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Technology absorption capability evaluation of small and medium enterprises in Vietnam: Conditions from the State and Enterprises
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DOI: http://dx.doi.org/10.20534/ESR-17-3.4-125-126
Trinh Minh Tam, Ph.D Deputy Director General Vietnam Centre for Science and Technology Evaluation (VISTEC) Ministry of Science and Technology (MOST), Vietnam E-mail: [email protected]; [email protected]
Technology absorption capability evaluation of small and medium enterprises in Vietnam: Conditions from the State and Enterprises
Abstract: In the context of the world and the region, in the face of rapid integration and economic globalization, Vietnam must implement international commitments in free trade agreements. This will have a very positive impact to enterprises in the context of Vietnam is a developing country at low level, the enterprise is mostly absorbed in technology and most of it is transferred from abroad. According to economic experts, Vietnam currently has about 500,000 enterprises with over 90% of small and medium enterprises. It is forecasted that in the time to come, businesses will be more and more difficult when Vietnam officially joins bilateral and multilateral agreements with other countries. Therefore, how to measure and assess the technology absorption capability of enterprises in order to improve the technology capacity of enterprises in general and technology absorption capacity in particular is one sentence ask for both the S&T management agencies and for the enterprise itself in the context of deepening international integration.
Keywords: Technology absorption, Technology absorption capability evaluation, Small and medium enterprises.
Current status of technology absorption capability ofViet-namese enterprises
First, the limitations of the production link channel
For the developing country, production linkage is an important channel for the spillover effect and absorption of technology from FDI enterprises to domestic firms. According to the experience of some countries, the most positive impact and absorption of technology is through contracts for the production of components and auxiliary accessories ordered by FDI enterprises for domestic enterprises.
According to a study conducted by the Central Institute for Economic Management (CIEM), the supply ofraw materials (both raw and intermediate) to FDI enterprises and Vietnamese enterprises comes mainly from Asia where China is the largest supplier, accounting for 26.4%. This result is not surprising as China is a cheap source of input. However, this also demonstrates the loose production linkage between FDI enterprises and local firms in the supply of raw materials and this will also limit the spillover effects and absorption of technology from FDI enterprises to domestic enterprises.
The duration of the contract with the supplier also correlates with the existence of a production link. According to CIEM research, all contracts have an average term of less than 12 months. In the FDI sector alone, the contracts of FDI enterprises with foreign suppliers are higher than those of domestic suppliers. Such short contracts will limit the benefits that domestic firms can derive from spillover effects, not enough time to establish good working relationships and this is also a constraint of production linkage between FDI enterprises and domestic enterprises.
According to CIEM survey data, the supply of raw materials to FDI enterprises by domestic enterprises only accounts for about 1/3 of the total supply. In terms of product distribution channels, the proportion of products that FDI firms distribute through domestic firms is relatively low. This also demonstrates the limitation of the technology spillover channel from FDI enterprises as well as the limitation of technology absorption capacity of Vietnamese enterprises through FDI.
Second, the limitations of technical work channels Up to now, one of the indicators used to measure technology absorption capability is the educational level or expertise of employees in enterprises and the indicators for technological innovation of enterprises through R&D activities.
Another limitation is that the channel of labor migration, skilled workers moving from FDI to domestic enterprises is considered as an important channel that can generate positive technological spillover effects. There are two ways to create a spillover effect and to absorb technology in this channel: workers leave the FDI enterprises to set up their own companies or transfer them to domestic enterprises, especially enterprises in the same industry. However, according to CIEM survey data, more than 30% of FDI enterprises surveyed said that migrant labor was mainly transferred to other FDI enterprises.
