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OPEN OPEN UNIVERSITY MALAYSIA HUTECH OUM MASTER OF BUSINESS ADMINISTRATION ASSIGNMENT – BMBR5103

A. CHAPTER I INTRODUCTION

This chapter explains: (1) research background (2) Problem statement (3) Research Objectives and the

Scope of the Research.

1.1 Research background.

After the Foreign Investment Law has been promulgated in Vietnam, Taiwan was one of the earliest

foreign investors in Vietnam. Since Vietnam and Taiwan signed four agreements: Protection Taiwan investors in

Vietnam, Prevention of double taxation, Agriculture and Fishing cooperation, Research development and labor

in 1993, Taiwan’s FDI in Vietnam has impressive increased.

According to annual report 2011 of the Ministry of Planning and Investment, Taiwan invested

the largest capital, occupying about 25% of foreign investments in Vietnam:

No Country No. of projectsTotal registered

capital (USD)

Charter capital

(USD)

1 Taiwan 2,180 23,164,997,783 9,857,400,908

2 Singapore 918 22,918,990,637 6,582,042,849

3 Korea 2,771 22,808,101,241 7,943,378,957

4 Japan 1,532 21,273,910,957 6,052,381,623

5 Malaysia 382 18,785,400,902 3,996,783,540

6British Virgin

Islands 494 14,797,956,400 4,656,241,700

7 USA 577 13,246,728,812 3,201,928,056

8 Hong Kong 634 8,444,334,699 2,983,878,592

9 Cayman Islands 52 7,432,182,851 1,474,385,118

10 Thailand 245 5,875,608,378 2,542,145,906

Table 1.1: Vietnam’s FDI investors (Source: Vietnam's FDI figures, June 23, 2011)

1.2 Problem statement.

According to Buller, Kohls, & Anderson, 1991, p.767, in the situation of increasing number of

multinational organizations, companies are becoming more interdependent and must learn to work cooperatively

for their mutual benefits.

When foreign invested companies operate their business in Vietnam, they are facing with many

difficulties. It should be the difference in social structure, religion, language, education system, political issues.

To Taiwanese companies, there are a lot of cross culture management issues come out which they need to know

how overcome to achieve the top position among the foreign investors in Vietnam so far.

Recently, through out the public media, a lot strikes have reported in foreign invested companies,

especially in industrial zones where many textile, garment and footwear enterprises located. The main reasons

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are the violations of labor salary, bonuses, social insurance between employers and employees. The root reason

is management style of Taiwanese owners.

How to handle such issues and manage the business efficiently have been important topics to be analysis

and discussed not only for Taiwanese academic business professors and also for Vietnamese authority.

Enterprises owners almost understand that they don’t know the local management situation well. Therefore, who

is the bridge to connect the two sides: the foreign owners and local employees?

Most of Taiwanese companies invested in Vietnam, they are using the middle managers who are

Vietnamese in their organization to minimize misunderstanding. Besides that, employees are usually paid higher

salary than other foreign invested companies, particularly in garment, food processing, footwear fields.

Lastly, the cultural factor is also impact on business model of Taiwanese investors. The different cultural

between Viet ethnic and Chinese ethnic are the gaps must be filled.

1.3 Research Objectives and the Scope of the Research

1.3.1 Research Objectives.

The reason led to research is aimed to high light the appropriate management styles of Taiwanese

companies which achieve successful business in Vietnam so far. It is very important to evaluate which

management style is appropriate when doing business in cross culture environment.

Besides more employments for Vietnamese employees created, Taiwanese invested companies also

generate conflict between Taiwanese employers and Vietnamese employees. The main reasons are the lack of

professional knowledge, skill, and attitudes of the local workers. Most of local workers come from the country

side of Vietnam with a low education, and not ready to live in major city like Ho Chi Minh City. Although

Vietnam and Taiwan are the ASEAN countries, there are many differences regarding culture, custom habits

which cause to misunderstand.

To overcome these barriers, Taiwanese invested companies found the solution: they train local

employees with management skills and assign them as middle managers in the company. By this way, the

middle managers play important role the business operation. They are the local person, so that they understand

what local employees want exactly. With the management skills, they can understand what the meaning of the

message from the owners. They take a role like a bridge to connect two opposite sides or fill the gaps. With out

middle managers, it could not be said that all the businesses were effective completely.

To understand how successful Taiwanese invested companies in Vietnam, it is necessary to undertake a

research on the current management styles at these companies.

Regarding to effectiveness of performance of management styles, there are different approaches have to

be applied. According to Quang, T. & Vuong, N. T. (2002). Management Styles and Organizational

Effectiveness in Vietnam, Research and Practice in Human Resource Management, 10(2), 36-55, middle

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managers are chose as the subject of their study on the management styles and organizational effectiveness in

Vietnam.

Steve McKenna, (1998) "Cross-cultural attitudes towards leadership dimensions", Leadership &

Organization Development Journal, Vol. 19 Iss: 2, pp.106 – 112, said that a manager should know how the

followers think about the management board. There are many problems with this overly simplistic approach, one

of which is the transferability of the definitions of competencies across cultures. In this paper, 138 middle

managers were studied from a North American telecommunications corporation. They were asked to comment

on the various dimensions of the overall competence “leadership”, as it was defined by the corporation’s human

resource development group. It was found that there was little broad cross-cultural agreement on these

dimensions among the managers surveyed which points to the difficulty, and indeed, validity, of attempts to

develop generic, global management competencies.

When selecting the most appropriate management style for doing business effectively in Vietnam,

Taiwanese invested companies need to get the feedback form local employers on current management style.

Middle managers who are local people can reflect reliable information to the upper managers. Based on the

information, the upper manager and the owner can make proper decisions to achieve the company mission and

vision.

