Thai Nguyen University Southern Luzon State University Socialist Republic of Vietnam Republic of Philippines DOCTOR OF BUSINESS ADMINISTRATION DISSERTATION CORPORATE RESTRUCTURING IN STATE-OWNED CONSTRUCTION SECTOR IN VIET NAM: THE CASE OF VINACONEX CORPORATION Adviser: Dr Melchor Melo O Placino Researcher: Nguyen Phuc Huong Researcher ID: SLSU-DBA12009-21 Date of birth: November 30, 1975 Course: SLSU-DBA1 (2009-2013) Thai Nguyen, November 2013 ACKNOWLEDGMENT During completion of this study, the author has received significant support and collaboration from many organizations and individuals First and foremost, I take this opportunity to express my profound gratitude and deep regards to my guide Dr Melchor Melo O Placino from Southern Luzon State University for his exemplary guidance, monitoring and constant encouragement throughout the course of this dissertation I would like to thank PhD Nguyen Ngoc Thang from Vietnam National University Hanoi, Tran Thi Kim Thu - Assoc.Prof PhD, Head of Faculty of Statistics - National Economics University and all my best friends who have supported and encouraged to complete my dissertation I have to acknowledge the contributions of my colleagues at subsidiaries of VINACONEX Corporation in the process of distributing to and collecting questionnaires Without this support, I could not have gathered such huge database for research and analysis I also thanks go to all Vinaconex leaders, other state-owned enterprises leaders and some MOC managers Special thanks goes to Thai Nguyen University and Southern Luzon State University for their cooperation in this training program which provides me with an opportunity to participate in and conduct the project that I have long cherished Last but not least, many thanks go to my family They are always beside me and encourage me through the duration of my studies I am also indebted this achievement to my beloved wife and my children for their great help and support Nguyen Phuc Huong, November 2013 DECLARATION I, Nguyen Phuc Huong, hereby submit my dissertation for oral examination, entitled “PROBLEMS AND ISSUES IN CORPORATE RESTRUCTURING IN STATE-OWNED CONSTRUCTION SECTOR IN VIET NAM: THE CASE OF VINACONEX CORPORATION”, truthfully declare that the said paper is a product of my original research investigation Signed this 15th November 2013 at Thai Nguyen University Nguyen Phuc Huong, DBA candidate TABLE OF CONTENTS ACKNOWLEDGMENT DECLARATION TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES ABSTRACT CHAPTER I: INTRODUCTION 10 1.1 Background of the study 10 1.2 Problem statement 13 1.3 Research Objectives .13 1.4 Research Questions 14 1.5 Hypotheses .15 1.6 Scope and Limitation of the Study 15 1.7 Reseach Definitions 16 1.8 Significance of the Study 17 1.9 Structure of the Study .18 1.10 Conclusion 19 CHAPTER II: LITERATURE REVIEW 20 2.1 International related research 20 2.1 National related research 22 2.3 Theoretical and analysing framework .26 2.4 Analysing framework .27 CHAPTER III: METHODOLOGY 30 3.1 Determination of sample .30 3.2 Research design 31 CHAPTER IV: RESULTS AND DISSCUSION 32 4.1 Overview of the Vinaconex Corporation 32 4.1.1 General information 32 4.1.2 History of Vinaconex Corporation 32 3.1.3 Main characteristics of Vinaconex 34 4.2 General points 36 4.2.1 Description of respondents 36 4.2.2 Verification of rating tools 39 4.3 Analysis on each issue relating to restructuring process 39 4.3.1 Reasons for restructuring of SOEs in the construction industry of Vietnam 39 4.3.2 Competition 42 4.3.3 Strategy 43 4.3.4 Conflict 46 4.3.5 Ownership 49 4.3.6 Leadership 51 4.3.7 Employment 54 4.3.8 Technological Innovation 57 4.3.9 Corporate Governance 60 4.3.10 Finance 62 4.4 Analysis of differences in opinions of staffs at different ages about key issues 64 CHAPTER V: FINDINGS, RECOMMENDATIONS, AND CONCLUSIONS 67 5.1 Findings 67 5.2 Implications 69 5.3 Limitation and recommendation for future research 71 5.4 Conclusion .72 REFERENCES 73 APPENDICES 77 CURRICULUM VITAE 128 LIST OF TABLES Table 1: The Workforce of Vinaconex Table 2: Vinaconex’s