Business Gift Giving in Vietnam Within and Between Organizations

ABSTRACT - This paper examines business gift giving characteristics in Vietnam between and within organizations. Gift giving is important for maintaining good relationships between buyers and sellers. In Vietnam, gift giving is also important within the organizational hierarchy and with various public officials in ways that are not typical in Western countries. It is shown that, in general, people working for foreign owned and joint venture firms give more gifts to customers and suppliers, people working at private domestic firms make more gifts to governmental and political/social authorities and people working at state owned enterprises give many intra-organizational gifts, particularly to superiors.

Citation:

Garold Lantz, Sandra G. Loeb, and Linh Thi My Le (2005) ,"Business Gift Giving in Vietnam Within and Between Organizations", in AP - Asia Pacific Advances in Consumer Research Volume 6, eds. Yong-Uon Ha and Youjae Yi, Duluth, MN : Association for Consumer Research, Pages: 286-290.

Asia Pacific Advances in Consumer Research Volume 6, 2005      Pages 286-290

BUSINESS GIFT GIVING IN VIETNAM WITHIN AND BETWEEN ORGANIZATIONS

Garold Lantz, Monmouth University, U.S.A.

Sandra G. Loeb, Europa UniversityBViadrina, Germany

Linh Thi My Le, National Economic University, Vietnam

ABSTRACT -

This paper examines business gift giving characteristics in Vietnam between and within organizations. Gift giving is important for maintaining good relationships between buyers and sellers. In Vietnam, gift giving is also important within the organizational hierarchy and with various public officials in ways that are not typical in Western countries. It is shown that, in general, people working for foreign owned and joint venture firms give more gifts to customers and suppliers, people working at private domestic firms make more gifts to governmental and political/social authorities and people working at state owned enterprises give many intra-organizational gifts, particularly to superiors.

This paper is concerned with the unique characteristics of business gift giving practices in Vietnam. The scope of this paper includes not just gift giving between firms but also gift giving within a firm. Business gift giving has received little attention in academic research and little has been written about the practice in Asian countries. Vietnam was selected for study because as a transitional economy, it is just now becoming the venue for large-scale economic development and attracting the attention of foreign firms. Also, since it is a country with a strong heritage of Confucian principles, gift-giving practices may be expected to differ sharply with Western practices. Finally, since it has been a relatively closed economy until the governmental decision to open up in the late 1980’s, some business practices may be built upon norms of local institutions and tastes that may differ from those of other countries.

CONCEPTUAL BACKGROUND AND PROPOSITIONS

Gift Giving

Vietnam is a transitional economy with a population of about 80 million. Since the 1986 implementation of the policy of 'Doi Moi’, or 'opening up’, Vietnam has engaged in significantly greater interaction with businesses from other countries. There are not only more buyer-seller relationships being created domestically, but also more interactions between foreign joint venture partners and others new to the Vietnamese environment. The different types of business organizations, such as state owned enterprises and foreign firms, might have different characteristics in regard to internal norms and their place in the existing cultural environment.

Most existing gift-giving research focuses on consumer-to-consumer gift giving situations with little research focusing on business-to-business gift giving situations. Among the few studies concerned with business gift giving, none have been found to deal with gift giving practices within the organization. It might be expected that the motivations and dynamics of gift giving within and between organizations are very different.

Specifically in regard to Vietnam there is very little published information regarding gift giving in general, much less business gift giving. In terms of the cultural perspective some literature about China and other Asian countries may be relevant. Culturally, there are significant similarities between Vietnam and China because of their close proximity and because of past instances of Chinese influence in Vietnam.

Both China and Vietnam have adopted Confucian principles of conduct that are particularly important in regard to respect for authority within an organization. Confucian philosophy professes respect for those higher in authority whether it is in the family, the nation, or the employer. Respect for the organizational hierarchy can be conveyed through relationship building acts that might include gift giving. So, intra-organizational gift giving may be more typical in Asian cultures than elsewhere.

Ritual occasions for giving gifts are also very important. The Vietnamese New Year celebration of Tet is similar to the Chinese New Year and is an important occasion for building and maintaining social ties. The Tet New Year Holiday includes a very wide range of gift giving events, opportunities and obligations.

