Impacts of start-ups and SMEs on the nature of work and employment in Vietnam: perspectives from evolutionary economics

Le Anh Khanh Minh | 187 Impacts of start-ups and SMEs on the nature of work and employment in Vietnam: Perspectives from evolutionary economics LE ANH KHANH MINH The University of Queensland – a.le@uq.net.au Abstract Never has the trend of start-ups and small-and-medium enterprises (SMEs) risen so rapidly in Vietnam In this context, these new business entities alter thoroughly the nature of work and employment in the economy The impacts can be studied using evolutionary economics because the mainstream, traditional thoughts have failed to incorporate institutional and social factors into analysis While traditional schools of thoughts view the main economic figure to be individual who is tasked with making decisions at a period of time under resource scarcity, recent heterodox perspectives start to adopt the fact that agents are also subject to history and complex systems of rules It is the meso-level movements that drive evolutions in behaviours of the micro, individual rule-carriers and in the macro domain of the whole industry or economy The continuum does not range from ‘micro-’ to ‘macro-’, but also includes ‘meso-’ in between Using micro-meso-macro framework from the evolutionary school, the paper seeks to explain the impacts of start-ups and SMEs at micro- and macro-level by looking from the mesoperspective In doing so, this exploratory paper also aims at laying out ideas for further research into the economic dynamics of start-ups, while adding, though little and incremental, contribution to the literature on evolutionary economics in Vietnam Keywords: start-ups and SMEs in Vietnam; nature of work and employment; evolutionary economics; micro-meso-macro; rule; complex system Introduction Although the start-up and SME trend is blooming in Vietnam, the start-up ecosystem remains an understudied aspect The rise of these new economic entities has altered the nature of work and employment in the country More focus is placed on soft skill training and extra- 188 | ICUEH2017 curricular experience rather than traditional education Huge and successful companies now invest more in new businesses and talents The idea of life-long career in one organization is becoming less common, replaced by the tendency to hop between jobs and freelancing These are only a few movements in the recent employment scene in Vietnam In the near future when there are more resources pouring into innovation and entrepreneurship, more changes can be expected It is time to start studying start-ups and SMEs and their impacts on the economy As innovation, entrepreneurship, start-ups and SMEs are dynamic by nature, frameworks from mainstream, neoclassical economics may not serve well to analyse the impacts of them on the nature of work Therefore, the author feels the need to take the perspective of evolutionary economics, in particular the micro-meso-macro framework by Dopfer et al (2004), to look at the changes At this stage of research, the paper aims to provide an exploratory survey of the impacts that start-ups and SMEs have on the employment scene in Vietnam The outline of the paper is as followed: First, the paper seeks to provide an overview of evolutionary economics and its main idea in contrast with mainstream neoclassical school, followed by the micro-meso-macro framework It then discusses the impacts of start-ups and SMEs at three levels: meso, micro and macro Among these, the meso-level analysis is further divided into four categories based on the taxonomy of rules: cognitive, behavioural, social and technical For readers’ convenience, these impacts are denoted as [Mic], [Mac], [C], [B], [S] and [T], corresponding to micro-, macro-impacts, cognitive, behavioural, social and technical rules A full summary table of these impacts can be found in the conclusion part of this paper The Evolutionary Economics Perspectives 2.1 Evolutionary economics – An overview Evolution economics emerged as a new economic school of thought only a few decades ago However, the original idea of the branch was rooted since the late nineteenth century In a 1898 article, Thorstein Veblen called into question “Why is economics not an evolutionary science?” and coined the idea of a new branch of economic thinking – evolutionary economics Veblen argued, in the article, that economics, as with other modern sciences, are evolutionary sciences (Veblen, 1898) Since then, many famous economists have made significant contributions to this modern, evolutionary line of thinking Besides Veblen with the notion of institutions, habits and norms as determinants of economic choice, there have also been other economic philosophers who have exerted considerable influence on the branch These include Joseph Schumpeter with his work on entrepreneurship, innovation and creative destruction, Friedrich Hayek with his notion of self-organization via knowledge, Kenneth Boulding and the parallel comparison Le Anh Khanh Minh | 189 between biological economics and evolutionary economics, Richard Nelson and Sidney Winter with their evolutionary theory of economic change, and Geoffrey Hodgson with his extended work on social institutions Following the tradition of evolutionary economics, there have also been recent economists in the field: Kurt Dopfer, John Foster and Jason Potts with their micromeso-macro framework for economic analysis, Jason Potts and Brian Loasby with complex system theory, Peter Earl and Tim Wakeley on business economics and consumer theory, and Thomas Mandeville on information economics In essence, evolutionary economics takes its main idea from biology’s Darwinism – it treats Darwin’s evolutionary theory as a starting point of the new thinking line Whereas the main analysis figure of biology is gene and genetic material, those of evolutionary economics are rules or routines (Boulding, 1983) Dopfer & Potts (2015) denoted a rule as the idea that organizes actions or resources into operations and, as such, economic actions or resources are the product of rules At individual level, routines or rules are the knowledge within the socio-economic context that shapes human’s cognition, behaviour, convention, and habit At