9

Human Resource Management in Vietnam

Anne Cox

Introduction

Shaped like an elongated S, the Socialist Republic of Vietnam stretches the length of the Indochinese Peninsula and covers a surface area of 329,560 square kilometres. The history of this small country can be described as nothing less than heroic and is marked by a nearly continuous fight for independence and autonomy against some of the biggest economies in the world, such as China, Japan, France and the United States of America.

In 1975, after ending the war with the United States, Vietnam committed to the development of a hard-line socialist economic system, which shortly resulted in economic failure. More than a decade later, in 1986, the Communist government ended its previous approach of maintaining a closed and centrally planned economy and embraced a dramatic economic reform (Doi Moi). The reform’s focus was on five main areas: (1) the market economy was accepted; (2) an ‘open door policy’ in foreign economic relations was adopted; (3) private ownership was allowed in all activities; (4) the industrialisation model that gave top priority to heavy industry at the expense of agriculture and light industry was dismantled and reversed; (5) state-owned enterprises (SOEs) were downsized and re-structured (Tran, 1997). A series of laws were enacted to implement the new direction of the economy. The new economic system was firmly established when the National Assembly adopted a new Constitution in 1992. These larger developments have produced a transformation in human resources management (HRM) and in industrial relations (IR) in Vietnam.

The broad aim of this chapter is to describe the changing HRM practices in Vietnamese enterprises and to develop an explanation of why their HRM practices have developed along this path. More specifically, the chapter seeks to systematically identify and compare the following HRM practices used in Vietnamese enterprises before and after Doi Moi: recruitment and selection of employees, performance management, compensation and reward management, training and development, and IR. The chapter then discusses the transformation of the HRM/ IR system and contemplates key challenges facing further development of the system in Vietnam.

Historical Development in HRM

Under the socialist economic system, the state sector is the backbone of the economy. Adopting the Soviet Union economic model, the Vietnamese government believed that a focused development of the state sector was the quickest way to achieve industrialisation and develop the economy. As a result of this development strategy, as early as 1960, 100 per cent of industrial establishments, 99.4 per cent of commercial establishments and 99 per cent of transportation facilities, which once belonged to foreign and Vietnamese capitalists, were nationalised and transformed into SOEs (Vu, 2002). SOEs were under the direct control and management of line ministries of the central and/or local government. They operated as production units only, leaving the management side of it to the government.

Several studies have suggested that during this period HRM practices in Vietnam were the product of the ideological, political and economic factors prevailing in that period, which followed the Soviet model (see, for example, Nguyen and Tran, 1997). HRM was centrally and tightly controlled by the state and characterised by a lifetime employment system, state-administered reward systems and labour immobility. The HRM system under the centrally planned system can be summarised as follows.

Recruitment and Selection

There was no concept of an external labour market as employees were assigned to enterprises by the government, except for a small proportion of the labour force who chose to enter the private sector. The government guaranteed permanent employment and lifetime welfare coverage in SOEs. The recruitment, allocation to firms and dismissal of employees were all subject to the official approval of state personnel departments. Geographical mobility was tightly controlled by a system of residence permits, which allowed persons to legally reside and work in one area only. Transferring to another job or locality also involved dealing with civil authorities who controlled residence registration, housing and food supply allocation. The complex system of keeping employees’ personnel files and registering them with various government bodies, in addition to facilitating administrative planning, also served the purpose of social and political control (also see, for example, O’Connor, 1996).

Performance Management

Performance management, during this period, was a lengthy and highly hierarchical process, involving staff at all levels of a company. Any performance appraisal decision had to be made with the agreement and supervision of the Communist Party representative, the board of directors, the trade union representative, the Youth Union representative and sometimes the Women’s Associations representative. Performance criteria were vague and included factors such as political attitude, work attitude, work performance, technical skills, cooperation and personal (harmonious) relationships with colleagues (especially with managers). Two non-performance related criteria, namely political attitude and work attitude, were commonly used for evaluation of employees’ performance. In this way, performance appraisals were subject to vagueness and were open to individual interpretation (see, for example, Vo, 2009).

Rewards

SOE managers had virtually no discretion over workers’ wages. Wages were calculated according to a government pay scale, based on educational level, grade and length of service. Salary and rank of employees were determined by the length of their service and by political attitudes and beared no relationship to the economic performance of the firm or even the individual’s performance. Salaries were paid as roughly 60 per cent in food coupons and subsidised commodities, and 40 per cent in cash (Che, 1995). The gap between the grades was small in order to achieve ‘egalitarianism’.

Training and Development

Bounded by bureaucratic rules and procedures, and secured by the lifetime employment system, SOE employees were not motivated to learn and develop new skills and knowledge. Training offered to workers was mainly on-the-job as required by the production lines that they were assigned to. Training programs were conducted for workers at a company-wide level with the main aim of enhancing productivity and improving organisational health and safety. Short courses to strengthen employees’ political beliefs were widely available and employees were required to attend if they wished to be promoted. As SOEs were considered merely as production units, SOEs managers were not trained in business management as the skills were deemed unnecessary.

Industrial Relations

At the workplace level, employees were managed by four pillars of power: the Communist Party representative, management, the trade union representative, and the representative of the Youth Union. The Party official carried the most power. The unions’ role was to act as a transmission belt between the Party and the masses (Fahey, 1995). Their major roles included activities such as acting on behalf of the enterprises in distributing goods to workers, organising social activities, allocating workers’ housing and looking after other material needs. They mobilised workers to fulfil and over-fulfil production quotas set by the command economy. They also provided the human touch for bureaucratic institutions by serving as counsellors for employees’ work-related and personal family problems.

In terms of economic performance, despite a large amount of investment that the government poured into this sector and its rapid expansion, the state sector performed very poorly. This was also the situation of the whole economy. In 1980, Vietnam’s growth domestic product (GDP) growth rate was negative 1.6 per cent (Statistical Office of Ho Chi Minh City, 1995). By the mid-1980s, the Vietnamese economy was only barely sustained thanks to significant assistance from the Eastern bloc. At the Sixth National Congress of the Communist Party in December 1986, the Vietnamese government introduced an intensive economic reform, known as Doi Moi, with the objective of re-directing the economic system from being centrally planned to being market oriented. This was the major turning point in the economic development of the country. This economic reform had an enormous impact on the structure of the Vietnamese economy and consequently on the working conditions of employees.

