Thạc Sĩ Factors influencing international joint ventures' performance An investigation into the telecommunic

Table of Contents

Acronyms. iii
Table of Figures. v
List of Tables. vi
CHAPTER 1: INTRODUCTION 1
1.1 Research Motivation. 1
1.1.1 International Joint Ventures (IJVs) in Telecommunication industry in Laos. 1
1.1.2 Factors influencing IJVs’ Performance in Telecommunication Industry in Laos. 4
1.2 Theoretical Background. 7
1.3 Research Methodology. 7
1.4 Contribution of the Study. 8
1.5 Organization of the Study. 10
CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK 12
2.1 Literature review on International Joint Ventures’ Performance. 12
2.1.1 Survival and Longevity. 14
2.1.2 Financial Output Measures. 15
2.1.3 Overall Satisfaction 16
2.1.4 Goal Achievement 17
2.1.5 Learning 18
2.2 Literature Review on Factors Influencing IJVs’ Performance. 19
2.2.1 Control of the IJV 21
2.2.2 Trust 22
2.2.3 Cooperation and Commitment 24
2.2.4 National Culture and Corporate Culture Differences. 26
2.2.5 Goal Compatibility. 30
2.3 Conceptual Framework. 31
CHAPTER 3: RESEARCH METHODOLOGY. 34
3.1 An overview of Research Approach and Research Design. 34
3.2 Case Study Method. 36
3.2.1 Secondary Research 37
3.2.2 Primary Research 37
CHAPTER 4: RESEARCH FINDINGS. 47
4.1 The Current Status of IJVs’ Performance in the Telecommunication Industry in Laos. 47
4.1.1 The Telecommunication Industryin Laos. 47
4.1.2 Performance of the IJVs in the Telecoms Industry in Laos. 65
4.2 Factors Influencing IJVs’ Performance in the Telecommunication Industry in Laos. 73
4.2.1. Identification of Factors Influencing IJVs’Performance. 73
4.2.2 The Impact of Several Factors on IJVs’ Performance - Regression Findings from Individuals’Perception 86
CHAPTER 5: CONCLUSIONS AND DISCUSION 96
5.1 Conclusions. 96
5.2 Discussion. 97
5.2.1 Research Implications. 98
5.2.2 Limitations and Future Research Directions. 103
REFERENCES. 106
APPENDICES. 121
Appendix 1: Information about all key service providers in telecom industry in Laos. 122
Appendix 2: GUIDELINE FOR IN-DEPTH INTERVIEWS. 124
Appendix 3: QUESTIONAIRE 125



Acronyms
ADSL Asymmetric Digital Subscriber Line
ADB Asia Development Bank
ASEAN Association of South East Asian Nations
ARPU Average Revenue Per User
BMI Business Monitor Investment
BTA Bilateral Trade Agreement
BTS Base Transceiver Station
CDMA Code Division Multiple Access
EDGE Enhanced Data Rates for GSM
ETL Enterprise of Telecommunication Laos
FDI Foreign Direct Investment
GDP Gross Domestic Product
GMS Greater Mekong sub-region
GPRS General Packet Radio Service (GSM)
GSM Global System for Mobile Communications
GOL Government of Laos
ICT Information and Communication Technologies
IJVs International Joint Ventures
ISPs Internet Services Providers
ITU International Telecommunications Union
Lao PDR Lao People’s Democratic Republic
LANIC Lao National Internet Committee
LAK Laotian Kip
LTE Long term Evolution
LTC Lao Telecommunication Corporation Limited
MCTPC Ministry of Communication Transport Post and Construction
MDGs Millennium Development Goals
MNEs Multiple National Enterprises
MIC Ministry of Information and Culture
MPT Ministry of Post and Telecommunications
NAPT National Authority on Post and Telecommunications
PCs Personal Computers
PM Decree Prime Minister Decree
PSTN Public Switched Telephone Network
ROI Return on investment
ROE Return on equity
ROA Return on assets
SIM Subscriber Identification Module
SMS Short Message Service
STL Star Telecom
USAID United States Agency for International Development
VoIP Voice over Internet Protocol
WLL Wireless Local Loop
WiMAX An air interface standard for fixed broadband wireless access (BWA) systems employing a point-to-multipoint architecture