firm level, routines are what determine corporate structure, organizational culture and features of the goods and services that a firm offers to the market These routines are emergent phenomena that are socially sourced, although they may have started with individual experimentation (Earl, 2017) As with the passing down of genes to later generations, evolutionary economics places emphasis on the passing down of rules and routines in the economy across time Mutations are viewed as similar to innovation, which is an origination of new rules and routines in the economic complex system Innovation ultimately changes relative competitive fitness of rivals Any rules or routines that have the best competitive fitness are retained and replicated by other rule carriers, leading to wider application of the routines or rules on which the success was based The process of changing rules is necessarily the process of knowledge growth, which in turn, is key to economic development Darwin’s biological evolution Evolutionary economics Gene and genetic material Rules and routines as socially sourced, emergent phenomena Selection and passing down of genes best adapted to changes in external context Competition, selection, diffusion of rules and routines with competitive fitness to the system Mutation Innovation, knowledge growth, origination of new rules and routines Figure Evolutionary economics and Darwin's biological evolution By definition, Veblen notes that evolutionary economics “must be the theory of a process of cultural growth as determined by the economic interest, a theory of cumulative sequence of economic institutions stated in terms of the process itself” His view places emphasis on the 190 | ICUEH2017 feature of path dependency, co-evolutionary process, and sets of institutions in economic analysis In other words, economics is not merely a computational cost-benefit analysis; rather, economics should also incorporate insights from other sciences that study human’s nature and behaviour, such as sociology, history, philosophy, and moral studies Movements in the economic sphere, including behaviour, decision, thinking, and evolution, are all products of the interactions in the complex system of rules and routines throughout history and across context Evolutionary economics differ from the currently dominant, mainstream neoclassical economics in many ways Firstly, the two lines of economic thinking hold contrast views on the nature of human, or more broadly, economic agents In mainstream economics, the economic human, homo economicus, is portrayed as having perfect rationality and computational capability He is self-interested and utility-maximizing creatures whose quest is to optimize his welfare under certain resource constraint Meanwhile, evolutionary economics consider human to be product of contexts This is in line with Veblen’s institutionalist view that human is a creature of habit that follows socially embedded rules and routines unconsciously In deed, we not simply gather information from the environment, compare the cost and benefit of each scenario and make decisions Our actions are drawn from a pool of habits, depending on their contingencies The use of a habit reinforces its probability of being chosen again in the future In this way, there is no given set of ranked preferences, but a set of habits with varied propensities (Veblen, 1898) Secondly, evolutionary economics also differ on the assumption of information in the economy Mainstream thinking assumes an environment of perfect information, where everyone is fully aware of all metrics and variables necessary for making decisions in his or her best interest This is not usually the case in reality as human is subject to bounded rationality with a certain set of available information (Simon, 1972) As a consequence of this imperfect information world, there exist transaction cost, search cost, cost of switching or changing mindset and behaviour, marketing cost of making the products known to target consumers, and barriers to entry and exit Evolutionary economics assumes the above as problems of knowledge Thirdly, evolutionary thinking does not view the economy to tend toward a state of equilibrium In mainstream economics, after a change in the economic system, such as a price change, the system eventually pulls back to the state before the change happens This reflects a conception of time as logical and reversible (Robinson, 1980) In this sense, any future events can be predicted upon probabilities of scenarios Recent heterodox economics hold a contrary view of irreversible time flow: Any disturbance in the economic system does not lead back to the previous state, but to a new state of new habits and their attached propensities As Bausor (1982, 1984) and Shackle (2010) denoted, a particular choice results in a certain outcome and Le Anh Khanh Minh | 191 new information, which alters perception and worldview of the decision-maker, who would then change the choice in the next stages of time, making an endless loop Evolutionary economics also emphasizes the role of history and institutions in economic evolution Small shocks can lead to big difference in the long run, creating system lock-ins that make it impossible to go back and differently As such, evolutionary economics not see the economy under the equilibrium approach Instead, it pictures the system as a process of interactions and selection of rules and routines underlying micro- and macro-level decisions and behaviours: a co-evolutionary process Economic evolution is essentially evolution of knowledge embedded in the socio-economic ground of society Mainstream economics Evolutionary economics Human agent as self-interested, utility-maximising creature with perfect rationality and hedonistic computational capability Human agent as creature of context, habit and bounded rationality, following embedded rules; actions drawn from a pool of habits according to the habit’s propensity of use Perfect, symmetric information Only some certain set of available information; assume problems of knowledge and costs of transaction, searching, switching, changing lifestyles, marketing, and barriers to entry and exit Logical, reversible, ergodic view of time; future events happen according