With these rapid changes, along with the expansion and diversification of the system, the traditional labour legislation proved increasingly inadequate. Recognising the necessity of adjusting to the changing labour situation, the Vietnamese government started passing many new laws addressing labour issues. Decision 25-CP, which was enacted in 1981 by the government, was probably one of the most important pieces of legislation that influenced the development of the HRM system in contemporary Vietnam. It provided guidelines and measures to increase the initiatives and financial autonomy of SOEs in business operations (Nguyen and Tran, 1997). After this milestone legislative piece, the Vietnamese government gradually introduced a series of guidelines, policies, laws and so forth for reforming the structure and management of SOEs. Most significantly, the new Trade Union Law was introduced in 1990, the Trade Union Constitution in 1993 and the Labour Law in 1994. These legislations have provided a common legal framework for new labour-management relations in both the public and the private sector and marked the beginning of the transformation of HRM and IR systems in Vietnam.

These new laws and regulations focused on some of the most important aspects of SOE management, such as formulation of plans, the purchase and sale of assets, profit-based accounting systems, reduced budgetary support, investment of an enterprise’s own resources, acquisition and leasing of assets and greater managerial flexibility in hiring and firing of employees, setting of wages, salaries and benefits and so on (Nguyen and Tran, 1997; McCarty, 1993). As far as labour recruitment was concerned, the lifetime employment system was gradually replaced by a ‘labour contract’ system. SOEs now have the freedom to hire employees or request governmental labour offices to recruit for them according to criteria set by the enterprises (Le, 1997; Nguyen and Tran, 1997). SOEs could now design their own reward systems in line with their own operating situation and on the principle of remunerating in accordance to performance. They could choose to pay and promote their workers in conformity with the government’s policy on salaries and wages. The government had only imposed a floor income but not an income ceiling (Le, 1997; Nguyen and Tran, 1997). Wage differentials within the state sector between skilled and unskilled workers had been significantly increased (O’Connor, 1996). With the growth of the private sector and foreign-invested enterprises, the demand for educated workers grew and with it education-related wage differentials. In an effort to retain more highly trained personnel, the government adjusted its official wage schedule, thereby encouraging a rise of the relative pay of educated workers in SOEs. The labour mobility restriction had been relaxed. These were early signals of a trend towards a more flexible and mobile labour market.

The Level of Business-HR Partnership

Before Doi Moi, SOEs were directly controlled and managed by the government. Both managers and employees paid little attention to production targets, knowing that operating profits were pre-determined in the plan, and losses were made up from the government budget expenditure (Vu, 2002). HR departments were called personnel or administration departments and were policy implementers rather than strategic decision makers. In fact, their roles and responsibilities focused more on administrative activities than on organisational management.

Although significant changes have occurred since Doi Moi, overall, HRM in Vietnam is still in an embryonic form. HRM is not considered a major contributor to the success of businesses, nor integrated into business strategies. Research indicates that the majority of SOEs have simply changed their personnel function to ‘HR’ without any change in its administrative focus or the adoption of a strategic role (see, for example, Vo, 2009). As a legacy of the centrally planned economic system, there is a very weak link between organisational objectives and HR objectives. HR managers do not work closely with the board of directors and/or line managers to achieve shared organisational objectives, such as designing and implementing HR systems and processes that support strategic business objectives. The common profile of a HR professional in an SOE is that of a person who has worked in the HR department of one company where they performed one HR function with limited exposure to other HR functions. These HR professionals therefore lack the knowledge and ability to work hand in hand with line managers and effectively penetrate into other parts of the organisation.

Although the aim of HR performing the work of a business partner and linking their work to business results is still far reaching, there is evidence of some SOEs attempting to align company business objectives and individual performance objectives with technical support from their HR departments (Vo, 2009). This can be considered an initial step towards establishing a link, or partnership, between the HR function and the organisation.

Key Factors Determining HRM Policies and Practices

Recent decades have witnessed the strong development of comparative institutionalism, which has shown how different forms of economic organisation have been established, reproduced and changed in different market economies. It focuses on macro-level societal institutions, in particular those that govern ‘access to critical resources, especially labour and capital’ (Whitley, 1999: 47). The effects of variations in businesses’ institutional contexts on companies’ behaviours are prominent, as a ‘firm will gravitate towards the mode of coordination for which there is institutional support’ (Hall and Soskice, 2001: 9). The influence of such social institutions is so strong that they can almost be regarded as additional factors of production that become the basis of competitive advantage or disadvantage (Maurice et al., 1980; Lane, 1992; Porter, 1990). Using the institutionalist approach, this section aims to reach an understanding of the political and socio-economic configurations of Vietnam, which have strong influences in the shaping and implementation of HRM and IR policies and practices in Vietnam.

The Economy

Vietnam’s economic reform has been gradual and homeopathic with overriding political power still remaining, as opposed to what is termed ‘shock therapy’ or ‘big bang’ in the context of East European economic reforms (Kerkvliet, Chan and Unger, 1999). The results of the economic reforms were remarkable. The GDP growth rate has increased since 1986. In the five years from 1992 to 1997, Vietnam achieved an average GDP growth rate of 8.8 per cent, with a peak of 9.54 per cent in 1995, which represents the longest period of sustained economic growth in Vietnam’s recent history (Vietnam Economic Times, 2003). Vietnam’s economy slowed down in the late 1990s, due to being affected by the Asian Financial Crisis. However, since the first quarter of 2000, the economy has witnessed some recoveries. In 2007, growth accelerated to 8.48 per cent, which marked seven consecutive years of increases (GSO, 2008). The growth rate of GDP in 2011 compared to that of 2010 was 5.89 per cent (GSO, 2012).

In spite of the recent economic successes, the fact remains that Vietnam is a poor country. The country is still healing the wounds from decades of wars,¹ and is in the process of recovering from decades of adopting distorted and ill-managed macro-economic policies. Vietnam is mainly an agricultural economy. It is estimated that in 2006, 16 per cent of the Vietnamese population were living below the poverty line (Joint Donor Group, 2007: 4). As far as population income is concerned, in 2010, Vietnam’s Gross National Income per capita was $US2,910, classifying Vietnam as a ‘lower middle-income’ economy ($1,006 to $3,975) (World Bank, 2011). Meanwhile, foreign direct investment (FDI) is one of the most essential sources of investment (World Bank, 2011).

The Culture

Vietnam’s cultural heritage is deeply rooted, having developed over 4,000 years with strong Confucius influences (Quang and Vuong, 2002). Confucians prioritise collective units, such as the group, family and community, over self-interest. They focus on order and hierarchy with senior members of the family and society exercising authority and expecting submission and obedience from younger members. Furthermore, according to the framework developed by Hofstede (1980), previous research on Vietnamese national culture describes it as high power distance, high collectivism, moderate uncertainty avoidance and high context (Quang, 1997; Ralston, Nguyen and Napier, 1999).

