Management innovation to improve the competitive capability in state owned enterprises

ficiency of enterprises' operations and promote economic development. 3. Research subject and scope 3.1. Research subjects The research object of the thesis is SOE governance, SOE governance innovation, SOE competitive capability as well as the role of governance innovation on SOEs' competitive capability (theory and practice). In addition, the thesis also studies the policy framework, laws, state management of SOEs, SOE governance, as well as factors affecting SOE governance efficiency. The thesis also mentions and studies corporate governance practices in the world in order to draw some relevant lessons for Vietnamese SOEs. 3.2. Research scope - Regarding the content: The research scope of the thesis is limited to corporate governance and focus on SOE governance, some aspects of business administration related to competitive capability as well as performance of SOEs and the current situation of SOE governance in Vietnam, factors affecting corporate governance efficiency and solutions of management innovation to improve the competitive capability of SOEs in Vietnam. 4. Research Methodology 4.1. Research methodology The thesis is based on the research methodology of dialectical materialism and historical materialism. The Party's views on market economy development, corporate governance and SOE development are also a guideline for the research methodology of the topic. 4.2. Specific research methods To implement the thesis, the author has used qualitative research methods that are mainly combined with quantitative research methods. The qualitative research methods are basically including: analytical - synthesis method, comparison - comparison method, statistical method, systematization method and interpretation method. 5. New contributions of the thesis - Clarify and contribute to additional academic issues on corporate governance, SOE governance and SOE competitive capability; conceptual issues, characteristics of the role of SOEs as well as governance activities, performance of SOEs. - Clarify the impact of SOE governance activities on the competitive capability of SOEs theoretically and practically, emphasizing the important and core role of governance innovation in improving the competitive capability of SOEs in Vietnam. - Clarify the inadequacies, challenges and even weaknesses of current SOE governance, based on which highlights the issues posed and challenges when implementing governance reforms to improve the competitive capability and efficiency of the SOEs. - The solutions and recommendations in the thesis contribute to the renovation of SOE governance, especially large economic corporations in order to improve the competitive capability of SOEs in the era of strong competition with private sector enterprises. 6. The structure of the thesis This thesis, in addition to the introduction, conclusion, list of references, appendices and structures of the thesis, includes: Chapter I. Overview of the research situation and the theoretical basis of the topic Chapter II. Theoretical issues on SOE governance and State-owned enterprises' competitive capability. Chapter III Current situation of SOE governance in Vietnam and lessons learned from a number of countries. Chapter IV Perspectives, goals and solutions to renovate governance to improve the competitive capability of state-owned enterprises. CHAPTER 1: OVERVIEW OF RESEARCH SITUATION RELATED TO THE THESIS THEMES 1.1. Literature review of the topic 1.1.1. Oversea researches In the world, there have been many research works, articles addressing each individual issue of corporate governance, SOE governance and SOE competitive capability. Typically, there are the following works: 1.1.1.1. Corporate governance and business administration research group There are many studies in the world that have mentioned the concept of corporate governance. One of the earliest studies was The Modern Corporation and Private Property by Berle and Means (1932). This work began to address the concept of corporate governance and later became the basis for many other studies Corporate governance here is understood as the process, procedures, policies, regulations, laws and institutions to guide organizations and enterprises how to act, operate and control their activities to achieve the set goals. 1.1.1.2. Research group on SOE governance and SOE governance innovation SOE governance has always been a concern of many countries, international organizations and scientists. Regarding the management of SOEs, typically the 2006 Guide to Corporate Governance of SOEs, OECD provides six basic guidelines. Research by World Bank (2014), Transparency of SOEs in Vietnam - current status and ideas for reform but with the idea of ​​information transparency starting from "Economic group, then expanding to general corporations, and finally the remaining 100% state owned SOEs" indirectly agreed to the concept. 1.1.1.3. The group of studies on the relationship between corporate governance and improving the competitive capability of state-owned enterprises The research on corporate governance in the world has been very popular in recent years, especially since the 2000s when corporate governance practices in the world have generated many problems and activities of joint stock companies are increasingly complex and diverse. The above studies have created a fairly complete theoretical basis for corporate governance and suggest theoretical and practical issues in the governance of State-owned enterprises. 1.1.2. Researches in Vietnam 1.1.2.1. Research group on corporate governance and SOE governance In Vietnam, there are many studies on corporate governance and SOE governance. The author Hoang Van Hai (2018) has a corporate governance project, based on the research related to institutions, policies and laws to guide, operate and control the company and the public. 1.1.2.2. Group of research works on management innovation and raising the Competitive capability of SOEs The book of Corporate Governance Management, Listed for Enterprises and Investors (Le Minh Toan, 2010) provides the most general overview of corporate governance, listed in Vietnam based on the current situation of Large joint stock companies in Vietnam. 