1.3.2 The Scope of the Research.

In accordance with the Ministry of Planning and Investment (MPI), most Taiwanese invested companies

in Vietnam are small and medium sized company. There are about 2000 projects in Vietnam in which more than

85% located in the South of Vietnam. Ho Chi Minh City is dynamic and modern city. The city authority has red

carpet policies to invite foreign investors. The surround cities like Dong Nai, Binh Duong having good

infrastructures for transportation. The goods can be produced there and transport to every where in nation wide

and to international port for export as well. With the advantages, major Taiwanese invested companies are

located on these cities. Thus, the number of local employers and the local middle managers are large enough.

And this population with its information, figures can reflect whole picture about the successful Taiwanese

management in doing business in Vietnam.

The sample size formula below is used to make sure the selected population is properly and reliable.

SS=

Where:

Z = Z value (e.g. 1.96 for 95% confidence level)

p = percentage picking a choice, expressed as decimal

(.5 used for sample size needed)

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c = confidence interval, expressed as decimal

(e.g., .04 = ±4)

There are some studies on Taiwanese management style in Vietnam before. However, they mostly focus

on Taiwanese owners who be known as rich investors. Other researches studied on violent Vietnamese law to

local employers when Taiwanese running their business. E.g. sexual harassment with female employees,

militaristic disciplines such as fine and money deduction or unbelievable working conditions: workers allow go

to toilet 3 times in a working shift.

There is not any study on the contribution of Vietnamese middle managers who contribute their part in

success business of Taiwanese invested companies in Vietnam.

Therefore, the purposes of the study are:

To acknowledge the contribution of Vietnamese middle managers towards the current Taiwanese management style at Taiwanese-invested companies.

Suggestions for improvement of the management style based on the exploration.

The research objectives of this study are:

The Vietnamese middle manager comments on the supervision dimension of Taiwanese management style.

Vietnamese middle manager comments on the decision making dimension of Taiwanese management style.

To find out relationship between demographic factors and satisfaction of Vietnamese middle managers towards the four dimensions.

The current Taiwanese management style and suggestions to improve.

The research questions of this study were:

How do Vietnamese middle managers comments on the supervision dimension of Taiwanese management style?

What are Vietnamese middle manager comments on the decision making dimension of Taiwanese management style?

Is there any relationship between demographic factors and satisfaction of Vietnamese middle managers towards the four dimensions?

What are suggestions for improvement of Taiwanese management style?

1.3.3 Definition of terms.

There are several terms defined in this section: Taiwanese-invested companies, management style, cross-

culture management, middle management.

(1) Taiwanese-invested companies

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According to the Vietnam Investment Law issued 2007, the term of foreign invested companies are

defined in two cases:

Enterprises with 100% foreign capital, or

Vietnamese enterprises are stock held, franchised by foreign investors

Thus, Taiwanese invested companies in this research are the companies have 100% Taiwanese invested

capital or other cooperation with Taiwanese.

(2) Management style

Management styles are characteristic ways of making decisions and relating to subordinates.

Management styles can be categorized into two main contrasting styles, autocratic and permissive. Management

styles are also divided in the main categories of autocratic, paternalistic, and democratic. (Robert Tannenbaum

and Warren H. Schmidt (1958, 1973)).

(3) Cross-cultural management

Cross-culture management techniques help managers contend with the challenges and opportunities of

managing employees in a culturally diverse organizational environment. Increasing globalization has created

more awareness of the need for managers to be sensitive to the cultural aspects of decision-making. (By Corr S.

Pondent, eHow Contributor , last updated September 02, 2011)

(4) Middle manager

Middle management is the intermediate management of a hierarchical organization, being subordinate to

the senior management but above the lowest levels of operational staff. Operational supervisors may be

considered middle management or may be categorized as non-management staff, depending upon the policy of

the particular organization.

Middle management may be reduced in organizations as a result of reorganization. Such changes include

downsizing, outsourcing. The changes may be made in order to reduce costs, as middle management is

commonly paid more than junior staff, or the changes may be made to make the organization flatter —

empowering the employees and making the organization more innovative and flexible. (Peter Aucoin (1989),

Middle Managers, Institute of Public Administration of Canada, p. 191)

B. Chapter 2 LITERATURE REVEIW

This part review published research related to the management style and how it impact to operating

business.

2.1 Definition and classification of management style

According to Steve Martin, Author of Instant Profits: Making Your Business Pay, a management style

most often describes the way a manager tends to made decisions. In the quest to put labels on people, researchers

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and management theorists have created a spectrum of management style types. There are several named styles,

but here are the four most classic types:

- The authoritarian (or autocratic) style is all power focusing the manager, and all interactions within the

group move towards the manager. The manager alone exercises decision making and authority for determining

policy, procedures for achieving goals, work tasks and relationships, control of rewards or punishments.-

Paternalistic: autocratic but sometimes considers others in decisions.

- The democratic style is where the focus of power is more with the group as a whole and there is greater

interaction within the group. The leadership functions are shared with members of the groups and the manager is

more part of a team. The group members have greater say in decision making, determination of policy,

implementation of systems and procedures.

- A laissez fair (genuine) style is where the manager observes that members of the group are working

well on their own. The manager consciously makes a decision to pass focus of power to members, to allow them

freedom of action “to do as they think best”, and not to interfere: but is readily available if help is needed. There

is often confusion over this style of leadership behavior. The word “genuine” is emphasized because this is to be

contrasted with the manager who could not care, who deliberately keeps away from the trouble spots and does

not want to get involved. The manager just lets members of the groups get on with the work in hand. Members

are left to face decisions which rightly belong with the manager. This is more a non style of leadership it could

perhaps be labeled as abdication

Figure 2.1 Management style (Jones, G. R., George, J.M., & Hill, C. W.(2000).Contemporary

management.

The advantage of contemplating one's own management style is for both personal improvement and

development.

