Factors influencing domestic consumption in vietnams market

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY  CAO QUỐC VIỆT FACTORS INFLUENCING DOMESTIC CONSUMPTION IN VIETNAM’S MARKET MASTER’S THESIS IN BUSINESS ADMINISTRATION Ho Chi Minh City – 2012 i MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY  CAO QUỐC VIỆT FACTORS INFLUENCING DOMESTIC CONSUMPTION IN VIETNAM’S MARKET MASTER’S THESIS In Business Administration Code: 60340102 Supervisor Dr Nguyễn Thị Mai Trang Ho Chi Minh City – 2012 ii Acknowledgements When I write these statements, it reminds me to turn back the time of two years ago; as I read the book “Nghiên cứu khoa học Marketing - Ứng dụng mơ hình cấu trúc tuyến tính SEM”, I could not understand anything It is a mysterious world that I need to discover It was also the start point for my study road My sincere thanks send to the authors who have composed this wonderful book I would like to thank my supervisor Dr Nguyen Thi Mai Trang for her supports, instructions, and valuable comments throughout the work leading to this thesis I would like to thank all respondents who gave me priceless time during the data collection phase of this thesis I never forget my thanks to Mr Nguyen Khanh Duy with his first SEM Vietnamese book My deep thanks to my wife, Tsằn Schếng Mỹ, and our son; their love is the motivation behind my work Thanks to my family, my Mother, Father, brothers and sister Thanks God bless and lead me iii Declaration I declare that the entirety of the work contained therein (except the citations) is my own work I declare that I am the only author and neither portion in the thesis has been submitted in support of another degree nor published by another person HoChiMinh City, 10/10/2012 Cao Quoc Viet iv Abstract The purpose of this thesis is to investigate domestic consumption The aim is to examine factors which influence the domestic consumption among consumers in Vietnam Furthermore, the research focuses on finding out determinant that influences domestic consumption the most Based on Vida and Reardon’s Model and literature review a theoretical model was proposed The model investigates the effect of some independent variables on the domestic consumption such as import product quality perception, consumer ethnocentrism, cosmopolitanism and patriotism A survey of 396 consumers was carried out Some techniques were used to analyze the model, such as descriptive statistics, reliability assessment, exploratory factor analysis and confirmatory factor analysis The proposed theoretical model was also empirically tested by means of the structural equation modeling technique The results show that only cosmopolitanism was insignificant factor The findings indicate that import product quality perception, consumer ethnocentrism, patriotism are significant predictors of domestic consumption Key words: domestic consumption, consumer cosmopolitanism, import product quality perception ethnocentrism, patriotism, v List of Acronyms AMOS - Analysis of Moment Structures CET - Consumer ethnocentrism CFA - Confirmatory Factor Analysis CFI - Comparative Fit Index CMIN - Chi square CMIN/df - Chi square/degree of freedom COS - Cosmopolitanism DC - Domestic consumption EFA - Exploratory Factor