to predicted probabilities Historical, irreversible, non-ergodic view of time; small shocks lead to big changes and system lockins; history and institution matters, loop of new information and new decisions The economy tends toward an equilibrium state after shocks No equilibrium; the economy cannot return to the state before shock; co-evolutionary process of information, rules and decisions keep the economy changing Figure Mainstream economics and Evolutionary economics Micro-meso-macro A framework used to analyze the evolution of economic system is the micro-meso-macro framework Dopfer et al (2004) developed the framework based on the ontology of evolutionary economics that the economic system, in nature, is a “population of rules, a structure of rules, and a process of rules” The authors not see the division of economics into macro and micro sufficient to examine economic evolution: “From the evolutionary perspective, one cannot directly sum micro into macro” In line with this thinking, economics is not merely defined by decisions and behaviours of individuals, firms, and the aggregate consequences Indeed, there must also be consideration for history, institutions, norms, and rules in the 192 | ICUEH2017 society From micro-level to macro-level, there needs an intermediate level that describes the underlying institutional factors that are actually driving economic changes This level is the meso-level lying in between the micro-macro continuum Micro Meso Macro Individual agent Generic rule Aggregate movements Figure Unit of analysis Dopfer et al (2004) characterize the economy as a highly complex system of rules, which interact with each other and change over time These dynamic interplay and evolution of rules give rise to new rules or enhance existing ones, driving economic evolution These drivers happen at the meso-level of the system in a process of origination, adoption, and retention of rules A meso unit consists of a generic rule and its population of actualization, which is made up of agents and agencies carrying the rule From micro perspective, economic agent is “a ruleusing and rule-making animal”; in other words, human is a product of institutions, expectations, surroundings, that creates and follows these rules simultaneously and unconsciously Such rules shape the cognitive reasoning and behaviour of economic agents, such as perception of work, organizational culture and division of labour From macro perspective, meso units make up the entire system or structure of concern Many rules from the broad environment, including economic, social, technological, political, ecological, and so forth, all dynamically interact and construct the big picture, particularly an industry or a whole economy The meso units within a system define the features of such system, such as industrial organization, market structure, management and governance Any change in generic rules at meso-level induces changes at other levels In the micro domain, it is the change in the cognition and behaviour of rule carriers and how they interact, whereas in the macro domain, it is the change in the coordination structure between meso units Impacts on the Nature of Work and Employment 4.1 The meso domain At meso level, the main unit of analysis is the meso unit, comprising of a generic rule and its population of actualization One way to classify generic rules is the taxonomy of rules (Dopfer & Potts, 2015), which divides rules into subject rules and object rules Subject rules are those that shape agents’ internal mind and external interaction with other subjects, which are then categorized into cognitive and behavioural rules Object rules are rules for organizing things, either between many subjects or objects, and further comprise of social and technical rules Le Anh Khanh Minh | 193 Generic Rules Subject Cognitive Object Behavioural Social Technical Figure Rule taxonomy In the case of Vietnam, the trend of start-ups and SMEs has given rise to changes in many rules and routines in the economy The rules not only originate, diffuse and retain by themselves, but also affect and be affected by other rules, creating a co-evolutionary process of cognitive, behavioural, social and technical rules in the economy Cognitive rules [C] Cognitive rules are subject rules for thinking and perceiving the world that operate in the internal mind of the subject – the economic agent In Vietnam, the perception and expectation of job and career have transformed dramatically since the rise of start-ups and SMEs Office hours are still hours per working day, but the actual hours people are on the job can exceed the total amount of time they spend in the office [denoted C1; a complete table of impacts can be found in the conclusion] With the aid of technology [T1, T2] jobs can now be brought to places other than the office, even home and on holiday, so people can be “at work” outside office hours [C2] The emergence of new types of jobs on part-time, contractual or voluntary terms [Mac2] leads to the concept “freelance” [C3] Prior to the wave of start-ups, labour would view employment as having a job with long-term contract and secured wage and benefit However, people now also see freelance, or self-employment, as a type of employment where labour not work for a firm or an employer, but manage their own business Due to the contractual, short-term nature of freelancing jobs, freelancers are also seen as job-hopping individuals [C4]: They switch fast between jobs and can work on many jobs at a time The retention rate of freelancers is much lower than of payroll staff, but that does not mean payroll staff not job-hop Such shifts to flexible working hours and spaces, freelancing, and job-hopping have altered the traditional mind-set for life-long career in one single organization [C5] As society becomes more open to new types of work, it is possible that a person has experience across many positions and organizations An entrepreneur, whether on payroll or self-employed, in this new scenario also looks different from the one before the start-up trends He is a risk-taking, failure-tolerating [C6] person who desires to have his own business [C7], as well as a self-starter [C8] To so, one must be aware that an inventor is not necessarily