Summary of Economic Doctoral dissertation: Relationship network, business model innovation and start-up performance of start-up firms in Vietnam

The dissertation examines the relationship between the relationship network, BMI and the start-up performance of start-up firms. From the achieved findings and results, the dissertation provides the implications for management to enhance the development of relationship networks, promote the implementation of BMI, and contribute to the improvement of start-up performance of start-up firms in Vietnam.

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY TRAN NHA GHI RELATIONSHIP NETWORK, BUSINESS MODEL INNOVATION AND START-UP PERFORMANCE OF START-UP FIRMS IN VIETNAM Major : Business Administration Code : 9340101 SUMMARY OF ECONOMIC DOCTORAL DISSERTATION Scientific instructors : Assoc Prof Dr Nguyen Quang Thu Dr Ngo Quang Huan Ho Chi Minh City - 2019 These works are completed at : University of Economics Ho Chi Minh City Scientific instructor : Assoc Prof Dr Nguyen Quang Thu Scientific instructor : Dr Ngo Quang Huan Reviewer 1: Reviewer 2: Reviewer 3: The dissertation will be defended in front of the Dissertation Evaluation Council at The University of Economics Ho Chi Minh City at ………………………………………………………………………………………….…… The dissertation can also be found at: LIST OF THE AUTHOR’S PUBLICATIONS RELATED TO THE DISSERTATION Articles published on the Science Journals: Nguyen Quang Thu, Ngo Quang Huan, & Tran Nha Ghi (2018) The relationship between firm resources, dynamic capabilities and firm performance of start-up firms in Ba Ria - Vung Tau province Journal of Asian Business and Economic Studies (JABES), 28 (12), 05–21 Nguyen Quang Thu, Ngo Quang Huan, & Tran Nha Ghi (2018) Effect of relationship quality on of business model innovation of start-up firms in Ba Ria - Vung Tau province Journal of Economics and Development (JED), 253(7), 59-69 Nguyen Quang Thu, Ngo Quang Huan, & Tran Nha Ghi (2018) Effect of relationship quality on start-up performance of start-up firms in Ba Ria - Vung Tau province Journal of Science Ho Chi Minh City Open University, 61(4), 67 – 79 Articles published in the Scientific Conference: Nguyen Quang Thu, Ngo Quang Huan, & Tran Nha Ghi (2016) The relationship between firm resources, dynamic capabilities and business performance of enterprises in Vung Tau City Scientific conference of Entrepreneurship in Vietnam: Opportunities and challenges in the period of integration, Tran Anh Thanh Son (editor), University of Economics HCM City, 179-189 Ngo Quang Huan, Bui Anh Tuan, & Tran Nha Ghi (2016) Research on the relationship between the start-up environment and capability to the business performance of small and medium enterprises in the Southern Vietnam Scientific conference of Entrepreneurship in Vietnam: Opportunities and challenges in the period of integration, Tran Anh Thanh Son (editor), University of Economics HCM City, 13-30 Ngo Quang Huan, & Tran Nha Ghi (2018) Improving start-up performance through business model innovation Workshop of start-up science and small and mediumsized enterprise management in Vietnam in the context of the 4.0 revolution University Publishing House Ho Chi Minh City -1- CHAPTER 1: INTRODUCTION 1.1 The necessity of research problems Derived from practical needs In Vietnam, the private economic sector plays an important role in the economic development of the country Statistics show that about 97% of small and medium enterprises (SMEs) contribute 40% of the state budget and create employment opportunities for 50% of the labor (Nguyen Trong Hoai, 2016) Start-up creates new businesses and firms (Gartner, 1985) Therefore, start-up firms are the first step for the formation, development and becoming mature firms and enterprises in later stages According to GEM (2017), the rate of maintaining business after starting up within the first 3.5 years accounted for 20.8% Although this has been improved when compared to 12.7% in 2016, the successful start-up rate is still very low The causes of the failure for start-up firms in the starting phase are very diverse such as: inappropriate business strategy, lack of legal knowledge, "calling for capital" problems and administrative procedure barriers (Y Nhi, 2017) Although start-up firms receive many priorities from the Government's development support policies, the interest of society and the support of related parties In fact, many start-up firms still have to face many difficulties in accessing information and resources Meanwhile, the information provided by state agencies only partially meets the demand; there are many start-up firms without the initiative and sufficient information According to a survey by the Vietnam Chamber of Commerce and Industry (VCCI), the personal relationships between firms and state agencies play an important role in the access to important information and official documents in business activities.1 Trimi & Berbegal-Mirabent (2012) have studied the business model innovation (BMI) in the start-up businesses; this new topic attracts increasing attention in scientific theory development Each firm in an industry has a different business model, built based on their available resources Competitors can hardly imitate or copy other business models to apply in their organizations (from resource point of view) In summary, in the first phase, when start-up firms lack resources, implementing BMI to adapt to