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While most managers have one dominant style, it is actually likely that professional managers will

employ multiple styles in various circumstances as they impact the ultimate management obligation of ensuring

organizational success.

The Principles of Scientific Management is a monograph published by Frederick Winslow Taylor in

1911 described what the best system of management in then current use, the system of "initiative and incentive."

In this system, management gives incentives for better work, and workers give their best effort. The form of

payment is practically the whole system, in contrast to scientific management. Taylor's scientific management

consisted of four principles:

First, they develop a science for each element of a man's work, which replaces the old rule-of-thumb method.

Second, they scientifically select and then train, teach, and develop the workman, whereas in the past he chose his own work and trained himself as best he could.

Third, they heartily cooperate with the men so as to insure all of the work being done in accordance with the principles of the science which has been developed.

Fourth, there is an almost equal division of the work and the responsibility between the management and the workmen. The management takes over all work for which they are better fitted than the workmen, while in the past almost all of the work and the greater part of the responsibility were thrown upon the men.

Another concept is how management style calculated. Culpan and Kucukemiroglu (1993) developed

management style in six dimensions:

Figure 2.2 Six dimensions in management style (Source: A Comparison of U.S. & Japanese

Management Styles and Unit Effectiveness. Management International Review 33(1), 27-42).

Moreover, there are many other different definitions and classifications of management styles. Most of

them are similar meaning with above ones. For example, organizational development was mentioned by

Grzeskowiak (2005), human interaction and relationships were mentioned by Grzeskowiak (2005), Khandwalla

(1995).

2.2 Characteristics of certain management styles.

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In some situations, the employees or followers tend to set their target lower than the managers

expectation because of failure scare and facing with poor performance in the eyes of their managers (Roslund,

1989).

In some cases, subordinates often want to set low targets because of the fear of failure and they are not

often encouraged to enhance targets (Roslund, 1989). There is a connection between this style and the style of

management by exception where delegation plays as a main role (Rohlander, 1998; Brown, 1998).

To avoid this tendency, Nelson (1994) believed that employees get more responsibility when they are

assigned to involve in decision making

Motivation skill is also important art in management. To normal task, managers can set target to

employees and give them the rights to decide how they can achieve. The managers take role as supervisor and

support them when necessary (Burns, 1968).

Communication in an organization is very important. Lack of information will lead to poor business

performance. In an organization, the management must to set up a communication process to make sure they get

information any time for monitoring or making decision. The lack of information in communication is described

as Parsley (2006):

Managers do not see communication as part of their day job.

Managers have not developed their communication skills.

Communication channels are absent, inappropriate, or over-subscribed.

Communication around corporate citizenship is disjointed.

Currently, most managers make decisions with relevant information. Communication systems help

managers to increase efficiency operation. As a result, the productivity rises (Gregory, 2005).

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Figure 2.3: The communication process and possible source of “noise”

Understanding the characteristics of certain management styles will help to understand the dimensions

of management style. And the relationship and attitude of the employees towards managers can be exposed.

2.3 Cross-culture management issues involving management styles.

Cross cultural management mainly focuses on the behavior of people from different culture working

together as a group or an organization (Adler, 1983). Most of cross-cultural management study aims at dealing

with the issue of organizational behavior, such as leadership style, motivational approaches, strategy,

organizational structure (Morden, 1995; Elenkov, 1998).

As to the cultural concept, culture is a complex issue in some fields such as sociology, anthropology and

now become a hot topic in management. Several contributions are voted in this area by some authors, such as

Hofstede (1997), Hall (1976, refered by Richardson and Smith, 2007), Golbe (2004). It is no exaggeration to say

that Hofstede’s dimensions of national culture theory are a dominant theory. Although a lot of people oppugn

Hofstede’s theory and his data are out of time (Holden, 2002, p20), however, the data of dimensions of national

culture is not an absolute value but relative values. At least, Hofstede’s dimensions of national culture theory

still are a famous and popular theory, which is engaged by a large number of researches. Project GLOBE is a

recent study, in which culture is linked to behavior in organization (Shore and Cross, 2005). Globe proposals

nine cultural dimensions, some of these are similar to Hofstede’s Dimensions of National Culture (Shore and

Cross, 2005). However, Globe’s theory is still a new theory without sufficient test; therefore it will not be

considered in this study. Hall’s high context-communication and low context communication can perfectly serve

for the cross-cultural communication study and conflict-resolution studies (Kim, Pan and Park, 1998).

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Because of the globalization and the rapid development of economics, multinational firms are more and

more prevalent. Intercultural communication presents a new challenge to managers. Culture, as Hofstede (1997,

p. 4) states, is the “software of mind” that can influence people’s patterns of thinking and behaving.

Several researchers have contributed their studies in cross-cultural communication area (Mary, 1993;

Bennett 1998; Yum, 1988; Ybema & Byun, 2009). In “Cross-cultural communication for managers”, Mary

(1993) applies a multiple insights to managerial communications. In order to make communication effectively,

Mary (1993) recommends managers to think about seven issues before communication. This study is designed

only in a managerial context. In Bennett (1998)’s “Intercultural Communication: A Current Perspective”, he

answers the question “How do people understand one another when they do not share a common cultural

experience?” The question is answered from several aspects such as levels of culture, intercultural

communication processes and cultural adaptation (Bennett, 1998). However, the focus of this study is too wide,

which does not stand on a managerial context but on a social context. In addition, Yum (1988, p 78) researches

“the impact of Confucianism on interpersonal relationships and communication patterns in East Asia”. He argues

that the discussions of most communicational studies stay on the surface of the problem and do not go deeply to

explore the source of problem. Thus, in his study, Yum (1988, p 78) “goes beyond these limitations and explores

the philosophical roots of the communication patterns in East Asian countries”. But the focus of his study is on

social contexts. Also, Yum (1988) only discusses the impact of Confucianism. Confucianism can in parts be

regarded as a culture, but not in its entirety. In addition, Ybema & Byun (2009) “explore issues of culture and

identity In Japanese-Dutch relations in two different contexts: Japanese firms in the Netherlands and Dutch firms

in Japan”. From three aspects: communication, the superior-subordinate relationship and decision making, they

illustrate that in different organizational environment, cultural difference influence people’s identity take. On

certain extent, Ybema & Byun’s (2009) study is similar with this study, for instance, engaging a comparison

between the people from different culture. However, their study pays more attention to power and identity talks

while other culture dimensions such as individualism, masculine, and Confucianism or long-term orientation

(Hofstede, 1980) have not discussed in the study. Thus it is interesting to look into different culture dimensions’

influence on the communication in multinational firms. By contrasting the differences of management style, staff

behaviors and communication system between different cultures the barriers of cross cultural communication in

multi-nation firms will be found.

