale has also been used for this thesis
with 1 being fully disagree, 2 is disagree, 3 is normal (neutral), 4 is agree, 5 is fully
agree.
Based on the findings of previous studies and of qualitative research, the

analysis used in this thesis with two control variables: operating period and type of
ownership. The detailed coding of the control variables can be found in Appendix 02.
Operating period means the duration from the point enterprises start its production
and business activities to the current point. This variable is divided into 02 subperiods including: less than 6 years; 6 years or more. Type of ownership are divided
into two categories: enterprises with and without state capital.

3.3.1.2 Questionaire development


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In order to ensure the quality of the collected data being used for the research,
the questionnaire design was carried out through a rigorous and scientific process.
The development of the questionnaire followed 5 steps as: 1 / Identify the concept of
variables and scales of variables in the research model based on previous studies and
qualitative research results; 2 / Develop Vietnamese version of the questionnaire; 3 /
Check the accuracy, clarity and coherence of the Vietnamese version with the support
of experts in the research field; 4 / Pilot a small sample to ensure the accuracy and
readability. The process was carried out in two steps, including direct interviews with
3 businesses and followed by pilot interview with 50 SMEs; 5 / Finalise the
questionnaire, with all color print hardcopies of A3 size paper. In addition, the
questionnaire also includes sections of business information, respondents'
information.

enterprises, big enterprises and newly established ones (Operating time of less than 3
years), the number of remaining enterprises is 1,269.

3.3.2 Research sample and data collection

The survey was conducted in Hanoi, Da Nang and Ho Chi Minh city. These are
the three most dynamic economic centers of the country and account for more than
80% of all SMEs operating in Vietnam (General Statistics Office, 2018). This
research sample was also selected to be representative for the whole Vietnamese
SMEs (for example, Swierczek and Thai, 2003).
The sample size was based on the number of observed variables of the study
and the research space. According to Hair et al. (1998), the minimum sample size is 5
to 10 times higher than the number of observed variables that can be used for factor
analysis and regression analysis. Thus, with 24 observed variables, then the sample
size should be at least 240 enterprises.
The sampling framework of the study is expected to meet the following
requirements:
1 / SMEs in accordance with the definition in Government Decree No. 56/2009
/ ND-CP, dated June 30, 2009; 2 / Having at least 3 years in operation; 3 / Enterprises
working in 5 areas including: industry/manufacturing; service/trade; mineral
extraction; construction; agriculture/ forestry/fishery. In which service/trade
enterprises accounts for 70.6% (General Statistics Office, 2018); 4 / The share of
micro and small enterprises out of the total number of SMEs in each region based on
official statistics of 98.5% (GSO, 2018); 5 / Type of ownership of both state and
private enterprises. Of which, private businesses accounts for 99.5% (GSO, 2018).
Based on the research objectives of the thesis and the sampling framework, the
Legal Department of VCCI was contacted to get a list of businesses which was
engaged in PCI 2016 survey in Hanoi, Da Nang and Ho Chi Minh city. This is the list
selected by VCCI based on random stratification method. After eliminating backup

According to Mangione (1995), the rate from 50% to 59% is acceptable, while
the response rate of many current studies is only 30% (Nguyen Thi Tuyet Mai and
Nguyen Vu Hung, 2015). Therefore, based on the minimum sample size requirement,
all 1,269 survey questionnaires were used.
In order to conduct data collection, 10 enumerators were trained on how to

