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The role of Social Networks on Household Business Performance in Vietnam: A qualitative assessment

Author

Listed:
  • Nguyen Thi Thu Phuong

    () (Centre for Analysis and Forecasting, Vietnamese Academy of Social Sciences)

  • Laure Pasquier-Doumer

    () (IRD, UMR DIAL, PSL, Université Paris-Dauphine)

Abstract

Household business owners mainly rely on their social networks of strong ties to acquire resources in Vietnam. However, no consensus is found in the literature on the influence of strong ties on the performance of small firms in developing countries. Using an original set of qualitative data, this paper provides new evidence on the influence of social networks on household businesses by following a relational approach of the networks. It contributes to the literature by distinguishing the effects of social networks at different phases of the business cycle. It shows that, in the business creation process, strong ties are by far the preferred source of the initial capital as well as information supports. They shape the business at a small size and make it not adapted to rapid changes in the market demand and the technologies in the latter phase of business development. Weak ties are much less mobilized at the start of the business, but they provide a source of valuable information to create innovative businesses. The more the business grows, the higher is the strength of the weak ties. The study illustrates that the use of social networks, including the weak ties, should be understood to be embedded in family structures and local community contexts, with a set of duties and rights embedded in reciprocal relationships beyond not only the business interactions. _________________________________ Les entreprises informelles comptent principalement sur leurs réseaux familiaux pour acquérir des ressources au Vietnam. Cependant, aucun consensus ne se dégage de la littérature sur l’influence des liens forts sur la performance des petites entreprises dans le contexte des pays en développement. À l’aide d’un corpus d’entretiens original, cet article fournit un nouvel éclairage sur l’influence des réseaux sociaux dans le fonctionnement des petites entreprises. En suivant une approche relationnelle des réseaux, il contribue à la littérature en distinguant les effets des réseaux sociaux à des phases différentes du cycle de vie de l’entreprise. Il montre que les liens forts sont la source privilégiée pour obtenir le capital initial et les informations nécessaires dans le processus de création d’entreprise. L’usage des liens forts façonne l’entreprise en la conditionnant à une petite taille et la rendant inadaptée aux changements rapides de la demande et des technologies. Les liens faibles sont beaucoup moins mobilisés au début de l'entreprise, mais ils constituent une source d'informations précieuses pour créer des entreprises innovantes. Plus l'entreprise se développe, plus les liens faibles deviennent cruciaux. L’étude montre que l’utilisation des réseaux sociaux, y compris des liens faibles, est fortement incluse dans les structures familiales et les contextes communautaires locaux, qui supposent un ensemble de droits et de devoirs, notamment une réciprocité qui va au-delà des relations commerciales.

Suggested Citation

  • Nguyen Thi Thu Phuong & Laure Pasquier-Doumer, 2018. "The role of Social Networks on Household Business Performance in Vietnam: A qualitative assessment," Working Papers DT/2018/13, DIAL (Développement, Institutions et Mondialisation).
  • Handle: RePEc:dia:wpaper:dt201813
    as

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    File URL: http://www.dial.ird.fr/media/ird-sites-d-unites-de-recherche/dial/documents/publications/doc_travail/2018/2018-13
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Social network; strength of ties; informal sector; Vietnam.;

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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