an innovator: A new invention or discovery does not always lead to a breakthrough If one is to characterize the new invention as a codified rule or knowledge, there must also be tacit knowledge to complement and diffuse the invention into an innovation (Leonard & Sensiper, 1998) Tacit knowledge is the knowledge that is 194 | ICUEH2017 difficult to codified into writing or visualization or transferred between agents Examples of tacit knowledge include interpersonal skills, ability to build network, leadership traits, and intuition Hence, employers in the new scenario place a stronger focus on soft skills to complement the codified knowledge from their academic education [C9] Furthermore, in early stages of operations, start-ups and SMEs not usually have clear and specialized division of tasks inside the organization [B1, B2] One person may take on many tasks of different functions Therefore, there is also a tendency of employers to develop a diverse set of skills instead of focusing on a narrow specialization [C10] For example, someone who is in charge of communication may also take on marketing, or one who works in the finance department can also crowd-funding for the organization Because of these changes in the nature of work and division of labour, the internal cognitive rule of economic agents – labour – also experience a change from recognition of tacit knowledge (soft skills) and multi-tasking ability Behavioural rules [B] Behavioural rules are embedded in the subject’s mind, operating his or her interaction with the external environment Vietnam’s employment scene has not stayed out of the world changes in the way people interact with each other in the workplace As start-ups are brought about by self-starters [C8] who desire to have their own business [C7], these small companies are usually short in finance and thus, lack of staff to cover every area of the business They manage to operate with limited resources by having the small personnel to multi-task different functions This means that the division of labour is not clear between staff [B1]; nor is the task division specialized to suit each person’s capabilities One staff can work on jobs of many functions, and the tasks can intersect with the others, creating a complex personnel structure [B2] Unclear division of labour leads to the need to communicate for better collaboration, resulting in a mindset toward cooperation and network [B3] Also arise in this behavioural rule change is the notion of appraisal and feedback mechanism [B4] Along with the rising need to cooperate, another result of the lack in human resources is the requirement of independence [B5] With limited resources and the demand to be multi-tasking, personnel of start-ups must be able to work independently without little supervision This is also the common requirement in job advertisement nowadays For start-ups with insufficient internal capabilities, outsourcing parts of its functions is an option to get the job done [B6] Outsourcing activities not only give rise to freelancing [C3], but also reorganizes the labour market: By introducing new types of jobs, such as part-time, contractual, or voluntary to the market [Mac2], these start-ups become competitors to full-time job companies, competing for labour supply and talents [Mac2] Le Anh Khanh Minh | 195 Changes in labour division and mind-set for cooperation affect the physical organization of interpersonal organization [B7] Previously, each firm would have its own office, however small it might be For larger firms, it is common to see long lines of desks separated into cubes so that each employee has his own workstation This is because the jobs in large firms are specialized to each staff; there is still the need to communicate, but the interactions not need to be as intense and frequent as in start-ups With the rise of start-ups and increasing need to collaborate, these small firms have to work around its budget constraint by arranging all its functions in one office space Alternatively, firms can choose to share the workplace with others, as seen in co-working spaces and hubs [Mic2] where a large office-furnished hall hosts employees from many different start-ups Apart from changes to open, collaborative workplace, there emerges the habit of working from home and round-the-hour work, thanks to advances in technology [T1, T2] In addition to changes in physical workplace, the total time spent on the job also faces tremendous extension from hours to however long the job requires [C1] Collaborative mind-set also gives rise to the supportive attitude of successful businesses towards start-ups and SMEs In neoclassical economics and in earlier times, firms are seen as competitors to each other, competing for resources and revenue Large, incumbent firms in the market would see new firms as a threat to their profit and would take strategies to hinder their entry into market Beside such substitution view, the late reality has also embraced a complementarity view that both large firms and start-ups can be beneficial from strategic alliances Embedded pedagogic nature [B8], along with expected value in return, drives successful businesses to invest and build capacities in start-ups in many forms, ranging from angel investment, venture capital, to incubation and idea camp [Mic3] Social rules [S] Social rules are object rules that bring together people into social organizations While behavioural rules define the way people interact with social surroundings within the subject’s mind, social rules look at it from an external perspective, examining how many subjects influence and get influenced by others Social organizations exist in many forms, from firms, hierarchies, networks, to markets, laws, and other institutions In Vietnam, there have been dramatic changes in social organizations since the rise of startups and SMEs Firms have started to adopt a less hierarchical management system [S1], allowing more communication and feedback between staff and functions [B4] It is less common to see U-form structure of firm, in which the firm is clearly divided into functions (e.g production, marketing, finance, and research), with management at the top notch More of Mform structure is embraced, in which the firms is divided