distribute and collect questionnaires. These enumerators are able to communicate
well and have certain experience to work with businesses, including: 4 marketing
staff in the tourism and hotel sector in Ha Noi; 2 from a research institute in Da
Nang; 4 final-year marketing students in Ho Chi Minh city. In order to increase the
response rate, all the questionnaires were color printed attached with an open letter
from the Vice Rector of National Economics University (see Appendix 2). In
addition, in each region, there was also support from SMEs Association who sent
letters or follow-up calls to request their members to fill in the questionaires. After
collecting data from each region, random check was done with some businesses to
verify reliability of the collected data.
The survey period was carried out from April 2018 to the end of July 2018.
The number of questionaires distributed was 1,269 and the number of response was
486, with the response rate of 39%, and there was 138 invalid questionaires. Low
number of distributed questionnaire was due to mis-contact with businesses of which
some have relocated or refused to respond. The number of enterprises who did not get
the questionaires were mainly micro enterprises.
In general, the characteristics of the sample met most of the criteria set in the
sampling framework. Specifically, the share of micro and small enterprises in the
sample was 90.2% compared to 98.5% as required, the proportion of enterprises
operating in the service/trade sector reached 71.6% compared to required ratio of
70.6%, the non-state enterprises accounts for 93.7% compared to set ratio of 99.5%.
Given the research sample methodology, the characteristics of the research sample
and data collection methodology were explained above, it is expected that collected
data can ensure the reliability and generalization for the overall study.
All collected data was made with high quality for data analysis. Results of data
analysis and justification of research results will be presented in the next chapter.


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CHAPTER 4

<.05). During the analysis, the risk-taking variable (CR3) and the proactiveness variable
(CD3) were dropped since the correlation coefficient of the total variable was too low
and the alpha coefficient improves significantly to the required level (> .70) when these
variables were dropped out. The EFA results with the remaining variables show that the
three factors are extracted as expected, ensuring the distinct and convergence value of
the scales, with the total variance extracted of 76.721%.

RESEARCH FINDINGS
This chapter presents research findings with a focus on model testing and
proposed research hypotheses. Before doing this test, a preliminary assessment of
scales through an analysis of the exploratory factor analysis (EFA) and the
Cronbach’s alpha coefficient was made. After that, confirmatory factor analysis
(CFA) was done through the evaluation of the full measurement model. Research
model and hypotheses were tested by structural equation modeling (SEM) analysis
technique. The affirmative factor analysis (CFA) and the structural equation model
(SEM) were carried out with the support of AMOS software integrated in SPSS 21.
4.1 Evaluation results of scales

4.1.1 Preliminary assessment of scales through EFA and Cronbach’s alpha
Evaluation of scale of independent variables
EFA analysis was firstly done simultaneously for all indicators measuring the
independent variables in the research model (two elements of formal institutions and
two elements of informal institutions). Before analyzing the factor, KMO and
Bartlett's Test were done. The results showed that Kaiser-Meyer-Olkin Measure of
Sampling Adequacy is equal to 0.836 (value from 0.6 is acceptable) and Bartlett's
Test of Sphericity has a significant level of under 0.05 (see annex 03). This result

indicates eligibility for EFA implementation. EFA was then conducted with the
Principal Component Analysis and the Varimax rotation. EFA results show that 4
factors are extracted at eigen value> 1.00 and the total variance extracted is 65.836%
(see Appendix 03). In addition, observed variables have high coefficient (factor
weight) on the concept they they measure (from 0.547 or more) and low coefficient
on the concept they do not measure. Therefore, the scales of four institutional factors
all achieve convergent values and distinct values.
The thesis evaluates the reliability of each scale of independent variables through
the Cronbach’s alpha coefficient. All scales have coefficient alpha above the normal
threshold of .70, except alpha of institutional trust scale of .672. Although it has not
reached the level of .70, the value is also higher than .60 and so is also acceptable (Hair
et al., 1998).
Evaluate the scale of dependent variables
The thesis continues to perform EFA analysis simultaneously for all indicators
measuring the three dependent variables in the research model (three aspects of
entrepreneurial orientation). KMO and Bartlett's Test results show that it is satisfactory
to implement EFA (KMO> .60 and Bartlett's Test of Sphericity with significance level

