Mnes vertical linkages experience of vietnam after malaysia

My assignment is about the Axele Giroud analysis – an international concern reappraisal on MNEs perpendicular linkages: The experience of Vietnam after Malaysia. I am traveling to analyze this reappraisal in the Part B accroding to 5 criterias, including Project Rationale, Literature Review, Paradigm and Design, Methods, Results and Presentation.

Malaysia and Vietnam: a development position

Associating to the my assignment ‘s subject, it is neccessary to grok a brief drumhead about the Foreign Direct Investment ( FDI ) invetment in both states.

As we know, pulling FDI is an indispensable portion in the economic development scheme in any states, particularly in term of accomplishing benefit from foreign engineering, capital and accomplishments.

Malaysia had encouraged FDI since 1960s ( Giroud 2007 ) and presently, Malaysia is one of the most successful Southeasterly Asiatic states in pulling FDI. This is due to the fact that “ Malaysia has ever endeavored to keep the fight of FDI determiners like legal trade government, legal substructure ( FDI in Malaysia, hypertext transfer protocol: // ) .

In contrast, Vietnam became attractive for FDI until 1990s ( Giroud 2007 ) and Vietnam has been rather sucessful in pulling FDI influxs since the origin of economic reform in 1986 after shiping on a way of reform, known as The Doi Moi policy. After that, Vietnamese economic system had achieved a important perfomance as one of the greatest turning economic systems in the universe ( Nguyen Ngoc Anh, Nguyen Thang, 2007 ) .

However, the flow of FDI into Vietnam after Malaysia for 30 old ages, therefore, the experence of attrative every bit good as acquiring benefit from MNEs is limited whereas Malaysia have been the successful instance in this issues. Therefore, many experts have studied about the impact of MNEs on host states, particularly in demostrating the potencial for cognition and engineering transportation and the Axele Giroud 2007 is non an exeption.


Project Rationale


Recognizing the job is that the impacts of transnational endeavors ( MNEs ) on host economic systems have been studied carefully in the literature since the 1960s, but one facet that still needs better apprehension is the manner foreign fimrs influence the development of local houses ( Moran, 2005 ) , through their local buying behavior. It is the good function of buyer-supplier linkages that have late attracted progressively turning attending of bookmans and policy in host states, particularly in the tranference of cognition and engineering to local providers.


From the above job, the writer chosen Malaysia and Vietnam with the purpose to compare MNEs supply activities in both states, specially concentrate on Vietnam experience, and pull out the lessons from possible benefits that could be obtained by the state ( and its houses ) from the development of MNEs-supplier linkages in Malaysian. Malaysia is chosen because it is a neighbouring state and in the same part grouping of ASEAN. Furthermore, MNEs have already developed substaintial perpendicular linkages with its provider industries. Therefore, the comparing with Malaysia is assessed to be utile.


As can be clearly seen from the reappraisal, the writer provided with two aims. The first is giving a desmonstration of the possible the cognition transportation between multinationals and their providers in both Malaysia and Vietnam. Second, proposing avenues for Vietnam to maximise good linkages from MNEs after discoursing the first aim.

However, the purposes and aims are look to be matching. In add-on, the 2nd aim ( proposing avenues for Vietnam to maximise good linkages from MNEs after discoursing the first aim ) has a larger significance toward maximal purpose. Therefore, the aims of this reappraisal are non appropriate for the purposes.


Before composing the reappraisal, the writer has studied many theoretical theoretical accounts that are relevant to the job, ( such as Markusen and Venables ( 1999 ) and Lin and Saggi ( 2005 ) , in corporating engineering transportation to a two-tier production construction ) , and the research based on the undermentioned premises.

First, multinationals have positive effects on the development of autochthonal houses through the creative activity of perpendicular linkages and sourcing of intermediate merchandises locally ( other effects notwithstanding ) ;

Second, the transnational engineering is superiror to that of its rivals ;

The concluding is that the providers ‘ capablenesss improve as a consequence of the interaction with foreign clients behind cognition transportation happening between foreign houses and local providers

Hypothesis – 4 hypothesis

From the old findings, the research asserted the critical function of local or national policies in footings of advancing non merely local sourcing, but besides the progressively deep relationships between foreign and local houses. With this position, “ Malaysia has adopted pro-active policies aimed at heightening inter-firm linkages in the industrial sector ( Jomo, 2001 ) , and some regional enterprises have proved successful in promoting preparation and human resource development, peculiarly in the electronics sector ” . Therefore, two hypotheses are expected that: the first is there is possible for cognition and engineering transportation from foreign affiliates based in Malaysia and Vietnam to their local providers ( proposition 1 ) ; the second is the nature of the relationship between foreign affiliates and their providers alterations over clip ( proposition 2 ) .