market changes and improve operating performance requires external supporting resources In this period, start-up firms also need to receive the attention and support of the Government Therefore, the question is how to access the information and resources from individuals/organizations to supporting start-up activities? To answer the above question, it is essential that the research issue on start-up firms' building relationship network with government agencies and individuals/organizations to access information and resources, implement business model innovation, improving performance is implemented in the current context https://baomoi.com/bao-dam-nhu-cau-tiep-can-thong-tin-cua-doanh-nghiep-khoi-nghiep/c/25023396.epi -2- Derived from the theory gap Foss & Saebi (2016) synthesized BMI studies in the period of 2000 - 2015 and proposed future research lines for BMI: (1) Building BMI concept and components of BMI; (2) Identify factors that are causes and results of BMI; (3) Determine moderator variables between causes and results of BMI; (4): The marginal impact of factors leading to BMI implementation and BMI results However, until now, there has not been any study to measure and verify the intermediary role of BMI between the network relationship and the start-up performance of start-up firms The impact of BMI on start-up performance: Studies on the effect of BMI on business performance of start-up firms are still limited In addition, the research results on this issue are different For example, Zott & Amit (2008), Heij et al (2014) and Anwar (2018) found that BMI positively affected business performance Meanwhile, Patzelt et al (2008) proposed there is no relationship between BMI and business performance Halecker et al (2014) found a negative relationship between BMI and business performance Therefore, this dissertation is conducted to test the relationship between BMI and start-up performance of start-up firms in the transition economy At the same time, the dissertation will reaffirm the direction of impact of BMI on business performance The impact of relationship network on BMI: There are few published studies about the influence of relationship network on BMI Guo et al (2013) considered the impact of human capital and social capital on BMI, and Anwar & Shah (2018) assessed the impact of financial relations, politics and business partnership networks on BMI So far, there is no study on the effect of relationship network on BMI for start-up firms published in Vietnam BMI concept approaches BMI is approached by researchers in many different points of view The approach of BMI from Zott & Amit (2007) is most used by researchers for their studies Some studies for this approach are of Guo et al (2013), Guo et al (2015), Anwar & Shah (2018), etc On the other hand, the study of Clauss (2017) applied the BMI approach as a type II scale of Jarvis (2003), in which BMI is a model of result-cause scale There are few researchers applying this approach of BMI Therefore, this dissertation will approach BMI according to Clauss (2017) To explain the formation of external resources for firms, previous studies such as Guo et al (2013) and Anwar & Shah (2018) used social network theory, social capital theory and innovation diffusion theory However, institutional theory has not been applied much in these studies The institutional theory shows how firms and businesses can increase the "acceptance" level of society The higher the acceptance level of society is, the more opportunities the firms will gain to access resources by their strategy In the initial phase, start-up firms enjoy preferential policies form the Government, support and concern from relatives, friends and colleagues So the research question is how start-up firms access essential information and resources? To answer this question, the dissertation uses institutional theory combined with -3- the theory of social networks to explain the formation of external resources This is a new explanation that previous studies have not used In this approach, the owners/senior managers play important roles in building a network to help their firms access information and resources to implement BMI and improve business performance In addition, according to the evaluation of GEM (2017) about Vietnam's business conditions, "the environmental dynamism of domestic market" is ranked highest in the start-up ecosystem Thus, it is very necessary that the effect of the environmental dynamism on the relationship between BMI and the business performance of firms in Vietnam to be verified Therefore, in order to examine the role of relationship network in conducting the current business model innovation, contributing to improving the start-up performance of start-up firms, the research topic “Relationship network, business model innovation and start-up performance of start-up firms in Vietnam” is necessary to be implemented in the current context 1.2 The general research framework of the dissertation The implementation of BMI through relationship network will contribute to improving the start-up performance of start-up firms, which is presented in the general research framework Relationship network directly affects start-up performance and indirectly affects start-up performance with BMI as an intermediate variable The environmental dynamism of the domestic market is considered to be the moderator of the relationship between BMI and start-up