4.1.2 Evaluation of scales through affirmative factor analysis (CFA)
The results of the CFA analysis with the full measurement model show that the
measurement model fits well with the data after eliminating an observed variable of
'corruption' (TN1) because this variable is associated with several standardized
residual covariances> 2.58 (Hair et al., 1998). Specifically, the results of the model's
relevance index are as follows: χ2 (167) = 350.707, χ2 / df = 2.10, p <.001, RMR =
.046, RMSEA = .056, GFI = .915 , CFI = .94, and TLI = .924. All t-tests have
reached the significance level of 0.001. The results of CFA analysis with full
measurement model, using AMOS software are presented in Appendix 03. Thus, the
scales with indicators are satisfactory and used for further analysis: descriptive
analysis to assess the status of institutional and entrepreneurship factors of
Vietnamese SMEs (from the perspective of SMEs), and SEM analysis to test research

hypotheses.
4.2 Current situation of institutional factors and entrepreneurial orientation of
Vietnamese SMEs

4.2.1 Descriptive statistics of institutional factors and entrepreneurial orientation of
SMEs
Statistical results of formal and informal institution factors
Statistical results show the level of the two formal institutional factors at a slightly above
the average point (> 3.2) on a scale of 5. This reflects SME’s perception of formal
institution elements being as vicious barriers to their business, especially the volatility,
inconsistency and overlapping of government policies and regulations (mean = 3,544,
S.D) = .744).
Descriptive results also show that the average score of the two elements of the
informal institution is also just above the average. Specifically, institutional trust was not
high (mean = 3.662 on a scale of 5; S.D. = .6268). Corruption is assessed at a slightly
above average level (mean = 3,351; S.D. = .8321). This reflects the fact that SMEs often
have to pay informal costs when working with state agencies and this is also a barrier to
businesses’ operations.
Statistical results of entrepreneurial orientation aspects


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Regarding SMEs' assessment of the three aspects of entrepreneurial orientation,
statistical results show that all three aspects are not high (<4 on a scale of 5). Specifically,
the risk taking level and proactiveness level are only at average (mean = 3.2 on a scale of
5). Among the three aspects of entrepreneurial orientation, innovation is evaluated
relatively higher (mean = 3.718; S.D. = .634), but still less than 4.

Regarding the impact of 'the mismatch of policy and regulation system' on
aspects of entrepreneurial orientation, SEM results show that all three research
hypotheses (H2a, H2b and H2c) are accepted. As proposed, 'the mismatch of the
policy and regulation system' has the negative effect on 'risk-taking level' (γ4 = -.439;
t-value = -3.53), on ‘innovation’ (γ5 = -.520; t-value = -3.747), and on 'proactiveness' (γ6 = -.509; t-value = -3.949).

4.2.2 Comparison of institutional and entrepreneurial factors according to business
groups
The analytical results of means (independent-sample T-test) show that the
enterprises with state capital assess barriers as the mismatch of state policies and
regulations, as well as the execution quality being bigger than those without state capital.
By operation period, enterprises of less than 6 years perceive barriers of execution
quality and the level of corruption being higher than the older businesses.
4.3 Results of model testing and research hypothesis
The thesis uses structural equation analysis (SEM) technique to test models and
research hypotheses. The results of SEM analysis showed that the relevance level of the
model is good: χ2 (197) = 407.466, χ2 / df = 2.068, p <.001, RMR = .045, RMSEA =
.055, GFI = .911 , CFI = .931, and TLI = .911. All t-tests have reached the significance
level of 0.001. The model explains 54.3% of the variation of "risk taking‘ aspect (R2 =
.543). R2 = .611 for the ‘innovation’ aspect and R2 = .606 for the ‘proactiveness’ aspect.
The following section presents the results of testing research hypotheses on the impact of
institutions (formal and informal) on aspects of entrepreneurial orientation.

4.3.1 Results of testing the impact of formal institutions on entrepreneurial
orientation
The results of hypothesis testing through SEM analysis show the hypotheses
on the impact of the 'mismatch of the state system of policies and regulations’ on
aspects entrepreneurial orientation is accepted, while the hypotheses on the effect of
'execution quality' is rejected.

Unexpectedly, the lines of relationship from ‘execution quality’ to all three
aspects of entrepreneurial orientation are all statistically significant but positive,
which is contrary to the proposed impact. Specifically, 'execution quality' is
positively correlated, respectively with 'risk taking level': γ1 = 1.441 (t-value =
6.359), 'innovation': γ2 = 1.569 (t -value = 5.686), and with 'pro-activeness': γ3 =
1.503 (t-value = 6.296). Thus, H1a, H1b and H1c are not accepted. The next chapter
will explain this result.

