How Capability Reconfiguration in Coping With External Dynamism Can Shape the Performance of the Vietnamese Enterprises

Huy-Cuong Vo-Thai,Shihmin Lo,My-Linh Tran

doi:10.1177/21582440211032666

Abstract

The purpose of this study is to examine the direct and moderating effects of internal endowment and external dynamism on capability reconfiguration, which in turn has a positive impact on a firm’s post-reconfiguration performance. A researcher-designed survey questionnaire was developed based on multiple works and subsequently administered with a final sample of 266 Vietnamese small and medium enterprises engaged in manufacturing industries. As a result, we find that internal endowment and external dynamism positively impact a firm’s capability reconfiguration and post-reconfiguration performance consequently. This empirical research provides four major contributions that supplement the extant literature. First, the internal endowment sponsored by resource abundance and absorptive capacity enables both a firm’s capability evolution and capability substitution. Second, the external dynamism in terms of market turbulence, technology turbulence, and competitive intensity directly affects the enterprise’s capability reconfiguration and positively moderates the relationship between internal endowment and capability reconfiguration. Third, this study demonstrates that the firm’s engagement on capability reconfiguration once in line with external and internal factors can help maintain its post-reconfiguration performance. Finally, the primary data collected in Vietnam offers a firsthand investigation of the catching-up economy to be compared with the research findings available in developed countries.

Highlights

The lapse of three decades since Doi moi—the socioeconomic reforms toward a market economy initiated in 1986— saw Vietnam grown from one of the lowest income countries to a thriving middle-income economy (Leaders, 2016)
Seven items displayed have lower than 0.4 factor loadings (AC-3: We are effective in transforming existing information into new knowledge, Resource abundance (RA)-2: The company’s financial capital, Market turbulence (MT)-2: Our customers tend to look for a new product all the time, MT-3: We are witnessing demand for our products and service from customers who never bought them before, Technology turbulence (TT)-4: A large number of new product ideas have been made possible through technological breakthroughs in our industry, and Capability evolution (CE)-1: Our firm’s reconfiguration built heavily on prior technology), which were not considered for further analysis to ensure the quality of the measures (Costello & Osborne, 2005)
Our study intends to fill this gap by bringing in dynamic capabilities and capability reconfiguration perspectives, designing a reliable and validated 32-item questionnaire, and conducting a two-step survey and statistical analyses from a final sample of 266 Vietnamese firms’ executives

Summary

Introduction

The lapse of three decades since Doi moi—the socioeconomic reforms toward a market economy initiated in 1986— saw Vietnam grown from one of the lowest income countries to a thriving middle-income economy (Leaders, 2016). The research makes four critical contributions to the perspectives of dynamic capabilities and capability reconfiguration: First, this study provides an unobstructed view that the enterprise’s internal endowments of resource abundance (RA) and absorptive capacity (AC) enable both CE and substitution; second, this engagement provides an opportunity to empirically test and show that external dynamism driven by market turbulence (MT), technology turbulence (TT), and competitive intensity (CI) positively impacts the enterprise’s capability reconfiguration directly and moderates the relationship of internal endowments and capability reconfiguration, which is rarely examined in extant related empirical research; third, this research empirically establishes that the firm’s engagement on capability reconfiguration in line with external and internal factors can help maintain successful PP; and fourth, all data analyzed from researcher-designed and validated survey questionnaires were primarily collected in Vietnam, which offer a firsthand investigation on the catching-up economy and compared the research findings available from developed countries. We conclude with a discussion of results, potential contributions, and future directions

Literature and Hypotheses

Results

Findings

Limitation and Future Research