To improve the cross-cultural management issues, it is necessary not only changes from the current

management style by senior managers but the participant of employees too. The employees need to be trained

with content related to specific cross-culture issues represented in the organization in order to minimize the

effect of local habits, values, and mores on company operations and individual career development (Masterson

& Murphy, 1986) as well as to minimize cross-cultural misunderstandings and conflict (Shuter, 1985).

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McKenna (1998), in the study on the competencies across cultures of management behavior, middle

managers from different cultural and institutional contexts were required to comment on the various dimensions

of the overall competence "leadership"; then, to identify the key behaviors of these dimensions; and finally, to

suggest ways to improve their leadership potential. Some points were worthy of attention in the findings:

1. To the evaluation of performance dimension: Managers should establish standards to evaluate performance, and the managers can make decision without discussion. This dimension was argued important to the evaluation of performance which based on communication and discussion in the organization. Managers were suggested to discuss the performance of subordinates as possible as he can in order to improve it.

2. To the coaching dimension: Coaching was regarded involving interdependence and mutually supporting working relationships that allow employees greater control over their work by Western managers while, was regarded more similar to paternalism and essentially a dependent relationship by the Asian managers. It seems that Chinese people prefer “a style in which the leader maintains a harmonious, considerate relationship and defines clear cut tasks for each member of the group”.

3. To the delegation dimension: Japanese mostly let the decision-making authority was delegated via employee relations system, quality control circles and other forms of employee involvement. In contrast, Asian managers thought that taking decision-making responsibilities was the managers job and it would be "too risky" if such authority were delegated. On the other hand, Chinese leaders tend to adopt an authoritarian pattern of leadership, making all the important decisions and assigning tasks to subordinates. In certain parts of Asia, using “power” seems more popular than delegation.

4. To the developing organizational talent dimension: British and Americans managers considered developing others as fully as they can was part of a leader’s job. Asian managers considered concentrated on establishing systems and structures to organize and support people working. In addition, some British and American have focused on measuring responsibility in the development of others. It also argued that leaders should encourage others to develop their ability but not being so closely involved with the development.

5. To the developing performance goals dimension: Asian managers, establishing performance goals was regarded as their duty while the Western managers want to leave that task for the employees for the own decision-making.

Nowadays, globalization is tendency in every country. Besides of the advantages of this tendency, there

are some disadvantages occurred. Thus the managerial behavior in cross culture is very important. The

appropriate leadership style in certain situation is the key factor led to successful business. In each country, the

ways of leader ship carry out are different. For example, the way uses in Europe country successfully might not

use in Asia country effectively. Moreover, other terms in management theory such as performance appraisal,

decision making method, coaching are also key elements involving cross cultural management issues.

2.4 Taiwanese management style and its situation in Vietnam.

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Previously, there are many studies on Taiwanese management style in general, but there are few studies

on Taiwanese management style in Vietnam.

As has already been stated, managers tend towards the authoritarian, giving instructions to subordinates

which they expect to be obeyed. It would be unusual for an employee to openly question the decision of the

manager. However, there may have been a great deal of behind the scenes consensus building undertaken prior

to an instruction being given. The manager expects to be consulted prior to any actions being taken and,

therefore, little initiative is expected or shown lower down the chain. Decisions taken during a meeting, at which

the senior manager is not present, should be viewed with some suspicion. The manager expects to be shown the

respect due to his (rarely her) position and this will mean that, from a Western perspective, an undue amount of

deference may be shown. Respect is given for position held, but age is also worthy of respect. It is difficult,

therefore, for older Taiwanese to accept being managed by younger expatriate managers. Equally, a younger

western manager on a trade mission is likely to be less well received than a visibly older colleague.

According to Chan and Wang (2003), Taiwanese investors often employed with a disciplinarian style,

harsh working conditions. Taiwanese managers were regarded to be very harsh in their treatment of their

subordinates (Curtis & Lu, 2004). The research by Curtin University in conjunction with the Eastern Consulting

Group (Singapore) pointed out that Taiwanese managers were criticized for not passing on management

information to lower staff, viewed as being extremely hierarchical, felt to generally have a great deal of

autocratic power. The research also mentioned that the Taiwanese management style was sometime viewed as

participatory, requiring teamwork and the ability to accept responsibility.

Hempel and Chang (2002) conducted in-depth interviews with 20 Taiwanese managers to examine the

reconciliation of traditional Chinese management with High-tech Taiwan. The interview outcomes showed

some of the perception of management styles in Taiwan. For example, some managers thought that Taiwanese

culture is changing; therefore, it was becoming more difficult to maintain the authoritarianism/paternalism

management style (the one has been regarded as the Chinese traditional management style). Another idea was

that certain managers do not want to be democratic, but not too autocratic.

