The 19th WORKSHOP
17 December 2005 (Sat), GRIPS Campus in Tokyo 14:00-17:00
"Supplier-Maker Networks Structure and Capability Improvement of Suppliers
in Newly Emerging Vietnam's Motorcycle Industry"
In the workshop, Mr. Hoang presented his research on the development and capability improvement of suppliers through supplier-maker network structure, and Vietnam’s motorcycle industry was analyzed as the case study. This research is a part of his PhD dissertation at Yokohama National University.
Under a rapidly changing of business environment, the newly emerging economies, including Vietnam, are growing differently from the matured emerging economies such as Korea, Taiwan, and Malaysia. At the beginning, Mr. Hoang reviewed two structures of supplier-maker networks, i.e. arm-length networks, and embedded networks. In the arm-length networks, such as those of American automobile companies, suppliers and makers have short-term and market-based relationship. In contrast, in the embedded networks, such as those of Japanese automobile companies, they base on long-term relationship and trust among participants. Following production process of suppliers, the author distinguished upstream (relating to designing) and downstream (relating to production and delivery) capabilities of suppliers. Based on the features of business environment in newly emerging economies and the characteristics of firms in these economies, two propositions were provided:
-- Proposition 1: In newly emerging economy, the more embedded relationship with makers the suppliers have, the higher downstream capabilities they can improve.
-- Proposition 2: In newly emerging economy, the more arm-length relationship with makers the suppliers have, the more upstream capabilities they can improve.
In the next part of his presentation, Mr. Hoang examined the patterns and processes of capability improvement of suppliers in the Vietnam’s motorcycle industry, in which the mix of different supplier-maker networks with different structures exists. Firstly, he reviewed briefly the Vietnam’s motorcycle industries to show the recent emergence of this young industry, particularly since 1998 when the “Chinese motorcycle shock” occurred. The Japanese, Taiwanese, and Vietnamese domestic makers have created various supplier-maker networks with the above two structures. Secondly, to make the analysis more clearly, Mr. Hoang provided five case studies of suppliers of this industry, and analyzed under two dimensions of “capability and performance improvement under the effects of inter-firm relationship” and “time-scale analysis”. The case studies showed evidences, supported the above two propositions. Based on those case studies, the author proposed two patterns of capability improvement of suppliers, i.e. single-pole (in which suppliers engage to one kind of network), and double-pole (in which suppliers dynamically participate in both networks). In addition to those patterns, Mr. Hoang also discussed other important sources of knowledge for suppliers in the newly-emerging economies, such as knowledge transfer from other affiliates or joint-venture companies.
Beside various questions during his presentation, in the discussion section, Mr. Hoang also received and answered several questions and comments. Mr. Khai (Yokohama National University) put his question on how suppliers in the newly emerging economies could improve their capability without close relationship with foreign makers in the short-term as in the first conclusion of the paper. Mr. Long (GRIPS) had the question related on the changes in network structure in the Japanese and Vietnamese motorcycle companies in Vietnam. He also suggested a deeper research on capability improvement of motorcycle firms in Vietnam in the context of fierce international competition, as well as advantages and drawbacks of the two patterns proposed in the paper. Sharing this idea, Mr. Khai emphasized on what would be the strategies for suppliers to improve their capabilities. Some of these ideas were the same as the ones from Mr. Tiep (Kyoto University), which were sent to VDF-Tokyo secretariats via e-mail. Mr. Baek (GRIPS), when referring to research by Clark and Fujimoto (1991), suggested that different characteristics between motorcycle and automobile industries might distort the theoretical framework in the study. Mr. Thanh (GRIPS) also raised some other questions on the development of the motorcycle industry in Vietnam with particular attention to the indicators.
Answering Mr. Khai’s comments, Mr. Hoang emphasized that, additionally to relationship with foreign makers, the domestic suppliers could also gain knowledge in the short-term through various sources such as cooperation within large state-run corporation. For Mr. Long’s questions, he referred to his previous study on the evolution of business architectures in the Vietnam’s motorcycle industry (*) as the detailed analysis on the development of this industry, and the dynamics in strategies of the motorcycle makers (both Japanese and Vietnamese). To reply Mr. Baek’s comments, Mr. Hoang admitted that there were remarkable differences between automobile and motorcycle industries. He emphasized, however, that the theoretical background of network structure had been widely known as theory to analyze inter-firm relationship relating to strategic management, and it had been applied in deferent industries, in which automobile industry was the most common. Mr. Hoang added that the shortage of literature on motorcycle industry also prevented references.
In conclusion, Mr. Hoang thanked all the participants for their comments and suggestions. He said that he would surely conduct further studies with deeper considerations about dynamic context of Vietnam.
In the information exchange section, all the participants introduced their research interests, and VDF Tokyo’s secretariats informed about the tentative schedule of monthly presentations, as well as coming activities in coordination with VDF Hanoi.
Pham, Truong Hoang, 2004, The Evolution of Business Architecture and the Chances for Vietnamese Enterprises: The case of the Vietnamese Motorcycle Industry, Economics and Development Review, Vol. 16 (Dec), 28-33
(By Pham Truong Hoang and Giang Thanh Long)
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