Analysis FDI - Foreign Direct Investment GFI - Goodness of Fit Index IPQP - Import product quality perception KMO - The Kaiser - Meyer - Olkin ML - Maximum likelihood OALD - Oxford Advanced Learner’s Dictionary PAT - Patriotism RMSEA - Root Mean Square Error Approximation SEM - Structural Equation Modeling TLI - Tucker & Lewis Index vi Table of Contents Acknowledgements ii Declaration iii Abstract iv List of Acronyms v Chapter 1: INTRODUCTION 1.1 Research background 1.2 Problem statement 1.3 Research objectives 1.4 Scope and Research methodology 1.4.1 Scope of the study 1.4.2 Research Method 1.5 Structure of the research Chapter 2: LITERATURE REVIEW 2.1 Introduction 2.2 Domestic Consumption (DC) 2.3 Import Product Quality Perception (IPQP), Consumer Ethnocentrism (CET), Patriotism (PAT) and Cosmopolitanism (COS) 2.3.1 Import Product Quality Perception (IPQP) 2.3.2 Consumer Ethnocentrism (CET) 2.3.3 Patriotism (PAT) 2.3.4 Cosmopolitanism (COS) 2.4 Hypothesis development and Research Model 2.4.1 Import Product Quality Perception (IPQP), Consumer Ethnocentrism (CET) and Domestic Consumption (DC) 2.4.2 Cosmopolitanism (COS), Patriotism (PAT) and Consumer Ethnocentrism (CET) 2.4.3 Patriotism (PAT) and Domestic Consumption (DC) vii 2.4.4 Research Model Chapter 3: METHODOLOGY 11 3.1 Introduction 11 3.2 Research design 11 3.2.1 Pilot study .13 3.2.1.1 Qualitative research 13 3.2.1.2 Quantitative research .13 3.2.1.3 Pilot study results .15 3.2.2 Official Quantitative research .18 3.2.2.1 Sample .18 3.2.2.2 Data analysis methods 19 3.3 Measurement 19 3.3.1 Scale to measure Consumer Ethnocentrism (CET) 20 3.3.2 Scale to measure Import Product Quality Perception (IPQP) 21 3.3.3 Scale to measure Patriotism 21 3.3.4 Scale to measure Cosmopolitanism 23 3.3.5 Scale to measure Domestic Consumption 23 3.4 Summary .24 Chapter 4: DATA ANALYSIS AND FINDINGS 25 4.1 Introduction 25 4.2 Descriptions of sample 25 4.3 Scale assessment 26 4.3.1 Normality assessment 26 4.3.2 Reliability testing 27 4.3.3 Exploratory Factor Analysis 28 4.4 Confirmatory Factor Analysis (CFA) .31 4.5 Testing Theoretical Model 41 4.6 Testing Hypotheses and Summary 44 4.6.1 Testing Hypotheses .44 viii 4.6.2 Summary 46 Chapter 5: CONCLUSIONS AND IMPLICATIONS 47 5.1 Introduction 47 5.2 Discussion of findings 47 5.3 Managerial Implications 48 5.4 Limitations and Future research 50 List of References 52 Appendix 57 Appendix Refrigerator statistics Vietnam 2005 - 2010 57 Appendix 3.1 Group discussion 59 Appendix 3.2 English Questionnaire 62 Appendix 3.3 Bảng câu hỏi khảo sát 66 Appendix 4.1 Descriptive Statistics 71 Appendix 4.2 Cronbach’s Alpha 72 Appendix 4.3 EFA 75 Appendix 4.4 CFA results 77 Appendix 4.5 Theoretical Model 85 ix LIST OF FIGURES Figure 2.1: Theoretical Model 10 Figure 3.1: Research procedure 12 Figure 4.4: Saturated Model 34 Figure 4.5: Refined Saturated Model 35 Figure 4.6: Final Saturated Model 37 Figure 4.7: SEM’s Result - Theoretical Model (Standardized) 41 81 Estimate IPQP4 IPQP3 IPQP2 IPQP1 PAT5 PAT4 PAT3 PAT2 PAT1 COS4 COS3 COS2 COS1 DC4 DC3 DC2 DC1 < < < < < < < < < < < < < < < < < - IPQP IPQP IPQP IPQP PAT PAT PAT PAT PAT COS COS COS COS DC DC DC DC 697 909 710 717 838 870 811 892 773 610 613 882 813 903 891 667 595 