Chang, Mellahi and Wilkinson (2005) pointed out some of Taiwanese management characteristics as

presented in Table 2-1 below:

Table 2-1 Taiwanese characteristics described by Chang, Mellahi and Wilkinson

Items Characteristics

Recruitment • ‘Recruitment agencies ‘and ‘executive search consultants’ are less

commonly used for managerial and professional vacancies

• ‘Panel interview’, ‘aptitude tests’, ‘competency-based interviews’

and ‘application forms’ are less commonly used for all levels

Training • Low in conducting training needs systematically

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Pay and benefits • High in egalitarianism and Low in pay differentials between those at

Performance Appraisal • Less likely used.

• Reluctant to provide feedback.

• Emphasis on group performance.Management appointment

Criteria

• Soft criteria such as ‘emphasis on generating participation and

involvement’, ‘a cooperative group action’, ‘loyalty’Flexible working • Part-time work is less commonly used

Organizational • Open-communication methods is less commonly used

Participatory management

and Industrial relations

• Quality circles is commonly used

• Less likely to exercise collective bargaining

(Source: Chang, Mellahi and Wilkinson, 2005. Transferring HMR strategies and practices across borders. An

empirical study of Taiwanese MNEs in UK)

Almost of Taiwanese-invested companies in Vietnam are small and medium-sized enterprises (Cao Son,

2006; Tran, 2004). Nearly 90 percent of them located in southern Vietnam in which Ho Chi Minh city, Dong Nai

and Binh Duong are the three provinces where attracted lots of Taiwanese investors (see appendix F). Business

areas in which the Taiwanese investors mainly operate are largely various, in both production and service

sectors, such as: food processing, text-tile, footwear, handicraft, stationery, building material, steel-iron,

motorbike and automobile parts, mechanical products, electronics products, wood-made products, banking, etc.

Taiwanese invested companies locate in the Export Processing Zones (EPZs) or Industrial Parks (IPs).

The factor attracts Taiwanese investors is low cost of Vietnamese labor force (EPZA, 2005). For

example, in textile industry, the average wave for blue collar workers in Vietnam was 0.18 USD per hour,

compared with Indonesia 0.23, China 0.34, Hong Kong 3.39, Taiwan 5.0 (Tran, 2004). Low labor cost is a factor

to decrease product cost to compete.

However, in such countries which employees have paid with low wave, worked in bad working

conditions, strikes occurred to opposite the Taiwanese owners. In Vietnam, after Tet holidays, thousands of

workers not come back to work. This headache matter make human resource department be put in alert.

Recruitment new employees, training for new employees are the reasons to increase operation cost as well as

production postponed. In addition, many of the strikes have occurred concerned communication problems with

Taiwanese managers (Glantz & Nguyen, 2006; Ascoly & Zeldenrust, 2003).

In addition, the way Taiwanese managers manage the business organization and behave to Vietnamese

employees also have problems. ''We're always on guard at work," and '' The officials yell and swear at us and

mistreat workers “one of the worker criticized her bosses. There was a widespread belief that the Taiwanese are

the most abusive managers (Chan & Wang, 2004-2005). It seems that using physical punishments was one of the

ways that some of Taiwanese managers had used in oversea assignments such as Mainland China (Chan &

Wang, 2003).

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Working regulations at some Taiwanese-invested companies also have problems. Although all the

decisions made and regulations set up aiming not only to remain but raise productivity of performance, however,

some of them were regarded severe and illogical to Vietnamese workers. One of the examples was “Time for

Toilet” in which unless the workers follow the regulation “only go the toilet three times during working” or

“have to get a permission card for going toilet” at some manufacturing companies (Wang, 2002; Vinh Tung &

Hong Hiep, 2005).

One of strategies of Taiwanese invested companies is using local management. In Vietnam, there are

many so called middle managers who are Chinese Vietnamese. The main reason to explain is they can use both

Vietnamese language and Mandarin language fluently. It is easy for such middle managers can understand the

message from the top and also from the bottom (Wang & Hsiao, 2002).

“Establishing good relations between employees and employers is vital to help businesses minimize

unnecessary labor disputes and thus create better conditions for their development." a Vietnamese official said.

As the case of Pouchen in Bien Hoa province, Vietnam, to decrease the number of strikes and improve the

relationship between employers and employees, the management holds the training course for employees about

living skills, situation handling skills. When the disputes between two sides occur, the employees know how to

use rules to protect themselves and how to express the ideas to avoid unexpected strikes (Vietnam Economic

News, Feb 2009).

2.5 Summary of the chapter.

Although there are many studies on Taiwanese business and management styles, most of them

concentrated in general, not focus on Vietnam situation. Taiwanese invested companies always rank in top 3 in

more than a decade. Many different dimensions of management style apply in Vietnam and how it becomes

effectively. How does important role of Vietnamese managers in Taiwanese organizations? We also found that

cross culture issues related management styles nowadays.

Managerial issues the Taiwanese-invested companies faced in Vietnam mentioned in previous studies

only related to a few managerial behaviors and policies of the management style such as ways of supervising,

salary and bonus, punishments regulation, etc., There were many other different managerial behaviors and

policies involved management style were not mentioned and studied employed to Taiwanese senior managers

and Taiwanese-invested companies in Vietnam. Thus, this research was undertaken to fill that lack.

C. Chapter 3 PROPOSED RESEARCH METHODOLOGY

This chapter includes two parts: (1)Research Methodology and (2)Data Collection/ Requirement

Gathering Methods

3.1 Research Methodology.

3.1.1 Research process

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All the steps of the study was presented in Figure 3-1 below:

Figure 3.1 Research process flow

3.1.2 Research methods.

In this research, the survey methodology is the combination of the two communication approaches:

In-depth interview with primary data of attitudes and expectation (Wu (2003)).

