Improving the business environment for Vietnamese tourism enterprises in the globalization process

Figure 2.2. Research model

Maybe you are interested!

Source: Author's synthesis

2.5.2. Research hypothesis

Recent studies based on multiple components of the business environment often use the World Business Environment Survey (WBES) at the firm level to assess the impact of the business environment on business performance. These studies focus on factors of the business environment including variables related to the institutional environment, infrastructure, and variables related to the ability of enterprises to access capital. Studies using this data set show that the business environment plays an important role in business growth (Dollar/Mengistae, 2005; Bah 2015).

Instead of focusing on all aspects of the business environment, most empirical studies assess each element of the business environment on firm performance (Fisman & Love 2004, Fisman & Svensson 2007).

 Economic factors affecting the business activities of tourism enterprises

Griffin (1997), in his article emphasizes much on the overall strength of the economic system in which many organizations operate. The important economic factors that affect many businesses are inflation, interest rates and unemployment. In order to earn a profit,

When unemployment is high, companies become selective in hiring employees and this can cause low production and service levels, causing the company to lose customer demand.

Therefore, the hypothesis is:

H1: Economic stability has a positive impact on tourism business activities.

Political factors affect the business activities of tourism enterprises

It can be seen that political factors are the Government regulations on business. The relationship between business and Government is important for three basic reasons: First , the legal system has partly determined what an organization should or should not do. Second , the business-friendly or anti-business situation, in which the Government is used to influence business activities in the organization. Third , political stability has a lot of influence on planning issues, for example, no organization wants to set up a business in another country where the trade relationship is not defined and stable.

Previous studies have shown that firms avoid investing in locations where there is a high probability that governments will take actions that adversely affect firms (Henisz & Delios 2001, Holburn & Zelner 2010, Jensen 2003). Politically unfavorable, political risk-related actions range from the expropriation of firm assets, to forms of expropriation such as changes in laws, regulations, and contractual terms governing investment. Such actions are often seen as having a negative impact on firms and their operations by directly limiting the firm's ability to exploit its assets and maximize revenues and profits from its investment (Butler & Joaquin 1998, Kobrin 1979).

Oyebanji (1994) believes that a stable political environment will promote growth and development as well as encourage domestic and foreign investors. With regard to the legal environment, it encourages business organizations to always comply with

Business law. To conduct business in compliance with the law, large businesses need to establish a legal department, while small businesses hire legal experts.

Economists have long argued that political corruption can reduce economic growth and discourage private investment in developing countries (Mauro 1995, Shleifer & Vishny 1993, Gupta/Davoodi…1998, MacLeans & Mangum 2000). Wei (2000) and Wei & Shleifer (2000, pp.303-354) found a significant negative relationship between a country’s level of corruption and foreign direct investment. Habib & Zurawicki (2002, pp.291-307) showed that corrupt countries have a very difficult time attracting investment from firms in low-corruption countries, some firms’ investment decisions reflect an effort to avoid engaging in corrupt business practices. In general, corruption can increase the cost of doing business in a country. And when corruption allows inefficient producers to grow and win business, it reduces efficient investment and reduces the quality of products - especially those sold to the public (Geo - JaJa & Mangum 2000).

The presence of extensive business regulation or market intervention is the stability and predictability of government policies over time. For example, in a study of the energy sector, Levy & Spiller (1994) found that a range of government policies were consistent with industrial success, provided there were constraints to ensure that policies did not change arbitrarily over time. The predictability of government policy allows private firms to base their investment decisions on economic considerations rather than speculation about the future political environment.

So the hypothesis is:

H2: Political stability has a positive impact on tourism business activities.

Technological factors impact on tourism business operations A good business environment will help contribute to productivity through

technological change and progress. According to Aron (2000), a good business environment will facilitate business activities and direct business efforts towards productive activities (innovation and export activities) rather than unproductive activities (rent seeking).

According to Hallberg (2006), infrastructure is defined as including hard infrastructure (roads, airports, seaports, electricity, water) and soft infrastructure (telephone, web, email, access to credit). Hard infrastructure is seen as a complement to other production inputs and encourages business productivity by increasing the rate of return on investment. Soft infrastructure (access to credit) is related to the ability of businesses to finance investment projects. A developed financial system will create more investment opportunities and allocate resources to profitable projects, bringing efficiency to businesses (Levine 2005).

Therefore the hypothesis is given as:

H3: Good technology factors have a positive impact on the business activities of tourism enterprises.

Socio-cultural factors impact on tourism business operations

The socio-cultural environment generally includes both the social system and culture of a person. It refers mainly to the man made intangible factors that influence the behavior, relationships, perceptions and lifestyle of people, and their existence and survival. In other words, the socio-cultural environment includes all the factors, conditions and influences that shape the personality of an individual and are capable of influencing his or her attitudes, dispositions, behavior, decisions and activities. Such factors include the beliefs, values, attitudes, habits, forms of behavior and lifestyle of people developed from culture, religion, education and society, (Bennett & Kassarjian 1972, Adeleke et.al 2003). These factors are learned and shared by a society and are passed on from generation to generation within that society.

The social environment in business includes social factors such as customs, traditions, values, beliefs, poverty, literacy, life expectancy, etc. Social structure and

The values that society holds have a significant impact on the performance of businesses. For example, during the festive season, the demand for new clothes, sweets, fruits, flowers, travel increases, etc. Due to the increase in literacy, consumers are becoming more conscious about the quality of products. Due to changes in family composition, single-parent families have emerged. This has increased the demand for various household goods. It can be noted that the consumption patterns, and lifestyles of people belonging to different social and cultural structures, are very different.

H4: Good socio-cultural factors have a positive impact on the business activities of tourism enterprises.