contributed capital in subsidiaries and affiliates Table 3: Vinaconex’s contributed capital in diffirent business sectors Table 4: Description of respondents Table 5: Reliability Statistics Table 6: Reasons for corporate restructuring Table 7: Opinions of respondents about reasons for restructuring Table 8: Opinions of respondents about competition during corporate restructuring Table 9: Opinions of respondents in different job positions about Competition Table 10: Opinions of respondents about Strategy during corporate restructuring Table 11: Opinions of respondents in different job positions about Strategy Table 12: Pearson Chi-Square Tests Table 13: Opinions about Conflicts regarding corporate restructuring Table 14: Opinions of respondents in different job positions about Conflict in benefit Table 15: Pearson Chi-Square Tests Table 16: Opinion about Ownership in corporate restructuring Table 17: Opinions of respondents in different job positions about the role of majority shareholders Table 18: Pearson Chi-Square Tests Table 19: Opinions about leadership in corporate restructuring Table 20: Opinions of respondents in different job positions about the role of shareholders Table 21: Pearson Chi-Square Tests Table 22: Opinion about Employment in corporate restructuring Table 23: Opinion of respondents in different job positions about opportunity to adjust Personnel Table 24: Pearson Chi-Square Tests Table 25: Opinion about Technological Innovation in corporate restructuring Table 26: Opinion of respondents in different job positions about Technological Innovation demands Table 27: Opinion about Corporate Governance in corporate restructuring Table 28: Opinion of respondents in different job positions about Corporate Governance Table 29: Pearson Chi-Square Tests Table 30: Opinion about Finance in corporate restructuring Table 31: Opinion of respondents in different job positions about Capital preservation in enterprises Table 32: Pearson Chi-Square Tests Table 33: Average score of different ages in assessment of key issues LIST OF FIGURES Figure 2.1: Kurt Lewin’s Change Management Model Figure 2.2: An analyzing framework Figure 4.1: Organization Chart of Vinaconex Figure 4.2: Age structure based on job position LIST OF ABBREVIATIONS VINACONEX: Vietnam Construction and Import - Export Joint Stock Corporation VINACONEX-1: Construction Joint-Stock Company No.1 (Subsidiary of VNACONEX Corporation) MOC: Ministry of Construction GDP: Gross Domestic Product CEO: Chief Executive Officer SOEs: State Owned Enterprises CIEM: Central Institute of Economic Management SPSS: Statistical Package for the Social Sciences BOM: Board of Managers PMU: Project Management Unit ABSTRACT The study of corporate restructuring in state-owned enterprises has been the hot topic in the academic world However the interests of researchers have focused on investigating the phenomena of corporate restructuring more in the developed countries than in the developing world Little study has been done in investigating the corporate restructuring in state-own enterprises in Vietnam This is the first study that devotes to explore the corporate restructuring in a specific construction company in Vietnam This study aims to investigate what problems and issues arise to corporate restructuring in a construction company A typical five-level Likert item questionnaire was designed for the data collection We will analyze the problems and issues arising from the restructuring in construction sector, and the social impact of restructuring on the stakeholders The findings show that majority of respondents strongly agreed with the reason that the restructuring resulted from their urgent needs which aimed to help them come out of recession, or avoid bankruptcy In addition, the company’s restructuring decision was determined by the company’s internal and external factors Vinaconex need to pay more attention to training on management for managers and carried out technological innovation From the findings, we proposed some solutions to deal with problems arising from the