Family and Friends in Small-Scale Businesses,
An Exploratory Study of Industrial Districts in Vietnam

Stephen J. Appold
Department of Sociology
National University of Singapore
11 Arts Link
Singapore 117570
Le Ngoc Hung
Institute of Sociology
Hanoi, Vietnam
Nguyen Quy Thanh
Department of Sociology and Psychology
University of Hanoi
Hanoi, Vietnam
John D. Kasarda
Kenan Institute for Private Enterprise
University of North Carolina
Chapel Hill, NC 27599-3440

Large changes in the external and internal environment, including the near-collapse of an international support network centered in the former Soviet Union and rapid domestic labor force growth, has placed great stress on Vietnam's centrally planned economy.  Regulatory changes, increased spending brought about by renewed economic growth, and employment dislocation stemming from the downsizing of some large state-owned enterprises have resulted in the growth in the number of small-scale manufacturing establishments.  These enterprises tend to locate in specialized clusters in cities and their immediate suburbs.

The literature on small-scale enterprise frequently emphasizes the role of non-economic relationships in the determining economic behavior, particularly in situations where markets are imperfect and where official regulatory mechanisms only insufficiently protect creditors, business partners, and workers.  A complementary literature on industrial districts stresses the role of pooling labor and orders resulting in intense inter-firm cooperation between competitors, in determining firm success.

Addressing both literatures, this paper is an initial exploration of a pilot survey of 124 small-scale enterprises which manufacture 1) aluminum cooking utensils, 2) ornamental iron for buildings, 3) clothing, and 4) wooden furniture in Hanoi.  In contrast to the South, Hanoi was under Communist rule since the 1950s so that none of the firm owners had been raised in a capitalist environment.  The role of family and personal friendships in a) gaining access to the capital needed to start a manufacturing business, b) the pooling of large orders among competing firms, and c) securing flexible labor arrangements will be investigated.


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