1.1.2.3. Group of research works on international experience Some researches on international experience on management and investment of state capital in enterprises, such as the law governing the model of state capital owner according to international experience. 1.1.3. Assess the research situation As mentioned above, domestic and foreign researches and articles have analyzed in various perspectives on corporate governance, SOE governance, corporate governance innovation and competencies. competition of State-owned enterprises. 1.1.3.1. The issues have been clarified - Researches have also inherited and clarified corporate governance, business administration - but the key to the success of the company. The works have also analyzed to clarify the concept of SOEs, the characteristics and role of SOEs and on the operation of SOEs; - There have been certain analyzes on the effectiveness, efficiency assessment of the current SOEs, the governance system and SOE governance innovation and on the competitive capability of SOEs; - There have been many analyzes on the specific contents of SOE governance activities such as remuneration, information transparency, the assurance of shareholders' interests, the structure of the board of directors. 1.1.3.2. Research gaps There has not been any comprehensive research on management innovation in order to improve the competitive capability of SOEs in Vietnam. PhD candidate aims at deepening the theory of SOE governance, clarifying management activities and the competitive capability of Vietnamese SOEs (100% State capital) in the context of integration, thereby, providing recommendations. 1.2. Theoretical basis, research questions, research hypotheses and approach of the topic 1.2.1. Theoretical basis The theoretical basis of the thesis is based on three research pillars: i) Theories of corporate governance associated with business administration as well as the impact of corporate governance on business strategy of the business; ii) theoretical views on SOEs, SOE operations and iii) the influence of SOE governance on SOE competitive capability in the context of strong competition in the market economy. 1.2.2. Research questions In order to achieve the research objectives set out and on the basis of analyzing the research situation of issues related to the content, the author identifies a number of basic research questions that underlie the research and solving objectives of the thesis. Those questions are: Question 1: What are the nature and basic characteristics of corporate governance, governance practices in SOEs and inadequacies in SOE management practices in recent years? Question 2: Why should SOE governance reform and the impact of SOE governance innovation on SOs competitive capability? What do SOEs need to do to renovate governance towards improving the competitive capability and increasing the efficiency in their operations? Question 3: Are there any solutions to renovate governance to improve the competitive capability for SOEs in the context of Vietnam's typical market economy and international integration? 1.2.3. Research hypotheses - The first research hypothesis: SOE governance has many differences compared to other corporate governance. Stemming from the role and characteristics of SOEs, SOE governance is more complex than governance at other types of enterprises. - The second research hypothesis: from the deep integration into the global economic system (accession to the WTO, new generation FTAs), the regulations on SOE governance of Vietnam must be changed in accordance with the law in the WTO, create equal competition of SOEs with private sector enterprises in the economy. - The third research hypothesis: Inadequacies in the provisions of the law on SOE governance and the poor awareness of SOEs on governance activities, weak compliance is the main reason leading to SOE Competitive capability is still limited. - The fourth research hypothesis: SOE governance reforms towards efficiency will help Vietnamese SOEs avoid business weaknesses and improve competitive capability in domestic and international markets. 1.2.4. Research approach of the thesis The dissertation's topic is in Business Administration, so the approach is to study corporate governance in combination with business administration, based on that propose SOE innovation and innovation to improve the competitive capability and performance of SOEs. CHAPTER II. THEORETICAL ISSUES ON THE MANAGEMENT OF STATE ONWED ENTERPRISES AND COMPETITIVE CAPACITY OF STATE OWNED ENTERPRISES 2.1. Conceptualizing on SOEs and SOE governance 2.1.1. Overview of state-owned enterprises 2.1.1.1. State enterprise concept SOE is a type of enterprise whereby the state invests capital or controls to perform economic functions and objectives set by the State. Basically, SOEs are expanded by the State with at least the majority of capital (over 50%) of the total contributed capital of the enterprises and accordingly the State is the owner with the right to dominate the enterprises. SOEs are not a concept that only appear in countries with transition economies but exist in most countries in the world. 2.1.1.2. Characteristics of state-owned enterprises In the economy, SOEs are also a type of enterprise, so they bring all the characteristics of the enterprise in general, such as an organization with its own name, assets, transaction offices, established in accordance with the law. 2.1.1.3. The role of state-owned enterprises SOEs play an important role in the economy in particular and in the society. SOEs play a multifaceted role with many goals both economically, politically and socially as well as other development orientations. 2.1.2. Overview of corporate governance 2.1.2.1. Corporate governance concept Basically, governance is concerned with the process of planning, organizing, leading and monitoring the activities of its members, using resources to achieve success in the set goals. 2.1.2.2. Characteristics of corporate governance Governance is the necessary process of activities carried out when people work together in organizations aiming at certain goals. 