Topic Implications for sustainable entrepreneurship in vietnam service sector in the context of 4th industrial revolution - Hoang Viet Huy

Nội dung text: Topic Implications for sustainable entrepreneurship in vietnam service sector in the context of 4th industrial revolution - Hoang Viet Huy

1. Entrepreneurship also helps increase the level of competition within industries and the economy as a whole. Admittedly, humanity has never experienced such rapid progresses in all aspects of life like it is happening nowadays. Along with the positive effects the development brings about, it cannot be denied that the fast pace of development has exposed nations to potential issues that directly impact and threaten the prospects of humanity. These are the consequences of the old concept of development, which focuses on accelerating economic growth without sufficient attention to social and environmental issues. Being aware of the current situation, nations are forced to come up with a more sustained concept of development, which shifts the traditional focus solely on economic issues to three pillars of development and emphasizes the early education of sustainability for not only firms but also potential future entrepreneurs. Following the general movement of the world, sustainable entrepreneurship has also been started paying attention in Vietnam. It can be seen that the development of Vietnam economy recently is accompanied by a noticeable increase in the number of businesses. While the problem of environmental pollution has already been severe in Vietnam, especially in urban areas and industrial parks, the continual escalation of newly registered firms may generate even heavier effects on environment if not properly controlled. Thus, the question in this moment is how to align firms’ development path and sustainability-oriented goals. The optimal solution perhaps are to educate firms, from the grass-root level, about the reciprocal relationship of economic, social and environmental factors and direct them to the idea of sustainability. Sustainable entrepreneurship, therefore, is the expected outcome of the education efforts. This article will first clarify the concept of sustainable entrepreneurship, then provide some firm figures in Vietnam relating to business registration, suspension and dissolution as well as firm profitability to give out some thoughts on the economic pillar mentioned in the concept of sustainable development. 429
2. Figure 1. The three pillars of sustainability Source: Researchgate.net While sustainability is closely related to preserving existing resources for future generations, entrepreneurship aims to develop new business solutions in the long run. Sustainable entrepreneurship, therefore, as defined by Pacheco et al. (2010), is “discovery, creation, evaluation, and exploitation of opportunities to create future goods and services consistent with the sustainable development goals”. Although entrepreneurship and sustainability are two differently terms, these two share the concept of longevity. However, according to Greco & Jong (2017), for entrepreneurship, the long-lasting goods and services, as a reflection of longevity concept, is not feasible because of the continual changes in demand that biasing the demand predictions. Furthermore, the continuous supply of a product or service without proper improvements may even damage the environment. Instead, Greco & Jong (2017) argue that the true goal of sustainable entrepreneurship is to create a positive impact, which is built on alertness, innovative thinking, risk-taking attitude and other ethical standards. While the concept of sustainable development has existed for long, sustainable entrepreneurship is a relatively new concept that has not received much attention due to the difficulty of meeting the sustainability requirements of entrepreneurial businesses. Entrepreneurial businesses often have to focus on profit targets to survive before pursuing social and environmental goals. 431
3. supply of electricity, water and gas, Finance, banking and insurance activities and Information and communication. It can be seen that the industries with the highest firm growth are mostly in the service sector. On the other hand, negative firm growth was recorded in the field of Transportation and storage. Table 1. Increase in the number of enterprises in 2017 compared to 2016 Unit: Firms Industries 2016 2017 Change (%) 1 Agriculture, Forestry and Fishery 1,883 1,955 3.82% 2 Mining and quarrying 642 687 7.01% 3 Manufacturing 14,806 16,191 9.35% Production and supply of electricity, water and 4 763 1,026 34.47% gas 5 Construction 14,502 16,035 10.57% Wholesale and retail trade; repair of motor 6 38,956 45,411 16.57% vehicles and motorcycles 7 Transportation and storage 6,269 5,903 -5.84% 8 Accommodation and Food service activities 5,303 6,336 19.48% 9 Information and communication 2,928 3,649 24.62% 10 Financial, banking and insurance activities 1,185 1,538 29.79% 11 Real estate activities 3,126 5,065 62.03% 12 Professional, scientific and technical activities 8,430 9,392 11.41% Job and travel services; rental of machinery, 13 5,541 6,742 21.67% equipment and other support services 14 Education and training 2,793 3,435 22.99% 15 Human health and social work activities 535 741 38.50% 16 Arts, entertainment and recreation 1,403 1,518 8.20% 17 Other service activities 1,035 1,235 19.32% Total 110.100 126.859 15,22% Source: Agency for Business Registration - Ministry of Planning and Investment In parallel to the increase of newly registered firms, the numbers of suspended and dissolved firms have been decreasing in the last 3 years. If in 433
