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respect for hierarchy, have smoothed business operations and enhanced
collaboration between Vietnamese firms and their foreign counterparts (Lei & Chen,
2011; Strange et al., 2009). However, it is important to note that while cultural

similarities can reduce barriers, differences in management styles and organizational
practices still pose challenges that need to be managed effectively.
4.6. Discussion and implications for promoting the sustainable development of
MNE subsidiaries in Vietnam
Firm performance is a complex, context-dependent concept lacking a universal
definition (Wheelen and Hunger, 2010). Many literature reviews have addressed this
topic, revealing key debates and gaps (e.g., Cardinal et al., 2011; Hennart, 2011). Kawai
& Strange (2014) found that environmental turbulence pressures subsidiaries in China
to adopt localized strategies for better performance, supported by earlier research (Cyert
& March, 1963; Meyer & Peng, 2005). Some scholars propose a positive linear
relationship between internationalization and performance, though this has been

criticized for oversimplifying the issue (Cardinal et al., 2011). Instead, nonlinear
models have emerged, such as a U-shaped curve, where performance initially declines
due to adaptation costs but improves as firms gain experience (Hymer, 1976; Zaheer,
1995). Conversely, the inverted U-shaped model suggests that internationalization
benefits peak at a certain level, after which costs surpass advantages (Geringer et al.,
1989; Gomes & Ramaswamy, 1999). Additionally, a sigmoid relationship indicates that

while performance may initially drop, it eventually increases unless firms expand too
far, leading to negative impacts from significant institutional differences. Adapting to
cultural distance is crucial for MNE success. Cultural differences—like communication
styles, management practices, and consumer behavior—can hinder MNEs' integration
into local markets. To address these challenges, successful MNEs often adopt
localization strategies. For example, Unilever has tailored its products, such as Dove
and Omo, to meet Vietnamese beauty standards and household needs. By employing
over 95% local staff, Unilever fosters a strong connection with the market and respects

local cultural values.
Similarly, Samsung, a major foreign investor in Vietnam, invests in training
programs for Vietnamese workers and managers. Its manufacturing plants in Bac Ninh
and Thai Nguyen are key to its global supply chain. Samsung’s focus on bridging
cultural gaps enhances operational efficiency and community among its workforce.
Vietnam's low labor costs, increasing productivity, and strategic location offer

significant opportunities for MNEs. Companies like Nike and Intel have capitalized on
these advantages to optimize their supply chains. Nike, for instance, has shifted much
of its footwear production to Vietnam, employing over 400,000 workers in local
contract factories and strengthening its presence in Southeast Asia’s manufacturing
sector.

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