Third, the limitations of the enterprise's R&D capability According to a survey by CIEM in 2013, the cost of R&D activities of enterprises in Vietnam comes from the owners of more than 86%, mobilized from credit sources of about 10%, from the state budget only about 3%. FDI enterprises spend about three times more on R&D than domestic ones. While domestic firms are mostly
Section 13. Economics and management
small and medium enterprises limited financial power compared to FDI enterprises. This demonstrates the limited ability to invest in R&D and technology research and development capacity of Vietnamese enterprises compared to FDI enterprises.
Therefore, the conditions for the spillover effect will be more difficult due to the technology gap. Therefore, in order to absorb technology from FDI enterprises, the domestic enterprises themselves must strive to narrow the technology gap with FDI enterprises through their R&D capability.
Fourth, limitations in the assessment of technology absorption capability of enterprises
Businesses are not aware ofthe meaning of evaluation as a kind of work that is not enthusiastic work. Even evade and make it difficult to process the work, get information and evaluation.
Some of the information for the evaluation process is within the scope of business secrets, which are protected by law, so businesses do not want to provide information to outsiders, or provide inaccurate information that result in incorrect results when conducting analysis and evaluation.
Businesses passive in the assessment process so some methodological points are not discussed and feedback, leading to slow adjustment and improvement of assessment methods.
Conditions for enhancing technology absorption capability ofVietnamese enterprises
First, on the State side
The assessment of technology capacity in general and assessment of technology absorption capability in particular is complex and highly specialized, so often the enterprises do not have sufficient capacity and often hire consultants. It is often the case that the parties place a commission on trusting and coordinating. Therefore, the main consultant is the evaluator. Counseling agencies are usually universities, research institutes, or related institutions. At present, the number of consultancy units as well as skills and experience in the assessment field is limited.
Therefore, it is necessary to clearly define the requirements, tasks and interests of the subjects involved in the assessment. For businesses that are the most beneficiaries of the assessment process. Therefore, they must take an active role in the assessment. For groups of agencies such as ministries, branches, and scientific bodies..., there should be coordination and full information from the
enterprises to accurately assess technological absorption capability of enterprises. This group should also have the power to decide on the technology innovation of the business, so the evaluation results should be considered as an important source and should be used for policy making or policy making of state management agencies involved in technology renovation activities of enterprises.
For the units conducting the assessment, it is necessary to invest in intensive training to improve the capacity of officials and experts to conduct the assessment. There should be provision for sharing of information among evaluating bodies. In addition, it is necessary to build a system of expert knowledge for unified evaluation on a national scale. The Ministry of Science and Technology needs to put the content of technology assessment into operation regularly every year so that the evaluation results are continually updated regularly and form a unified database across the country. Furthermore, it is also necessary to define a system of uniform criteria for evaluation and to develop a rating system that quantifies the criteria for assessing the technology absorption capability of enterprises, especially small and medium enterprises by sector.
It is necessary to add specific conditions to organizations that perform advisory and evaluation tasks, especially those on organization and personnel, and must have a database of specialists who can serve the evaluation tasks.
Second, the conditions on the side of the enterprises
For an enterprise directly owning the technology to produce products and goods or services, the assessment will help the business know the current state of its technology competency relative to its competitors in the same field. Therefore, the enterprise is the subject of the evaluation process and has full discretion in making decisions about its technology. Businesses are also the most beneficiaries of the assessment process, and they must take an active role in the assessment.
Today, businesses, especially small and medium enterprises, are often not paying enough attention to evaluating. Therefore, enterprises need to be empowered to see that they are the most beneficiaries of the assessment and should take an active role in this activity. In addition, evaluations should be considered as an important source of information that is used for the decision-making process or policy formulation of relevant government agencies.
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6. Trinh Minh Täm (2015), The Role of FDI in Technological Innovation in Vietnamese Enterprises, Vietnam Trade and Industry Review, - No. 6, May - 2015, - P. 18-21.
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8. Trinh Minh Täm et al. (2016), Spillover effects of FDI on technology innovation of Vietnamese enterprises, Journal of Economics & Development, 224 (II), February - 2016, - P. 2-9.