High power distance is reflected in family life where children are expected to have high levels of obedience to the heads of the family and within organisations where subordinate–superior relationships are clearly defined (Quang, 2002). Collectivism is another defining feature of the Vietnamese culture, where the role of the individual is recognised as being secondary to the group (Xingzong, 2000). Formal guidelines and tight social frameworks inform social interaction as a means of protecting a group’s ‘face’ or reputation (Quang, 1997). The Vietnamese will generally avoid conflict; however, where it does arise, they strive for a win–win situation (Quang and Vuong, 2002). Quang and Vuong (2002) also suggests that Vietnamese culture is characterised by moderate levels of uncertainty avoidance. Ambiguity is largely regarded as a threat in the work environment, and is reconciled with greater job stability, the establishment of formal rules and the rejection of deviant ideas and behaviours.

Having manifested over several centuries, these beliefs are deeply entrenched in the Vietnamese value system and heavily influence how firms are managed in Vietnam. Respect for authority, hierarchical order, collectiveness, consensus, cooperation and long-term commitment characterise the traditional Vietnamese firm. In the workplace, many Vietnamese managers still display authoritarian and familial styles of management, particularly in the state sector (Quang and Vuong, 2002). This reflects the tradition of a centrally controlled system and is consistent with Vietnamese culture (Vo and Hannif, forthcoming).

The Role of the Party and the State

As in other socialist countries, the Vietnamese polity is characterised by extensive Party intervention in the affairs of state. It is very difficult, if not impossible, to separate the Vietnamese government’s roles and functions from that of the Party. The Vietnamese political system is dominated by a sole political party – the Vietnamese Communist Party (VCP). Like other communist parties, the Vietnamese Party adheres to the principles of democratic centralism, which insists on unanimity at the top and unquestioning obedience from below (Riedel and Turley, 1999). Vietnam’s zeal for Doi Moi has not been mirrored in its approach to political reform. Vietnam’s ruling VCP has consistently rejected external calls for political reform, insisting that its self-appointed ruling elite can better serve the country than political pluralism. VCP and the government maintain a long-standing policy of not tolerating open dissent and of prohibiting independent political and labour organisations. All non-governmental Vietnamese organisations must belong to the VCP-controlled Fatherland Front. As with China, the communist party’s rule is grounded in broad – although not unquestioning – popular support (Beresford, 1988). However, if the economic reforms and ideological shifts continue apace, the Party may find itself communist in name only (Ashwood, 1994; Beresford, 2008).

The nature and the role of the VCP have one major implication for the operation of HRM/IR. The Party maintains the ideology of a socialist society, imported from the former Soviet Union. This ideology respects the peaceful co-existence of different actors of the economy in a win–win relation: the state, the management and the employees/their legal representatives. This defines the nature of IR in Vietnam and the unions’ stance towards management and it influences HRM policies and practices in firms. Furthermore, the Party’s monopoly in the political arena and its close relationship with the State ensure that governments enjoy majority support and that policy initiatives have not usually been overturned after government changes. This creates a high degree of political stability, which contributes to the creation of a long-term framework for industrial decision making.

The Banking System

As in other countries, the banking system is a macro-economic tool to guide the economy. Prior to 1988, the Vietnamese banking system was characterised as a part of the centrally planned economy. It was under the direct control of the government with the sole task of financing the national budget and SOEs on a noncommercial basis (Wolff, 1999; Gates and Truong, 1992). Vietnam’s first banking reform was initiated in early 1988. However, nowadays the banking system is still characterised by its small size and under-capitalisation. It is still under the strict control of the government.

The banking system is dominated by five large, state-owned commercial banks (SOCBs) that frequently operate on a non-commercial basis, with a culture of policy lending that is subject to government direction and interference. SOEs remain the main recipients of bank credit, typically borrowing on an unsecured basis at concessionary interest rates. Additionally, in 1997, the State Bank of Vietnam issued several directives to the SOCBs aimed at improving the availability of credit to SOEs. Having close ties with the SOCBs and being able to obtain credit fairly easily compared to other economic sectors discourages SOEs from being innovative and competitive in their operations in general and in management practices in particular.

The Education and Training system

In 2010, the population of Vietnam was approximately 86.93 million (GSO, 2012). In terms of its population, Vietnam ranks 13th in the world. With 89 per cent of the population under or of working age, the labour pool continues to increase by 1.1–1.3 million workers annually (GSO, 2008). The Vietnamese government is aware that an improvement of the human resource base is essential to underpin macro-economic reforms, where continued weakness in the education sector will result in a human resource bottleneck that will impede faster growth.

In the early 1990s, with the significant improvement of the economy, action was taken to renovate the education and training (E&T) system, for example ownership in education was diversified, more attention was paid to vocational training, the contents and methods of education and training were continuously renewed, and the standardisation of teachers was implemented at all levels (Ministry of Education & Training, 1997a, 1997b). Although the reform in the E&T system achieved some encouraging results, such as increasing the number of enrolments and the number and type of educational institutions, the national E&T system’s weaknesses are shown by an insufficient infrastructure, an irrelevant curriculum and under-qualified and under-paid teachers at all levels of education (ADB, 2000). Furthermore, even though mass education levels are high, Vietnam still suffers from a significant scarcity of highly skilled labour. It is estimated that 96 per cent of the Vietnamese population is literate and that 80 per cent graduate primary school. However, the skilled labour force accounts for only 8 per cent of the total labour force (MOLISA, 2002: 7). Management and people-related skills continue to be the weakness of Vietnamese employees (Vo, 2009). This leads to competition among companies for skilled managerial employees and an augmentation of salaries for this segment of the workforce.

The Vietnamese E&T system strongly emphasises Confucian values, which have greatly influenced the Vietnamese standards of social values and provided the background for Vietnamese political theories and institutions. The educational system upholds strict hierarchical orders, righteous behaviour in relationships and social harmony. Whitley (2000) makes the criticism that the Confucian values present in the teaching and learning style affect the nature of authority relations in the workplace. Paternalism in education and training leads to paternalism in employment relations where there is an imbalance in the employer–employee relation and the superiors are expected to give concrete directions and to act in the interests of subordinates. The Confucian values that govern personal relationships, such as respect for elders, loyalty to friends, benevolence on the part of superiors and so forth also influence the conduct of HRM/IR practices such as payment and performance appraisal practices in firms.