performance of start-up firms Based on the general research framework, the dissertation concludes new research points that previous studies have not mentioned as follows: New point 1: The relationship between the relationship network, BMI and start-up performance of startup firms has not been verified in the transition economic market Also, according to the latest review of the author, this relationship has not been explored in the developed economic market New point 2: The combined approach of institutional theory and social network theory to explain the formation of external resources to implement BMI of start-up firms has not been applied in previous studies New point 3: The approach of BMI scale according to Clauss (2017), which is a scale with the form of hierarchical component models (HCMs) has not been widely tested 1.3 Research objectives General objective: The dissertation examines the relationship between the relationship network, BMI and the start-up performance of start-up firms From the achieved findings and results, the dissertation provides the implications for management to enhance the development of relationship networks, promote the -4- implementation of BMI, and contribute to the improvement of start-up performance of start-up firms in Vietnam Detailed objectives: In order to achieve the general objective, the dissertation needs to fulfill the following specific objectives: Building a model of relationship between relationship network, BMI and start-up performance of start-up firms; Verifying the relationship between relationship network, BMI and start-up performance of start-up firms; Verifying the regulation of the environmental dynamism of the domestic market on the relationship between BMI and start-up performance of start-up firms; Suggesting managerial implications to improve start-up performance through the relationship network and BMI implementation 1.4 Research Methodology 1.4.1 Qualitative research methods Interview method is used in qualitative research The dissertation collected ideas and opinions of experts who are experienced in the field of start-up activities Qualitative research methods are implemented to standardize theoretical models, explore research and adjust the scale Implementation techniques are direct individual interview with experts based on designed outline Interview results will be aggregated in order to form a draft scale to serve pilot study in quantitative research and formal quantitative research 1.4.2 Quantitative research methods Pilot study: After data entry, research data is tested for the reliability of scales with Cronbach’s Alpha reliability coefficient Next, exploratory factor analysis (EFA) is applied to check the convergence value and distinctive value of observed variables in the scale The purpose of this method is to preliminary assess the scale of research concepts in theoretical models before conducting formal research Formal quantitative research: The scales will be tested with Cronbach’s Alpha coefficient and EFA analysis again Next, the scale will be evaluated by measurement model analysis and linear structure model through PLS-SEM software 1.5 Research objects and scope Research objects: Research concepts such as relationship networks, BMI, start-up performance of start-up firms and their relationships Subjects of the survey: The owners, the board of directors, the capital contributors, the founders and representatives of start-up firms with operating time less than years (according to Decision No 844/QD- TTg) -5- Research scope: the research is conducted with start-up firms in the area of Ho Chi Minh city, Ba Ria - Vung Tau, Dong Nai, Binh Duong and some other provinces 1.6 The significance of the research 1.6.1 Practical significances For start-up firms: start-up firms recognize the importance of building a relationship network to supplement information and resources in the early stages of operation Start-up firms use various resources to support BMI, increase start-up performance and minimize failure risks At the same time, start-up firms realize the importance of implementing BMI in order to adapt to the changing environment For policy makers: the research results suggest ideas to help policy makers issue effective and detailed policies and solutions to support start-up firms A number of official documents (Decisions, Decrees, Plans, Laws, etc.) have been issued without specifically mentioning the practical detailed content to support business model innovation Therefore, the later documents need to supplement the content to support business model innovation for start-up firms For start-up consultancies: Start-up consultancies realizes their missions in providing training services, information support on laws and tax policies, especially consulting in planing and building appropriate business model, in order to help start-up firms improve management skills, professional skills and select appropriate business models for their start-up businesses 1.6.2 Theoretical significances Firstly, the dissertation has synthesized institutional theory, social network theory, innovation theory and VARIM theory In addition, the dissertation has systematized the relationships between the theories to build the strategy of start-up firms in the transition economy Secondly, the proposed research model is combined from background theories and tested in Vietnam market with the following results: - Relationship network consists of components (relations with government officials, social relations and business partnerships) that positively affect BMI and the start-up performance of start-up firms - BMI is a concept with a high-level structure, a scale of decentralized factor model (results - causes scale), which is inherited from the study of Clauss (2017) The results of verification in the Vietnamese market show that BMI reaches the permitted value and has a positive impact on start-up performance of start-up firms - Researchers can make a general assessment of the relationships between the theories mentioned and re-test the above relationships in other areas (space, specific occupations) Finally, the dissertation has adjusted, supplemented and tested the research scale and developed a particular set of observed variables for specific scales of start-up activities in Vietnam -6- CHAPTER 2: LITERATURE REVIEW AND RESEARCH MODEL 2.1 Institutional theory North (1990) defined institutions as "social playing rules", which are human-made rules and restrictions that guide and regulate what an individual should and should not in some certain cases It is a regulatory framework for human interaction Scott (1995) defined institutions including constraints and actions that belong to cognition, norms and laws to create stability and meaning of social behavior The view of institutional theory in economics and sociology is that every business that adheres to institutional constraints will be accepted by society (legitimacy) When accepted, businesses are more likely to "survive" "Acceptance of society" becomes the key concept in institutional theory Aldrich and Fiol (1994) pointed out two types of acceptance Acceptance in awareness: awareness of entities (businesses / industries) or practices (systems, management policies) can be spread Socio-political acceptance: the extent to which society (stakeholders, the public, officials) considers an entity/practice to be consistent with social and legal standards 2.2 Social network theory The relationship network of start-up firms is mentioned including: formal networks and informal networks In particular, formal networks are the network of official relations with banks, Government agencies, lawyers, etc and informal networks are those with family, friends and colleagues In the first phase of operation, start-up firms are more interested in informal relationship networks than formal networks (Peng, 2000, p 158) 2.3 Theory of Innovation Business model innovation (BMI): Baden-Fuller & Mangematin (2013), Zott & Amit (2013) and Spieth et al (2014) have presented three components of a business model: value creation, value proposition and value capture BMI is innovating and renewing the above three components Clauss (2017) developed the measurement of BMI concept to ensure reliability and validity The results show that the compositions of BMI include value creation innovation, value proposition innovation and value capture innovation Value creation innovation has components including new capabilities, new technology/equipment, new partners, and new processes/structures In value proposition innovation, there are components including new offerings, new markets, new distribution channels, new customer relationships Value capture innovation has components including new revenue model and new cost structure 2.4 VARIM theory VARIM theory consists of components Value: The business model provides benefits that customers perceive to be valuable to them It is measured through satisfaction and loyalty, market share, benefits provided to customers compared to competitors' offerings, reputation/image in customers' perceptions -7- Adaptability: Can the business model be reformatted to provide the benefits that customers find valuable to them? It is measured through the number and variety of new benefits provided by the business, the level of improvement that customers perceive, revenue from new products, flexibility of valuable competencies Rareness: Is business unique when it provides this benefit to customers? It is measured through the number of competitors or businesses with alternative products, the level of benefits compared to competitors Inimitability: Is the customer benefits difficult for competitors to imitate or replace? It is measured through number of imitated objects, inimitable resources, inimitable scope of activities Monetization: Does the business make money from providing benefits to customers? Measurements include ROS, ROE, reasonable price, importance and value of additional assets 2.6 Research models and hypotheses Relationship with Government officials, BMI and start-up performance of start-up firms: Officials at all levels of government have considerable power in approving projects and allocating resources (Walder, 1995) Relationship with government officials is recognized as useful in emerging markets, because it provides operational performance for venture projects (Kotabe et al., 2017; Li & Zhang, 2007) Research by Du & co (2016) shows that in China, venture business projects rely on the network of political relationship to survive and develop Therefore, firms should create relationships with government officials because it affects their performance (Peng, 1997) According to the results of some previous studies, relationship with government officials will simplify procedures for government and banking institutions (Peng & Luo, 2000; McMillan & Woodruff, 1999; Meyer & Nguyen, 2005) Start-up firms with strong relationship with Government officials will approach many donations, aid and government support programs Firms will be supported with training to improve their capacity (knowledge/expertise, capacity to meet environmental changes, etc.), improving and developing technology Start-up firms are also introduced to business partners, investors, support funding for testing, making sample products and changing the process accordingly In addition, relationship with Government officials helps firms and businesses access Governmentfunded projects or customers (Le et al., 2006) Start-up firms will be supported in developing new products/services, intensive training on construction and product development, market testing, accessing to foreign markets, participating in available distribution channels and connecting customers Start-up firms builds relationships with Government officials to help reduce transaction costs in registration and business activities, such as access to information, land, and other operating licenses (Meyer & Nguyen, 2005) In a transitional economy, the costs for these barriers are very significant and sometimes very high for private enterprises (Tenev et al., 2003) Finally, start-up firms will be supported in commercialization of the scientific research results, exploitation and intellectual property development in order to generate more revenue for start-up firms -10- Hypothesis H3b: Strong relationship of start-up firms with business partners has a positive impact on BMI's value creation innovation; Hypothesis H3c: Strong relationship of start-up firms with business partners has a positive impact on BMI's value proposition innovation; Hypothesis H3d: Strong relationship of start-up firms with business partners has a positive impact on BMI's value capture innovation; The relationship between BMI and start-up performance of start-up firms Capability innovation has a direct impact on the performance of businesses (Alam, 2013) Reichert & Zawislak (2014) argued that technology capability has a positive impact on business performance Atalay et al (2013) stated that process innovation directly impacts on business performance Corporate profits are improved from product innovation, distribution channels and new markets which have not been served The reality shows that the profits of enterprises mainly come from existing customers (Nguyen Dinh Tho & Nguyen Thi Mai Trang, 2009) BMI allows businesses to regain position and profit in the current market (Johnson et al., 2008) The new business model has a strong impact on performance compared to the old model (Nunes & Breene, 2011) In addition to securing profits in the current market, BMI helps businesses expand their reach by penetrating new markets The components of the new business model focus on targeted customers who are not yet served (Aspara et al., 2010) and create new markets (Zott & Amit, 2007) Exploiting new opportunities can help businesses maintain performance (Velu & Stiles, 2013) Firms renew revenue models to create long-term revenue and independent of existing revenue In the early stages, start-up firms have incurred many costs for fixed investment and investment activities The structure of costs determines the performance of the business Extend the cost structure to determine the types of operational costs related to the business at the lowest level Foss & Saebi (2016) stated BMI will reduce costs BMI provides productivity, return on revenue, market value (Andreini & Bettinelli, 2016) and financial performance for businesses (Pedersen et al., 2016) BMI provides significant financial performance in a developing economy (Gerdoỗi et al., 2017) Business model is an important factor to improve business performance (Dunford et al., 2010) From the above mentioned bases, the proposed H4 H5, H6 hypotheses are proposed: Hypothesis H4: BMI's value creation innovation has a positive impact on start-up performance of startup firms; Hypothesis H5: BMI's value proposition innovation has a positive impact on start-up performance of start-up firms; -11- Hypothesis H6: BMI's value capture innovation has a positive impact on start-up performance of startup firms; The regulation of the environmental dynamism of domestic market on the relationship between BMI and start-up performance of start-up firms In a dynamic market, implementing BMI is necessary to replace the existing business model (McGrath, 2010) to address threats to the current business model, creating a fit for the new environment (Giessen et al., 2010) and pursuing a solid existence (Hamel & Välikangas, 2003) Therefore, in dynamic environments, BMI has a stronger impact on business performance than in less dynamic environments Because, in dynamic environments, businesses have to deal with more threats to the existing business model (Heij et al., 2014) Therefore, in dynamic environments, the implementation of BMI is expected to have a stronger impact on performance than in the less dynamic environment Therefore, in the dynamic market of Vietnam today, the hypotheses H7a, H7b and H7c are stated: Hypothesis H7a: The environmental dynamism has a regulation impact on the relationship between BMI's value creation innovation and start-up performance of start-up firms; Hypothesis H7b: The environmental dynamism has a regulation impact on the relationship