Covariances: (Group number - Default model) IPQP PAT COS CET CET CET IPQP PAT IPQP CET e11 e14 e7 e18 e13 < > < > < > < > < > < > < > < > < > < > < > < > < > < > < > PAT COS DC IPQP PAT DC COS DC DC COS e10 e13 e6 e17 e11 Estimate 156 262 116 077 292 653 -.081 432 -.190 065 202 195 466 160 -.096 S.E .064 056 061 072 078 103 049 083 078 058 057 048 096 057 031 C.R 2.438 4.714 1.879 1.065 3.739 6.318 -1.639 5.186 -2.448 1.124 3.535 4.033 4.835 2.786 -3.116 Correlations: (Group number - Default model) P 015 *** 060 287 *** *** 101 *** 014 261 *** *** *** 005 002 Label 82 Estimate IPQP PAT COS CET CET CET IPQP PAT IPQP CET e11 e14 e7 e18 e13 < > < > < > < > < > < > < > < > < > < > < > < > < > < > < > PAT COS DC IPQP PAT DC COS DC DC COS e10 e13 e6 e17 e11 139 295 108 064 229 426 -.096 303 -.141 068 325 401 359 163 -.214 Variances: (Group number - Default model) CET IPQP PAT COS DC e5 e4 e3 e2 e1 e9 e8 e7 e6 e14 e13 e12 e11 e10 e18 e17 e16 Estimate 1.376 1.063 1.184 666 1.710 1.539 1.715 1.923 1.752 2.059 1.126 405 1.233 1.363 501 474 554 421 915 1.121 863 319 S.E .195 144 121 107 155 137 160 161 168 168 096 099 112 125 052 063 050 059 084 089 069 056 C.R 7.074 7.387 9.825 6.243 11.003 11.225 10.703 11.965 10.448 12.228 11.679 4.080 11.027 10.917 9.645 7.510 11.170 7.088 10.955 12.583 12.565 5.672 P Label *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** 83 e15 e22 e21 e20 e19 Estimate 546 389 420 1.359 1.344 S.E .063 058 057 106 101 C.R 8.689 6.698 7.395 12.877 13.257 P Label *** *** *** *** *** Model Fit Summary CMIN Model Default model Saturated model Independence model NPAR CMIN DF P 59 253 403.663 000 4805.52 194 000 2.081 231 000 20.803 RMR GFI AGFI PGFI 118 000 601 917 1.000 385 891 703 326 351 NFI Delta1 RFI rho1 IFI Delta2 TLI rho2 916 1.000 000 900 955 1.000 000 945 22 CMIN/DF RMR, GFI Model Default model Saturated model Independence model Baseline Comparisons Model Default model Saturated model Independence model 000 000 CFI 954 1.000 000 84 Parsimony-Adjusted Measures Model Default model Saturated model Independence model PRATIO PNFI PCFI 840 000 1.000 769 000 000 801 000 000 NCP LO 90 HI 90 209.663 000 155.896 000 4352.76 271.194 000 4803.53 NCP Model Default model Saturated model Independence model 4574.523 FMIN Model FMIN F0 LO 90 HI 90 Default model Saturated model Independence model 1.022 000 12.166 531 000 11.581 395 000 11.020 687 000 12.161 RMSEA LO 90 HI 90 PCLOSE 052 224 045 218 059 229 291 000 AIC BCC BIC CAIC Default model 521.663 528.958 815.566 Saturated model 506.000 537.285 4849.523 4852.24 756.566 1513.29 4937.11 RMSEA Model Default model Independence model AIC Model Independence model ECVI 1766.298 4959.114 85 Model ECVI LO 90 HI 90 MECVI Default model Saturated model Independence model 1.321 1.281 12.277 1.185 1.281 11.716 1.476 1.281 12.857 1.339 1.360 12.284 HOELTER HOELTER 05 01 Default model 223 238 Independence model 22 24 HOELTERModel Minimization: 063 Miscellaneous: 1.087 Bootstrap: 000 Total: 1.150 Appendix 4.5 Theoretical Model 86 Analysis Summary 87 Date and Time Date: Monday, September 03, 2012 Time: 9:12:47 PM Title Sem 31072012 du lieu final 396: Monday, September 03, 2012 9:12 PM Your model contains the following variables (Group number 1) Observed, endogenous