restructuring for VINACONEX The result of study provides more evidence for the theories about corporate restructuring and contributes to the growing knowledge in strategic management by using the specific Vietnamese case In this study, we also draw some limitations and recommendations for future research Agree 32 28.8% 33 25.8% 45 28.0% strongly agree innovation 59 53.2% 61 47.7% 58 36.0% 111 100.0% 128 100.0% 161 100.0% Total Pearson Chi-Square Tests Positions Q81- Leading issues of the restructuring is technological innovation Chi-square Df Sig 14.894 061a,b Results are based on nonempty rows and columns in each innermost subtable a More than 20% of cells in this subtable have expected cell counts less than Chi-square results may be invalid b The minimum expected cell count in this subtable is less than one Chi-square results may be invalid * Custom Tables CTABLES /VLABELS VARIABLES=q83 A2.3 DISPLAY=LABEL /TABLE q83 BY A2.3 [C][COUNT F40.0, COLPCT.COUNT PCT40.1] /CATEGORIES VARIABLES=q83 ORDER=A KEY=VALUE EMPTY=INCLUDE TOTAL=YES POSITION=AFTER /CATEGORIES VARIABLES=A2.3 [1, 2, 3, OTHERNM] EMPTY=INCLUDE /SIGTEST TYPE=CHISQUARE ALPHA=0.05 INCLUDEMRSETS=YES CATEGORIES=SUBTOTALS Positions Leaders Count Q83Technological innovation should be carried out continuously Column N% strongly disagree 0.0% Disagree Normal Managers Staffs Column N% Count Column N% 0.0% 0.0% 0.0% 8% 2.5% 16 14.4% 18 14.1% 25 15.5% Agree 44 39.6% 30 23.4% 40 24.8% Disagree 51 45.9% 79 61.7% 92 57.1% Count 117 Total 111 100.0% 128 100.0% 161 100.0% Pearson Chi-Square Tests Positions Q83Technological innovation should be carried out continuously Chi-square Df Sig 13.226 040*,b Results are based on nonempty rows and columns in each innermost subtable * The Chi-square statistic is significant at the 05 level b More than 20% of cells in this subtable have expected cell counts less than Chi-square results may be invalid * Custom Tables CTABLES /VLABELS VARIABLES=q91 A2.3 DISPLAY=LABEL /TABLE q91 BY A2.3 [C][COUNT F40.0, COLPCT.COUNT PCT40.1] /CATEGORIES VARIABLES=q91 ORDER=A KEY=VALUE EMPTY=INCLUDE TOTAL=YES POSITION=AFTER /CATEGORIES VARIABLES=A2.3 [1, 2, 3, OTHERNM] EMPTY=INCLUDE /SIGTEST TYPE=CHISQUARE ALPHA=0.05 INCLUDEMRSETS=YES CATEGORIES=SUBTOTALS Positions Leaders Managers Staffs Count Q91- Reform corporate governance Column N% strongly disagree 0.0% 0.0% 0.0% Disagree 5.4% 3.1% 0.0% Normal 11 9.9% 23 18.0% 19 11.8% Agree 64 57.7% 31 24.2% 47 29.2% strongly agree 30 27.0% 70 54.7% 95 59.0% 111 100.0% 128 100.0% 161 100.0% Total Count Column N% Count Column N% 118 Pearson Chi-Square Tests Positions Q91- Reform corporate governance Chi-square 48.202 Df 000*,b Sig Results are based on nonempty rows and columns in each innermost subtable * The Chi-square statistic is significant at the 05 level b More than 20% of cells in this subtable have expected cell counts less than Chi-square results may be invalid * Custom Tables CTABLES /VLABELS VARIABLES=q102 A2.3 DISPLAY=LABEL /TABLE q102 BY A2.3 [C][COUNT F40.0, COLPCT.COUNT PCT40.1] /CATEGORIES VARIABLES=q102 ORDER=A KEY=VALUE EMPTY=INCLUDE TOTAL=YES POSITION=AFTER /CATEGORIES VARIABLES=A2.3 [1, 2, 3, OTHERNM] EMPTY=INCLUDE /SIGTEST TYPE=CHISQUARE ALPHA=0.05 INCLUDEMRSETS=YES CATEGORIES=SUBTOTALS Positions Leaders Managers Staffs Count strongly disagree 0.0% 8% 6% Disagree 9% 3.1% 3.7% Normal 7.2% 13 10.2% 23 14.3% Agree 27 24.3% 51 39.8% 62 38.5% strongly agree Q102- Capital preservation requirements Column N% 75 67.6% 59 46.1% 69 42.9% 111 100.0% 128 100.0% 161 100.0% Total Count Column N% Count Column N% Pearson Chi-Square Tests Positions 119 Q102- Capital preservation requirements Chi-square 19.672 Df 012*,b,c Sig Results are based on nonempty rows and columns in each innermost subtable * The Chi-square statistic is significant at the 05 level b More than 20% of cells in this subtable have expected cell counts less than Chi-square results may be invalid c The minimum expected cell count in this subtable is less than one Chi-square results may be invalid * Custom Tables CTABLES /VLABELS VARIABLES=q103 A2.3 