Business Networks

Embedded in an institutional environment that until 1986 did not encourage the development of the private sector, and where the allocation of input and distribution of output of the production process were centrally controlled, business associations in Vietnam have been historically weak. Currently, there are three main types of associations. First, the Vietnamese Chamber of Commerce and Industry (VCCI), which in the past was essentially responsible for foreign trade interests, represents business enterprises from all economic sectors and business associations in Vietnam. Second, separate from the VCCI are a small number of business groups representing specific domestic industries. Third, the Vietnam Union for Cooperatives and Small and Medium Enterprises emerged from the former association of cooperatives. None of these bodies have so far been particularly successful in representing their members in an economic sense. They are dependent on government contributions and finance their activities by qualifying for development aid resources and running their own enterprises. Alongside business networks of Vietnamese firms, many businesses from around the world have formed groups in Vietnam representing country and regional commercial interests.

The Vietnamese government, however, promotes inter-firm cooperation in strategic industries. In Vietnam’s SOE conglomerates, inter-firm cooperation is utilised to stabilise output and prices. Elsewhere, inter-firm relationships have been very limited. Weak linkages among firms and industries are the main reason why Vietnamese firms tend to centre on traditional industries that require a low level of capital investment and focus on short-term profit maximisation. In terms of HRM, weak linkages among firms and industries augment the situation where poaching talents and job-hopping to accelerate salary are popular. In this context, firms are more hesitant to invest in the training and development of their staff members.

In brief, this section provided an overview of some key factors in the Vietnamese national business system, their vigorous reforms and the influences they have had on the HRM policies and practices at the workplace level. The main characteristics of the Vietnamese national business system are summarised in Table 9.1.

The Contemporary HRM/IR System in Vietnam

Recruitment and Selection

SOEs focus strongly on internal promotions and personal recommendations. To a much lesser extent, they also utilise advertisements in newspapers to attract more candidates. The selection criteria used are mainly based on educational qualifications and harmonious personal characteristics. Nepotism is still prevalent. A typical process for selecting white-collar and blue-collar workers is very simple and consists of reading a written application to make the first cut, and then interviews, health checks and a probation period for the newly recruited employee. For blue-collar workers, a manual dexterity test is also normally required. SOEs rely heavily on unstructured interviews as a selection method, which has a low level of reliability and validity, and thus is not a sufficient or appropriate method for identifying the best candidates. Furthermore, top-level positions are normally appointed rather than selected. This situation implies the need for objective selection criteria and sophisticated selection methods in the state sector.

Performance Management (PM)

PM in SOEs is in a gradual transition from a political-oriented bureaucratic assessment towards an equitable system that aims to break egalitarianism by linking performance to compensation and placing stronger emphasis on merit and achievements. The PM process has been separated from the intervention of mass organisations, although trade union representatives are still informed of the final performance-rating decisions. Employees can no longer take for granted that they will receive the same treatment regardless of their productivity. Instead, the new performance appraisal system places emphasis on competence and performance criteria, which are used to evaluate an employee’s work effectiveness and real contributions to the organisation. Although solid attempts to link performance to payment have been recorded, it is evident that the old practice of egalitarianism still lingers. Vietnamese employees have a non-confrontational style of communication, as they try to minimise the loss of face and preserve harmonious relations. Negative feedback and areas for improvement are normally provided and recorded in vague terms only (for example, ‘working attitude needs to be improved’ or ‘performance can be enhanced’). More detailed feedback is preferably given in informal talks in some private place out of working hours.

PM systems still serve more of an evaluation purpose rather than a developmental purpose. Although SOEs use PM systems to justify pay for performance and salary increases and to identify candidates for promotion, all of which are considered short-range goals, they do not use this tool to implement any long-range goals. It is evident that SOEs show more concern with the assessment of past performance than on planning future development. There is a very weak link, if any, between the results of an employee’s performance appraisal and any training and development opportunities they may receive in the near future. In practice, career planning and development are hardly discussed during the performance appraisal process.

Reward System

In the wake of the Doi Moi period, the government has given special attention to the remuneration policies in order to reinvigorate the state sector. The government only imposed a floor income but not an income ceiling. Wage differentials within the state sector between skilled and unskilled workers have been increased. However, SOEs are not totally free to set their own remuneration system as the government still determines and promulgates minimum salary levels for each region and each industry (Labour Code 1994, Article 56) and stipulates the principles for formulation of wage scales, wage tables and labour rates (Labour Code 1994, Article 57).

The current salary system is criticised for being too complex and being burdened with too many salary schemes, grades and steps. Furthermore, employees can gradually proceed through salary schemes and ladders without the need to improve their performance, and thus seniority is strongly emphasised. More importantly, the SOE salary is notoriously insufficient for employees to maintain an average standard of living. In this situation, SOE employees must find other jobs to supplement their income, leading to low productivity and limited work stimulation in the state sector.

Unofficial income and related issues such as the generation of the unofficial income by enterprises and by employees in the state sector, is a phenomenon that emerged in the transition to a market economy in Vietnam (Vo, 2009). These issues are complex, controversial and closely connected to the present low salary, allowance and bonus system. There are no official statistics available on unofficial income. CEOs can receive gifts and under-the-table money as thanks or to ask for a favour. The amount in the envelope depends on the role of the receiver and the political and/or economic benefit the favour may bring. Employees in lower positions can also receive ‘facilitation payment’ in the forms of gifts or money for providing assistance in dealing with certain issues. Unofficial income paid by individuals is extremely hard to measure; however, it is an ongoing issue in SOEs. Lucrative unofficial income enjoyed by highly positioned employees is believed to be the real reason for them staying with the state sector, when their official income is as low as 10 times less than that of their colleagues in the foreign invested or private sectors.

Meanwhile, corruption is endemic in Vietnam. A ‘Report of the Survey on Corruption in Vietnam’ (2005) by the Vietnamese government reveals that 77 per cent of enterprises consider corruption to be the most significant socio-economic problem in Vietnam. However, according to the World Bank’s Vietnam Development Report (2006), few companies rank corruption as a constraint on their business activities. One possible explanation for the relatively low importance attached by respondents to corruption is the very institutionalisation of bribes, which means that companies may have learned how to ‘live with floods’, to the point where they do not see it as a significant constraint on their activities.

Training and Development

After Doi Moi, workforces with low skill levels are still a common situation in SOEs. SOEs only invest limited resources on training and development for their managerial staff. Their activities suffer from limited financial resources, low-quality training, out-of-date training methods and a lack of systematic training systems. Workers are offered technical on-the-job training and are required to pass technical grade examinations, which are held every year. Management training courses are still primarily concerned with familiarising managers with the government’s laws and regulations rather than offering opportunities to learn modern management concepts and methods. Finally, SOEs demonstrate a lack of a systematic approach to training with no analysis on training needs, poor training design and implementation and no training evaluation process. There is also a lack of commitment and involvement by senior management to the training processes.