2.1.2.3. Principles of corporate governance Corporate governance is the operation of a system of rules, internal processes and the implementation of such content to guide, operate and control the company, in relation to the relationships between the Board of Directors. Director, Board of Directors / Members' Council and shareholders of a company with related parties. 2.1.3. State owned business governance 2.1.3.1. State owned enterprise governance concept Corporate governance is a big category, can approach CG in many different angles such as: management purpose, management mechanism or through governance entities. 2.1.3.2. State owned enterprise governance characteristics Legally, SOEs operate like a normal business, taking responsibility for all their activities in the production and business process. 2.1.3.3. Content of state owned enterprise governance In Vietnam, according to the new regulations, SOE is legally a state-owned enterprise and exists as a one-member limited liability company. Therefore, SOE governance is mainly based on the principles of corporate governance (rather than public companies). 2.2. Corporate governance innovation 2.2.1. Concept Management innovation including innovation of business management and administration is the path to success and sustainable development of enterprises. Management innovation is also attached and towards good governance, whereby a competent, timely, comprehensive and transparent management system is implemented in an organization. 2.2.2. Content of corporate governance innovation In the face of unpredictable changes in the business environment and competition, innovation of business management thinking must be considered as a vital line of business, especially for large enterprises and public enterprises. 2.3. Issues of competitive capability of state-owned enterprises 2.3.1. The concept of the competitive capability of SOEs Competitive capability of SOEs is their ability to maintain and improve their competitive advantages in production and consumption of products, expanding markets, attracting and using effectively factors of production (capital, energy, labor, technology) to achieve high economic benefits (maximize profits) and ensure sustainable economic development of SOEs. 2.3.2. Criteria for assessing the competitive capability of state-owned enterprises General competitive capability of businesses in the market economy is the core factor to survive. This factor especially plays an important role in the complete market economy conditions, international economic integration, businesses will have to compete to survive in the market with international elements and increasingly fierce. When competing equally, SOEs will also have to improve the Competitive capability to maintain their existence. At the same time, the competitive competence of SOEs must also rely on the same evaluation criteria as private sector enterprises. 2.4. The effect of governance innovation on SOE competitive capability Corporate governance plays a special role in maintaining efficiency, sustainable development and thereby maintaining the competitive capability of your business. In this relationship, in order to improve competitive capability, management activities need to be renewed in the following contents: management capacity, administration, improving the quality of human resources, improving product quality to meet Market demand, compliance, businesses also need to have appropriate production strategies to take advantage of production and business opportunities. The Board of Directors, Board of Members, and Board of Directors need to be identified as the nucleus of the innovation and creativity process in all aspects of governance to improve the competitive competence of the enterprise. CHAPTER 3. THE CURRENT SITUATION OF STATE ENTERPRISE GOVERNANCE IN VIETNAM AND EXPERIENCE LESSONS FROM SOME COUNTRIES 3.1. Overview of production and business activities of SOEs in Vietnam 3.1.1. The process of formation and development of SOEs In addition to SOE innovation and development, the policy of building large-scale economic corporations and groups and holding a leading position in a number of important industries and fields is determined by Government. 3.1.2. Some production and business results According to data from the National Enterprise Registration Database (Ministry of Planning and Investment), as of December 31, 2018, the whole country had 714,755 operating enterprises, an increase of 9.2% compared to the same period in 2017. The total number of operating enterprises having production and business results (business and production) surveyed and updated on December 31, 2017 on the whole scale, there are 560,417 enterprises, an increase of 11% compared to December 31, 2016 (MPI 2019, p. 26). 3.2. Actual state of SOE governance innovation 3.2.1. On corporate governance innovation The transformation of SOEs to operate under a market mechanism and in a legal framework equal to those of other economic sectors is a consistent policy of the State. 3.2.2. Some governance strategies affect the competitive competence of SOEs When assessing the effectiveness of strategic governance in SOEs, the survey results show indicators on the professional qualifications of strategy developers, coordination of management levels, and strategy implementation, the level of supervision and handling of arising problems are assessed at a fairly high level with an average score of 4 points or more on a 5-point scale. 