[Abstract]
This study has attempted the analysis on the Korean small medium manufacture enterprises which conducted business activities for more than 2 years by making investments on Vietnam in order to examine the determining factor of its effects on the investment result of the direct investment small medium enterprise advanced into Vietnam. To put it concretely, this study¡¯s questions are as follows. First, how are the determinants of the foreign direct investment performance under other environment like Vietnam different from factors in existing theories?
Second, how does the extent of production globalization affect to the performance in accordance with globalization progress of multinational enterprises?
Third, from the viewpoint of network, is the global integration good for performance? or is the localization good? which is better for performance?
Fourth, what is the suggestion through the analysis of determinants of performance?
With priority given to the enterprises, the question investigation has been carried into effect, the regression analysis analysis of variance has been used as the analytical method.
With priority given to the Korean small medium manufacture enterprises advanced into Vietnam, this study conducted the analysis on location-specific advantage, firm-specific advantage, global integration localization level, in order to find out their influence power over the investment result. Also, the influence factor of results on those enterprises has been observed by divided the form of investment motive into the domestic market oriented the global sourcing oriented investment change in its influence factor in case of the multinational enterprise.
The results of actual analysis can be summarized as follows:
At first, upon the relation between location-specific advantage performance, labor productivity are significant for positive performance whereas market trait, local procurement level have no influence. also the market potential would be determinant of performance for investors opening domestic market.
Secondly, upon the relation between parent firm`s factor performance, globalization level internationalization experience(in case of multinational enterprises) give `+' effect whereas competitiveness level do not influence.
Hence, performance is created by maximizing relativity efficiency among countries through geographical diversification. also the reason why competitive power has no influence on the performance seems to be caused by that many firms make the profit by moving the manufacturing facilities, already entered into the mature stage, to Vietnam that has cost competitiveness. Therefore, strategy of manufacturing the stardized products is needed for Vietnam investor companies better than being high quality strategy due to considering the low level of local Vietnamese technical resources raw materials.
Thirdly, as trait factor of affiliated companies manufacturing technical level influence positively but production period has no influence with performance.
Fourthly, the relation among global integration, localization level performance. The level of global integration in the business strategy fields does not influence directly whereas in the business management fields such as recruitment extension of equipment, global integration has negative impact on the performance. However in the t-test between high low level integration companies in the business strategy fields raise better performance. Consequently in the perspective localization would be always advisable.
The results presented in this paper suggest as follows:
Firstly, items suitable to investment in Vietnam are fields that maintain a certain degree of the competitive power in Korea can improve the manufacturing technique continuously, inconsideration of Vietnam's market trait technical manpower level, stardized goods rather than high-tech's are more suitable.
Secondly, many current invested firms mainly show the outcome on the basis of low cost labour. However, they say their main bottlenecks are rapid increase of wage labour management problem, also as Vietnam government promote a plan to revise the labour law to be consistent with ILO rule before the year 2011, the cost reduction oriented investment is not desirable. Rather, such a long-term strategy as the extension of foreign manufacturing area through the geographical diversification is needed.
Thirdly, FDI firms for opening up the local market also should be able to secure the economies of scale through the export to neighbour countries, considering the Vietnam's market size, also their products should possess the special characteristic different from Vietnam's local product, considering the notion of preferring a foreign made goods.
Fourthly, as the global integration strategy of an affiliated company, to enlarge the localization step by step from the recruiting in the beginning, equipment investment, pricing, to the marketing like advertising, distribution etc. rather than to strengthen the global integration would be more desirable, because the Vietnam's market environment is different from other countries.'
To backup the suggestion of these kind business-strategic sides, it is suggested that gov¡¯t policy also is needed to replenish as follows.
First, as world business enterprises are promoting the globalization strategy following with WTO system the domestic productive capacity of Korean companies invested in Vietnam is nothing but 13.6%, our small medium enterprises support strategy also should support not only domestic production operation but international activities. That is, our financial support, R&D support assurance support system are targeted only domestic production activities, however, it is needed to enlarge the supporting area more aggressively to the activities between the foreign investment companies domestic businesses between foreign investment companies the 3rd national companies, keeping step with Korean companies¡¯ geographical diversification promotion.
Second, the existing internationalization support programs for small medium business, such as foreign investment support center, foreign incubating support program, also support by ing the target item through each nation¡¯s market survey, but inter-regional joint support program is needed to support the wider range¡¯s strategic specialization in production including neighbor countries.
Third, as the foreign investment enterprises in Southeast Asia has concentrated the productive efficiency on the basis of the low wages, the backup of technical manpower¡¯s supply is needed, however, there is bottleneck in securing the technician. So it needs to review the technical education training program for foreign worker by making use of domestic declining industries technician.
However, this study has some limits.
First, Korean small medium enterprises¡¯ investments on Vietnam are still early stage most of them invested for global sourcing. Therefore, there are limit to examine closely the difference of determining factors of its effects on the investment for opening the domestic market, because of observation¡¯s limitation. also, as the investors still concentrate on some industries, I could not examine the difference by the characteristics of industries' specification.
Second, in order to analyze the effect of global integration level on performance, I divided the business activities into the strategy field the management field, classified product planning, pricing, distribution management etc, into the strategy field. However, as it can be seen as classification by function, it needs to study the global integration level by subdividing in detail according to the business characteristics in future.