Industrial Relations

Economic reform in Vietnam has had an enormous impact on the working conditions of employees. Recognising the necessity of adjusting to the changing labour situation, the Vietnamese government passed the new Trade Union Law in 1990, the Trade Union Constitution in 1993 and the Labour Law in 1994. These legislations, however, have not led to any fundamental changes in the IR system in Vietnam. After many decades under the shadow of the Party, trade union cadres are not equipped with the necessary knowledge to fulfil their roles properly and their organisation lacks the necessary resources to make use of their newly found autonomy and create their own power. As far as financial resources are concerned, officially the main financial source of unions has been their modest union fees. This amount is clearly insufficient to pay for the union’s activities and to finance the salaries of the union cadres. In contrast to what is regulated and understood from labour-related laws, the trade unions’ roles and activities in the workplace are limited to organising social activities and providing education to employees regarding labour law and work discipline, and as such have not exceeded the traditional roles and activities defined under the former centrally planned system.

The Transformation of the HRM/IR System in Vietnam

In order to achieve a meaningful discussion on the changes in the HR function in Vietnam, one main characteristic of the Vietnamese business system needs to be emphasised: the incoherent and transforming nature of the national business system. In the middle of a radical transformation process, the Vietnamese business system contains features of both a centrally planned economy and a market-oriented one. Moreover, the transformation of the country to a market economy itself is a learning and experimental process. The formation and implementation of new legislation, including regulations governing the status and operations of foreign firms, remains a major source of uncertainty. Institutional change in Vietnam is what Djelic and Quack (2002: 10) call a ‘stalactite’ model of change, in which national configuration is eroded and reshaped progressively through time.

The state sector, for the last 20 years or so, has witnessed this sector cruising through the Doi Moi storms. As never before, since the country’s reunification SOEs have had to change dramatically to survive and successfully retain their roles as the key economic instrument of the state in the socialist-oriented market economy. It is clear that the transformation process of Vietnamese SOEs, in terms of their structure and operations, is far from complete. In the centrally planned economy, SOEs placed the personnel function within the administration department. As SOEs operated as production units only, leaving the management side of things to the government, the administration department’s roles were limited to keeping personnel records, processing payroll, benefits administration and recording employee status. However, following Doi Moi, administration departments assumed more strategic responsibilities pertaining to HRM, including but not limited to job analysis, HR planning, recruitment and selection, performance appraisals, compensation and benefits, and training and development. As enterprises progressively obtained control of their own managerial activities, they were able to implement more practical managerial strategies.

Vo (2009) argues that Vietnam HR is increasingly being viewed as having strategic and financial implications where competitive pressures will lead to the development of management systems along the lines of Western-style HRM policies and practices. However, organisational inertia, ideological legacies of socialism, the lack of financial resources and a general lack of knowledge about the ‘modern’ concept of HRM among those responsible for HR functions has resulted in a slow pace of change in SOEs’ HRM systems. This argument conforms to the main findings made by a number of pieces of research. The best of these studies recognise that Vietnamese firms seem to still be in the period of ‘learning and developing a HRM system’ (Siengthai, 2004: 18) (see also Kamoche, 2001; Zhu, 2002; Thang and Quang, 2005).

Barriers and Challenges of Implementing Strategic HRM

At the macro level, weak and incoherent business systems have posed considerable constraints to the implementation of strategic HRM in Vietnamese firms. The environment for the operation of HRM is complex, chaotic and uncertain. The sub-systems (the economy, culture, the state, the financial system, the system of education and training, the network of business associations and the system of HRM/IR) are constantly under pressure due to change and innovation. Furthermore, although SOEs are provided with autonomy and self-responsibility for their business and HR operations, considerable red-tape still persists and HR procedures are under the control of at least a half dozen governmental bodies. The system is made more complicated by legislative duplication and incoherence, which might send confusing messages to firms and HR practitioners. This macro environment places great constraints on daily HR operations as well as any intention to introduce changes, as a new policy may not be relevant in the near future. HR managers therefore still rely heavily on government’s regulations and guidelines.

At the miso level, the barriers and challenges of implementing strategic HRM come from the state sector itself. A few milestones in the development of SOEs since Doi Moi will show that this sector has experienced and will continue to experience turbulence in the years ahead. On 21 January 1981 the government enacted Decision 25 – CP that aimed to provide guidelines and measures to increase the initiatives and financial autonomy of SOEs in business operations. Decree 315/HDBT in 1990 realised the rationalisation and liquidation of SOEs. By the end of 1989, there were 12,297 SOEs in operation in Vietnam, with a total capital value of 34,216 billion VND (US$1.6 bn). By June 1993, the total number of SOEs had dropped to 7,060, with a total capital value of 44,965 billion VND (US$2.16 bn). Since 1994, SOE reform has become even more robust, targeted at reorganising SOEs, establishing General Corporations, and implementing the transformation of SOEs into joint-stock companies. Recently, the focus of reform was on speeding up the equitisation process. The number of SOEs continues to decline. In 2000, the number of SOEs was 5,759, decreasing to a total number of 3,706 at the end of December 2006 (GSO, 2008: 125). The transformation of Vietnamese SOEs is far from being complete. The number of SOEs is still large and there will be further reduction. These constant changes no doubt have created a very chaotic environment for HR operations. When uncertainty is present, inaction is preferred.

At the micro level, or organisational level, major challenges facing the implementation of strategic HRM include financial problems and inefficient management. SOEs still encounter financial difficulties and incur prolonged and unsettled debts. In 2000, the number of profitable enterprises accounted for just over 40 per cent, while break even enterprises fell to 31 per cent, and chronically loss-making enterprises accounted for 7.8 per cent (Tran, 2003: 4). In this context, HR departments are always in the situation where they lack the financial resources to make use of their newly found autonomy, given to them by Doi Moi. Furthermore, the management and operation of SOEs are said to be inefficient, compared to the foreign invested sector, and are burdened by bribery and corruption. HR managers are under pressure to introduce changes but are equipped with little knowledge of a market-oriented economy and far less business understanding. Attempts to attract a new generation of highly competent managers are still feeble and unsystematic.

Finally, at the HR-specific level, each HR function is facing a different set of constraints to its operation. As far as recruitment and selection is concerned, companies face an unbalanced labour market. A noticeable aspect of the Vietnamese labour market is the excess of non-skilled and semi-skilled labour co-existing with the shortage of highly skilled labour, even though companies continuously display a demand for skilled labour. It is estimated that in 2005 the size of the labour force that graduated from universities accounted for only 5.28 per cent of the total labour force – although this is the highest figure since 1996 (MOLISA, 2006: 160). Companies claim that the outputs of the educational system do not meet with the required inputs of their companies. This leads to tough competition among firms for skilled and managerial employees and an augmentation of salaries for this segment of the workforce. Interestingly, while multinational companies (MNCs) display a continuous and rising need for talent, SOEs’ labour retrenchment means that they require minimum new labour input, with the exception of some newly found and expanding industries such as banking and finance and information technology. Shortage in the skilled labour supply leads to other problems such as high turnover rates of white-collar workers, rising salaries and job-hopping (to obtain a higher salary).