Mail survey with primary data of opinions and suggestions. Secondary data were gathered from previous

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and relevant studies, articles, journals, reports, papers and websites. Subjects of the research were Vietnamese middle managers whose duties related to the managerial tasks in Taiwanese-invested

companies in southern Vietnam. (Chang, Mellahi and Wilkinson (2005) in their study of Taiwanese Multi-national enterprises in United Kingdom).

a/ In-depth interview

Conducting in-depth interviews are aimed to explore the perceptions of Vietnamese managers

throughout their comments on the four dimensions of the Taiwanese management style. After getting permission

from Taiwanese owners, a short list of ten Vietnamese managers is selected. The participants are invited to join

the interviews. In the interview, the interviewer introduced the purposes of the research, informed the allowance

to take the interview from their Taiwanese boss or senior managers, and said thank you for the participating by

the interviewee. Then the interviewees were asked to talk as in detail as possible about:

The ways their Taiwanese senior managers manage works and treat Vietnamese subordinates.

The comments on the advantages and disadvantages of Taiwanese managers behavior. To the disadvantage issues, the suggestion of overcoming is welcomed.

Some interview techniques are used as closed questions and open questions. Data collected in the in-

depth interviews were recorded by tape and hand-writing.

b/ Mail survey.

The second method is mail survey. An official email with the introduction about the important purpose

of research sent to General Manager of the Taiwanese invested companies. In the body of email, the sender asks

for permission and approval from them to make a mail survey. With the highest position in the companies, the

General Manager will assign who will conduct the email survey. A questionnaire regarding the issues of the

management styles, the treatment of employers to employees, the communication among them, the advantages

and disadvantages of current management situation and suggestions from interviewees. In the questionnaires,

there is also a bank part which the interviewees can write whatever they want.

3.2 Question Design.

According to Culpan and Kucukemiroglu (1993), the management style usually displays in 4

dimensions below: Supervision style, Decision making, Communication pattern, Paternalistic orientation.

Therefore, questionnaires in in-depth interview and mail survey also design to reflect in the four dimensions.

16


Figure 3.2 Research frame work

3.2.1 In-depth interview question design.

The design of questions in in-depth interview is find out what the real situation between Taiwanese

employer and local employee. Thus, as per above definition of management dimensions, there are four sub

topics regarding to the four dimensions of the management style: Supervision style, Decision-making,

Communication, and Paternalistic orientation.

After each part, the interviewees were asked for the strong and the weak of the management styles. Their

suggestions to improve the situation are also appreciated.

3.2.2 Mail survey question design.

The self-administered questionnaire type is used in the mail survey. It was designed with three

parts as below:

No Name Purpose

Part 1 Administrative and Classification questions. To gather general data from the

respondents and companies

Part 2 Target questions. To determine the satisfaction

towards the four dimensions of the

current management style

Part3 Open questions Gathering any ideas and

suggestions contributed to the

improvement of the current

management style and others

comments on the advantages and

disadvantages of the characteristics

of the current management style.

Table 3.1 The self-administered questionnaire type

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Part 1: Administrative and Classification questions.

These multiple choice questions are designed:

Q1: The business scope of the company.

Q2: The type of the company or form of investment.

Q3: The volume of labor of the company.

Q4: The time of business operation of the company.

Q5: The position title of respondent.

Q6: The age, gender, ethnic of the respondent.

Q7: The time the respondent works for the company.

Q8: The number of employees under directly the respondent’s supervision.

Part 2: Target questions.

This part determines the satisfaction regarding the four dimensions of current management styles. To

evaluate the satisfaction level, the 5-point Likert scale ranging is used as below:

Strongly

agree

Tend to

agree

Neither

agreenor

disagree

Tend to

disagree

Strongly

disagree

Perception of Vietnamese employees towards Taiwanese owners

[ ] [ ] [ ] [ ] [ ]

Table 3.2 Likert 5 point scale

(Source: Likert, R. (1932). A Technique for the Measurement of Attitudes, Archives of Psychology, No.140).

All the items in questionnaires are developed with references as table below:

Table 3.3 Items in the questionnaire with references

Items Reference

Delegating responsibilities and activities Nelson (1994), Rohlander (1998)

Executing motivation seeking quality IME (1996), Hickey & Lotto (1998)

Setting rewards-punishment regulations Koch (1998), Chan & Wang (2003)

Encouraging individuals compete each other IME (1996), McKenna (1998)

Supervising by walking around the company Schramm (2005), Adams et al., (n.d.)

Making decision through feeling than reason Bruce (1998), Chen (2002)

Emphasis on results rather than on process Burns (1968), Blanchard (1987)

Questionnaire has four groups of questions:

Group number Purposed to explore

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Group 1 (Q1-5) Perception towards supervision style dimension with five elements:

- Delegation.

- Motivation.

- Rewards-punishment.

- Supervision.

Group 2 (Q6-12) Perception towards decision making with seven elements:

- Approach of making decision

- Emphasis on results vs. processes.

- Intension of improvement.

- Management standards.

- Scheduling.

- Setting objective.

- Innovation.

Group 3 (Q13-17) Perception towards communication system with five elements:

- Sharing information.

- Training.

- Adjustment to changes.

- Communication means and information technology application.

Group 3 (Q18-20) Perception towards paternalistic orientation with three elements:

- Staff development.

- Human relations.

- Gender equality.

Table 3.4 Four groups of questions in a Questionnaire

Part 3: Open questions

This part is focused on collection of ideals and suggestions of interviewees to improve the current

management situation. Other comments are also appreciated.

3.3 Sampling design

There are two types of sampling approach: in-depth interview and mail survey.

3.3.1 Stages to be followed for the selection of a sample.

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Figure 3.3: Stages in Selection of a Sample

Source: Based on Zikmund (2000)

Target population defined was Vietnamese managers in middle level who duties involved in managerial

tasks at Taiwanese-invested companies in southern Vietnam. As mentioned in the literature review of this

research, nearly 90 percent of about 3,500 Taiwanese companies located in southern Vietnam. Suppose that there

was one Vietnamese manager working at each of the companies in southern Vietnam, there was a group of at

least 3,000 Vietnamese middle managers made the target population of the research.