Table of Figures
Figure 1: A Conceptual Model for Studying Factors influencing International Joint Ventures’ Performance. 35
Figure 2. Research Design 38
Figure 3: Secondary Data and their sources. 41
Figure 4: Laos Mobile Sector 2010 – 2017 52
Figure 5: Laos Mobile ARPU 2010 – 2017 53
Figure 6: Laos Fixed-Line Sector 2010 – 2017 57
Figure 7: Laos Broadband sector 2010 – 2017 59
Figure 8: Laos internet Market growth 2003 – 2011 62
Figure 9: Laos Broadband Market growth 2005 – 2011 63





List of Tables

Table 1: Interview summary 43
Table 2: Demographic Profile of Respondents. 45
Table 3: Telecoms sector in Laos – Historical Data and Forecasts. 50
Table 4: Key players in Laos’ telecoms sector. 66
Table 5: Perception of performance of LTC (N = 31). 67
Table 6: Perception of performance of Unitel (N = 26). 69
Table 7: Financial performance of Tigo/Beeline in the period 2010-2013 70
Table 8: Perception of performance of Beeline (N = 30). 71
Table 9: Perception of performance of the 3 IJVs (N = 87). 72
Table 10: Perception of control mechanism at the 3 IJVs (N = 87). 74
Table 11: Perception of Trust at the 3 IJVs (N = 87). 76
Table 12: Perception of cooperation and commitment at the 3 IJVs (N = 87). 77
Table 13: Perception of goal compatibility at the 3 IJVs (N = 87). 80
Table 14: Perception of cultural differences at the 3 IJVs (N = 87). 83
Table 15: Summary of descriptive statistics of 3 IJVs and ANOVA results 86
Table 16: Performance measures and factor loading results (N = 87). 88
Table 17: IDVs’ measures and factor loading results (N = 87). 90
Table 18: Descriptive Statistics and Correlations (N = 87). 92
Table 19: Regression results (N = 87) DV: Financial Performance. 93
Table 20: Regression results (N = 87) DV: Overall Satisfaction 93
Table 21: Regression results (N = 87) DV: Goal Achievement 94
Table 22: Regression results (N = 87) DV: Learnings. 95