DISPLAY=LABEL /TABLE q103 BY A2.3 [C][COUNT F40.0, COLPCT.COUNT PCT40.1] /CATEGORIES VARIABLES=q103 ORDER=A KEY=VALUE EMPTY=INCLUDE TOTAL=YES POSITION=AFTER /CATEGORIES VARIABLES=A2.3 [1, 2, 3, OTHERNM] EMPTY=INCLUDE /SIGTEST TYPE=CHISQUARE ALPHA=0.05 INCLUDEMRSETS=YES CATEGORIES=SUBTOTALS Positions Leaders Count strongly disagree 0.0% Disagree Normal Staffs Column N% Count Column N% 1.6% 0.0% 0.0% 3.1% 1.9% 8.1% 15 11.7% 21 13.0% Agree 19 17.1% 26 20.3% 36 22.4% strongly agree Q103- Policies of state on capital preservation requirements Column N% Managers 83 74.8% 81 63.3% 101 62.7% 111 100.0% 128 100.0% 161 100.0% Total Count Pearson Chi-Square Tests Positions Q103- Policies Chi-square 11.627 120 of state on capital preservation requirements Df Sig 169a,b Results are based on nonempty rows and columns in each innermost subtable a More than 20% of cells in this subtable have expected cell counts less than Chi-square results may be invalid b The minimum expected cell count in this subtable is less than one Chi-square results may be invalid 121 APPENDIX 6/ PHỤ LỤC Point average - the age of the respondents/ Điểm trung bình theo độ tuổi * Custom Tables CTABLES /VLABELS VARIABLES=q12 a3 DISPLAY=LABEL /TABLE q12 [MEAN] BY a3 [C] /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 40-49 >=50 Mean Q12- Due to recession 30-39 Mean Mean Mean 4.19 4.28 4.82 4.77 * Custom Tables CTABLES /VLABELS VARIABLES=q22 a3 DISPLAY=LABEL /TABLE q22 [S][MEAN] BY a3 /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 40-49 >=50 Mean Q22- focus on their competitive products and market 30-39 Mean Mean Mean 4.50 4.43 4.72 4.72 * Custom Tables 122 CTABLES /VLABELS VARIABLES=q31 a3 DISPLAY=LABEL /TABLE q31 [MEAN] BY a3 [C] /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 30-39 40-49 >=50 Mean Mean Mean Mean Q31- Focus on core business 3.38 3.47 4.32 4.29 * Custom Tables CTABLES /VLABELS VARIABLES=q42 a3 DISPLAY=LABEL /TABLE q42 [MEAN] BY a3 [C] /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 30-39 40-49 >=50 Mean Mean Mean Mean Q42- conflict of perception and/or benefits 3.50 3.60 3.97 4.22 * Custom Tables CTABLES /VLABELS VARIABLES=q51 a3 DISPLAY=LABEL /TABLE q51 [MEAN] BY a3 [C] /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 30-39 40-49 >=50 123 Mean Mean Mean Mean Q51- The effect from incompatibility of business fields of dominant shareholder 4.04 3.85 4.72 4.33 * Custom Tables CTABLES /VLABELS VARIABLES=q53 a3 DISPLAY=LABEL /TABLE q53 [MEAN] BY a3 [C] /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 30-39 40-49 >=50 Mean Mean Mean Mean Q53- The role of state shareholders - which owns more than 51% for enterprises 3.92 3.89 4.42 4.08 * Custom Tables CTABLES /VLABELS VARIABLES=q64 a3 DISPLAY=LABEL /TABLE q64 [MEAN] BY a3 [C] /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 40-49 >=50 Mean Q64- The qualification, knowledge and the profession of board members 30-39 Mean Mean Mean 4.19 4.17 4.70 4.57 124 * Custom Tables CTABLES /VLABELS VARIABLES=q71 a3 DISPLAY=LABEL /TABLE q71 [MEAN] BY a3 [C] /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 30-39 40-49 >=50 Mean Mean Mean Mean Q71- Downsizing of staffs 3.42 3.89 4.12 4.23 * Custom Tables CTABLES /VLABELS VARIABLES=q81 a3 DISPLAY=LABEL /TABLE q81 [MEAN] BY a3 [C] /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 30-39 40-49 >=50 Mean Mean Mean Mean Q81- Leading issues of the restructuring is technological innovation 3.54 3.69 4.50 4.09 * Custom Tables CTABLES /VLABELS VARIABLES=q83 a3 DISPLAY=LABEL /TABLE q83 [MEAN] BY a3 [C] /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 30-39 40-49 >=50 125 Mean Q83- Technological innovation should be carried out continuously Mean 4.38 Mean 4.40 Mean 4.29 4.41 * Custom Tables CTABLES /VLABELS VARIABLES=q91 a3 DISPLAY=LABEL /TABLE q91 [MEAN] BY a3 [C] /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 30-39 40-49 >=50 Mean Mean Mean Mean Q91- Reform corporate governance 4.19 4.26 4.20 4.39 * Custom Tables CTABLES /VLABELS VARIABLES=q102 a3 DISPLAY=LABEL /TABLE q102 [MEAN] BY a3 [C] /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 