Academic journal article International Journal of Business Studies

Globalisation, Competitiveness and Human Resource Management in a Transitional Economy: The Case of Vietnam

Academic journal article International Journal of Business Studies

Globalisation, Competitiveness and Human Resource Management in a Transitional Economy: The Case of Vietnam

Article excerpt

In the light of competition and the search for sources of competitive advantage, developing and managing human resources has increasingly become the focus of attention in some countries. The importance of human assets for success has been recognised and stressed in developed, as well as developing, countries. For example, in Vietnam a new focus was driven by the 'doi moi' ('renovation') policy that was meant to shift a rigid centrally planned system towards a more flexible market-oriented economy. The consequent structural reforms revealed several impediments, including human resource management systems, slowing the pace of development and global integration with implications for competition. This study reassesses the status of people management in Vietnam and argues for the need for better management and development of its human capital.

Keywords: globalisation, competitiveness, HRM, transitional economy, Vietnam


While globalisation may be making the world a better place for some (Sorman, 2007: 35), it can simultaneously create problems for the economy and businesses of a country. Vietnam is facing the same challenges as some other emerging economies seeking to compete in globalised markets. After many years of war and post-war readjustment, in the 1990s Vietnam started to rebuild its economy. Both the process of change toward a market-oriented economy and integration into the global economic mainstream, requires highly qualified people. The latter is of even greater importance as Vietnam has been applying a development model based more on free market economy principles with a 'socialist orientation' ('kinh te thi truong theo dinh huong xa hoi chu nghia'), while at the same time aiming to join the 'industrialised countries club' by 2020 (CPV, 2001).

In order to achieve these goals Vietnam began to place greater emphasis on a more balanced and 'quality-focused' economic growth pattern (Doanh, 2006; Viet, 2006) after a sustained period of high 'quantitative-focused' growth. The pursuit of competitiveness in the face of increasing free trade agreements has encouraged the government and business (public and private sector alike) to readjust the workforce to the new conditions. Significant milestones include membership of the ASEAN (Association of South East Asian Nations) Free Trade Area (AFTA), the conclusion of the US-Vietnam Bilateral Trade Agreement (2001) and WTO membership (2007). All these events necessitated even more rapid and comprehensive changes in economic (macro level) and organisational (micro level) structure towards a more value-added, manufacturing-based and export-oriented economy. Under the mounting pressure of competitiveness enhancement and the new strategic orientation, the critical role of human resources (HR), HR management (HRM), and HR development (HRD) have become more urgent (Cam Ha, 2006). While the fallout of the post-2008 global 'credit crunch' and consequent financial crisis is important, it does not necessarily undermine our thesis on the growing importance of HR and HRM in this economic shift.

Vietnam is in many aspects a typical case of an 'emerging economy' undergoing significant change that puts a premium on the task of utilising and further developing its abundant HR (Quang, 2006). This can be achieved with HRM and HRD strategies. This case of Vietnam will provide a valuable example for countries with similar conditions to draw lessons and learn from. This paper analyses the way HRs are managed and stresses the need for a HRM strategy to enhance competitiveness in response to globalisation.

The paper is structured as follows. This introduction is followed by sections covering: some relevant literature on globalisation, competitiveness and HRM, the country's socio-economic base; competitiveness enhancement; HRD and HRM for development; future challenges and its illustrations by three informative cases; possible solutions to bridge the gaps and an implications and conclusion section. …

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