Furthermore, it is clear that MNE ‘s supply dealingss in Vietnam differ from those in Malaysia with the elaborate informations and statistics about the FDI flow into both states. To be more specific, the clip that Malaysia has encouraged FDI since the late sixtiess while Vietnam in 1990s and this marked the Vietnam passage from a centrally planned economic system to a market economic system every bit good as lacked of experience of market capitalist economy. As a consequence, it is expected that Because Vietnam is a passage economic system, there is a difference in the degree of cognition and engineering transportation from MNE ‘s depending on whether they are located in Malaysia and Vietnam ( Proposition 3 ) ; and the Proposition 4 is MNEs ‘ cognition and engineering transportation to local providers contribute to the betterment of local provider ‘s capablenesss.

Literature Review

The Giroud research has been implemented with a broad scope of modern-day surveies and given logical statements with theoretical framewoks concentrating on its chief intent. Therefore, through the reappraisal, it is cleary easy to roll up relevant informations about the impact of MNEs on host economic systems job and the lucidity of thoughts are acquired.

Right constructs

It is really indispensable to cognize whether the dei¬?ned job has already been solved, position of the job, techniques that are utile to look into the job and other related inside informations ( S. Rajasekar, P. Philominathan, V. Chinnathambi, 2006 ) . Harmonizing to this theory, we can see that the writer has been done the literature research establishing on a big figure of old findings since 1960s and empirical surveies which are highly related to the job.

With the research ‘s job, the demand of understanding about the impact of MNEs on host economic systems through their local buying behavior every bit good as buyer-supplier linkages is clearly shown with the definitions of two type of linkages. The construct exhibits about the perpendicular linkages ( or backward ) which represents the dealingss established with provider houses while horizontal linkageg ( frontward ) comprise dealingss established with concern clients in the host economic system.

Other constructs which are utile principles linking to the research ‘s purpose: Vertical linkages have received increased attending in the academic literature, with increasing Numberss of surveies turn toing the issue of spillovers generated through perpendicular linkages ; Linkages have positive effects on the houses concerned through spillovers ; MNEs engage in tranfer activities that are good for the development of local providers ; Malaysia ‘s experience in following policies aimed at heightening inter-firm linkages in the industrial sector


Harmonizing to the ( hypertext transfer protocol: // March 3, 2009 ) , it is peculiarly of import to stand for the spread in cognition which the research aims to make full because of necessitating to convert the reader that there is an gap in the country of survey. Therefore, based on reappraisal of relevant literatures, the writer point out existing issues ( spreads ) which have been relevant to the proposed job and do a batch of troubles to cunduct the research.

First, although transnational linkages have received considerable attending in the literature in host states ( Blomstrom, Kokko, and Zejan, 2000 ; Giroud, 2003 ; Rodriguez-Clare, 1996 ; UNCTAD, 2001 ) , the mechanisms throuh which perpendicular linkages take topographic point are still non good understood. Second. the survey of linkages is good established in the economic development literature, it has non been integrated to the full within the theoretical strands of multinationals ‘ activities ( Meyer, 2004 ) . Finally, there has been no probe of the potentially good impact of MNEs on local provider through transportation of cognition and engineering in the specific instance of Vietnam.

Up to day of the month

In footings of making literature reappraisal, it is truly of import to hold a diversified beginning which should be updated, precise information. In this research, Giroud collected informations from a assortment of old findings which related to the good MNEs in host states in general every bit good as Malaysia and Vietnam in peculiar. The statistics about the Features of MNEs in Malaysia and Vietnam in 1996 is an illustration for this issue. It seems to be out of day of the month and may be act upon the truth of the research.

Paradigm and Design:


Harmonizing to Geoff Wheeler and Steve Carter ( P.19, 2010 ) , at the research scheme lever, such as suvery, instance survey, ECT. and the lever o quantitative and qualitative informations assemblage and methods, eg. Interview, questionare, etc, assorted attacks may be adopted. Therefore, it can be seen from the Giroud reappraisal, the writer applied the realist attack in his research.

In the position of epistemology, the research debated the nature of the potencially good for cognition transportation between multinationals and their providers in both Malaysia and Vietnam every bit good as pulling the sucessfull experiences of MNEs-supplier linkages in Malaysia for Vietnam. In add-on, the research based on incontrovertible information which are determined through observation and/or experimentation from old surveies.

Besides that, in footings of ontology, Giroud ( 2007 ) clearly defines the relationship with provider houses with the definition of perpendicular linkages and forward linkages which are necessary to any normal industrial market.