variables CET5 CET4 CET2 IPQP4 IPQP3 IPQP2 IPQP1 PAT5 PAT4 PAT3 PAT2 PAT1 COS4 COS3 COS2 COS1 DC4 DC3 DC2 DC1 Unobserved, endogenous variables CET DC Unobserved, exogenous variables e5 e4 e2 IPQP e9 e8 e7 88 e6 PAT e14 e13 e12 e11 e10 COS e18 e17 e16 e15 e22 e21 e20 e19 e24 e23 Variable counts (Group number 1) Number of variables in your model: Number of observed variables: Number of unobserved variables: Number of exogenous variables: Number of endogenous variables: 47 20 27 25 22 Parameter summary (Group number 1) Fixed Labeled Unlabeled Total Weights 27 20 47 Covariances Variances 0 0 25 25 Means 0 0 Notes for Model (Default model) Computation of degrees of freedom (Default model) Number of distinct sample moments: Number of distinct parameters to be estimated: Degrees of freedom (210 - 50): 210 50 160 Intercepts 0 0 Total 27 50 77 89 Result (Default model) Minimum was achieved Chi-square = 321.798 Degrees of freedom = 160 Probability level = 000 Estimates (Group number - Default model) Scalar Estimates (Group number - Default model) Maximum Likelihood Estimates Regression Weights: (Group number - Default model) CET CET DC DC DC CET5 CET4 CET2 IPQP4 IPQP3 IPQP2 IPQP1 PAT5 PAT4 PAT3 PAT2 PAT1 COS4 COS3 COS2 COS1 < < < < < < < < < < < < < < < < < < < < < - PAT COS PAT CET IPQP CET CET CET IPQP IPQP IPQP IPQP PAT PAT PAT PAT PAT COS COS COS COS Estimate 230 023 321 322 -.257 1.000 1.031 954 1.000 1.323 1.093 1.174 1.000 1.125 950 1.195 1.080 1.000 884 1.289 1.269 S.E .073 099 063 058 067 C.R 3.127 230 5.067 5.584 -3.859 P 002 818 *** *** *** 091 088 11.282 10.814 *** *** 095 086 091 13.958 12.752 12.895 *** *** *** 043 052 060 066 26.292 18.411 19.988 16.370 *** *** *** *** 081 107 106 10.915 12.004 11.990 *** *** *** Label 90 Estimate S.E C.R P Label DC4 < - DC 1.000 DC3 < - DC 969 043 22.698 *** DC2 < - DC 798 052 15.240 *** DC1 < - DC 653 050 12.978 *** Standardized Regression Weights: (Group number - Default model) CET CET DC DC DC CET5 CET4 CET2 IPQP4 IPQP3 IPQP2 IPQP1 PAT5 PAT4 PAT3 PAT2 PAT1 COS4 COS3 COS2 COS1 DC4 DC3 DC2 DC1 < < < < < < < < < < < < < < < < < < < < < < < < < - PAT COS PAT CET IPQP CET CET CET IPQP IPQP IPQP IPQP PAT PAT PAT PAT PAT COS COS COS COS DC DC DC DC Estimate 186 014 263 325 -.201 782 733 659 701 898 718 727 833 870 807 901 774 611 614 878 817 905 892 671 597 Covariances: (Group number - Default model) e7 e11 e13 < > < > < > e6 e10 e11 Estimate 432 184 -.109 S.E .096 058 031 C.R 4.486 3.176 -3.499 P *** 001 *** Label 91 e14 e18 < > < > e13 e17 Estimate 203 158 S.E .050 058 C.R 4.097 2.751 P *** 006 Label P *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** Label Variances: (Group number - Default model) Estimate 1.074 1.168 667 1.721 1.317 1.130 1.630 2.117 1.115 450 1.205 1.323 517 474 566 385 914 1.120 861 330 536 386 421 1.358 1.349 IPQP PAT COS e24 e23 e5 e4 e2 e9 e8 e7 e6 e14 e13 e12 e11 e10 e18 e17 e16 e15 e22 e21 e20 e19 S.E .145 120 107 225 127 153 182 195 096 099 112 125 053 065 050 060 085 089 069 058 064 058 057 105 102 C.R 7.428 9.709 6.233 7.662 10.388 7.382 8.970 10.873 11.597 4.540 10.767 10.609 9.765 7.346 11.271 6.404 10.803 12.534 12.510 5.651 8.331 6.609 7.369 12.874 13.266 Squared Multiple Correlations: (Group number - Default