The concept of reciprocity is important in the gift-giving context in virtually all cultures. The acceptance of a gift carries the duty to give something in return (Gouldner 1960). The important issue in the business context concerns the nature of the reciprocity. In Vietnam, business gift giving may be a manifestation of commitment to a relationship, an opportunity to elicit an act of reciprocity in the future, or sometimes simply a requirement or obligation to share the success of a good business transaction with co-workers or superiors. In Western cultures exhibiting low context standards of propriety may indicate that the case of an employee giving gifts of money to superiors may be better defined as bribery or possibly extortion. Such strong an provocative terms are not likely to be heard in the Vietnamese context. While much gift-giving may be obligatory, such characterizations may show a poor understanding of the importance of relationships and the importance of gift-giving in a high context culture.

Much Vietnamese business gift giving is done to build and maintain harmonious relationships that may be seen as very similar to the Chinese concept of guanxi. Typically guanxi is thought of in terms of relationship building with a particular sense of reciprocity and increasing commitment (Annamma 2001). On the other hand, it is not universally true that Asian gift giving practices are different from Western practices. Singapore has adopted the view that 'relationship maintenance’ is not necessarily a fixed cultural norm (Razzaque and Tan 2002). The former Prime Minister Lee Kuan Yew is of the firm belief that some of the things attributed to Asian culture are not necessary and only slow social and economic progress (Lee 2000).

Within the organization, gift giving may be seen as part of the milieu of the social working environment. Zhou and Martocchio (2001) examined how Chinese managers make compensation awards in comparison to American managers. Their conclusion was that Chinese managers: 1) put less emphasis on work performance when making bonus decisions, 2) put more emphasis on relationships with co-workers when making non-monetary decisions, 3) often put more emphasis on relationships with managers when making non-monetary award decisions, and 4) put more emphasis on personal needs when making decisions. Essentially, Zhou and Martocchio (2001) support the proposition that the maintenance of relationships is more important in work settings in China than in Western countries. Their conclusion may hold for Vietnam as well.

To many Westerners and, indeed, to many Vietnamese some gifts are seen as bribery and kickbacks but many gifts are given for legitimate relationship building or to fulfill a legitimate social obligation. While an interesting area for future research, this paper does not deal with characterizing national cultures in regard to behavioral norms or about redefining the concept of business corruption. This paper deals simply with observing gift-giving practices in the business setting in Vietnam.

Type of Business Organization

Corporate cultures often have some effect on business gift giving characteristics. In Vietnam, the type of ownership of the organization may be a relevant characteristic in understanding gift-giving practices. There are three basic types of business ownership in Vietnam; state-owned enterprises, foreign or foreign joint ventures and privately owned (domestic) enterprises. The propositions to be examined in this paper relate the type of firm ownership to the nature of the gift recipient.

There are many state owned enterprises (SOEs) in Vietnam. These are often large organizations and they are criticized as being operated without regard to marketing constraints and market-based criteria for success. If this is true, then decisions about promotion or job assignment may not be made for purely business reasons. In SOEs relationships may be more important in making decisions than other criteria. The maintenance of relationships and sharing the rewards of business success may be an important aspect of life in an SOE.

Proposition 1: For SOEs, the norms of behavior for maintaining social relationships require that there is substantial gift giving within the structure of the organization.

A second category of business ownership is the small, privately owned business. Most small businesses are oriented towards the consumer market such as retailers and suppliers of specialty products. Being small, the norms of behavior in regard to the maintenance of relationships may be more informal and personable with parties with whom the firm interacts.

With the informality of these small business organizations the maintenance of relationships through gift giving practices within the organization may be less important than with SOEs. However, active attention to entities outside the organization may be more important. The most relevant relationships that must be maintained are the relationships with government and political/social authorities. In Vietnam governmental and political/social authorities have major influence on business activities.

Proposition 2: For privately owned businesses, gift giving is oriented towards the maintenance of relationships with governmental and political/social authorities.