into sets of miniature U-form companies, each handling a particular product line (Williamson, 1991)) In this organizational 196 | ICUEH2017 structure, each sub-firm acts as a sub-system of the whole one that is independent in terms of making profit and tactical operations The head office remains in charge of overall strategic management to align all sub-firms with overall direction, marketing and funding Just as in start-ups where each staff can be doing various tasks of different functions, sub-firms have sovereignty and flexibility in allocating resources to internal departments For large firms, this decomposable structure [S2] is also a way to reduce risks of shocks on the entire company because the system is composed of sub-systems In case of disturbances, only a part of the firm is damaged, while the others are not harmed as much Industrial structure has undergone major changes, too The substitution and competition view is not as dominant as before; rather, actors in industries now have a more open view towards complementarity [S3] Network of firms and start-ups [S4] are formed and serve as platforms for knowledge sharing and exchange between those who would previously compete for resources These networks can be in the form of forum, strategic alliance, partnership, competition, and co-working space [Mac2] This movement has transformed industrial organization into a complex network structure where entrepreneurs and expertise not only compete for financial and human resources but also interact and share ideas together [Mac2] For such networks and alliances to sustain, an essential institution is trust [S5] Trust is an underlying element of interpersonal interaction that helps reduce transaction costs and failure risks In particular, in the case of recruitment, there is a growing trend of recruitment within a network of entrepreneurs who recruiters would expect to be like-minded and passionate about start-ups Cooperation between actors also requires trust as a foundation for them to work together Here, the institution acts to bind actors to their commitment, or else they would face distrust and lose credit in the start-up community Technical rules [T] If social rules are rules for organizing human subjects, technical rules are for organizing matter and know-how Changes in these rules are best seen in several advances in technology, especially in information and communication, which have been facilitating the emergence of start-ups and SMEs Technical rules are embodied in electronic device (computer, laptop, smartphone, and tablet) [T1], connection network [T2] (the Internet, wireless connection, and 4G), and websites, applications and social media channels [T1, T2, T3, T4] These rule changes have enhanced the access, processing and communication of information and knowledge in the economy According to Live Stat Internet (Internet Live Stats, 2017), more than 49 million people in Vietnam had access to the Internet in 2016, making a penetration rate of 52% out of total population Le Anh Khanh Minh | 197 Electronic devices and Internet connection have made possible the concept of work-fromhome and round-the-hour work [C1, C2] Anyone with a laptop or smartphone can work, whether he is at home, on the road, or at any other places with Internet connection In Vietnam, cafes and restaurants are now places for people to come and their work [Mic2, Mic3], especially for those who are at the start of their entrepreneurship and cannot afford an office yet For example, jobs can be worked on on-road when Uber or Grab drivers receive their trip details on screen, without having to talk or report to a real-person coordinator The Internet also gives rise to platforms for project management and teamwork [T3] Asana, Zoho and Slack are some of the commonly used applications for collaboration, task management and progress tracking in small start-ups, so the nature of work is now less physical and more online [C2] The perception of workplace is no longer confined in office desks and cubes, but extends to outside the office and on the Internet [B7] The Internet and the rise of websites boost the communication of knowledge; several sites, forums, and blogs have been set up to share experience and know-how to others who are in need of expertise [T4] Contents on these websites are contributed voluntarily by the community based on the tendency of natural pedagogy [B8] Self-employment [C3] also benefits from technological changes More people are now participating in e-commerce and become owners of their own businesses thanks to e-commerce platforms such as Lazada and Vatgia [T5] Besides online retaling, transportation and shipping have also seen self-employed actors, as in the case of Uber, Grab, and Delivery Now Selfemployees and start-ups can as well market their services faster on a wider scope by using social media channels such as Facebook and Zalo Furthermore, advances in technology facilitate the coordination process in the economic system [T6] In particular, they match demanders and suppliers of resources and labour services For example, websites such as Upwork, Vlance and Vietfreelance bring together those looking for short-term job and those needing to outsource part of their operations Websites about start-ups such as Khoinghiepvietnam.org and Startupvietnam.org are also where investors and starting entrepreneurs find matching partners Forums and social media of startup-related interests are some other channels for people to look for like-minders In short, changes in technical rules, specifically in technology, have made significant transformation in the nature of work and employment by reducing transaction costs as well as facilitating communication between agents 198 | ICUEH2017 The micro domain Changes in embedded rules of society affect the way economic agents – individuals and firms – make decision and behave For individuals, particularly entrepreneurs, employees and students, cognitive, behavioural, social and technical rules work together to shape their view of work nature and employment In the new employment scene, a labour now has certain portraits: He is pro-active, self-starting, and initiative in making decisions about his career [C3, C4] He copes better with disturbance, risk and