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Resource curse or destructive creation in transition: Evidence from Vietnam's corporate sector

Author

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  • Quan Hoang Vuong
  • Nancy K. Napier

Abstract

Purpose - – The purpose of this paper is to explore the “resource curse” problem as a counter-example of creative performance and innovation by examining reliance on capital and physical resources, showing the gap between expectations and ex-post actual performance that became clearer under conditions of economic turmoil. Design/methodology/approach - – The analysis uses logistic regressions with dichotomous response and predictor variables on structured tables of count data, representing firm performance as an outcome of capital resources, physical resources and innovation where appropriate. Findings - – Key findings relevant to economic and business practice follow. First, a typical characteristic of successful Vietnamese firms in the transition period is their reliance on either capital resources or physical asset endowments. Second, poor performers exhibit evidence of over-reliance on both capital and physical assets. Third, firms that relied on both types of resources tended to downplay creative performance. Some evidence suggests that firms face more acute problem caused by the law of diminishing returns in troubled times. Fourth, the “innovation factor” has not been tapped as a source of economic growth. Research limitations/implications - – This study has some limitations. The size of the survey sample is approximately 150 firms, while the potential sample of > 300 should be possible in the future. When the size increases, the research could be expanded to include further variables that will help investigate more deeply into the related issues and business implications. With regard to the implications of the study, the absence of innovations has made the notion of “resource curse” identical to “destructive creation” implemented by ex-ante resource-rich firms, and worsened the problem of resource misallocation in transition turmoil. The Vietnamese corporate sector's addiction to resources may contribute to economic deterioration, through a downward spiral of lower efficiency leading to consumption of more resources. Practical implications - – Insights obtained from this study could save transition economies' resources which have almost always been considered Originality/value - – Original data set on Vietnam stock market are collected, processed, prepared and used by the authors. Original design by the authors for regression equations with dichotomous predictor variables: dependence on endowed physical assets, reliance on capital resources and significant signs of creative performance/innovations. Original idea of viewing “resource curse” as absence of innovation and due to uncreative “destructive creation” of poor-performing commercial operations by resource-rich firms is used in the paper. We have searched the literature in business research and found that the empirical results have not been previously reported.

Suggested Citation

  • Quan Hoang Vuong & Nancy K. Napier, 2014. "Resource curse or destructive creation in transition: Evidence from Vietnam's corporate sector," Management Research Review, Emerald Group Publishing, vol. 37(7), pages 642-657, June.
  • Handle: RePEc:eme:mrrpps:v:37:y:2014:i:7:p:642-657
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    Citations

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    Cited by:

    1. Quan-Hoang Vuong & Nancy K. Napier, 2012. "Resource Curse or Destructive Creation: A Tale of Crony Capitalism in Transition," Working Papers CEB 12-037, ULB -- Universite Libre de Bruxelles.
    2. Quang-Hoi Vu & Thu Trang Vuong & Quan-Hoang Vuong, 2016. "Relationship between past experience, social network participation and creative capacity: Vietnamese entrepreneurship survey," Working Papers CEB 16-032, ULB -- Universite Libre de Bruxelles.
    3. repec:spr:joiaen:v:5:y:2016:i:1:d:10.1186_s13731-016-0047-7 is not listed on IDEAS
    4. Quan-Hoang Vuong & Thu Trang Vuong, 2016. "Medical insurance and expenditure thresholds for Vietnamese patient satisfaction with healthcare services," Working Papers CEB 16-041, ULB -- Universite Libre de Bruxelles.
    5. Viet-Ha T. Nguyen & Hong Kong Nguyen-To & Thu Trang Vuong & Manh Tung Ho & Quan-Hoang Vuong, 2018. "How swelling debts give rise to a new type of politics in Vietnam," Working Papers CEB 18-026, ULB -- Universite Libre de Bruxelles.
    6. Quan-Hoang Vuong & Nancy K. Napier, 2013. "Acculturation and Global Mindsponge," Working Papers CEB 13-053, ULB -- Universite Libre de Bruxelles.
    7. Quan-Hoang Vuong, 2019. "The Vietnamese financial economy: reforms and development, 1986-2016," Policy Papers CEB 19001, ULB -- Universite Libre de Bruxelles.
    8. repec:hur:ijarbs:v:8:y:2018:i:2:p:244-261 is not listed on IDEAS
    9. Quan-Hoang Vuong, 2014. "Vietnam’s political economy: a discussion on the 1986-2016 period," Working Papers CEB 14-010, ULB -- Universite Libre de Bruxelles.
    10. Quan-Hoang Vuong, 2014. "Operational scales, sources of finance, and firms’ performance: evidence from Vietnamese longitudinal data," Working Papers CEB 14-017, ULB -- Universite Libre de Bruxelles.
    11. Quan Hoang Vuong & Thu Hang Do & Thu Trang Vuong, 2016. "Resources, experience, and perseverance in entrepreneurs’ perceived likelihood of success in an emerging economy," Journal of Innovation and Entrepreneurship, Springer, vol. 5(1), pages 1-24, December.
    12. Thu Trang Vuong & Ha Nguyen & Quan-Hoang Vuong, 2016. "Health insurance thresholds and policy implications: a Vietnamese medical survey in 2015," Working Papers CEB 16-039, ULB -- Universite Libre de Bruxelles.
    13. Quan-Hoang Vuong, 2016. "Impacts of geographical locations and sociocultural traits on the Vietnamese entrepreneurship," Working Papers CEB 16-012, ULB -- Universite Libre de Bruxelles.
    14. Quan-Hoang Vuong & Nancy K. Napier & Thu Hang Do & Thu Trang Vuong, 2015. "Creativity and entrepreneurial efforts in an emerging economy," Working Papers CEB 15-052, ULB -- Universite Libre de Bruxelles.

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