Legal factors affecting the business operations of tourism enterprises

The legal environment refers to the set of laws and regulations that affect business organizations and their operations. Every business organization must comply with and operate within the framework of the law. Important documents related to tourism businesses include: Enterprise Law, Foreign Investment Law, Tourism Law... and Government Decrees related to tourism activities, regulatory documents of Ministries...

There is not much research conducted to examine the direct relationship between legal preparedness and business success. Legal aspects in developing countries are perhaps the most important obstacle to the success of SMEs. In many cases, dealing with legal aspects has forced SMEs to allocate a significant amount of financial resources due to bribery practices.

Legal aspects are often used in the decision to choose an activity to ensure the future success of the business (Tim Mazzarol & Choo 2003). Inappropriate legislation is also found among the obstacles faced by Slovenian SMEs (Duh 2003).

Therefore, the hypothesis is posed as:

H5: Transparent and clear legal factors have a positive impact on the business activities of tourism enterprises.

International factors (globalization) have an impact on the business activities of tourism enterprises.

Globalization means “integrating” a country’s economy with the world economy. This implies the free flow of goods and services, capital, technology and labor across national borders. To achieve these globalization goals, governments have adopted various measures such as reducing customs duties, restricting the quantity or quota of exports and imports, facilitating foreign investment and encouraging the use of foreign technology. These measures are expected to achieve higher growth rates, expand employment potential and reduce regional disparities.

One of the earliest and most widely known theories of globalization is the “Globalization Process” theory, also known as the “Stage Model” or the “Uppsala Model”, developed by Johanson & Vahlne (1977). According to this theory, globalization is a four-stage process in which firms make continuous efforts to increase their participation and share in international markets, while gradually improving foreign consumers’ awareness and commitment to their products. Specifically, in the first stage, firms operate in the domestic market and do not engage in export activities. In the next stage, firms begin to be interested in expanding their business across borders by exporting through representatives or agents. In the third stage, due to the binding relationship with resources in the international market, enterprises often set up sales branches abroad, and further build production/manufacturing facilities abroad in the final stage. Therefore, business performance will also vary depending on each stage of business globalization.

Many studies suggest that the degree of globalization has a positive linear effect on business performance (Buckley 1988, Caves 1996, Grant 1987). However, other studies show that the results of expanding operations abroad bring

While globalization has both benefits and costs, it also has risks and leads to failures, and thus reduces business performance (Geringer et. al 2000, Denis et.al 2002). This also means that there is a relationship between the level of globalization and business performance of enterprises (Sullivan 1994; Hitt et.al 1997). Thus, globalization will improve business performance of enterprises at a relatively fast rate in the early stages, but will quickly decrease business performance as soon as the level of globalization reaches its maximum value. The reason is that in the early stages of globalization, the costs incurred by globalization participation do not exceed the benefits that globalization brings to enterprises. Initial benefits include increased sales and profits due to market penetration strategies aimed at capturing market share, achieving economies of scale and economies of perspective due to product diversification, and falling average costs (Kogut 1985). However, the expansion of globalization over a long period of time is associated with increased management scope, complexity, the business must serve more diverse markets, more complex customer tastes, leading to the emergence of many types of costs, including transaction costs, management costs (Gomes & Ramaswamy 1999) or the diversity of the market itself beyond the control of the business. Therefore, as the level of globalization increases, the negative impact of globalization on business performance increases. Therefore, the hypothesis is put forward that:

H6: Good international environmental factors have a positive impact on the business activities of tourism enterprises.

Natural environmental factors affect the business activities of tourism enterprises.

The natural environment includes geographical and ecological factors that affect business operations. These factors include the availability of natural resources, weather and climatic conditions, geographical location, topographical factors, etc. Business is greatly influenced by the nature of the natural environment. For example, sugar factories are only built in places where sugarcane can be grown. Business efficiency is always considered better if the production unit is established near the sources of inputs. Moreover, government policies to maintain ecological balance, conserve natural resources, etc. add more responsibility to the business sector.

Tourism not only contributes to climate change, but is also affected by it. Climate change can increase the severity and frequency of storms and extreme weather events, which can have a devastating impact on tourism in affected areas. Some of the other impacts the world is experiencing as a result of global warming include drought, disease, and heatwaves.

These negative impacts can drive tourists away from vacation destinations. Global warming can cause:

Less snowfall at ski resorts means a shorter ski season in the Alpine regions. In hot regions like Asia and the Mediterranean, tourists stay away because of the intense heat, and for fear of illness and lack of water.

Damage to vulnerable ecosystems such as tropical forests and coral reefs is caused by rising temperatures and less rainfall. The major risk to coral reefs is bleaching, which occurs when corals are stressed by rising temperatures, high or low salinity, poor water quality, and increased suspended sediment. These conditions cause zooxanthallae (single-celled algae that produce the colors in corals) to leave the coral. Without the algae, the coral turns white, or “bleachs,” and quickly dies (Hall 2001).

The report on Vietnam tourism by the Ministry of Culture, Sports and Tourism (2009 - 2015) shows that the ecological environment in Vietnam is considered to be relatively pristine, with high biodiversity. However, in recent years, due to the impact of industrialization , rapid growth, unplanned development, and lack of vision, the quality of the ecological environment has declined. In addition , climate change has increasingly shown unusual and unpredictable signs : rising sea levels, high tides in coastal areas, the Red River Delta, and the Mekong River Delta; strong storms and tornadoes ; extreme hot and cold temperatures (snow in Ha Giang, Lao Cai, Lang Son)... are factors of concern that require the tourism industry to have measures to prepare capacity to adapt , minimize negative impacts, and proactively receive positive impacts.

Therefore, the hypothesis is:

H7: Good natural environmental factors have a positive impact on the business activities of tourism enterprises.