failure, as well as has more flexibility and resilience [C6] He is competent in terms of knowledge and skills, and is able of multi-tasking [C9, C10] Enabled by social [S] and technical [T] rules in the meso domain, economic actors have also modified their decisions and behaviours to adapt to changes in routines They now demand start-up related services [Mic1] As soft skills become essential requirements for jobs, more and more individuals now develop demand for opportunities to acquire these skills In universities, students are becoming more interested in extra-curricular activities Whereas previously, students only focused on studying, they are now more engaged in clubs and activities outside the class to gain the tacit knowledge that cannot be otherwise taught in their majors Young people also opt to take training courses on soft skills such as communication, public speaking, presentation and teamwork Besides activities and soft skills, there is also a growing demand for gaining practical experience Internship or work experience has now become an important element in the profile of those who seek good jobs Furthermore, there is also a desire to showcase start-up ideas and run one’s own business, shown through participation in competition and start-up network events In short, changes in rules of work have allowed and encouraged labour, especially students, employees and entrepreneurs, to become more capable and prepared to cope with the fast-changing, more demanding employment scene From the above demands come accordingly supplies [Mic2] Following the start-up trend, many skill-related services are born to meet new demands in the employment field [Mic] Training centres such as YUP Institute Vietnam, Youth Spark Career Readiness by Microsoft and Vietnam Chamber of Commerce and Industry, and Information Technology Park (ITP) by Vietnam National University, thrive on the need to gain soft skills of students and young entrepreneurs Several clubs and organizations seek to provide opportunities for young people Even clubs that work for causes other than youths also recruit these targets into their teams, so more are added to the overall opportunity pool Some popular organizations within the young community are VietAbroader, Project Sugar, and International Youth Club (an affiliate of the Communist Youth Union), to name a few Le Anh Khanh Minh | 199 The need for increasing teamwork and collaboration in start-ups and SMEs gives rise to a new form of workplace: co-working spaces and hubs In Hanoi, popular places for entrepreneurs are HATCH! NEST Hanoi, HanoiHub, 5DESIRE Co-working space, Hub.IT and Up Co Meanwhile, young people in Ho Chi Minh City turn to Work Saigon, Dreamplex, Circo, Fablab Saigon, and Citihub (Shona, 2016a) These hubs provide a wide variety of services, ranging from hot desk, meeting room to Internet connection, printing and document storage Not only they build up infrastructure for the start-up community, they also support young entrepreneurs with events and workshops, as well as chances to network with investors and other entrepreneurs Saigon Coworking even offers legal, financial and accounting consulting as part of their package These hubs tend to locate where the environment is calm and quiet and there is good view out on the city or green spaces, such as Work Saigon equipped with swimming pool and organic garden There is also the search website Coworker.com where users can visit and compare different hubs in Vietnam Cooperation and network among firms lead to the physical organization in which these firms are located into start-up districts, such as Hoa Lac Hi-tech Park (HHTP), Saigon Hi-tech Park (SHTP) and Quang Trung Software City These are areas where many companies are based, reducing proximity among them and fostering more collaboration Besides the increasing supply of co-working spaces and hubs, restaurants and cafes have also transformed their functions to suit the trend Previously, these places were mainly for eating and social hangouts, but cafes have now become destinations for working and meeting as well Toong and Clickspace in Hanoi are typical model of a mix of start-up hub and coffee shop Besides, 24/7 cafes are also spots for working, such as Thuc Coffee and The Factory in Ho Chi Minh City The third change in the micro domain is the rise of new economic actors that specialize on supporting start-ups and new businesses [Mic3] Venture capital is a kind of investment by wealthy individuals as part of their investment portfolio (Velayanikal, 2014) IDG Venture Vietnam, CyberAgent Venture, DFJ VinaCapital, and Prosperous Vietnam Investment are some popular venture capitals that have successfully invested in businesses like Vietnamworks, VinaGame, Vatgia, Foody, Tiki, and Yeah1 (Khoi Nghiep, 2016) Firms and organizations, which were previously not related to start-ups, are now developing programs to support new businesses, such as FPT Ventures, the Communist Youth Union, Ho Chi Minh City Start-up and Innovation Fund (HSIF), and even the Ministry of Science and Technology Next, there are incubators to provide entrepreneurs training and support for start-ups in their first stages of development Some examples of incubation programs in Vietnam are the government-led Vietnamese Silicon Valley Project, Hatch!, Founder’s Institute, X-Incubator, and Vuon Uom Vat 200 | ICUEH2017 Gia (Shona, 2016b) In addition to the above new actors, there are also angel investors, nonprofit organizations, and competition organizers in the start-up scene The next change in the micro domain is in the emergence of other related actors in the startup scene Following the demand and supply of start-ups and supporting services are the rise of further related actors, such as book authors, websites, support centres, and television programs Unlike previous times, there are now books written by successful innovators to share their experience on their start-up journey Besides books from Vietnamese authors such as Smart-up (Khoi nghiep thong minh, by Ngo Cong Truong) and Start-up Handbook (So tay khoi nghiep, by many authors), those from international writers such as Zero to one (by Peter Thiel), and Business model generation (by Alexander Osterwalder and Yves Pigneur) are also titles to