Mediating Effects of Standard Adoption Between Stakeholders on Firm Performance in Economic Transition: A Tale of Vietnam

This study concerns the complicated institutional logics that SMEs in emerging markets employ when deciding to upgrade management quality. We assume that social relationships affect business decisions. Political ties induce SME decisions to upgrade quality by urging firms to align with the institutional rationale for upgrading management quality. By contrast, business ties may induce or discourage standard adoption, depending on the logic. We further hypothesize that innovation orientation positively moderates the effects of political and business ties on the decision to upgrade. However, a global orientation shifts the rationale of the decision from the “domestic” to the “foreign,” thereby negatively moderating all links between network ties and the upgrading of management quality. We use an unbalanced panel of 373 Vietnamese SMEs, with 1,012 firm-year observations. A fixed-effect logit regression analysis shows that political ties increase standard adoption, whereas business ties discourage it. Furthermore, an innovation orientation strengthens the negative effect of business ties on management quality upgrades, whereas a global orientation weakens the positive link between political ties and standard adoption as well as the negative link between business ties and standard adoption. Our study suggests that state initiatives for upgrading management quality may not easily reach emerging-market SMEs owing to the competing logics surrounding them.