between BMI's value proposition innovation and start-up performance of start-up firms; Hypothesis H7c: The environmental dynamism has a regulation impact on the relationship between BMI's value capture innovation and start-up performance of start-up firms; -13- H1a (+) H1b (+) Relationship with Government officials H1c (+) H2b (+) BMI: value creation innovation H4 (+) H1d (+) Social relations H2c(+) BMI: value proposition innovation Start-up performance H5 (+) H7a (+) H3b (+) H6 (+) H3c (+) H2a (+) Relationship with business partners H2d (+) BMI: value capture innovation H3d (+) H3a (+) Figure 2.1 Proposed research model Source: Author's proposal H7c (+) H7b (+) -14- CHAPTER 3: RESEARCH METHODOLOGY 3.1 Research process This research was conducted in two main stages: (1) preliminary research by preliminary qualitative methods and quantitative pilot study, (2) formal research by quantitative methods Preliminary research: Preliminary qualitative research: From the research objectives, the dissertation synthesizes relevant theoretical foundations (background theory, research concepts and previous studies) On that basis, the research model, the hypotheses and the observed variables to measure scales of the research concepts are formed Through qualitative method of interviews with experts, the research model is evaluated to standardize theoretical models, appear new factors and adjust/supplement the scale for clarity and relevance in research context Quantitative pilot study: The scale is used to test the sample of 50 start-up firms by convenient sampling method and verify Cronbach’s Alpha reliability and EFA analysis before conducting formal research Formal research: The purpose of this method is to assess the suitability of the measurement model and structural model using the PLS-SEM method Evaluating the measurement model: the scales are tested by composite reliability, convergent validity, uni-directional and discriminant validity Evaluating the decentralized factor model by "Repeated Indicators Approach" through two stages Evaluating the structural model with Bootstrapping (N = 5000): determination coefficient (R2), predictive relevance (Q2), effect size (f2) 3.2 Results of qualitative research 3.2.1 Results of theoretical model adjustment The research data of interviews and research theory show that: (1) The relationships between research concepts (relationship network, BMI and start-up performance of startup firms) are confirmed The components of relationship network (relationships with government officials, social relations and relationships with business partners) are clearly affirmed The components of BMI are complete, specific and consistent with the business model of start-up firms in Vietnam (2) The important roles of owners/senior managers are confirmed in building a network of relationship with related parties to implement BMI and contribute to improving start-up performance This shows that there is an interaction between the relationship network, BMI and the start-up performance of start-up firms Moreover, the environmental dynamism of Vietnam market is highly appreciated so its role in promoting BMI to improve start-up performance is necessary to be examined and verified In conclusion, the theoretical model is evaluated to be consistent with the reality and research context of Vietnam market 3.2.2 Results of scale adjustment -15- From the suggestions to adjust the scale, the author summarizes and adjusts the scales of research concepts: Table 3.1 The scale of relationship network Name Scale No of observation Relationship network Tiesgov Relationship with Government officials Soties Social relations Tiesmanager Relationship with business partners Source: Adjusted results from the original scales Sources Peng & Luo (2000) Le et al (2006), qualitative research results Peng & Luo (2000), qualitative research results Table 3.2 BMI scale Name Scale No of observation Value creation innovation (VCI) CAP New capabilities TEC New technology PART New partners PRO New processes Value proposition innovation (VPI) OFF New offerings MARK New markets CHAL New distribution channels REL New customer relationships Value capture innovation (VCIN) REV New revenue model COST New cost structure Source: Adjusted results from the scale of Clauss (2017) Sources 3 Clauss (2017) Clauss (2017) Clauss (2017) Clauss (2017) 3 3 Clauss (2017) Clauss (2017) Clauss (2017) Clauss (2017) Clauss (2017) Clauss (2017) Table 3.3 The scales of environmental dynamism and start-up performance Name Scale ENVIRDYNA Environmental dynamism STARTPERF Start-up performance No of observation 3 Sources Jansen et al (2006) VARIM theory, Ju et al (2019), qualitative research results Source: Adjusted results from the original scales 3.3 Quantitative research method Data collection method: To collect data, the dissertation mainly sends online survey via email and social networks (Facebook and Zalo) with Microsoft Forms tool The survey was sent to start-up -16- communities in localities (Ho Chi Minh City, Ba Ria - Vung Tau, Dong Nai, Binh Duong, etc.), SIYB startup clubs (promoting start-up business), and Vietnamese start-up community Sampling method: Due to time constraints, the dissertation uses convenient sampling method Start-up firms are classified according to criteria such as size (number of employees), type and industry of operation Data analysis method: The process of data analysis is