CHAPTER 1: INTRODUCTION
1.1 Research Motivation
1.1.1 International Joint Ventures (IJVs) in Telecommunication industry in Laos
Lao People Democratic Republic (Lao PDR) is located in the central part of the Indochina peninsula. The country covers about 236,800 KM2 and has a population of just over 6.5 million (2012 census). Lao PDR shares borders with 5 countries: Vietnam to the East, China to the North, Union of Myanmar to the Northwest, Thailand to the West, and Cambodia to the South. Since 1986 when the new Economic mechanism was adopted, the government of Lao People’s Democratic Republic (Lao P.D.R) has been promoting social and economic development under the policy of a market oriented economic. During 2001-2005, Lao PDR had an average annual GDP growth rate of 6.2 percent, and it has increased to 8.1% in 2012.During 2006 – 2008 he average GDP per capita was approximately USD 700, and in 2011 it grew to over USD 1,300 (World Bank 2012). The service sector contributed to 26 percent of Laos’ GDP. In 2008, the telecommunications sector accounted for approximately 1.6 percent of the total GDP and is considered one of the fastest growing sectors in Laos. For example, since 2000, competition in the telecommunications boosted investment in the sector dramatically. Investment per year jumped from USD 19 million in 2000 to USD 154.9 million in 2008 (USAID, 2009)
Telecommunication technology plays a significant role for the flow of information. It is an extremely useful tool to spread knowledge and new ideas, which can reduce infrastructure development gap between people in rural and urban area. Furthermore, it can improve education, health care services, and encourage business activities. In addition, it also plays the crucial role to the national economic development, especially to the developing country like Laos. Therefore, telecommunication technology development is one way that Lao government uses to generate revenue and create job opportunity for people. In addition, Lao government aims to improve people living standard and increase the ability to compete in global trade of Lao business by giving priority to the development of telecommunication technology with the intention to promote sustainable development of the nation.
In line with the new Economic mechanism, the Telecommunication sector in Laos was privatized at the year 1996 as a joint venture with a Thai investor (Shinawana International Public Company Limited). However, this telecom privatization policy has been revised due to the importance of a national telecommunication development strategy which is able to resolve keen issues such as digital divide among regions and the frequent telephonic traffic congestion caused by a deficiency in the nation-wide telecommunication facilities (eg. switching and telephone line capacity and human resources) (MCTPC, 1982; MCTPC, 1990 &1995; MCTPC, 1990 – 2007).
Besides, Lao P.D.R has a responsible position for promoting telecom development programs planned for the Greater Mekong sub-region (GMS). This development concept of GMS proposed by Asia Development Bank (ADB) and is applied to an area or regional development approach to GMS, promoting networks among the six Mekong riparian countries, including supporting activities for a common standard of telecom services availability which is increasing in Laos. Telecommunication increased steadily from 2007 to 2011 (MCTPC, 2007 – 2011).
There are some communication policy studies undertaken by scholars and media and political organization, but research on International Joint Ventures (IJVs) in Telecommunication industry in Laos has been limited. Especially, it seems that very modest attention has been given to investigateIJVs’ performance and factors influencing it in the industry in Laos. Thus, these issues will be the focus of this research.
Regarding telecommunication service policies in Laos, National Authority of Posts and Telecommunication (NAPT) was established on 22nd October 2007 by the PM Decree No: 375/PM. NAPT is an organization under the Prime Minister office, dealing with policy, strategy and its implementation and administrative issues on Posts and Telecommunication sector and the Information and CommunicationTechnologies (ICT) in Laos. NAPT is responsible for both the policy making and regulatory function for Telecommunication and ICT sectors. On 15th June 2011, NAPT has been upgraded to Ministry of Posts and Telecommunications (MPT) (MCTPC, 1990 – 2007; MCTPC, 2011). Moreover, Telecommunication Act was passed and entered into force in 2011. Telecom sector policy 2004 of Laos government has stake in all the operators. Based on ASEAN framework agreement on science, for value addedservicesthe new entry can only take place into Laos through a joint venture with Lao’s service provider or acquisition of existing operators. Under BTA with America, Laos has made commitments to provide unrestricted market access and full national treatment for the whole range of basic fixed and mobile (on the facilities basic or by resale, through any mean of technology, as value-added telecommunication service) (MCTPC, 2004).
Related to telecommunication providers in Lao P.D.R, there are five authorized enterprises which are providing fixed and mobile telecommunication services in Laos. All these providers have the government ownerships, including: Lao Telecommunication Corporation Limited (LTC) with Government of Laos (GOL) and Shinawatra (Thailand) share 51% and 49% of possession respectively; Enterprise of Telecommunication Laos (ETL) with GOL 100% but currently become to ETL public; Star Telecom (STL): GOL 51% and Viettel Global 49% (now has been renamed to Unitel); Milliom international cellular SA (now has been transferred to Vimpelcom Russia (Beeline): GOL 22% and Vimpelcom 78%; and SKY communication Laos (SKY) withGOL 100% (since 2010). (before 2010 – foreign private owner)