look for (Son, 2016) Many websites are published to cover news about start-ups, match investor and entrepreneur, and build network: These include Life-changing Books (Tu sach nen tang doi doi, by Dang Le Nguyen Vu), Start-up Vietnam (startupvietnam.org), Khoi Nghiep (khoi.nghiep.vn) and Khoi Nghiep Tre (khoinghieptre.vn) Support centres such as the Business Start-up Support Centre (BSSC) were born News media also feature a column on their newspapers for start-up related news, as seen on Thanh Nien News, Tuoi Tre News, and VnExpress In addition, television broadcasters now develop programs about start-ups, too, such as VTV with Start-up Trip (Chuyen xe khoi nghiep) and HTV with Start-up Cafe (Ca phe khoi nghiep) The macro domain The macro perspective looks at the changes in work nature and employment as changes of rules and of the populations carrying the rules These rules are cognitive, behavioural, social and technical rules, which all develop and interact in a dynamic way, resulting in a co-evolutionary process that shape movements of rule populations in society Rule populations include but are not limited to, entrepreneurs, employees, students, firms, investors, and media agents In short, the evolution of work and employment nature in Vietnam is a process of enhancing existing rules [Mac1] while constantly leaning towards the ‘new’ [Mac2] Several of the ‘new’, influenced by changes in rules and routines of economic actors, can be observed since the rise of start-ups and SMEs Less fixed-term, full time employment [C3, C4, C5] and intersecting labour division [B1, B2, B3, B6] have led to the rise of new types of job contract in the labour market: short-term, voluntary, or part-time jobs New expertise, such as entrepreneurship and innovation management, emerges as the result of increasing demand for information and knowledge in the economy The tendency for network and collaboration has paved way for partnership and alliance between previously competitors in the economy, leading to physical organization for cooperation such as co-working offices and start-ups districts Le Anh Khanh Minh | 201 Following the changes in rules, new products and services are born, as well as supply and, at the same time, demand for these products and services There are now markets for labour, talents investments, funds, training courses, competitions and awards, as well as books and programs on entrepreneurship and innovation to meet the trend of start-ups Several names and brands emerge, as the actors behind these names: HATCH! NEST, 5DESIRE, Dreamplex and CitiHub for co-working spaces; IDG Venture Vietnam, CyberAgent Venture, DFJ VinaCapital, and Prosperous Vietnam Investment for venture capitals and funds; Vietnamese Silicon Valley Project, HATCH!, Founder’s Institute, and X-Incubator for incubation programs There are also book titles such as Smart-up, Start-up Handbook, Zero to one, and Business model generation; websites such as Start-up Vietnam (startupvietnam.org), Khoi Nghiep (khoi.nghiep.vn) and Khoi Nghiep Tre (khoinghieptre.vn); support centres such as the Business Start-up Support Centre (BSSC) and as in co-working hub providers Media channels are also new actors in the start-up scene: Thanh Nien New, Tuoi Tre News, VnExpress with columns for start-ups, VTV with Start-up Trip (Chuyen xe khoi nghiep) and HTV with Start-up Cafe (Ca phe khoi nghiep) In essence, the entry of new actors and the formation of new markets for start-up related services reflect an allocation of resources to the ‘new’ in the economy In addition, there is also a reallocation of resources towards start-ups and supporting activities For example, organizations, whose businesses or purposes were not related to start-ups, are now becoming more involved in the scene In 2015, FPT Group – a leading information technology company in Vietnam, launched its venture capital arms FPT Venture (FPT, 2015) Life-changing books was initiated in 2012 by CEO Dang Le Nguyen Vu and is now affiliated with his coffee brand Trung Nguyen Group The Communist Youth Union, Youth Cultural Centre, Women’s Union, Ministry of Science and Technology and other governmental bodies are now offering short courses, mentor programs and competitions for the start-up community (Van, 2012; Anh, 2017) More widely seen, cafes, restaurants, and bookstores are investing more in their facilities and services, such as 24/7 opening hours, broadband connection, furnishing and decorations, to target at young entrepreneurs Moreover, universities are now placing stronger emphasis on entrepreneurship Curricula and assessment now have more elements of teamwork, communication or research skills, which are those that will be required in the real working environment Students are also encouraged to participate in extra-curricular activities and university’s student clubs Furthermore, the start-up community also witness the rise of networks and alliances between entrepreneurs and start-ups Competitions, co-working spaces, incubation programs, and idea camps are where young people can meet and find like-minders Several competitions are commonly known among young people who wish to start-up: Viet 202 | ICUEH2017 Youth Entrepreneurs (VYE) Bootcamp, VietChallenge, Start-up Wheel, Creative Idea Contest (CiC), and i-Start-up Finally, one huge change at macro-level comes from the government and its strategic direction Although the concept of start-up and start-up activities has been around since early 2000s, it is not until 2016 that the Vietnamese government publicly takes innovation and entrepreneurship into policy and planning consideration Prime Minister Nguyen Xuan Phuc announced 2016 to be “the year of start-up” and further stressed that never before has entrepreneurship received much attention from the government (Do, 2016) In the same year, Vietnamese government proposed a concept of Chinh phu kien tao, in which it aims at encouraging innovation, providing a stable, dynamic and favourable business environment, as well as more engagement, transparency, and accountability towards the public (Vu, 2017) In this sense, government becomes an economic actor who not only regulates or manages but also facilitates innovation and entrepreneurship Several government programs are created