The third category of business is the joint venture, usually made up of a foreign firm and a local partner. While there is an increasing number of wholly owned foreign firms operating in Vietnam, most foreign firms are required to have some portion of local ownership. Many foreign firms have also found that it is easier to conduct business with a local partner. So, for most practical purposes the form of ownership of a foreign firm is a joint venture with a local partner. These firms are often operated using a business model and practices that are typical to more modern international business organizations. It is likely that these firms will have a corporate culture that is similar to international business custom, as contrasted to the more local businesses. The significance of foreign ownership is that the foreign firm often brings with it the norms of behavior and the cultural orientation that existed in the country where it originated, or else norms of a more homogenized multi-national character.

Proposition 3: For foreign firms and foreign joint ventures, gift giving is oriented towards the maintenance of relationships with customers and suppliers.

METHOD

Sample

The sample comprises fifty interviewees employed at firms located in and around Hanoi, Vietnam. Interviews lasting approximately 30 minutes were conducted with these individuals. The interviewees were not selected at random; rather they were selected to represent the three types of business ownership discussed above. Twenty-two worked for SOEs, seventeen worked for privately owned firms and eleven worked for foreign firms or foreign joint ventures. Interviewees were mid-to-lower level managers. The average age of the interviewees was 35. Forty nine percent were male and fifty one percent were female.

Data Collection

Data collected was primarily qualitative in nature, but interviews were structured enough to make the interviewees’ responses relatively easy to classify for quantitative presentation. Items of information collected include the type of ownership of the interviewee’s employer, the general business category, the respondent’s job position, the recipient of each gift, the type of each gift, the value of the gift, whether the gift is characterized as a personal gift or a company gift, the purpose for giving the gift and the respondent’s opinion about whether or not the gift recipient understood the expected reciprocity associated with the gift.

A coding issue arose about how to count the number of gifts an interviewee reported. Some interviewees reported that they gave certain gifts to an entire class of people such as "doctors" or "our best customers" or "all of the people I work with". In the case of many gifts to a single class of recipients it would serve no purpose to try to deal with them separately. For purposes of reporting a number of gifts, it serves the purposes of this research to consider these gift sets as a single item. So, the number of gifts reported also includes all gifts to a set of similar recipients.

Interviews were conducted in Vietnamese. Notes from the interviews were transcribed and translated into English. For classifying responses little interpretation was necessary. The ownership structure of the respondents’ employer was clearly expressed and the gift recipient was clearly expressed except in a few cases. For purposes of analysis, 'gift recipient’ was classified as: 1) government or political authority, 2) customer or supplier and 3) intra-organizational recipient. In order to study organizational dynamics intra-organizational recipients were further classified into three groups based on the gift recipient’s place in the organizational hierarchy: 1) higher than the giver, 2) lower than the giver and 3) equal to the giver.

TABLE 1

GIFTS BY FIRM OWNERSHIP AND TYPE OF RECIPIENT

TABLE 2

INTRA-ORGANIZATIONAL GIFT-GIVING: FIRM OWNERSHIP AND HIERARCHICAL RELATIONSHIP OF RECIPIENT TO THE GIVER

RESULTS

Analysis of the data shows definite patterns in regard to the type of ownership. Many respondents from all three types of business ownership gave gifts to current customers and co-workers, particularly for the Lunar New Year Holiday (Tet). Beyond this, distinctive patterns developed based on type of ownership. Results of gift giving based on type of firm ownership is summarized in Table 1.

In the state owned enterprises gifts were often given to others within the firm hierarchy, particularly those in superior positions. Comments showed that interviewees primarily sought to protect or enhance their position within the firm. These gifts were typically paid from the personal funds of the giver. In contrast, in the case of a foreign joint venture or privately owned organizations, when gifts were given within the organization they were more evenly distributed to recipients at all levels of authority.

While many intra-organizational gifts were in the SOE category many were in the foreign joint venture and private firms, as well. Many of these were related to the Tet New Year’s Holiday. Gift giving and the maintenance of relationships appeared to be important in all types of business organizations. Nevertheless, most intra-organizational gift giving occurred in SOEs and the comments support the proposition that it is done due to the norms of the organization.

The gift giving in the foreign joint ventures was similar to that of typical Western firms. Most gifts were for customers and were in the nature of food or small personal items. Foreign firms also made gifts to suppliers, which may not be typical behavior in Western countries.