model) CET DC Estimate 035 247 92 DC1 DC2 DC3 DC4 COS1 COS2 COS3 COS4 PAT1 PAT2 PAT3 PAT4 PAT5 IPQP1 IPQP2 IPQP3 IPQP4 CET2 CET4 CET5 Estimate 356 450 796 819 667 771 377 373 599 812 651 757 693 528 516 807 491 434 538 612 Standardized Regression Weights: (Group number - Default model) (bootstrap standard errors) Parameter CET < CET < DC < DC < DC < CET5 < CET4 < CET2 < IPQP4 < IPQP3 < IPQP2 < IPQP1 < - PAT COS PAT CET IPQP CET CET CET IPQP IPQP IPQP IPQP SE 063 065 060 059 058 044 047 042 035 031 045 046 SE-SE 001 001 001 001 001 001 001 001 001 001 001 001 Mean 186 014 260 328 -.197 781 734 659 701 898 718 729 Bias 001 000 -.003 002 004 -.001 001 001 001 000 000 002 SE-Bias 002 002 002 002 002 001 001 001 001 001 001 001 93 Parameter PAT5 < PAT4 < PAT3 < PAT2 < PAT1 < COS4 < COS3 < COS2 < COS1 < DC4 < DC3 < DC2 < DC1 < - PAT PAT PAT PAT PAT COS COS COS COS DC DC DC DC SE 029 029 038 023 036 047 054 031 033 029 026 038 044 SE-SE 001 001 001 001 001 001 001 001 001 001 001 001 001 Mean 832 869 805 901 772 610 613 877 817 905 891 671 597 Bias -.001 -.001 -.002 -.001 -.001 -.001 -.001 -.001 000 000 -.001 000 000 SE-Bias 001 001 001 001 001 001 002 001 001 001 001 001 001 Model Fit Summary CMIN Model Default model Saturated model Independence model NPAR 50 210 20 CMIN 321.798 000 4415.159 DF 160 190 P 000 CMIN/DF 2.011 000 23.238 RMR 169 000 581 GFI 926 1.000 395 AGFI 903 PGFI 706 331 357 NFI Delta1 927 1.000 000 RFI rho1 913 IFI Delta2 962 1.000 000 TLI rho2 955 RMR, GFI Model Default model Saturated model Independence model Baseline Comparisons Model Default model Saturated model Independence model 000 000 CFI 962 1.000 000 94 Parsimony-Adjusted Measures Model Default model Saturated model Independence model NCP PRATIO 842 000 1.000 PNFI 781 000 000 PCFI 810 000 000 Model Default model Saturated model Independence model NCP 161.798 000 4225.159 LO 90 114.490 000 4012.484 HI 90 216.887 000 4445.105 FMIN 815 000 11.178 F0 410 000 10.697 LO 90 290 000 10.158 HI 90 549 000 11.253 RMSEA 051 237 LO 90 043 231 HI 90 059 243 PCLOSE 440 000 AIC 421.798 420.000 4455.159 BCC 427.413 443.583 4457.405 BIC 620.868 1256.097 4534.788 CAIC 670.868 1466.097 4554.788 ECVI 1.068 1.063 11.279 LO 90 948 1.063 10.740 HI 90 1.207 1.063 11.836 MECVI 1.082 1.123 11.285 FMIN Model Default model Saturated model Independence model RMSEA Model Default model Independence model AIC Model Default model Saturated model Independence model ECVI Model Default model Saturated model Independence model 95 HOELTER HOELTER 05 234 20 Model Default model Independence model Minimization: Miscellaneous: Bootstrap: Total: 081 1.068 000 1.149 HOELTER 01 252 22 ... MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY  CAO QUỐC VIỆT FACTORS INFLUENCING DOMESTIC CONSUMPTION IN VIETNAM’S MARKET MASTER’S THESIS In Business Administration... buying and using domestic products Thus, exploring determinants influence the domestic consumption in Vietnam’s market is a valuable contribution for domestic enterprises within the field of marketing... investigate domestic consumption The aim is to examine factors which influence the domestic consumption among consumers in Vietnam Furthermore, the research focuses on finding out determinant that influences