40-49 >=50 Mean Q102- Capital preservation requirements 30-39 Mean Mean Mean 3.62 3.96 4.55 4.52 * Custom Tables CTABLES /VLABELS VARIABLES=q103 a3 DISPLAY=LABEL /TABLE q103 [MEAN] BY a3 [C] 126 /CATEGORIES VARIABLES=a3 ORDER=A KEY=VALUE EMPTY=INCLUDE a3 – Age 20-29 40-49 >=50 Mean Q103- Policies of state on capital preservation requirements 30-39 Mean Mean Mean 4.23 4.21 4.71 4.60 127 CURRICULUM VITAE Personal information Full name Nguyen Phuc Huong Birth 30/11/1975 date/place Hai Sex: M × ; F Duong province – Viet Nam Academic - Construction Engineer degree Position - English Bachelor Deputy director in charge Investment Department - Master of Economics (MBA) of Vinaconex - High-level political theory – Coporation Administration Director of and high- tech industrial Hoa Lac investment projects PMU of Vinaconex Civil Status: Parents: - Father: Nguyen Phuc Loi - 64 year old, retired - Mother: Trinh Thi Mua (died) Spouse's name: Nguyen Thi Huong – Teacher 128 Children: - Daughter: Nguyen Ha Phuong – was born 2001 - Daughter: Nguyen Mai Phuong – was born 2007 - Son Company address : Nguyen Phuc Minh – was born February 2013 VIETNAM CONSTRUCTION AND IMPORT - EXPORT JOINT STOCK CORPORATION 34 Lang Ha Street, Dong Da district, Ha noi city, Vietnam Department/ division/ faculty Office tel Department of Investment (+84) 62849215 Mobile phone (+84) 913347206 No Fax (+84)4 E-mail phuchuongvinaconex1@yahoo.com Educational Qualifications University/Academic Faculty/ Time Kind of degree institutions Specialty Ha Noi Construction University Faculty of Civil Engineer of 1993-1998 (National University of Civil and Industrial Construction Engineering) construction 129 2002 – 2005 Ha noi Open University English Faculty English Bachelor School of Ha Noi University of Science 2007-2009 Master of Economics and Technology Economic Management Regional Academy of Politics – High-level Public Administration I (Ho Chi political theory 2010-2012 Political Bachelor Minh National Academy of Public Administration – Administration Southern Luzon State University, Philippines 03/2010 – Business (International Present Programs at Joint Graduate Thai DBA Student Administration Nguyen University) Experiences Start End month month Country of Position Name of Company Employment and year and year Engineer construction of Construction jont- Technical and Economical stock company No.1 Department 5/1998 12/2002 Vietnam 12/2002 12/2004 (VINACONEX-1) Vice chief of Technical and Construction Economical Department Vietnam jont- stock company No.1 130 (VINACONEX-1) Construction jont- Director of Enterprise No.11 stock company No.1 Vietnam 1/2005 1/2007 Vietnam 1/2007 12/2009 Vietnam 12/2009 2/2012 Vietnam 2/2012 2/2013 Vietnam 2/2013 7/2013 Vietnam 7/2013 Present (subsidiary of Vinaconex-1) (VINACONEX-1) Construction Deputy CEO of Vinaconex-1 jont- stock company No.1 (VINACONEX-1) Deputy CEO and Director of Construction Project Management stock company No.1 Vinaconex-1 Deputy jont- (VINACONEX-1) Director of Vinaconex Investment Department Corporation Deputy Director in charge of Vinaconex Investment Department Corporation Deputy Director in charge of Investment Department and Vinaconex Director of PMU high-tech Corporation industrial Hoa Lac projects of Vinaconex I, the undersigned, certify that to the best of my knowledge and belief, this data correctly describes me, my qualifications and my experience Date …………………………Nguyen Phuc Huong ……………………………… 131 ... Central Committee in 11th term – Communist Party of Vietnam (on Friday, October 10th 2011) and emphasized: in 2012 and coming years, Vietnam will give top priority to control inflation, stabilize... statistical reliability 4.1 Overview of the Vinaconex Corporation 4.1.1 General information Name of corporation: VIETNAM CONSTRUCTION AND IMPORT - EXPORT JOINT STOCK CORPORATION (VINACONEX) Address:... thank PhD Nguyen Ngoc Thang from Vietnam National University Hanoi, Tran Thi Kim Thu - Assoc.Prof PhD, Head of Faculty of Statistics - National Economics University and all my best friends who have