4.3.2 Results of testing the impact of informal institutions on entrepreneurial
orientation
The SEM results show that 'corruption' has negative impacts on all three aspects
of entrepreneurial orientation. Specifically, as expected, 'corruption' has a negative
impact on 'risk-taking level' (γ7 = -.658; t-value = -4.535), on 'innovation' (γ8 = -.845;
t-value = -4.949), and on 'pro-activeness' (γ9 = -.729; t-value = -4.835). Therefore,
hypotheses H3a, H3b and H3c are accepted.
Regarding impacts of ‘institutional trust’ on entrepreneurial orientation, the
analysis results indicate that all three hypotheses of H4a, H4b and H4c are accepted.
Specifically, 'institutional trust' has a positive impact on 'risk taking level' (γ10 = .492;
t-value = 4.289), on 'innovation' (γ11 = .534; t- value = 4.131), and on 'pro-activeness'
(γ12 = .642; t-value = 5.134).
Based on the results of model testing, in the next chapter, the thesis will present
recommendations and suggestions to enhance entrepreneurial orientation of
Vietnamese SMEs.


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CHAPTER 5
COMMENT ON RESEARCH RESULTS AND SOME RECOMMENDATIONS
5.1 Comment on research results

5.1.1 Comment on the research results of the relationship between formal
institutions and entrepreneurial orientation
The mismatch of the State's system of policies and regulations has a negative
relationship with all three aspects of entrepreneurial orientation. This indicates
negative effects of formal institutions on the business operations of SMEs, especially
affecting their strategic decisions.

5.1.2 Comment on research results of the relationship between informal
institutions and entrepreneurial orientation
Institutional trust and entrepreneurial orientation
Institutional trust is positively correlated with all three aspects of entrepreneurial
orientation. Thus, this is the only institutional element in the study that positively
affects the entrepreneurial orientation of SMEs.
Corruption and entrepreneurial orientation
The results of qualitative and quantitative research confirm negative effect of
corruption on entrepreneurial orientation. Businesses lose motivation to carry out
innovative activities and pursue high-risk business opportunities when informal costs
have become unwritten laws.

5.1.3 Comment on the different results among business groups when assessing
institutional barriers.
The research results show that there are differences when assessing
institutional factors among enterprise groups. Specifically, when assessing the
mismatch of the state policy and regulation system, as well as the execution quality,
the group of enterprises with state capital seems to face bigger barriers than those
without. This may be only explained by differences in current regulations applicable
to the former group. In other words, "the more you do, the more guilty you will be."
The results of group comparisons by operational duration of enterprises show
that execution quality barriers and the level of corruption seem to be higher in

enterprises with less operating time (<6 years) than in the other group. It is not too
difficult to understand this difference, as businesses with longer operational duration
seem to get familiar to business environment where informal costs have become
unwritten laws.

22

5.1.4 Comment on research hypothesis results are not accepted
Execution quality has a positive relationship with all three aspects of
entrepreneurial orientation. This result is contrary to previous research results as well
as contrary to the perceptions of some enterprises in the qualitative research sample.
In the end, increased barrier to execution quality means increased transaction
costs, leading to higher input costs for business operations. Given limited resources,
SMEs must find ways to survive even negative behaviors when costs increase. In
fact, most SMEs are difficult to avoid mistakes in their production and business
activities, the ultimate goal is to find ways to survive. Therefore, the greater this
barrier, the higher the level of "entrepreneurial orientation" behaviors. This result
could be an interesting finding in the context of Vietnamese SMEs.
5.2 Some recommendations to improve institutions and create a favorable
business environment towards promoting entrepreneurial orientation of
Vietnamese SMEs

