Knowledge transfer channels to Vietnam for process improvement

Purpose: In the globalized economy, it is becoming increasingly necessary for firms in emerging economies to adopt advanced knowledge and technology from external sources, both domestic and abroad. This paper aims to identify knowledge flows through domestic and international customer‐supplier relationships that cause gaps in quality assurance, cost reduction, and timely delivery among firms in emerging countries. Design/methodology/approach: The authors constructed an original dataset on production networks within manufacturing firms in Vietnam (including Hanoi and the surrounding region) and estimated statistical models for the relationship between face‐to‐face interactions within a supply chain and QCD (Quality, Cost, Delivery). Findings from in‐depth interviews with Japanese firms in emerging economies complement the quantitative analysis. Findings: The incidence of face‐to‐face interactions between two firms within a production chain via resident engineers significantly explains the variation in performance of total quality management among firms in Vietnam under controlling vertical ownership within a chain. Since the authors could find no significant correlations between transactions of goods along the supply chain and QCD, it is safe to say that transfer of intangible assets among interconnected firms may cause the difference in QCD among firms in Vietnam. Originality/value: This represents the first systematic quantitative research on the asymmetric gains from face‐to‐face interactions with downstream and upstream firms, and it offers a new development in the study of transfers of intangible assets within a supply chain in Asian emerging economies.