Privately owned enterprises were largely concerned with remaining in the good graces of public authorities and protecting their relationships with others who had regulatory power over them. Often these authorities were tax offices or the local Communist party officials (People’s Committee). It was very typical for a basket of goods to be given to many people for the Tet Holiday. Other gift recipients included customers, suppliers and many people who had a role in the continuance of the business such as police, and people who maintained the supply of electricity (in the case of a garment manufacturer).

To provide a little more insight into the intra-organizational gift giving, gifts were classified according to the level in the organizational hierarchy between the giver and the receiver. These hierarchical relationships are shown in Table 2. Specifically of interest are the occasions when an interviewee gives a gift to people above him/her in the hierarchy. Of 84 intra-organizational gifts 46 were given to people above the giver. And of these, people working at the SOEs gave more than 50%.

Gift Giving by Type of Recipient

Qualitative results relating to the type of business ownership will be presented first. Then the types of gifts and aspects of the motivation and expected reciprocity will be discussed.

The interviewees reported 190 gifts or gift sets with an average of 3.8 per interviewee. Of these 190, ninety-three were intra-organizational, fifty were to customers or suppliers and forty-five were to governmental of political/social authorities and two did not fit any of the categories. The gifts by type of business ownership are shown in Table 1.

Intra-organizational Gifts. The basic proposition of this paper is that business gift giving practices differ based on the type of business ownership. The proposition in regard to SOEs is that people are interested in protecting and enhancing their position in the firm and that this is manifested in their gift giving practices. Gifts given by people working with SOEs are by a large majority, intra-organizational. Comments from interviewees show that the gifts were intended to build and protect relationships within the organization.

In one case the interviewee, the head of a work group in an SOE gave gifts of cash to 1) Head of the Department, 2) Deputy Head of the Department and 3) the Director (highest in the organizational hierarchy). Gifts to the Head of the Department and Deputy Head of the Department are monthly gifts of approximately $34 each. The gifts to the Director are less frequent but average $100.

With regard to a gift to the Head of the Department,

"I want to be at my current position for ages because it brings me much benefit. My Head of Department has the right to send me to other positions that bring a lower income."

With regard to the Deputy Head of the Department,

"To tell you the truth, this is a kick-back. If I earn some, I have to share with the others. Otherwise, I cannot remain at my present position."

Another notable characteristic in regard to intra-organizational gift giving concerns the positions in the organizational hierarchy between the giver and the recipient. If the motivation for gift giving were to protect and enhance one’s position in the organization, then the gift giving would be likely to occur with those in higher authority in regard to the giver. There seems to be a clear pattern of this happening, as shown in Table 2.

Table 2 also shows support for the proposition that the practice of using gifts to support one’s position in the organization is more prevalent in SOEs. Interviewees from SOEs gave 57% of their intra-organizational gifts to people higher in the organizational hierarchy compared to 47% for foreign joint ventures and 36% for privately owned firms. Still, the 47% figure for foreign joint ventures is high by many Western standards. This may be due to the small sample size or it may call for further investigation to gain a better understanding.

Customer/Supplier Gifts. Gifts to customers were often similar to the gifts given in Western business situations. For instance, a foreign joint venture pharmaceutical firm gives gifts to doctors to encourage the use of the firm’s pharmaceutical products.

Interviewee #50 gave gifts valued at $34-$67 to doctors: The gifts were given

"for the purpose of doctors to write out the prescription to use my company’s medicine. It is an effective marketing method."

The interviewee described the gifts as: "Pictures, flower vases, necklaces, etc.; the gift depends on the demand and the interest of (the doctors)." Apparently, the salesperson either solicited suggestions from the doctors or the doctors made requests for specific gifts. While pharmaceutical firms in the United States, for instance, usually establish and adhere to specific guidelines, patterns of gift-giving to doctors is not very different.

The more pure motivation to maintain good relationships can be seen in the gifts given to suppliers. The primary motivation for these gifts was simply to maintain positive relations. Gift-giving to suppliers exhibited a sense of reciprocity and relationship building rather than opportunism. In Western cultures, there is likely to be less flow of gifts from buyers to the sellers.

Government and political authorities. The proposition in regard to gifts to governmental and political/social authorities is that privately owned firms would engage in giving to these entities proportionately more than SOEs or foreign joint ventures. Gifts to governmental and political authorities most frequently took the form of gifts to tax authorities, police and the People’s Committee.