4. the survivability of Vietnamese service firms, orientation towards the direction of sustainable development (for existing firms) and sustainable entrepreneurship (for new/about-to-establish firms). 3.2. Lost-making firms According to VCCI (2015), the service sector witnesses the highest number of loss-making firms. The smaller scale of firms, the higher loss-making ones; this fact shows the vulnerability of Vietnamese firms because most enterprises in this sector are SMEs. Table 3. Loss-making firms by industries from 2011-2015 Unit: % Industries 2011 2012 2013 2014 2015 1 Agriculture, Forestry and Fishery 31.6 28.5 35.1 34.9 39.6 2 Mining and quarrying 35.5 33.3 36.8 36.8 39.2 3 Manufacturing 39.2 23.8 42.1 42.1 45.0 Production and supply of electricity, water and 4 30.3 28.7 28.3 31.5 34.8 gas 5 Construction 35.0 15.8 38.4 38.6 43.8 Wholesale and retail trade; repair of motor 6 42.6 12.4 43.6 44.6 49.4 vehicles and motorcycles 7 Transportation and storage 42.7 25.9 43.4 43.2 50.8 8 Accommodation and Food service activities 47.2 51.2 54.0 55.5 56.1 9 Information and communication 53.3 51.1 59.2 59.3 57.8 10 Financial, banking and insurance activities 36.4 22.0 38.5 42.5 50.2 11 Real estate activities 60.2 31.7 60.4 57.7 60.4 12 Professional, scientific and technical activities 50.6 34.8 50.7 50.5 54.8 Job and travel services; rental of machinery, 13 53.3 27.3 55.2 55.8 57.2 equipment and other support services 14 Education and training 64.9 54.7 63.3 64.0 63.9 15 Human health and social work activities 48.1 26.1 50.9 53.8 55.5 16 Arts, entertainment and recreation 55.3 52.4 53.0 53.7 52.5 17 Other service activities 58.2 29.2 52.7 55.2 57.3 Source: Vietnam Business Annual Reports 435
5. capture the positive effects brought about by the 4th Industrial Revolution. New emerging digital technologies, such as crypto currencies and online-based services, cannot be managed in a traditional manner but require additional regulatory framework. If regulatory framework is incomplete and cannot catch up with the rapid development of the digital technology in particular and the 4th Industrial Revolution in general, it will slow down the access of local firms to modern technologies and make them unable to compete with foreign firms, even in the Vietnam markets. Moreover, many Vietnamese firms either cannot grasp the useful information for them or cannot make use of provided information to enrich their firms due to the information ambiguity and confusing administration procedures. Relating to government’s encouragement on technological renovation, the government has established two funds to support firm’s access to advanced technology, which are National Foundation for Science and Technology Development (NAFOSTED) and National Technology Innovation Fund (NATIF). These funds intend to boost the technology capacity of Vietnamese firms through providing applicable and practical technological ideas with sufficient fund to be implemented. These funds are undoubtedly helpful, nonetheless the publicity level of information and strict conditions of the funds hinder the borrowing intention of firms. From the business side, it can be easily seen that the number of people working in the service sector sharply increases in the past years. The tendency of labor concentration to the service sector is actually not newly happened in Vietnam. It is a necessary stage to transform Vietnam from a factor-driven economy to an efficiency-driven economy and it is also supported by the widespread of the 4th Industrial Revolution. Although the labor reallocation is essential, it also comes with negative consequences of business failures as shown in the data analysis. In fact, despite the practicality of the ideas, the prerequisite for success of current entrepreneurial activities lies on careful preparation and especially, innovation-and-technology-based development. The competitiveness of firms operating in the service sector very likely rests on customer satisfaction, 437
6. 5. Implications for sustainable entrepreneurship in Vietnam’s service sector in the 4th Industrial Revolution In the service sector, the number of newly established firms is huge but the amount of suspended, dissolved and loss-making ones is not small. As mentioned above, there are many reasons underlying this fact. In the light of the 4th Industrial Revolution, some suggestions for sustainable entrepreneurship in the service sector are proposed as follows: Firstly, the awareness of the business community about the 4th Industrial Revolution is limited as shown above. Thus, enhancing the awareness of firms in the service sector on the Industrial Revolution 4.0 must be put in priority. It is needed to understand that this is not just a digital transformation, it's an intelligence transformation. Secondly, equipping appropriate business management skills in the 4th Industrial Revolution is necessarily. Computer processing power has reached its limits, silicon chips are the size of atoms now, and they can’t get any smaller. Automation, digital platforms, and other innovations are changing the fundamental nature of work. This requires businessman appropriate skills to manage businesses. Lastly, Vietnamese entrepreneurial service firms must apply modern technology in doing business. Global development trend shows that entrepreneurial businesses need to be technology-integrated, especially during the 4th Industrial Revolution. An increasing number of businesses is using software tools, such as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM), to improve management efficiency. More technology-oriented firms may apply a complex system of operations and management tools to run the businesses. The active application of technological advancements from the beginning, nonetheless more expensive, will help entrepreneurs firmly build the foundation for their business. 6. Conclusion 439
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