The number of internet service providers (ISPs) has grown from two in 1990s to about seven after nearly 15 years. They are ETL internet, Lao telecom Planet online, Lane Xang internet, Sky telecom KPL and Mill com. The entry of Milliom and Sky, the large shareholding by Shincorp, the operation of Planet and prevalence of Voice Over Internet Protocol (VOIP) operators show that private investors are willing to invest in Laos even under the current policies and regulatory regime. However, such investors are still primarily focus on central of Vientiane and major urban center. Therefore, adjustments are necessary to be added to current policies and regulatory framework in order to further develop the telecom sector through these strong private investors (MPT, 2011).
1.1.2 Factors influencing IJVs’ Performance in Telecommunication Industry in Laos
Many scholars and practitioners have conducted research about what factors affecting the performance of IJVs. However, their research has mainly conducted in the context ofthe developed countries (Ren et al., 2009). Many previous studies (e.g., Hoang & Rothaermel, 2005; Isobe, Makino, & Montgomery, 2000; Luo, 2001; and Tong et al., 2008) have examined IJVs performance, which enhanced human beings’ knowledge about this attractive topic. However, the conceptualization of IJV performance and factors influencing it remains an often-debated issue in IJV research (Reus & Ritchie, 2004).
In recent years, more researchattention hasbeen given to studyIJVs performance and factors influencing IJVs performance in the context of developing countries (e.g. Phan & Ngo, 2009; Phan et al., 2006; Cao, 2012) but it seems that very modest research attention has been given to investigate the impact of these factors in the context of Laos, especially no study has examined the issue in the Telecommunication industry in Laos. In other words, this attractive topic has not been investigated adequately in the context of Laos, especially in the telecommunication sector.
The telecommunication technology in Lao PDR is at the infant stage in terms of development in comparison with other countries in the ASEAN region. It is due to the low percentage of consumption and the limited use of only in big cities. The main cause of low consumption may be due to the population lack of purchasing power and awareness of the important of telecommunication technology. In addition, Laos is inadequate in telecommunication technology experts. There are only few schools in the country offering courses concerning ICT. Moreover, they still have not met international standard yet. However, nowadays telecommunication technologies in Laos are changing very fast. So, all telecommunication service providers need to pay great attention to keep an eye to the latest technologies.
In order to survive in the market that has very high degree of competition especially, competition on the price, new technology, and quality services, many communication companies are rushing to find out new things to offer to the market for their customers. In the recent years, the price of SIM card has been dumping down gradually in order to help companies to gain more market share. In contrast the quality of the service has been increased annually. Every company tries to improve its signal and expand its network system as much as possible. Moreover, there are more functions in mobile phone such as download ring tone, logos, Short Message Service (SMS), and voice massages. International callscan be conducted through using phone cardsor the internet service with very cheap rate comparing to common ways of phone calls. The price charge for the internet service is also considerably cheaper as there are more and more ISPsentering into the industry such as LaoTel, LaneXang Internet and many Internet companies, which has official ISP licenses from The MPT (APT Regional Forum for ICT Experts in south-East Asia Jakarta, 4-5 February 2004) (BMI, 2012).
The telecoms industry in Laos is receptive to foreign investment. With the exception of the Enterprise of Telecommunications Lao, the remaining three mobile operators are supported by foreign companies with telecoms knowledge. However, according to BMI’s Risk Reward table, Laos is not as attractive as its regional peers and a significant part of its low score to be attributed to its low country risk score of 40.5.
Laos' long-term political outlook depends heavily on how well the country balances between the need to spur economic growth to achieve its millennium development goals and the need to address corruption in the country. Heavy reliance on foreign aid and development assistance also means that the country's policies will remain susceptible to the political and economic interests of its much more powerful neighbours.
Addressing corruption is expected to remain top of the government's agenda over the coming years. The Lao PDR's decision to devote most of its attention and resources to achieving its Millennium Development Goals (MDGs).
For facilitating the sustainable development and ensure the success of IJVs in the important fields like the telecommunication industry in Laos, it is very essential to have better understanding of the current status of the IJVs’ performance and investigate the determinants of the IJVs’ success or failure.
While focusing on the main objective of investigating the impact of several factors on performance of the IJVs in telecommunication industry in Laos, this study aims to answer the following questions:
1. What is the overall picture of business performance of IJVs in Lao’s telecommunication industry regarding different aspects of performance based on the theoretical framework?
2. What are the key factors influencing the performance of the IJVs in the telecommunication industry in Laos and what are the impacts of these factors on the IJVs’ performance?