3.3. Evaluate the impact of corporate governance innovation on the competitive competence of SOEs Changes in SOE governance to aim at are improving the competitive capability, business efficiency, and profitability in both short, medium and long term; compliance, meeting environmental, social and sustainable development requirements. New and popular strategic trends in the world are of interest to corporate executives, including in SOEs. 3.3. Assess the impact of corporate governance innovation on the SO's Competitive capability Changes in SOE governance to aim at are improving the competitive capability, business efficiency, and profitability in both short, medium and long term; compliance, meeting environmental, social and sustainable development requirements. New and popular strategic trends in the world are of interest to corporate executives, including in SOEs. 3.4. Experience of management innovation to improve the competitive capability of SOEs in some countries around the world 3.4.1. Experience of China 3.4.1.1. Securing the basis for an effective governance framework 3.4.1.3. Responsibilities of the board of directors The Chinese government has realized that good corporate governance is necessary to improve the competitive capability of the company and attract international capital (Hong Kong Economic Journal, 2001). 3.4.2. Experience of Korea 3.4.2.1. Securing the basis for an effective governance framework 3.4.2.2. Information disclosure and transparency 3.4.2.3. Related parties and unusual transactions 3.4.2.4. Responsibilities of the board SOE governance has been mentioned in South Korea since the Asian financial crisis in 1997. A series of reform measures were introduced after the collapse of more than one-third of SOEs in Korea. Quoc because of weak corporate governance. 3.4.3. Experience of Singapore 3.4.3.1. Temasek State Capital Investment Corporation 3.4.3.2. Changes in organizational structure 3.4.3.3. Changes in management 3.4.3.4. Changes to information disclosure In Singapore, state-owned enterprises (SOEs) are called government-linked companies (GLCs) .GLCs are partly or wholly owned through Temasek, State Capital Investment Corporation (SWF - Sovereign Wealth Fund), so they are also called TLCs (Temasek-linked companies). 3.4.4. Lessons learned for Vietnam 3.4.4.1. A solid legal framework is a prerequisite to improving the governance of state enterprises 3.4.4.2. Public and transparent information about the business 3.4.4.3. Improve the professionalism of the board of directors/ board of members. 3.4.4.4. About SOE management agencies Through studying the experiences of some countries as above, it can be seen that many models of state property management and supervision, in which, some countries have many similarities in the environment and economic institutions that Vietnam can consult as well as learn from experience. China has built a centralized model of state asset management through the establishment of a system of State Asset Management and Supervision Commission (SASAC) at both the central and local levels. In Vietnam, it is very necessary to continue to consider and perfect the management model and functions of the Committee above. CHAPTER IV. VIEWPOINTS, OBJECTIVES AND SOLUTION FOR MANAGEMENT INNOVATION TO IMPROVE THE COMPETITIVE CAPABILITY CAPACITY OF STATE OWNED ENTERPRISES 4.1. Viewpoints on innovation and improvement of governance of Vietnamese SOEs The Government has implemented many measures to arrange and renovate SOEs and has achieved some positive results. The restructuring of SOEs was promoted, the number of SOEs was narrowed, focusing on key industries and fields. The operational mechanism of SOEs has been renovated in the direction of business autonomy, fair competition, more openness and transparency. 4.2. Indicators of competitive capability of SOEs should be directed 4.2.1. Targets of growth The average growth rate in the period of 2010 - 2015 of the SOE sector was lower than that of the private sector, not commensurate with the State resources invested and advantages compared to other economic sectors. 4.2.2. Targets of market share and ability to dominate the market Market share is the market share that enterprises have occupied; In other words, this is the market segmentation of enterprises to competitors in the industry), banks, telecommunications. 4.2.3. Targets of profitability 4.2.4. Targets of capital 4.2.5. Targets of science and technology level 4.2.6. Targets of human resource 4.2.7. Targets of on production strategy, distribution and product development 4.3. Management innovation solutions to improve the competitive capability of state-owned enterprises 4.3.1. Governance reform is associated with the policy of restructuring State enterprises Since SOE governance is heavily influenced by SOE management policies, a change in SOE rearrangement policy will have a great impact on this corporate governance system. 4.3.2. Improve the professionalism and operational efficiency of the Board of Members In order to properly exercise their authority, the Board of Members of SOEs requires members to behave for the common interests of the enterprise, without conflicts of interest when performing their assigned functions, with sufficient experience and appropriate expertise, including experience in the private sector. 4.3.3. Strengthening the capacity of the contingent of state enterprise administration To perform well the governance functions, SOEs strengthen training and training to gradually improve the governance capacity and quality of the management team to meet the requirements of corporate governance in the market mechanism and current extensive international integration. 4.3.1. Raising awareness about the policy of organizing and renovating state-owned enterprises' administration The arrangement and innovation of SOE governance is a big policy, and it is also a very sensitive and complex field because it changes a habit and a management mentality in a long time of the mechanism. 4.3.2. Improve the professionalism and operational efficiency of the Board of Directors In order to properly exercise its authority, the Board of Directors of SOEs requires its members to behave for the common good of the enterprise, without conflicts of interest in the performance of their assigned duties, with appropriate experience and expertise. including experience in the private sector. 4.3.3. Strengthening the capacity of state management enterprises In order to perform well the management functions, the SOEs enhance their training and fostering to gradually improve the management capacity and quality of the management team to meet the requirements of business administration in the market mechanism and extensive international integration today. 4.3.4. Separate ownership and administrative rights of SOEs SOE governance is only t