Research setting and variable selection

Our core research setting is Vietnam in its transitional economic process, with combined characteristics of a centrally planned and a market-oriented economy. During the process of transition, legal and institutional frameworks have been gradually developed toward a more competitive and transparent system. In the export sector, the institutional development, especially the implementation of new laws and regulations, has paved the way for the private sector to participate in export activities. The right to export was

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granted for various types of enterprises rather than being strictly under the control of specific, state-owned import-export firms. Export quota and other export restrictions have been gradually removed.

This period has witnessed the downscaling of the predominant State Own Enterprises (SOE) sector, following the so-called ‘equitization’ process. ‘Equitization’ is the euphemism used out of consideration for political sensitivities, since this process essentially means ‘privatization’ (De Jong, Tu & van Ees 2012). Resulting from the equitization process, the number of private firms has increased dramatically. However, this transformation offers favourable conditions for rent seeking and rent appropriation. There are inconsistencies between the old and the renovated sets of laws and regulations. These inconsistencies and lack of uniformity have given opportunities for rent-seeking behaviours.

In such a research setting, I concentrate on domestic SMEs in the manufacturing sector. Unlike foreign-invested SMEs which have extensive reach to foreign markets, including their home market, local manufacturing SMEs can be depicted as lacking market information and knowledge, besides experiencing various other barriers; thus, how they tackle these difficulties to participate in export activities is worth examining.

There are many definitions of small- and medium-sized enterprises. According to the World Bank, micro enterprises are those having less than 10 employees, small enterprises are those having from 10 to 49 employees and medium-sized enterprises have from 50 to 300 employees. This definition is the most common one and it is also consistent with that used by the European Union (Tewari et al 2013).

In Vietnam, the current definition of small- and medium-sized enterprises is stated in Article 3 of the Decree 56/2009/ND-CP of the Government, where small- and medium- sized enterprises are legally registered enterprises which are classified in three categories, micro enterprises, small enterprises, and medium enterprises, according to the size of their total capital or total average number of employees, with preference given to total capital. According to the same regulation, a further classification distinguishes firm size according to sector; and that an SME in the manufacturing sector would have up to 300 labourers. The detailed classification of SMEs is presented in Table 2.4, Chapter 2, Section 2.4.1.

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The present study uses the total number of employees as the primary criterion to select SMEs eligible for the qualitative research. Similarly, this criterion was used to screen the quantitative data, so that only SMEs with less than 300 employees are included in the quantitative dataset for the present study.

4.3.2 Variables, constructs and concepts

The key idea of parallel design is “to collect both forms of data using the same or parallel variables, constructs, or concepts” (Creswell 2014, p. 222). This approach allows a valid comparison between qualitative and quantitative results. For this study, I use the same key concepts, constructs and variables in both qualitative and quantitative approaches. The working concepts of social capital and export performance have been defined earlier, in Chapter 1. For that, social capital is defined as “the sum of the actual and potential resources embedded within, available through and derived from the network of relationship possessed by an individual or social unit”(Nahapiet & Ghoshal 1998, p. 243); whereas export performance is defined as “the composite outcome of a firm’s international sales” (Shoham 1998, p. 61).

The constructs of social capital, and its measurement variables, in both the qualitative and quantitative studies measure the size of networks and the quality or resources that SMEs have obtained from such networks. I note, however, that the measurement of social capital from the two methods might not completely overlap. Several aspects of social capital viewed qualitatively cannot be portrayed quantitatively; thus, I expect the qualitative study to provide more insightful explanations to complement the quantitative study.

A summary of the concepts, constructs and variables for the qualitative and quantitative studies is presented in Table 4.2.

Page 72 Table 4.2: Concepts, constructs and variables

Concepts / constructs/ variables Qualitative Quantitative Social capital concepts

“the sum of the actual and potential resources embedded within, available through and derived from the network of relationship possessed by an

individual or social unit”(Nahapiet & Ghoshal 1998, p. 243) Social capital constructs/ measurement Network size Network resources Number of contacts Number of assists from such

network contacts

Network types Business network

Bank network

Authority (or political/public officials) network Other social networks

Export propensity

Experience of the first export venture and the impact of social capital on such experience

Propensity to export (yes / no)

Export performance

“the composite outcome of a firm’s international sales” (Shoham 1998, p. 61)

Export performance measurement

Subjective measurement / Comparison with expectation:

- Export revenue growth - Export profit - Export market access

Objective economic measurement / financial data:

- Export revenue - Export intensity (percentage)

- Export market diversity Source: Author’s illustration