In terms of the research scope, the data collected for this study mainly from the three IJVs in the telecommunication industry in Laos. In terms of timing, the collected data mainly cover recent three years (from 2010 to date). The analyses focus on several aspects of IJV’s performance and the factors influencing it. The primary data mainly focus on the perspective from Lao’s partners in the IJVs.


1.2 Theoretical Background
This study employs the theoretical background regarding IJVs performance and factors influencing their performance (e.g., Cao, 2012, Ren et al., 2009, Bener & Glaister, 2010). On the basis of literature review, performance of IJVs has been assessed through some measurement variables, such as: survival, financial output, overall satisfaction, achievement of individual or joint goals, and learning (Dhanaraj & Beamish, 2004; Gaur & Lu, 2007; Lu & Xu, 2006; Meschi & Riccio, 2008; Ren et al., 2009; and Steensma & Lyles, 2000).
In addition, many previous studies have identified that IJVs performance has been influenced by many factors, including internal and external ones. These factors include control of parent firms, trust, autonomy, national culture differences, corporate culture differences (Bener & Glaister, 2010; cf., Ren et al., 2009), commitment, bargaining power, justice, conflict, effectiveness of conflict resolution, cooperation, and goal compatibility (cf., Ren et al., 2009).
1.3 Research Methodology
In this study, both secondary data and primary data were collected to develop the three case studies in order to reflect IJVs’ performance and the factors influencing their performance during the time of the research.
As this study mainly aims to analyze factors influencing FDI companies’ performance in the selected cases, multiple data collection methods were used to increase credibility and validity. In this study, both secondary data and primary data are useful to answer the research questions.
To serve the purpose of case study investigation, both qualitative and quantitative data were collected. For each case study, the author first collected qualitative data, and then collected qualitative data. The main purpose of collecting qualitative data is to explore and discover the relevant concepts and the interested relationships among them in the new context of Laos’ telecommunication industry. Specifically, the concepts of IJV’s performance and its dimensions and the factors influencing IJVs’ performance were explored. The relationships between the factors and the IJVs’ performance were also examined. The survey data were collected to provide empirical findings regarding the current status of the IJVs’ performance in the telecom industry in Laos and empirical evidence on the impact of some factors influencing the IJVs’ performance.
Specific data collection methods used in this study include desk research (for collecting secondary data), observation, interviews (both face-to-face and by telephone), and survey (for collecting primary data).
1.4 Contribution of the Study
Theoretical contribution: As the global proliferation of IJVs continues and the economic health of firms and societies becomes ever more dependent upon the performance of these inter-organizational collaborations, the importance of improving the less than stellar performance rates of IJVs becomes accentuated. It is obvious that better understanding of factors influencing IJVs performance is a means to improve these rates. Therefore. much more research attentionshould be put forth theory on and empirically examined such factors. The past research have rarely addressed the issue in the context of developing countries, especially in Laos. Therefore, the answers for the research questions raised in this dissertation have implications for the advancement of organization theory, strategic management, and enrich international business knowledge.
The findings of this study also help to enrich the knowledge about IJVs by investigating simultaneously the key dimensions of IJV performance. Specifically, all five performance dimensions were examined in the context of the telecommunication industry in Laos, including Survival and Longevity of the IJV, Financial Performance/financial output measures, Overall Satisfaction, IJV’s Goal Achievement, and Learning.
This study also explored the main factors influencing IJV performance and empirically tested the impact of these factors in four regression models. In addition, with the case study method used in this study, multiple data sources were employed. This method was useful and necessary to obtain better understanding of the research issues.
This dissertation also has the potential to benefit executives, managers, their firms, and policymakers. If cooperation is to become part of the strategic repertoire of organizations and not just an operational convenience, then executives, strategists and policymakers must understand the key factors influencing IJV performance in telecommunication industry in Laos. Specifically, by illuminating the host country legal environment, relationships between the local partners and foreign partners, and other factors that could affect IJV performance, this dissertation has the potential to provide insight that may benefit:
For Corporate executives and managers: by providing them with knowledge and insight that would improve their strategic partnering decisions, and in turn the IJV and firm performance. Executives who better understand the dynamic roles played by institutional factors in partner selection, and the impact these factors have on IJV performance, would be better able to take advantage of the various opportunities that exist in the global arena.
For IJVs: By providing knowledge that may serve to enhance their performance. To adapt and perform effectively in a host country, firms must comprehend and appreciate those factors that affect their partner selection decision and venture’s performance. For foreign partners, especially who are multiple national enterprises (MNEs), an understanding of how the host country’s legal environment influences top management’s concerns, its behaviors and IJV performance is central to decisions on entry and expansion. Such an understanding would certainly enable foreign partners to improve their partnering success rate, and in turn to enhance firm performance.
For Policymakers and trade organizations: By providing them with an understanding of international partnering policy makers may enable the construction of appropriate laws and regulations that better serve international inter-firm collaboration. A better understanding of how the host country legal environment affects cross-national partnering activities would assist governmental entities in anticipating the probable impact of alternative policy options available to them. Such anticipation may lead to the establishment of policies that facilitate free and open trade and investment. In particular, such insight may promote the importance of transparency, stability and cooperation which would enable sustainable growth, equitable development and national stability.
For Scholars and researchers: By providing the review of IJVs performance and the main factors influencing them in one of the developing countries like Laos, this dissertation could motivate future similar research in the context of other developing nations, especially in Asian area. If researchers have the reference case study about one of typical nation in Asia, they could build up suitable analysis which help foreign companies make right decisions before investing in this area.
1.5 Organization of the Study
The organization of this dissertation is based upon the objectives that it sets out to serve, and includes five chapters. The first chapter is brief introductory chapter which is followed by Chapter 2 where readers can find the reviews of literature related to IJVs performance and the factors affecting it. Chapter 2 also provides the conceptual framework which is used to explore the impact of several facfors on Laos’ IJV performance in the telecommunication sector. The next chapter (Chapter 3) presents the research methodology which refers to the research approach, research design and specific methods used to collect data and analyze them in order to investigate the three cases, IJVs in Laos telecommunication industry. Chapter 4 reports the main research findings in the context of Laos IJVs in the telecommunication industry. The final chapter (Chapter 5) concludes the dissertation by providing a summary of the findings and a discussion of the research implications, an outline of the study’s limitations, and a roadmap for future research directions.