conducted through two stages in quantitative research: Stage 1: Preliminary quantitative research with sample size n = 50; Cronbach's Alpha reliability coefficient testing and EFA analysis Stage 2: Formal quantitative research with sample size N = 150: Step 1: Evaluate Cronbach’s Alpha reliability coefficient and EFA analysis Step 2: Evaluate the measurement model: composite reliability, convergent validity, discriminant validity, multicollinearity, relevance of the model Step 3: Evaluate the Hierarchical Compositional Models (HCMs): apply the technique of "Repeated Indicators Approach" Step 4: Evaluate the internal model/structure: determination coefficient R2, assess the effect size (f2), estimate the path coefficient, assess the predictive relevance (Q2) 3.4 Preliminary evaluation of the scale After a small sample test of 50 start-up firms with SPSS 23 software, most of the scales mentioned in the theoretical model meet the requirements of reliability, convergent validity and discriminant validity The variable soties4 “Firm has relationships with universities and research institutes” are excluded from the social relations scale However, due to limitations of small samples, this observed variable is retained in the official survey questionnaire for consideration 3.5 Official research sample The research sample is officially selected by convenient method, online survey via Microsoft Forms Due to limitations on the time of the dissertation, the results of online surveys are set to the time taken from the beginning of April 20, 2019 to the ending date of May 25, 2019 Hair et al (2010) suggested that the sample size must be at least 100 to 150 Therefore, based on the statement of Hair et al (2010), the dissertation decided to use the research sample size of 150 start-up firms for official quantitative research -17- CHAPTER 4: RESEARCH FINDINGS 4.1 Characteristics of research samples Type of operation: The start-up firms operate mainly in the form of private enterprises (accounting for 42.7%) and limited liability companies (accounting for 43.3%) Scope of activities: The start-up firms operate mainly in the service sector (accounting for 49.3%) and trading and commerce (accounting for 30%) Labor size: The number of labor of start-up firms is mainly under 10 employees (accounting for 43.3%) and from 10 to 30 people (accounting for 41.3%) Location: Due to the random data collection method, the number of startup firms has not been evenly distributed among provinces The most surveyed start-up firms are in Ba Ria Vung Tau province (accounting for 54%) 4.2 Scale testing Cronbach's Alpha reliability coefficient testing of scales: relationship network (relationship with government officials, social relations, relationship with business partners), BMI (value creation innovation, value proposition innovation, value capture innovation), environmental dynamism, start-up performance of start-up firms The results show that all scales are reliable because they have Cronbach’s Alpha coefficient> 0.6 and the total correlation coefficient> 0.3 In the scale of new cost structure, the variable cost4 has this coefficient 0.5 and 50% and load factor > 0.5 Therefore, the scales reach convergent validity and discriminant validity 4.3 Evaluation of the measurement model The results show that the scales have composite reliability (CR) > 0.7; The lowest CR value is 0.903 and the highest CR value is 0.919 The scales are reliable The value of variance extract (AVE) of scale > 0.5 The matrix coefficient Fornell - Larcker shows that the top coefficients are larger than the coefficients in the same column Therefore, the scales are differentiated The VIF value of the observed variables is < 5, so the model does not have multicollinearity phenomenon The results show that the SRMR of the critical model and the estimated model are < 0.12 Thus, the estimated model meets the requirement of survey data compatibility compared with market data 4.4 Evaluation of Structural Equation Model 4.4.1 Evaluation of adjusted coefficient of determination (R2adj) The level of explanation of network relationship on BMI (VCI, VPI, VCIN) is 0.379, 0.322 and 0.199 respectively The results show that the explanation level of R2adj is moderate (range from 0.25 to 0.5, except R2adj of VCIN = 0.199 < 0.25) The network relationship and BMI have a simultaneous level of explanation on the start-up performance of start-up firms with R2adj = 0.814 The adjusted coefficient of determination R2adj = 0.814 > 0.75 is considered to be significant (Hair et al., 2017, p.206) -18- Table 4.1 Results of Structural Equation Modeling Estimation Standard t VIF P β B (Bootstrap) deviation Relationship with Government officials ->BMI and start-up performance of start-up firms TIESGOV -> VCI 0,483 0,485*** 0,061 7,895 1,169 0,000 TIESGOV -> VPI 0,317 0,319*** 0,069 4,633 1,169 0,000 TIESGOV -> VCIN 0,375 0,377*** 0,070 5,326 1,169 0,000 TIESGOV -> STARTPERF 0,115 0,113*** 0,047 2,473 1,635 0,008 Social relations -> BMI and start-up performance of start-up firms SOTIES -> VCI 0,125 0,129ns 0,078 1,601 1,318 0,109 SOTIES -> VPI 0,276 0,278*** 0,071 3,880 1,318 0,000 SOTIES -> VCIN 0,072 0,074ns 0,079 0,914 1,318 0,361 SOTIES -> STARTPERF 0,119 0,117** 0,050 2,373 1,480 0,018 Relationship with business partners > BMI and start-up performance of start-up firms TIESMANAGER -> VCI 0,175 0,179** 0,075 2,328 1,282 0,020 TIESMANAGER -> VPI 0,165 