Some gifts were public service in nature such as donations to the People’s Committee to buy school supplies. Gifts with a public service intent appear to be an effective means of maintaining good relations with an important political entity and demonstrating good corporate citizenship.

Gifts to tax authorities were mentioned most frequently. The purpose of giving the gift was almost invariably to maintain good relations in terms of avoiding future adverse decisions rather than to avoid paying taxes. Perhaps the good relationship, demonstrated by a thoughtful New Year’s gift, will reduce the likelihood of excess scrutiny in the coming year.

Interviewee #31 from a private firm, gave $13.34 to the tax official responsible for collecting taxes for the Tet New Year holiday. Asked why the gift was given:

"I think taxation officials are very important. We did not want to escape from paying tax but when we have good relations with them, our business would be flowing smooth. Giving gift is a way to show thanks to him."

Types of Gift

There was a very broad range of types of gifts. The types of gifts given were often money or items related to the Tet New Year holiday. New Year gifts were most typically food such as fruit and cakes. However, the New Year was also the occasion for making large gifts intended to return value throughout the coming year. Gifts to taxation authorities, police and important customers and bosses were likely to be cash or expensive items. In most Western countries gifts to taxation officers and police are specifically proscribed and the proscriptions are usually complied with.

Interviewee 43, marketing manager of a foreign telecommunications firm gave such items as a hand phone, camera, imported wine and confections to "decision makers or strong influencers" valued at $200-$340.

Other gifts included such items as lacquer and silk paintings for occasions like arriving or leaving, birthdays and notable life events. Gifts of parties were also common among co-workers or employees below the interviewee in the organizational hierarchy.

Motivation and Reciprocity

Overall, it seems that a clear distinction between work and personal relationships is not so great. In all types of firms there was a lot of gift giving. However, in the case of the SOE, intra-organizational gift giving was often seen as very near to obligatory. Likewise with privately owned firms, the gift giving to government and political/social authorities was considered to be highly advisable to avoid future problems. No interviewee mentioned an element of bribery or extortion in gift giving to these authorities. The motivation was always stated as being to have good relations.

The aspect of reciprocity is sometimes indirect in gift giving. Many interviewees said that the intended reciprocity was understood but that it was uncertain whether the reciprocity would be achieved. Some expressed near certainty while some expressed merely a faint hope.

CONCLUSION

There is a distinctive pattern of business-to-business gift giving in Vietnam based on the type of business ownership. Each of these patterns of gift giving is rational with respect to the social environment in which they occur. Foreign joint venture firms showed gift giving patterns that are similar to firms from Western countries. They offer small gifts to customers and prospective customers such as meals and promotional items. Consistent with local custom, they also give team-supporting gifts such as lunches for office staff. These gifts are from the firm rather than from individuals. These firm sponsored gifts may reflect the fact that the foreign joint ventures have more resources to support such activities.

The predominant pattern among state owned enterprises is personal gift giving in the organizational hierarchy. It was quite common for personal gifts to be given to one, two or more individuals higher in the organization. These gifts were described by one respondent as 'a kickback’ and by another respondent as necessary to maintain a good relationship. Gifts were also given to others for events such as birth of children and returning from trips.

Privately owned firms showed a pattern of gift giving to local officials who had the power to facilitate business dealings. These officials were often tax authorities or members of the People’s Committee. These gifts were most frequently described by the interviewees as serving the purpose of 'relationship maintenance’.

A general finding is that there is a lot of intra-organizational gift giving by all types of firms. The Tet New Year holiday was a major gift giving event. It was mentioned by a large number of respondents as being the motivating event for the gift giving occasion. There appeared to be a greater tendency to give food items for Tet.

The selection of interviewees represents a limitation of this study. The interviewees did not comprise the scope of the whole organization. Particularly in the case of larger firms, it is possible that the interviewees were not involved with gift giving to many entities who received gifts from others in the organization. This study focused on gift giving patterns based on business ownership but the size of the organization is certainly also important.

Firms often have a distinctive corporate culture. This corporate culture carries over to gift giving patterns within and outside of the organization. When doing business in Vietnam the type of business ownership might give some guidance as to the prevailing norms of behavior in regard to gift giving.

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