According to Hair, J., Babin, B., Money, A. H., Samouel, P. (2003), a formula used to calculate

sample size in order to meet the specified precision and confidence goals:

Sample size = [(degree of confidence required X variability)/(desired precision)]2

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In the study, the satisfaction was measured with a 1 to 5 rating scale and the range 4 (5-1 = 4). The

estimated standard deviation (variability) of the rating scale was 1 (4/4 = 1) with the assumption that the

distribution of the responses to the four dimensions was normal.

Hence, a confidence interval of plus or minus 2 standard errors (95 percent) was used. Also suppose that

the precision is specified as 1/3 of a unit on the rating scale. So we have:

Sample size = [(2 X 1.0)/(0.33)]2 = 36.7

The result 36.7 was the minimum sample size the study should obtain. In fact, the responses were 52.

Therefore, the sample met the specified precision and confidence goals.

3.4 Data collection.

As above mentions, all in-depth interviews are recorded by writing or tape. All documentaries are

primary data. There is data processing desk which process all the primary data. To mail survey, a temporary mail

box is set up to help the interviewees send back their answer easily and confidently.

After finish the survey, there are 52 answered-questionnaires return in total 300 questionnaires sent out.

The response rate is 18% lower than expected. The reason for low response rate may be the interviewees,

Vietnamese managers, were busy with their daily functions in the companies. Other reason is the General

Managers who are the first contact in the study did not allow their subordinate to answer the survey. They don’t

want some confidential information leak out. Several studies on Vietnamese people issues have also low

feedback rate and accepted by research analyses.

The internal validity and reliability of the data collected and the response rate that you achieved highly

depend on the design of the questions, the structure of the questionnaire and the rigour of one's pilot testing; A

valid questionnaire will enable accurate data to be collected and one that is reliable will ensure that data are

collected consistently.

To design questionnaire perfectly, one board of experts who are specialized in business management,

human resource, and cultural issues research invited to review and advice. Some revisions made after getting

valuable contributions. On the other hand, validity of the survey instrument was identified by taking the

squared root of reliability coefficient as it is proved that the maximum validity coefficient (validity index)

equals the squared root of reliability coefficient.

To measure internal consistency, Cronbach's alpha method is used. The formula for the standardized

Cronbach's alpha:

21


In which: N is equal to the number of items. c-bar is the average inter-item covariance among the items. v-bar equals the average variance.

The value Cronbach’s alpha higher than 0.8 was considered “acceptable” in most social science

application. The value of 0.7 was considered generally as a minimum of Cronbach’s alpha by researchers

although lower coefficients may be acceptable depending on research objectives (Hair, Babin, Money &

Samouel, 2003).

3.5 Data Analysis Methods.

Data gathered from in-depth interviews were analyzed by data processing experts. To data gathered from

mail survey were analyzed by statistical software.

In this research, there are four methods use to analyze data.

Descriptive statistics analysis.

Test of reliability.

Independent sample test.

Analysis of variance.

3.5.1 Descriptive statistics analysis.

Business researchers edit and code data, as explained in the previous topics, in order to provide input

that will result in tabulated information for answering research questions. With this input, researchers

statistically describe project results. In this context the term analysis is difficult to define, because it refers to a

variety of activities and processes. All these form of analyses attempt to portray data so that the results may be

studied and interpreted in a brief and meaningful way.

Descriptive analysis refers to the transformation of raw data into a form that will make them easy to

understand and interpret. Such analysis rearranges, orders, and analyses data to provide descriptive information.

As the analysis progresses, researchers generally apply the tools of inferential statistics to assess the statistical

significance of various hypotheses about variables of interest in the study.

With Likert scale tool, we measure the perception of Vietnam managers from (1): strongly disagree to

(5) strongly disagree. The point 3 of this scale, the Vietnamese managers feel agree with Taiwanese management

style.

3.5.2 Test of reliability.

The reliability of a measure indicates the extent to which it is without bias (error free) and ensures

consistent measurement' across time and various items in the instrument. Two dimensions underlie the concept

of reliability.

22


Stability/repeatability.

Internal consistency.

For first dimension, the research use Test-retest Reliability to determine reliability coefficient with a

repetition of the same scale or measure to the same respondent. If the measure is stable over time, the test,

administered under the same conditions each time, should obtain similar result.

For the second dimension, the consistency can be tested through Interterm consistency Reliability. This

is test of the consistency of respondent's answers to all the items in a measure. In this case, items construct

independently to measure the same concept, they will be correlated with one another. The test of interitem

consistency reliability is the Cronbach's coefficient alpha (Cronbach's alpha, Cronbach, 1946).

3.5.3 Independent sample test.

The t-test was used to test whether the means of agreement levels of satisfaction for the measured items

and measured dimensions between the two independent groups (male group vs. female group and Viet ethnic

group vs. Hoa ethnic group) were significantly different or not.

Hypothesis H10:

There was no difference in means between the male group and female group.

Hypothesis H11:

There was difference in means between the male group and female group.

Hypothesis H20:

There was no difference in means between the Viet ethnic group and Hoa ethnic group.

Hypothesis H21:

There was difference in means between the Viet ethnic group and Hoa ethnic group.

3.5.4 Analysis of Variance (ANOVA).

This method examined the effect of every demographic factor (non-metric independent

variables) on every item (metric dependent variables). The result indicates if groups of demographic

factors have impacts on items or not. There were 8 pairs of hypotheses developed for testing as follows:

Hypothesis No Result

Hypothesis H30 There was no difference in satisfaction means between groups of field of business.

Hypothesis H31 There was difference in satisfaction means between groups of field of business.

Hypothesis H40 There was no difference in satisfaction means between groups of type of company.

Hypothesis H41 There was difference in satisfaction means between groups of type of company.

Hypothesis H50 There was no difference in satisfaction means between groups volume of labor.