In terms of performance appraisal, certain cultural traits such as non-confrontation and a strict hierarchical order might hinder the practice. However, some studies pointed out that the transitional period in Vietnam, which has witnessed the fall of the centrally planned system and its promises, is receptive to new and seemingly contrasting practices. As argued by Gamble (2001), cultural traits such as attitudes to hierarchy are often complex and ambiguous, provoking different responses in different situations.

In terms of the reward system, the government regulates the state sector and foreign invested sector with two different sets of law. In the state sector, the government stipulates the principles for developing the salary system (employee specifications, salary scales and salary tables), minimum salary and salary ratio. Under the pressure of rising living costs and competition from the private and foreign invested sectors, in recent years the government has frequently increased the minimum salary level. Even with the new regulation, the minimum salary level in SOEs is lower than that of MNCs. The regulations on rewards is criticised as being rigid and always falling behind the real needs of employees and market changes. On the other hand, foreign invested companies claim that the Vietnamese personal income tax rates are very high and that they effectively place a barrier to the upward progression of Vietnamese employees as they desire to advance to positions of authority.

As far as training and development are concerned, the weak vocational training system has become a serious constraint to the development of the economy and poses a serious constraint to companies (Nguyen and Truong, 2007). Furthermore, there is a chronic mismatch between the output of the education system and the input of companies (Duoc and Metzger, 2007; Hargreaves et al., 2001). Up to 80 per cent of graduate students have to be retrained by employers to match job requirements (Nguyen and Quang, 2007: 142). Due to the above mentioned weaknesses in the E&T system, the workplace is expected to be the other major source of skill formation and training in Vietnam. However, companies are faced with a dilemma – they could spend a fortune on training and developing their management staff only to see them leave the company (newly equipped with skills that make them more desirable in the marketplace) for higher-paying employers, in many cases a competitor company. As skills are scarce within and across industries, job-hopping to accelerate salary growth is popular. While some companies have a practical viewpoint on this matter, others think twice before determining their training budget.

Lastly, as far as IR is concerned, at the national level the new Trade Union Laws and new constitutions suggest that the VCP is willing to relax its hold on the labour unions, and that there is a strong legislative base for trade unions to step out of the Party and State’s shadow and renew their organisation and activities to perform the function of workers’ representatives in protecting their rights and interests. However, at the workplace level, organisational inertia and the government’s eagerness to maintain labour peace and attract foreign capital make for an enormous gap between what is written on paper and the reality of what is implemented. After many decades under the shadow of the Party, trade union cadres are not equipped with the necessary knowledge and their organisation lacks the necessary resources to make use of their newly found autonomy to create their own power.

Future Development of the Vietnamese HRM System

As previously mentioned, the adoption of best practices in SOEs and the transformation of HRM/IR systems in Vietnam are weak. Instead of adopting best practices systematically, SOEs are still dependent on government guidelines and regulations, and tend to use fairly universalistic forms of common-sense management, experimenting, learning and copying pieces from foreign firms and/or other local firms in a haphazard and eclectic manner. The low degree of transformation may be attributed to the perceived lack of necessity and assumptions about the importance of particular HRM practices, lack of financial resources and a weak management team. There are cases where more advanced HRM models are available in joint ventures with foreign partners for ‘imitation’ or ‘learning-by-watching’, however SOEs choose to maintain their old and less effective models of management.

On the other hand, with Doi Moi, the Vietnamese government has sought industrialisation by embracing an ‘open-door policy’ towards foreign investment, thus welcoming an influx of newcomers to the economy in the form of MNCs. SOEs are facing fierce competition from MNCs, which have well-developed strategic management plans for their enterprises due to their historical exposure to the global market economy. A component of these plans is HRM policies and practices. Due to the comparatively advanced nature of MNC HRM development and the diffusion of these HRM policies, MNCs are in a stronger position than SOEs in regard to having well laid out strategic management plans for HRM. There is strong evidence that MNCs have successfully transferred their home country HRM to their Vietnamese subsidiaries, albeit with some adaptations to the local situation (see, for example, Vo, 2009; Vo and Stanton, 2011). These HRM policies and practices are advanced and sophisticated.

This chapter acknowledges positive spill-over effects (Tran, 2002; Le Thanh Thuy, 2007) from MNCs to SOEs. In her succinct summary of the literature on spill-over effects, Le Thanh Thuy (2007) argues that there are three important channels through which foreign direct investment (FDI) can benefit the innovation activity of domestic firms in the host country: demonstration, competition, and labour turnover (Le Thanh Thuy, 2007). By their presence in the domestic markets, foreign firms can inspire and stimulate local firms to innovate or develop new products and processes. The first source of potential competitive advantage for MNCs is at the parent company level and represents the unique bundle of assets and capabilities that the MNC has developed over its lifetime (Taylor, Beechler and Napier, 1996). If these factors are transferred to the subsidiaries, technical progress in industry in the host country is expected (Blomström, 1986). Domestic firms can observe foreign firms’ actions, skills or techniques and ‘imitate’ them or make efforts to acquire these techniques and apply them, which results in production improvements. MNCs also can diffuse their superior technology to domestic firms through competition. Under the pressure of competition, domestic firms are more likely to introduce new technologies earlier than would otherwise have been the case. On the other hand, competition spurs further technology transfers to subsidiaries (Blomström, 1994). Finally, MNCs can create spill-over effects on domestic production through labour turnover. This effect occurs when employees employed in MNCs decide to move to domestic firms or open their own enterprises (Blomström and Kokko, 1996). Furthermore, foreign invested firms have helped to modernise management and corporate governance, and have helped to train a new group of young and dynamic managers. Some 300,000 workers, 25,000 technicians and 6,000 managers have been trained or retrained partially abroad (Le, 2002 cited in Le Thanh Thuy, 2007: 16).

