Previously published as: Management Research News
Online from: 2010
Subject Area: Management Science/Management Studies
|Title:||Resource curse or destructive creation in transition: Evidence from Vietnam's corporate sector|
|Author(s):||Quan Hoang Vuong, (Centre Emile Bernheim, Université Libre de Bruxelles, Brussels, Belgium), Nancy K. Napier, (College of Business and Economics, Boise State University, Boise, Idaho, USA)|
|Citation:||Quan Hoang Vuong, Nancy K. Napier, (2014) "Resource curse or destructive creation in transition: Evidence from Vietnam's corporate sector", Management Research Review, Vol. 37 Iss: 7, pp.642 - 657|
|Keywords:||Creative performance, Destructive creation, Physical and capital resources, Rent-seeking, Resource curse|
|Article type:||Research paper|
|DOI:||10.1108/MRR-12-2012-0265 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||The authors gratefully acknowledge support and assistance from Tran Tri Dung (DHVP Research) and Shanshan Bai (Boise State University).|
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.
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