Hue Thi Kim Trinh Wilhelm George Blomdal Master Thesis BI Norwegian Business School Networking and internationalization How do networks trigger and facilitate Norwegian firms’ entry into Vietnam? Examination code and name: GRA 19003 Master Thesis Date of submission: 26.08.2016 Programme: Master of Science in International Business Supervisor: Rolv Petter Amdam This thesis is a part of the MSc Programme at BI Norwegian Business School. The school takes no resposibility for the methods used, results found and conclusions drawn. GRA 19003 Master Thesis 01.09.2016 Acknowledgements Foremost we would like to express our sincere appreciation and gratitude to our supervisor Rolv Petter Amdam, for his continuous guidance and support throughout the process of writing this master thesis. His enthusiasm and excellent guidance have been much appreciated. We would also like to thank all the participants in the study for their help and for being so congenial and accessible. Without their contribution it would not have been possible to conduct this study. Finally, we would also like to thank BI Norwegian Business School, and in particular the staff and lecturers involved in the International Business programme, for a very interesting and educational 02 years as MSc students. BI Norwegian Business School, Oslo August …. 2016. Hue Thi Kim Trinh Wilhelm George Blomdal i GRA 19003 Master Thesis 01.09.2016 Abstract The usefulness of network in the internationalization process has been proven in numerous literatures, mainly as a supporting mechanism, compensating for the lack of experiential knowledge in the foreign market. This paper examines special roles of network in the Vietnamese market entry of Norwegian firms – as a trigger and facilitator. Using a multiple case study approach, findings of this qualitative paper illustrate the dynamics of how firms expose themselves to market potential, sustain in foreign market and benefit from pooled resources through interaction with their network partners, from individuals to firms and governmental actors. Case firms were active in building network as a supplement for market uncertainty and the lack of market knowledge. The theoretical contribution is that the paper shows how the case companies responded by actively drawing on their networks in order to overcome the liabilities of foreignness within a transforming economy. The study is based on a model where a comprehensive set of involving network actors are carefully examined, drawn from business, personal and governmental actors. The study also shows how networks can be expanded either through trade fairs or through recruitment of well-connected personnel. The paper concludes with managerial implications and suggestions for further research. ii GRA 19003 Master Thesis 01.09.2016 Table of Contents ACKNOWLEDGEMENTS ................................................................................ I ABSTRACT ...................................................................................................... II 1. INTRODUCTION ......................................................................................... 1 1.1. PROBLEM DEFINITION ................................................................................. 1 1.2. STRUCTURE ............................................................................................... 2 1.3. VIETNAMESE CONTEXT ............................................................................... 2 1.3.1 Economic development ........................................................................ 2 1.3.2 Institutions – the foundations for Vietnam development ....................... 4 1.3.3 Business Culture.................................................................................. 4 1.4. VIETNAM – NORWAY POLITICAL AND ECONOMIC RELATIONS ....................... 5 2. LITERATURE REVIEW .............................................................................. 8 2.1. NETWORK .................................................................................................. 8 2.1.1. Business associates........................................................................... 10 2.1.2. Personal relations ............................................................................ 13 2.1.3. Governmental actors ........................................................................ 17 2.2. CLASSIFYING THE MNC AND SME ........................................................... 19 2.2.1 Applied criteria for the study ............................................................. 20 3. THEORETICAL PROPOSITIONS............................................................ 21 3.1. NETWORK – FROM BEING A TRIGGER AND A FACILITATOR .......................... 21 3.2. FIRM SIZE AND THE USE OF NETWORK ....................................................... 21 3.3. MARKET DEVELOPMENT AND THE USE OF NETWORK .................................. 22 3.4. CULTURE AND THE USE OF PERSONAL NETWORK ....................................... 23 3.5. OBTAINING LOCAL KNOWLEDGE AND EXPAND NETWORK THROUGH NEW RECRUITS........................................................................................................ 23 4. METHODOLOGY ...................................................................................... 25 4.1. STRATEGY ............................................................................................... 25 4.2. RESEARCH DESIGN ................................................................................... 25 4.2.1 General design .................................................................................. 25 4.2.2 Case companies ................................................................................. 26 4.3. DATA COLLECTION ................................................................................... 27 i GRA 19003 Master Thesis 01.09.2016 4.4. DATA ANALYSIS ....................................................................................... 29 4.5 VALIDITY AND RELIABILITY ...................................................................... 29 5. DATA ANALYSIS AND FINDING ............................................................ 32 5.1. NORAD, INNOVATION NORWAY AND THE THREE COMPANIES - PHARMAQ, EWOS AND AKVA ........................................................................................ 32 5.2. WITHIN CASE ANALYSIS .......................................................................... 33 5.2.1. PHARMAQ...................................................................................... 33 Business associates .................................................................................... 34 Personal relations ...................................................................................... 36 Governmental actors .................................................................................. 36 Story in brief .............................................................................................. 38 5.2.2. EWOS GROUP ................................................................................ 38 Business associates .................................................................................... 39 Personal relations ...................................................................................... 41 Governmental actor ................................................................................... 42 Story in brief .............................................................................................. 43 5.2.3. AKVA GROUP ................................................................................ 44 Business associates .................................................................................... 45 Personal relations ...................................................................................... 46 Governmental actors .................................................................................. 47 Story in brief .............................................................................................. 48 5.2.4. SKRETTING ................................................................................... 48 Business associates .................................................................................... 49 Personal relations ...................................................................................... 50 Governmental actors .................................................................................. 51 Story in brief .............................................................................................. 52 5.2.5. CONTEMI ....................................................................................... 52 Business associates .................................................................................... 53 Personal relations ...................................................................................... 54 Governmental actors .................................................................................. 55 Story in brief .............................................................................................. 55 5.3. CROSS-CASE ANALYSIS ............................................................................. 55 5.3.1. Business associates .......................................................................... 59 5.3.2. Personal relations ............................................................................ 59 ii GRA 19003 Master Thesis 01.09.2016 5.3.3. Governmental Actors ......................................................................