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Lastly, government policies and institutional support are vital for MNE
subsidiaries in Vietnam. Reforms like the Đổi Mới have improved the business
environment, while agreements such as the Bilateral Trade Agreement with the U.S.

and Vietnam’s WTO accession have expanded market access. These changes have
allowed companies like LG and Toyota to thrive in Vietnam.
Toyota has capitalized on Vietnam’s growing automotive market and government
incentives to establish a strong presence. Its joint ventures with local firms have helped
navigate the regulatory landscape while benefiting from tax breaks. Additionally,
Toyota’s integration of local suppliers into its global supply chain enhances operational
efficiency and sustainability. Sustainability is increasingly vital for MNEs aiming for

long-term success in Vietnam. Environmental responsibility is not just a regulatory
necessity but also crucial for social acceptance and reputation. Companies like
Heineken and Coca-Cola have led sustainable practices aligned with Vietnam’s
environmental goals. Heineken has reduced its environmental footprint through energy-
efficient brewing technologies and by sourcing significant energy from renewables like
biomass. This commitment has made it a leader in corporate responsibility, aiding

Vietnam’s efforts to lower carbon emissions.
Coca-Cola promotes sustainability via community development programs and
water stewardship initiatives. It has implemented water recycling systems and supports
local water management to ensure sustainable supplies. Furthermore, Coca-Cola
invests in programs that help small and medium-sized enterprises (SMEs) grow,
fostering positive socio-economic impacts.
By adopting strategies of cultural adaptation, economic integration, institutional
alignment, and sustainability, MNE subsidiaries in Vietnam can boost their long-term

competitiveness and contribute to the country's sustainable development. As Vietnam
remains an attractive destination for foreign investment, MNEs that engage proactively
with the local context will thrive.
5. Conclusion
Overall, our results indicate that both economic distance and institutional
distance have significant impacts on MNE subsidiary performance. In detail, cultural

distance negatively affects MNE subsidiary performance, while higher economic and
legal institutional distance brings better outcomes for MNE subsidiaries within
manufacturing industries. This result is consistent with prior research that highlights
the importance of understanding the host country's environment and its effect on
MNE subsidiaries' success.

References

1. A smaller world? Technology may have brought people and markets closer together, but distance
and location still influence economic performance. (FUTURE OF THE INTERNET ECONOMY: A smaller
world). (2008). OECD Observer, (268), 33.

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