Hypothesis H51 There was difference in satisfaction means between groups of volume of labor.

23


Hypothesis H60 There was no difference in satisfaction means between groups of time of operation.

Hypothesis H61 There was difference in satisfaction means between groups of time of operation.

Hypothesis H70 There was no difference in satisfaction means between groups title of position

Hypothesis H71 There was difference in satisfaction means between groups of title of position.

Hypothesis H80 There was no difference in satisfaction means between groups of age.

Hypothesis H81 There was difference in satisfaction means between groups of age.

Hypothesis H90 There was no difference in satisfaction means between groups of time of working.

Hypothesis H91 There was difference in satisfaction means between groups of time of working.

Hypothesis H100 There was no difference in satisfaction means between groups of people supervised.

Hypothesis H101 There was difference in satisfaction means between groups of people supervised.

Table 3.5 Hypotheses and results

3.6 Limitations.

The research purposes were related directly to the perception of Vietnamese middle managers towards

their Taiwanese senior managers. Therefore, in some cases, the employees have tendency to reflect more

positive point of view than negative. To collect accurate results, the interviewee answers have guarantee of

confident.

The low rate of responses is also limitations. All the respondents are working at the time the survey be

taking, they have a limited time to response the questionnaires. Some of respondents return the questionnaires

with poor answer or improperly. Other ones do not return. Hence, the research may not cover all aspects of the

research issues.

D. Chapter 4 RESEARCH CONCLUSIONS, SUGGESTION, IMPLICATION

4.1 RESEARCH CONCLUSIONS

Vietnamese middle manager comments on the dimensions

Both positive and negative comments on the managerial behaviors and policies regards to four

dimensions supervision style, decision making, communication and paternalistic orientation of Taiwanese

management style. The qualitative analysis showed that an unequal proportion of satisfaction level to each of the

managerial behaviors and policies which made the four dimensions.

Vietnamese managers satisfaction.

There are the same results of one-sample test coming from 2 groups: sex and ethnic regarding to

perception of Vietnamese middle managers toward Taiwanese management. The average point by voting the 5-

point Likert scale ranging is valued of 3 point. That means Vietnamese managers satisfied with the current

Taiwanese management styles

24


Relationship between demographic factors and satisfaction.

The result of analysis of variance of company democratic factors and participant democratic

factors showed that:

Satisfaction Result Management dimension Note

Different level Rewards-punishment Different fields of business

Different level Supervising Different types of company

Different level Schedule activities Different operating time

Different level Ideas and innovation Different types of company

Different level Motivation Different titles of position

Different level Communication Different to different age

Different level Information technology Different time duration of working

Table 4.1 The result of analysis of variance of company democratic factors and participant democratic

factors

4.2 RESEARCH SUGGESTION

The Vietnamese middle managers, in most cases, accepted the current management styles at their

companies. However, unless the Taiwanese high-rank managers really focus on the improvement of their

managerial behavior, the situation may cause an ineffective performance. It is very important that only having

satisfaction with the current working environment, the employees can contribute best of their power, their

energy. On the way looking for the appropriate management style for the company, it requires lots of energy

from all members in the organization. There were many suggestions of improvement of the current Taiwanese

management style gathered mostly from in-depth interviews. They were summarized as follow:

1. Taiwanese employers/seniors mangers should have more confidence in employees, especially in people who work for the company for long time. The best way was empower or delegate more tasks, duties and responsibilities to Vietnamese subordinates.

2. Salary should increased more (although the salary is increased every year but not much) both volume and frequency, together with the associate bonuses (the employees often compare their current salary with the others colleagues working in other foreign-invested companies in the same geographical area.).

3. Both monetary and non-monetary motivation need to be increased in volume and frequency. In addition, equality should be applied especially in motivation.

4. Cost for dealing business or business transaction should be interested in, especially, to marketing employees in order to create the most satisfactory working mood to employees; (5) Making decision by perception through feeling must be replaced by perception through reasons.

5. The ideas contributed by employees should be regarded quickly, if not, the problem may become worse. On the other hand, Taiwanese employers/seniors mangers should reduce the "me-myself" so the employees will feel relax to contribute ideas.

25


6. Not only saving in salary, benefit but saving in power, material, stationary should be mentioned. The more employers integrate the Vietnamese customs, the better the relation improved.

7. Taiwanese employers/seniors mangers should increase time of contacting employees in order to understanding what they feel, how they understand to get feedback and have quick adjustment consequently.

8. Gender equality needs to be interested in, especially at working places.

9. Working environment might need to be improved better (e.g. air-conditions and advanced tele-communication equipments should be equipped more).

4.3 RESEARCH IMPLICATION

The research findings and results have shown the perception of Vietnamese middle managers toward

Taiwanese management style at Taiwanese-invested companies in Vietnam. The final conclusion was that the

current Taiwanese management style satisfied Vietnamese employees although the level was not high.

There were only twenty items related to managerial behaviors of Taiwanese senior managers and

managerial policies of Taiwanese-invested companies in southern Vietnam. The later studies can develop more

related items with more dimensions to study the satisfaction of Vietnamese employees to Taiwanese

management style. Even to the four dimensions, more items can also be explored and used for studying.

Furthermore, the research findings and results also have shown the difference of satisfaction between

different groups of Vietnamese middle managers categorized on some demographic factors. However, the

research findings and results only enable the researcher to conclude that statistical differences were existed

somewhere between the groups, not identify where the differences were.

Therefore, the later studies, from the present results of this research can develop other intensive

objectives related to the management styles at Taiwanese-invested companies in Vietnam, focus on analysis of

these differences to point out where and how the differences were.

In addition, the later researches focused on studying ways of improvement of the current Taiwanese

management style at Taiwanese-invested companies in Vietnam are also suggested. Such studies are always

useful to the Taiwanese-invested companies, not only in Vietnam but to other investment places.

26


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