0,170** 0,068 2,415 1,282 0,016 TIESMANAGER -> VCIN 0,123 0,127ns 0,090 1,376 1,282 0,169 TIESMANAGER -> STARTPERF 0,101 0,099** 0,042 2,416 1,391 0,016 BMI -> Start-up performance of start-up firms VCI -> STARTPERF 0,358 0,362*** 0,059 6,061 2,415 0,000 VPI -> STARTPERF 0,255 0,256*** 0,049 5,175 2,132 0,000 VCIN -> STARTPERF 0,230 0,226*** 0,054 4,215 1,772 0,000 Moderator variables ENVIRDYNA -> STARTPERF 0,061 0,062 0,045 1,375 1,429 0,169 VCI*ENVIRDYNA -> STARTPERF -0,065 -0,068ns 0,054 1,205 2,197 0,228 VPI*ENVIRDYNA -> STARTPERF -0,063 -0,059ns 0,048 1,304 1,499 0,192 VCIN*ENVIRDYNA -> STARTPERF 0,056 0,054ns 0,046 1,210 1,830 0,226 2 2 R = 0,379; R = 0,322; R = 0,199; R =0,814 R adj VCI VPI VCIN STARTPERF f2SOTIES->STARTPERF = 0,056; f2TIESGOV->STARTPERF = 0,047; f2TIESMANGER2 >STARTPERF = 0,042; f VCI->STARTPERF = 0,307; f VCIN->STARTPERF = 0,173; f2VPI->STARTPERF = 0,176; Effect size f2 f2TIESGOV->VCI = 0,329; f2TIESMANGER->VCI = 0,039 f2TIESGOV->VCIN = 0,153 f2SOTIES->VPI = 0,087; f2TIESGOV->VPI = 0,130; f2TIESMANGER->VPI = 0,032 Relationship Note: *, **, *** corresponds to 10%, 5% and 1% significance levels; ns (non-significant): not statistically significant Source: Processing results from the author's survey data -19- Figure 4.1 Measurement model at stage Source: Processing results from the author's survey data 4.4.2 Evaluate the multicollinearity Based on Table 4.1, the VIF value is lower than the allowed threshold (< 5) Therefore, the estimated structure model does not have multicollinearity The level of explanation of the independent variables on the dependent variables is reliable 4.4.3 Evaluate the effect size (f2) Evaluate the effect of relationship network on BMI: ▪ The effect size of relationship with government officials on BMI: the relationship with government officials has strongest and greatest effect value to VCI (f2 = 0.329 VCIN = 0.153 > 0.15); and finally, moderate and lowest effect to VPI (f2TIESGOV-> VPI = 0.130 < 0.15) ▪ The effect size of relationship with business partners on BMI: The effect size is assessed as weak (f2 VPI = 0.032 < 0.15) ▪ The effect size of social relations on VPI is low (f2SOTIES-> VPI = 0.087 < 0.15) Evaluate the effect of relationship network on start-up performance of start-up firms: In relationship network, social relations have the greatest effect on the start-up performance of start-up firms, followed by relationship with government officials in second place Finally, relationship with business partners has the lowest effect on start-up performance of start-up firms Evaluate the effect of BMI on start-up performance of start-up firms: The effect size of BMI on the start-up performance of start-up firms is moderate (f2 STARTPERF = 0.307 < 0.35; next is VPI with the value of f2VPI-> STARTPERF = 0.176 > 0.15; and finally is VCIN with f2VCIN-> STARTPERF = 0.173 > 0.15 -20- 4.4.4 Estimate the path coefficients and confidence intervals The results show that the difference between Bootstrapping (N = 5000) and the original weight is very small The path coefficient is within the confidence range from 2.5% to 97.5% Therefore, estimating the path coefficient is reliable 4.4.5 Evaluate the predictive relevance Q2 by Blindfolding The predictive relevance of relationship network and BMI to start-up performance of start-up firms are very strong (Q2 = 0.532 > 0.35) Relationship with government officials and relationship with business partners have a moderate predictive relevance level (Q2 = 0.151 < 0.35) to VCI Relationship with government officials has predictive relevance to VCIN at a moderate level (Q2 = 0.168 > 0.15) Relationship with government officials, social relations and relationships with business partners have predictive relevance to VPI at a moderate level (Q2 = 0.102 < 0.15) 4.4.6 Research hypotheses testing Based on the P-value from the estimated model structure results, the results of hypothesis testing are concluded and summarized The dissertation proposed 18 hypotheses The research findings have supported 12 accepted hypotheses and hypotheses are rejected 4.5 Discussing research findings 4.5.1 Comparing the research findings of the dissertation with the background theories Research findings of the dissertation show that the owners/senior managers of start-up firms building a relationship network with government officials, social relations and business partners will promote BMI (VCI, VPI, VCIN) Research results are consistent with the views of institutional theory and social network theory The dissertation used the innovation theory and VARIM theory to explain the relationship between BMI and start-up performance of start-up firms Firms' implementation of BMI will contribute to improving business performance (Morris et al., 2015; Amit & Zott, 2012, etc.) The research results of the dissertation show that the implementation of BMI contributes to increase start-up performance of start-up firms The results are consistent with the innovation theory of Schumpeter (1943) and VARIM theory 4.5.2 Comparing the research findings of the dissertation with previous studies 1) The impact of relationship with government officials on BMI and start-up performance of start-up firms: Hypothesis H1a stated that strong relationship with government officials will have a positive impact on the start-up performance of start-up firms The estimated results show that this hypothesis is accepted (β = 0.113, p = 0.008