In Vietnam, the technology gap between foreign and domestic sectors is expected to create the spill-over effects from FDI. Furthermore, FDI flows into Vietnam during periods when the country is experiencing important structural reforms; hence, its impact in introducing new ideas, technology and know-how is likely to be higher compared to the cases of other countries. Le Thanh Thuy (2007) finds significant positive spill-over effects in Vietnam’s industry during 1995–99 and, to a lesser extent, pullovers in 2000–2002. However, it is noted that compared to technology spill over, the effects in terms of management technologies in Vietnam is subject to little research, with some exceptions such as Zhu (2002), Le and Truong (2005) and Napier (2005). In terms of HRM policies and practices, Le and Truong (2005) point out that foreign invested firms in general are more advanced in the adoption of some practices, such as selection, compensation, benefits, and training, compared to SOEs (see also Vo, 2009). Apparently, MNCs offer models of ‘best practices’ that local firms could choose to benchmark. Foreign-owned firms, without doubt, have important implications for the development of HRM practices in Vietnam. The way that human resources is managed in MNCs, especially those that attempt to transfer ‘best practices’ to their Vietnamese subsidiaries, is expected to impact on the way that other organisational forms (including SOEs and private enterprises) will be managed in the future.

Useful Websites

Asian Development Bank: Vietnam operations business plan (2009–11) www.adb.org/documents/viet-nam-country-operations-business-plan-2009–2011?ref=countries/viet-nam/documents

Asian Development Bank: Country planning documents 2012–14 www.adb.org/documents/viet-nam-country-operations-business-plan-2012–2014-vi?ref=countries/viet-nam/documents

CIA World Factbook

www.cia.gov/redirects/factbookredirect.html

General Statistic Office:

www.gso.gov.vn/default.aspx?tabid=217

Ministry of Labour – Invalids and Social Affairswww.molisa.gov.vn

Vietnam Chamber of Commerce and Industry: http://vccinews.com

Vietnam News

http://vietnamnews.vnagency.com.vn

World Bank: Taking stock: An update on Vietnam’s recent economic developments (June 2011)

http://www.wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2005/12/02/000160016_20051202141324/Rendered/PDF/34474φVN.pdf

World Bank: Vietnam Data and Statistics

http://data.worldbank.org/country/vietnam

Note

1After the French and American war, the country fought the Chinese (over national boundaries), and the Khmer Rouge at different times from 1954 until 1989.

References

Ashwood, N. (1994) Vietnam, a Business Guide. London, UK: Graham and Trotman.

Asian Development Bank (ADB) (2000) Country Economic Review: Socialist Republic of Viet Nam, November 2000, www.adb.org/documents/CERs/CER_VIE_2000.pdf, last accessed 12 January 2003.

Blomström, M. (1986) ‘Foreign investment and productive efficiency: The case of Mexico’, Journal of Industrial Economics 15: 97–110.

Beresford, M. (1988) Vietnam: politics, economics and society. London: Pinter Publishers.

Beresford, M. (2008) ‘Doi Moi in Review: The Challenges of Building Market Socialism in Vietnam’, Journal of Contemporary Asia 38(2): 221–243.

Blomström, M. and Kokko, A. (1996) ‘The impact of foreign investment on host countries: A review of the empirical evidence’, The World Bank Policy Research Working Paper Series, No. 1745, World Bank, Washington, D.C.

Blomström, M, Kokko, A. and Zejan, M. (1994) ‘Host country competition and technology transfer by multinationals’, Weltwirtschaftliches Archiv,130: 521–533.

Che, T. N. (1995) ‘The Sequence of Economic Reforms in the Industrial State-Owned Enterprises of Vietnam’, Working Paper, AUSAID/NCDS Vietnam Economic Research Project, presented at Project Workshop, Hanoi.

Decision 25 – CP, issued on 21 January 1981 by the government, regarding several directions and measures to enhance the rights of industrial state enterprises to take initiative in production and business and in self-financing.

Decree No. 315/HDBT, issued on 1 September 1990 by the Vietnamese Council of Ministers, regarding reorganizing Production and Business in the Public Sector.

Djelic, M. L. and Quack, S. (2002) ‘The missing link: Bringing institutions back into the debate on economic globalisation’, Discussion Paper FS I 02–107, Wissenschaftszentrum Berlin für Sozialforschung.

Duoc, T. Q. and Metzger, C. (2007) ‘Quality of Business Graduates in Vietnamese Institutions: Multiple perspectives’, The Journal of Management Development 26(7): 629.

Fahey, S. (1995) ‘Changing labour relations’, in Kerkvliet, B J T (ed.), Dilemmas of development: Vietnam update 1994, Australia National University Department of Political and Social Change Research School of Pacific and Asian Studies, Canberra.

Gamble, J. (2001) Transferring Business Practices from the United Kingdom to China: The limits and potential for convergence, Paper presented to ‘Multinational companies and human resource management: Between globalisation and national business systems’ Conference, De Montfort University Graduate School of Business, Leicester.

Gates, C. L. and Truong, D. (1992) Reform of a Centrally-managed Developing Economy: The Vietnamese perspective, NIAS report No. 20, Nordic Institute of Asian studies, Copenhagen.

General Statistics Office (GSO) (2008) Statistical Yearbook of Vietnam 2007, Statistical Publishing House, Hanoi.

General Statistics Office (GSO) (2012) Statistical Yearbook of Vietnam 2011, Statistical Publishing House, Hanoi.

Hall, P. and Soskice, D. (2001) ‘An introduction to varieties of capitalism’, in P. Hall and D. Soskice (eds), Varieties of Capitalism: The institutional foundations of comparative advantage. Oxford: Oxford University Press.

Hargreaves, E., Montero, C., Chau, N., Sibli, M. and Thanh, T. (2001) ‘Multigrade teaching in Peru, Sri Lanka and Vietnam: An overview’, International Journal of Educational Development 21(6): 499–520.

Hofstede, G. (1980) ‘Motivation, leadership, and organization: Do American theories apply abroad?’, Organizational Dynamics 9: 42–63.

Joint Donor Group (2007) Vietnam Development Report 2008: Social Protection. Hanoi: The World Bank.

Kamoche, K. (2001) ‘Human resources in Vietnam: The global challenge’, Thunderbird International Business Review 43(5): 625–650.

Kerkvliet, B. J. T., Chan, A. and Unger, J. (1999) ‘Comparing Vietnam and China: An introduction’, in Chan, A., Kerkvliet, B. J. T., and Unger, J. (eds), Transforming Asian Socialism: China and Vietnam compared. Sydney: Allen and Unwin in association with ANU, pp. 1–14.

Labour Code 1994.

Lane, C. (1992) ‘European business systems: Britain and Germany compared’, in R. Whitley (ed.), European Business Systems Firms and Markets in their National Contexts. London: SAGE publications.

Le, C. T. and Truong, Q. (2005) ‘Human Resource Management Practices in a Transitional Economy: A Comparative Study of Enterprise Ownership Forms in Vietnam’, Asia Pacific Business Review 11(1): 25–47.

