Resource Curse or Destructive Creation: A Tale of Crony Capitalism in Transition

ULB-CEB Working Papers Series, No. 12/037

11 Pages Posted: 29 Dec 2012 Last revised: 29 Jul 2019

See all articles by Quan Hoang Vuong

Quan Hoang Vuong

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management; Phenikaa University

Nancy K. Napier

Boise State University - College of Business & Economics

Date Written: December 28, 2012

Abstract

This paper explores the “resource curse” problem as a counter-example of creative performance and innovation by examining reliance on capital and physical resources, showing the gap between expectations and ex-post actual performance became clearer under conditions of economic turmoil. The analysis employs logistic regressions with dichotomous response and predictor variables, showing significant results.

Several findings that have use for economic and business practice follow. First, in a transition period, a typical characteristic of successful firms was their reliance on either capital resources or physical asset endowments, whereas the innovation factor was not significant. Second, poor-performing enterprises exhibited evidence of over reliance on both capital and physical assets. Third, firms that relied on both types of resources tended to downplay creative performance. Fourth, reliance on capital/physical resources and adoption of “creative discipline/innovations” tend to be mutually exclusive. In fact, some evidence suggests that firms face more acute problem caused by the law of diminishing returns in troubled times.

The Vietnamese corporate sector’s addiction to resources may contribute to economic deterioration, through a downward spiral of lower efficiency leading to consumption of more resources. The “innovation factor” has not been tapped as a source of economic growth. The absence of innovations and creativity has made the notion of “resource curse” become identical to “destructive creation” implemented by ex-ante resource-rich firms, and worsened the problem of resource misallocation in transition turmoil.

Keywords: organization of production, firm behavior, business economics, creativity/innovation processes

JEL Classification: D21, L23, M21, O31

Suggested Citation

Vuong, Quan Hoang and Napier, Nancy K., Resource Curse or Destructive Creation: A Tale of Crony Capitalism in Transition (December 28, 2012). ULB-CEB Working Papers Series, No. 12/037, Available at SSRN: https://ssrn.com/abstract=2194329 or http://dx.doi.org/10.2139/ssrn.2194329

Quan Hoang Vuong (Contact Author)

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management ( email )

ULB CP 145/01
21 Ave. F.D. Roosevelt
Brussels, Bruxelles 1050
Belgium
+32-2-6504864 (Phone)
+32-2-6504188 (Fax)

HOME PAGE: http://www.ceb-ulb.com/vuong-quan-hoang.html

Phenikaa University ( email )

To Huu road, Yen Nghia
Ha Dong district
Hanoi, Hanoi 100803
Vietnam

HOME PAGE: http://sites.google.com/site/vuongqh2019/

Nancy K. Napier

Boise State University - College of Business & Economics ( email )

1910 University Drive
Boise, ID 83725
United States
208 426-1314 (Phone)
208 426-3637 (Fax)

HOME PAGE: http://cobe.boisestate.edu/graduate/faculty/VITAES/html%20format/Nancy%20Napier.htm

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