Using the comparative design, Giroud ( 2007 ) illustrates clearly about the reappraisal ‘s intents and information related to the jobs. It is evidently acknowledge about the differences of the concern environment in general and MNEs ‘ supply dealingss in specific of both states. These are shown in the clip of having FDI, the benefits from MNEs in Malaysia for a long clip and from that, supplying the sugget avenues for Vietnam to maximise the benefit of linkages from MNEs such as the demand to reforming of competitory environment every bit good as policies for MNEs operation in Vietnam.

Assorted Method

As said in the Paradigm portion, the research utilized the realistic method which both portions philosophical facets with rationalist, and acknowledges the importance of understanding people ‘s socially constructed readings and significances while seeking to understand broaders societal forces, constructions or procedure that influence and possibly even restrain, the natura of people ‘s position and behavior ( Geoff Wheeler & A ; Steve Carter, P.13 ) .

Besides, with the assorted method, the reappraisal used both quantitative and qualititative attack to roll up informations. The paper usage many informations from primary beginnings through inverviews ( semi-structred quetstionare ) , suvery and in footings of the secondary beginnings, the paper utilized the information from ASEAN Statistical yearbook 2005.

Besides, utilizing Positivist ( chiefly quantitative ) , the research used longtitudinal surveies such as a seme-structured questionare used to interview directors in Malaysia and Vietnam ( Mirza et al. , 2003 ) to analyze the activities performed by MNEs and assess perpendicular linkages established in the host economic system while a similar survey was impleneted in Malaysia in 1996 “ a comparision with a similar earlier survey conducted by the writer of transnational houses in the electronics/electrical sectors in Malaysia in 1995. ( Giroud 2003 ) . It means that utilizing the survey in Malaysia in 1996 to comapre to the features of MNEs in this state and Vietnam in 2002 ( The tabular array 1 in this research, ( Giroud, 2007 )

In interpretivism attack ( chiefly qualitative ) , the writer use the instance of Malaysia in the period between 1996 and 2002 to bespeak that cognition transportation activities have changed in nature overtime every bit good as represent positive correlativities for cognition transportation activities with the figure of old ages spent by foreign houses in the host state.

With the above methods utilized in the Axele Giroud ( 2007 ) , it can be said that all the informations and explainations are strongly related to the research ‘s job. However, the restriction of its methods is that it merely focuses on the two industries of textlile and electronic whereas MNEs houses includes a great scope of industries. Therefore, it may be non reflect the existent state of affairs to the full, taking to subjective rating.

Consequence and Presentation

The impact of MNEs on host states have been a progressively turning capable in globalisation and studied in many researches. In instance survey of Malaysia and Vietnam, the Giroud achieved the purpose of measuring the being of engineering and knolwdge transportation from MNEs to local providers every bit good as cormparing the experience of the two states.

Besides, this paper are highly utile for many states in the part of Southeast Asia every bit good as a figure of Central Asian economic systems, for which the FDI experience has merely merely been initiated. ( Giroud 2007 )

Furthermore, the research solved about gaps shown supra. The paper indicated about the mechanism through which perpendicular linkages are still non understood. Therefore, Giroud ( 2007 ) suggest that “ Vietnamese economic and political systems need to be considered to plan an effectual publicity coder of perpendicular linkages ” , including advancing its competitory environment every bit good as sing to the sweetening of domestic houses capablenesss, for both SOEs and non-SOEs in order to beef up the potency for linkages and spillovers by MNEs.

Giroud besides marked that his reappraisal is the first research look intoing about the impact of MNEs on local providers through cognition and engineering transference in Vienam.

However, the integrating within the theoretical strands of multinationals ‘ activities seems to be ill-defined explained in the research.

In footings of utilizing construction, the paper is not-well organized. It is non in the undermentioned order and makes readers confounding such as the hypothesis, which was placed in portion 2 – literature but explained until portion 5 and 6. Furthermore, the purposes and aims of this research are non appropriate with their chief map ; hence, readers seem non to separate them.

In add-on, although the portion 7 – treatment contained a big overview of the development position in Malaysia and Vietnam, particularly Vietnam that the paper aims to concentrate most but in my sentiment, this portion should be placed in the beginning of the research. Before reading this analysis, readers need to understand clearly about the position of the development of MNEs linkages both states, particularly associating to the chief intent of the research.

Furthermore, the linguistic communication of the Giroud ( 2007 ) is professional with appropriate nomenclatures.


With the Giroud reappraisal, we can comprehend more clearly about the impacts of transnational endeavors ( MNEs ) on host economic systems, particularly the possible for cognition and engineering transportation in Malaysia and pull the lessons that could be learnt from it for Vietnam.

In add-on, this paper besides valuable for Vietnam where the competitory environment and legal trade government remain deficient to reform the concern environment and policies to pull more FDI endeavors.

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