Le, D. D. (1997) ‘Legal consequences of state-owned enterprise reform’, in Yuen, N. C., Freeman, N. J. and Huynh, F. H. (eds), State-owned Enterprise Reform in Vietnam: Lessons from Asia. Singapore: Institution of Southeast Asian Studies, pp. 63–76.

Le Thanh Thuy (2007) ‘Does foreign direct investment have an impact on the growth in labor productivity of Vietnamese domestic firms?’, Research Institute of Economy, Trade and Industry (RIETI), IAA, Tokyo.

McCarty, A. (1993) ‘Industrial Renovation in Vietnam, 1986–91’, in M. Than, M and J. L. H. Tan, (eds), Vietnam’s Dilemmas and Options: The Challenge of Economic Transition in the 1990s Singapore: Institute of Southeast Asian Studies, pp. 97–143.

Maurice, M., Sellier, F. and Silvestre, J. J. (1980) ‘Societal differences in organizing manufacturing units: A comparison of France, West Germany and Great Britain’, Organization Studies 1: 59–86.

Ministry of Education and Training (1997a) Tong ket va danh gia muoi nam doi moi giao duc va dao tao (1986–1996): Bao cao tong hop va chi tiet [Summarising and assessing the renovation of education and training in the 1986–1996 period: General and detailed report], Hanoi, Vietnam.

Ministry of Labor, Invalids and Social Affairs (MOLISA) (2002) Statistical Yearbook of Labour-invalids and Social Affairs 2002. Vietnam: Labour Social Publishing House.

Ministry of Labor, Invalids and Social Affairs (MOLISA) (2006) Statistical Data of Employment and Unemployment in Vietnam 1996–2005. Hanoi: The Publishing House of Social Labor.

Napier, N. K. (2005) ‘Knowledge Transfer in Vietnam: Starts, Stops, and Loops’, Journal of Management Psychology 20(7): 621–636.

Nguyen, V. H. and Tran, V. N. (1997) ‘Government policies and state-owned enterprises’, in Yuen, N. C., Freeman, N. J. and Huynh, F. H. (eds), State-Owned Enterprise Reform In Vietnam, Lesson From Asia. Singapore: Institute of Southeast Asian Studies.

Nguyen, N. T. and Truong, Q. (2007) ‘International briefing 18: Training and development in Vietnam’, International Journal of Training and Development 11(2): 139–149.

O’Connor, D. (1996) ‘Labour Market aspects of state enterprise reform in Vietnam’, Technical Papers No. 117, OECD development centre, Paris.

Porter, M. (1990) The Competitive Advantage of Nations. London/Basingstoke: MacMillan.

Quang, T. (1997) ‘Conflict management in joint-ventures in Vietnam’, Transitions, 38(1and2): 282–306.

Quang, T. and Vuong, N. T. (2002) ‘Management Styles and Organisational Effectiveness in Vietnam’, Research and Practice in Human Resource Management 10(2): 36–55.

Ralston, D. A., Nguyen, V. T. and Napier, N. K. (1999) ‘A Comparative Study of the Work Values of North and South Vietnamese Managers’, Journal of International Business Studies 30(4): 655–672.

Riedel, J. and Turley, W. S. (1999) ‘The Politics and Economics of Transition to an Open Market Economy in Viet Nam’, OECD Development Centre Working Papers 152, OECD Development Centre, Paris.

Siengthai, S. (2004) ‘HR practices in Southeast Asia: an exploratory notes’, An occasional paper, School of Management, Asian Institute of Technology, Thailand.

The Socialist Republic of Vietnam (2005) Report of the Survey on Corruption in Vietnam 2005, Government of the Socialist Republic of Vietnam, Hanoi.

Statistical Office of Ho Chi Minh City (1995) Statistical Yearbook, 1995. Ho Chi Minh City: City Statistical Office.

Taylor, S. Beechler, S. and Napier, N. (1996) ‘Toward an integrative model of strategic international human resource management’, Academy of Management Review 21(4): 959–985.

Thang, L. C. and Quang, T. (2005) ‘Human resource management practices in a transitional economy: A comparative study of enterprise ownership forms in Vietnam’, Asia Pacific Business Review 11(1): 25–47.

Tran, N. C. (2002) ‘Learning Technological Capacities for Vietnam’s Industrial Upgrading: Challenges of Globalization’, Working Paper 165, National Institute for Science and Technology Policy and Strategy Studies and Stockholm School of Economics, Stockholm.

Tran, N. C. (2003) ‘International cooperation in science and technology: some critical issues for Vietnam’, paper presented at MOST-IDRC roundtable on international cooperation in science and technology, Hanoi, October.

Tran, V. H. (1997) (ed.) Economic Development and Prospects in the ASEAN: Foreign investment and growth in Vietnam, Thailand, Indonesia, and Malaysia. Basingstoke: Macmillan.

Vietnam Economic Times (2003) 26 May.

Vo, A. N. (2009) The Transformation of Human Resource Management and Labour Relations in Vietnam. Oxford: Chandos Publishing.

Vo, A. and Hannif, Z. (forthcoming) ‘The Reception of Anglo Leadership Styles in a Transforming Society: The Case of American Companies in Vietnam’, The International Journal of Human Resource Management.

Vo, A. N. and Stanton, P. (2011) ‘The transfer of HRM policies and practices to an transitional business system – the case of performance management practices in US and Japanese MNEs operating in Vietnam’, International Journal of Human Resource Management 22(17): 3,513–3,527.

Vu, Q. N. (2002) ‘State Owned Enterprises Reform in Vietnam’, PhD Thesis, Australian National University, Canberra.

Whitley, R. (1999) How and Why are International Firms Different?: The consequences of cross-border managerial coordination for firm characteristics and behaviour, presented to sub theme 3 ‘Business System in their International Context’ of the 15th EGOS Colloquium held at the University of Warwick, 4–6 July 1999.

Whitley, R. (2000) Divergent Capitalisms: The social structuring and change of business systems. Oxford: Oxford University Press.

Wolff, P. (1999) Vietnam – the incomplete transformation. London: Frank Cass Publishers.

World Bank (2006) ‘Vietnam Development Report 2006’, Report No. 34474-VN, www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2005/12/02/000160016_20051202141324/Rendered/PDF/344740VN.pdf, last accessed 3 April 2008.

World Bank (2011) Country Classification – Data and statistics. http://ddp-ext.worldbank.org/ext/ddpreports, Accessed 2 January 2012.

Xinzhong, Y. (2000) An Introduction to Confucianism. Cambridge: Cambridge University Press.

Zhu, Y. (2002) ‘Economic Reform and Human Resource Management in Vietnam’, Asia Pacific Business Review 8(3): 115–135.