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Resource Curse or Destructive Creation: A Tale of Crony Capitalism in Transition

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  • Quan-Hoang Vuong
  • Nancy K. Napier

Abstract

This paper explores 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 became clearer under conditions of economic turmoil. The analysis employs logistic regressions with dichotomous response and predictor variables, showing significant results.Several findings that have use for economic and business practice follow. First, in a transition period, a typical characteristic of successful firms was their reliance on either capital resources or physical asset endowments, whereas the innovation factor was not significant.Second, poor-performing enterprises exhibited evidence of over reliance on both capital and physical assets. Third, firms that relied on both types of resources tended to downplay creative performance. Fourth, reliance on capital/physical resources and adoption of “creative discipline/innovations” tend to be mutually exclusive. In fact, some evidence suggests that firms face more acute problem caused by the law of diminishing returns in troubled times. 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. The “innovation factor” has not been tapped as a source of economic growth. The absence of innovations and creativity has made the notion of “resource curse” become identical to “destructive creation” implemented by ex-ante resource-rich firms, and worsened the problem of resource misallocation in transition turmoil.

Suggested Citation

  • 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.
  • Handle: RePEc:sol:wpaper:2013/135307
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    References listed on IDEAS

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    1. Quan Hoang Vuong & Nancy K. Napier & Tri Dung Tran, 2013. "A categorical data analysis on relationships between culture, creativity and business stage: the case of Vietnam," International Journal of Transitions and Innovation Systems, Inderscience Enterprises Ltd, vol. 3(1), pages 4-24.
    2. Quan-Hoang Vuong & Tran Tri Dung, 2009. "The Cultural Dimensions of the Vietnamese Private Entrepreneurship," Working Papers CEB 09-027.RS, ULB -- Universite Libre de Bruxelles.
    3. Vu Dang Le Nguyen & Nancy K. Napier & Quan-Hoang Vuong, 2012. "It Takes Two to Tango: Entrepreneurship and Creativity in Troubled Times – Vietnam 2012," Working Papers CEB 12-022, ULB -- Universite Libre de Bruxelles.
    4. Nancy K. Napier & Vuong Quan Hoang, 2011. "Getting to the real story: what Vietnamese business people wish foreigners understood about doing business in emerging and transition countries like Vietnam – before they start," International Journal of Human Resources Development and Management, Inderscience Enterprises Ltd, vol. 11(2/3/4), pages 208-220.
    5. 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.
    6. Quan-Hoang Vuong & Nancy K. Napier, 2012. "Coffee Filters and Creativity: The Value of Multiple Filters in the Creative Process," Working Papers CEB 12-036, ULB -- Universite Libre de Bruxelles.
    7. Quan-Hoang Vuong & Nancy K. Napier, 2010. "Getting to the Real Story: What Vietnamese business people wish foreigners understood about doing business in emerging and transition countries like Vietnam – BEFORE they start," Working Papers CEB 10-051, ULB -- Universite Libre de Bruxelles.
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    Cited by:

    1. Quan-Hoang Vuong & Nancy K. Napier & Donaldine E. Samson & Hong Kong Nguyen, 2013. "Empirical Evidence on Relationships between Ex Ante Innovation Pursuit and Post-M&A Performance in the Vietnamese M&A Industry, 2005-2012," Working Papers CEB 13-009, ULB -- Universite Libre de Bruxelles.
    2. Quan-Hoang Vuong, 2014. "The Harsh Reality of Pursuing Innovations: Emerging Market Perspectives," Working Papers CEB 14-028, ULB -- Universite Libre de Bruxelles.

    More about this item

    Keywords

    Organization of Production; Firm Behavior; Business Economics; Creativity/Innovation Processes;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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    1. Kutukan sumber daya in Wikipedia Indonesian ne '')
    2. Прокляття ресурсів in Wikipedia Ukranian ne '')

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