Recommendations to promote entrepreneurial orientation of Vietnamese SMEs
Firstly, although formal institutional factors and corruption are still barriers to business
and production activities of enterprises, the institutional trust of many SMEs is not
negatively affected. Therefore, gradually removing formal institutional barriers, restricting
corruption and prioritizing institutional trust will be fundamental solutions to promote
entrepreneurial orientation of Vietnamese SMEs.
Secondly, research results show a positive relationship between execution quality and
entrepreneurial orientation of SMEs. However, the increase in the level of all three aspects

of entrepreneurial orientation is not sustainable. That change may lead to the existence
only and disproportionate development of entrepreneurial orientation. Therefore,
institutional barriers in terms of execution quality must be gradually removed for the
sustainable development of entrepreneurial orientation of SMEs.
Thirdly, since enterprises with state capital have higher awareness of institutional barriers
than those without it, entrepreneurial orientation may be more negatively affected.
Therefore, equitization and divestment process of state-owned enterprises should be
accelerated to enhance entrepreneurial orientation of this enterprise group.
Eliminate formal institutional barriers regarding the mismatch of the state system of
policies and regulations as well as execution quality, limit corruption to reduce
transaction costs for enterprises.

Strengthen institutional trust
It can be said that this is the most important, long term and most effective
solution in the current context of Vietnamese SMEs. The characteristics of informal


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institutions is regards to longer time required for changes as compared to formal
institutions, so institutional trust cannot change quickly. However, in specific
contexts, formal and informal institutions can support and replace each other.
Completing formal institution in the long run can help strengthen institutional trust.
In addition, institutional shocks may change institutional trust more quickly, because
trust with spiritual values looks like beliefs through awareness. The current anticorruption work in Vietnam is unprecedented, so this is a big push that can enhance
the trust of the whole society in general and SMEs in particular. Previous studies
have also shown that when social trust increases, then institutional trust is also
improved. This can be a favorable condition for perfecting formal institutions,

limiting corruption and promoting institutional trust.

CONCLUSION

Finally, recommendations are only made possible when there is the highest
determination of the entire political system.

This study explores the nature of entrepreneurial orientation in the context of
Vietnamese SMEs. The three emerging aspects of entrepreneurial orientation are
innovation, risk taking and proactiveness. In addition, the thesis has identified the
main institutional factors of execution quality and the mismatch of the state system of
regulations and policies which have effect on entrepreneurial orientation. The
informal institution represented by two factors that affect entrepreneurial orientation,
which are institutional trust and corruption, are also explored. In particular, the thesis
has examined the relationship between formal and informal institutions with
entrepreneurial orientation of SMEs in the context of Vietnam - one of the transition
and developing economies.
While above results have been achieved, certain limitations could not be
avoided that may need further studies. Firstly, regarding the scales used in the study,
in addition to the original scales inherited from previous studies, new observed
variables are developed based on a specific basis (from completed studies and
qualitative results); though it has been tested to ensure reliability and eligibility in the
thesis. However, these scales need to be reconfirmed in subsequent studies in
different contexts. Secondly, the study was conducted at the same time with the
appearance of an important impetus of the political system which may change
institutional trust. Therefore, the effect of institutional trust on entrepreneurial
orientation should be further studied at a reasonable time to explore this relationship
more carefully.
Thirdly, a positive relationship between execution quality and entrepreneurial
orientation has been partly explained. However, if all three aspects of entrepreneurial

orientation increase with the increased impact of execution quality barriers just
because of existence, the relationship between entrepreneurship aspects and business
performance is unlikely. and business results. In order to understand this relationship
more deeply, further studies need to add a business performance variable to get it
simultaneously tested in the research model.
In summary, the thesis provides an important empirical evidence on the
relationship between formal, informal institutions and each aspect of entrepreneurial
orientation of Vietnamese SMEs. Given specific contribution in terms of theory and
practice, the results of this thesis can not only be further referred and used in
subsequent studies of relevant topics, but also could be served as scientific
framework for policy makers, state agencies to improve institutions towards
promoting entrepreneurial orientation of Vietnamese SMEs. Thereby, it will help
strengthen the competitiveness of SMEs in the context of broader international
integration.