to foster the ecosystem of start-ups in Vietnam (Shona, 2016c) Ministry of Science and Technology plays a leading role in Vietnam’s innovation system, with two agencies under its management: The National Technology Innovation Fund (NATIF) and National Agency for Technology, Entrepreneurship, and Commercialization Development (NATECD) These two government-led programs provide start-ups and entrepreneurs with training, mentorship, incubation and acceleration as well as financial support for R&D activities Vietnam Silicon Valley is another initiative of the government in nurturing a knowledge-base economy and building network Apart from government-led ones, there are also programs that are in partnership with foreign and international agents These include The Finland-Vietnam Innovation Partnership Program (IPP), The Fostering Innovation through Research Science and Technology (FIRST, in cooperation with World Bank) and Mekong Business Initiative (MBI, funded by Asia Development Bank) Furthermore, a new development plan called Fostering start-up ecosystem and innovation to 2025 was officially in effect since 2016 Several support are proposed by the government, ranging from building startup infrastructure and research facilities, to investment in start-up education and tax incentives In the near future, the government pledges to develop investment procedures, legal and statutory frameworks for venture capitals, funds, labour, and a favourable tax scheme so as to better cope with constant, dynamic changes in the start-up environment (Anh, 2016; An, 2017) Discussion and Conclusion Taking the evolutionary perspective, the impacts of start-ups and SMEs can be seen at three levels of analysis: micro, meso and macro A summary table of the possible impacts can be Le Anh Khanh Minh | 203 found on the next page By nature, these impacts can be explained at meso level by looking at the changes in cognitive, behavioural, social and technical rules in the Vietnam’s socio-economic context Evolution of meso-level rules consequently enhances or reshapes decisions and behaviours of economic agents in the micro-level, such as individuals and firms At the same time, this evolution causes movements in the overall economic systems, particularly in industries and government planning Micro [Mic1] Increase in demand for start-up related services -More recognition for soft skills, leading to decision to acquire soft skills through extra-curricular activities, competition, internship, work experience -Higher need to collaborate and teamwork, leading to demand for co-working hubs and hi-tech districts [Mic2] Increase in supply of soft skills opportunities -New services: soft skill courses, clubs organizations, co-working spaces, start-up districts, consulting, funding, incubation, idea competition, books, websites, support centres, news coverage and television programs -Change in function of existing firms and organizations to suit micro demands: cafes, bookstores, government bodies [Mic3] Rise of new economic actors: Angel investors, venture capitals and their investors, incubators, book authors, bloggers, and reporters on start-ups Meso [C1] Flexible working hours [B1] Not clear task division between staff [S1] Less hierarchical management style [T1] Increasing use of electronic devices [C2] Change in perception of workplace to outside office hours and online [B2] Intersecting functions and tasks [S2] Decomposable organization structure [T2] Widespread Internet connection [C3] Freelancing and self-employment [B3] Mindset for cooperation and teamwork [S3] Less substitution view, more focus on complementarity [T3] Rise of platforms for project management and teamwork [C4] Job-hopping, lower staff retention [B4] Appraisal and feedback mechanism [S4] Networks of firms and start-ups [T4] Rise of websites, forums, blogs for sharing experience and know-how [C5] Less inclination towards life-long career in one single firm [B5] Independence and ability to work on own [S5] Trust as an institution for collaboration and exchange [T5] Rise of ecommerce and online marketing [C6] More tolerance for [B6] Outsourcing [T6] Better 204 | ICUEH2017 risk and failure functions [C7] Desire to have own business [B7] Changes in physical organization of firms to open-space, collaborative workspace [C8] Self-starter [B8] Natural pedagogy and support for new firms coordination of supply and demand for resources [C9] More focus on soft skills to complement academic knowledge [C10] Multi-tasking rather than narrow specialization Macro [Mac1] Enhancing existing rules and populations – relocation of resources in different purposes towards start-ups and supporting activities [Mac2] Emergence of new coordination and organization in the economy – the allocation of resources in the economy to the ‘new’ -New types of jobs (fixed-term, contractual, freelance) and expertise (financial, legal, marketing, consulting) -Rise of network, partnership and strategic alliance -New market due to new demand and supply for start-up related services: Market for labour, talents, investments, funds, training courses, competitions and awards, books, programs and so on [Mac3] Change in government strategic planning and direction -More emphasis on entrepreneur and innovation in government’s policy -More support in terms of funding, training, legal and statutory framework Figure Impacts on nature of work and employment One caveat remains in the analysis above: The impacts are only observations This leads to a situation where incidents are merely coincidence without any correlation between them For example, changes in perception of workplace [C2] may be attributed to more of a result of technological advances rather than of the start-up and SME emergence Similarly, increasing use of electronic device [T1] may stem from overall trend in the world rather than from the increasing need to communicate and cooperate While this caveat makes up the paper’s limitation, it can as well be, on a brighter note, topics for future papers Further research can Le Anh Khanh Minh | 205 take up from these unanswered questions and expand into econometric models for these impacts References An, K (2017) Quy dau tu khoi nghiep sang tao 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