Korean multinational companies in the Philippine Economic Zones : strategic framework for the development of investment partnership / 6
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Keun Jae Lee.
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- xxxii, 245 pages 28 cm.
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Thesis (Ph.D.) -- Pamantasan ng Lungsod ng Maynila, 2012.;A dissertation presented to the faculty of the Graduate School of Management in partial fulfillment of the requirements for the degree Doctor of Business Administration.
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ABSTRACT: The study focuses on assessing the Korean Multinational National Companies' (KMNCs) presence in the Philippines. The objectives of the study are: (1) determine whether the establishment of KMNCs in the Philippine Economic Zone (ecozones) is mutually beneficial given the various investment determinants; (2) identify the investment challenges and opportunities in doing business at the ecozones; and (3) come up with an investment framework that will strengthen and sustain long-term KMNC investment into the Philippines and thus strengthen economic partnership between the Korea and the Philippines. Specifically, the study sought answers to the following questions: 1. What is the profile of the KMNCs operating in the Philippine Economic Zones with regard to: a) Capitalization; b) Years in operations; c) Number of local and expatriate employees; d) Aggregate trade transactions (both exports and imports) and e) Average profit? 2. As assessed by the participant-KMNCs, to what extent do the following investment factors influence the establishment of their businesses in Philippine Economic Ecozones such as: a) Economic gains; market potentials, incentives, labor cost & policy and trade barriers; b) Political stability; c) Infrastructure: legal mechanisms and facilities/ transportation; d) Geo-socio-cultural: geographical location, education & language, and aesthetics? 3. Are there significant differences relative to the aforementioned investment factors to the KMNCs in establishing businesses in the Philippine ecozones when classified into: a) capitalization; b) years in operation; c) number of local and expatriate employees; d) Aggregate trade transaction (both import and export); and e) Average point? 4. What is the extent of the contributions of KMNCs established in the Philippine ecozones when grouped according to: 4.1 KMNCs benefits in terms of: capital, technology, management, income generation, and employment? 4.2 KMNCs contributions to the host country in terms of: monetary gains, Labor availability and employment generation, technology implementation and utilization, Management system development; and political and socio-cultural influence? 5. What are the challenges encountered and opportunities created by the entry and continuing operation of KMNCs in the Philippine ecozones? 6. What investment partnership framework can be developed to enhance the trade relations between Korea and the Philippines? In relation to the foregoing problems, the following hypotheses were tested: 1. There is no significant difference in the investment factors that motivated the KMNCs to locate in Philippine Ecozones when classified according to: a) capitalization, b) years in operation, c) number of employees, d) aggregate trade transactions, and e) average profit. 2. There is no significant difference in the assessment of the respondents with regard to the contributions of KMNCs presence in the Philippine ecozones in terms of: a) KMNCs benefits such as capital; technology; management; income generation; and employment; and b) KMNCs contributions to the host community/ country such as monetary gains; labor availability and employment generation; technology implementation and utilization; management system development; and political stability and geo-socio-cultural influence. This study is a descriptive research which is focused not only on the investment factors influencing Korean businessmen's decision of choosing the Philippines as investment area, also on the challenges encountered, the opportunities created as well as the contributions of the KMNCs' entry and continuing business operation in the Philippine Economic Zones. The respondents were from the Cavite economic zones, hence the subject of the study. The Researcher used the questionnaire instrument supplemented by unstructured interviews through focused group discussion. Documentary analysis was also extensively used. The following findings of the study are summarized in alignment to the statement of problems and hypotheses: 1. The Profile of the participant-KMNCs at the Philippine ecozones: 1.1 As to capitalization The KMNCs with a capital above 5 million US dollars accounted for 46.2% while 30.8% of the KMNCs have a capital of 1 million US dollars and below. 1.2 As to years in operation Majority (30.8%) of the participant-KMNCs, have been in operation from 5 to 9 years and twenty-six point nine (26.9%) percent of the KMNCs have been operating in Cavite from 10 to 14 years and likewise twenty-six point nine (26.9%) have been operating from 15 to 19 years. 1.3 As to number of employees The participant-KMNCs with employees numbering from 1 to 100 accounted for 53.8%. The participant-KMNCs employ only a small number of expatriates ranging from 2-7, while 26.9% do not employ any expatriates at all. 1.4 As to aggregate trade transactions Majority or 46.2% of the participant-KMNCs have 10 million US dollars or less in aggregate export sales. While only about 19.2% are considered big players in exports, registering aggregate sales of above to 40 million US dollars. Forty-two point three (42.3%) percent of the participant-KMNCs have aggregated import transaction of 10 million US dollars or less. 1.5 As to average profit Fifty-seven point seven (57.7%) percent have an average profit of 10 million US dollars or less. Only 3.8% have an average profit of above 30 million to 40 million US dollars. 2. Investment Factors that influence participant-Korean Multinational Corporations to do business in the Philippine economic zones: All investments factors identified in this study such as economic gains, political stability/ structure, infrastructure, and geo-socio-cultural influencing decision to invest in the Philippines economic zones were considered by participant-KMNCs to have influenced to a great extent their decision to invest in the Philippines economic zones. 3. The assessment of participant-KMNCs as to the investment factors that influence their decisions to invest in the Philippine economic zones 3.1 Participant-KMNCs' Assessment on Economic Gains (market potential, incentives, labor cost and policy and trade barriers): All the mean values obtained can be interpreted to mean that the participant-KMNC assessed the economic gains on market potential, incentive, labor cost and policy and trade barriers to have influence to great extent. 3.1.1 The p-values obtained from the assessment of the participant-KMNCs on the economic gains: incentives, labor cost and policy and trade barriers, as investment factors that influenced KMNCs to invest in the Philippine ecozones, when subjected to ANOVA testing, indicated significant difference as they are grouped according to capitalization. While there is no significant difference on the assessment of the participant-KMNCs, on economic gains: market potential as investment factors that influenced KMNCs to invest in the Philippine ecozones as they are grouped according to capitalization. 3.1.2 The p-values obtained from the assessment of the participant-KMNC on the economic gains: incentives, labor cost and policy and trade barriers, as investment factors that influenced KMNCs to invest in the Philippine ecozones, when subjected to ANOVA testing, indicated no significant difference as they are grouped according to years in operation. On the other hand, there is no significant difference on the assessment of the participant-KMNCs, on economic gains: market potential as investment factors that influences KMNCs to invest in the Philippine ecozones as they are also grouped according to years in operation. 3.1.3 The p-values from the assessment of the participant-KMNC on the economic gains: market potential, incentives, labor cost and KMNCs to invest in the Philippine ecozones, when subjected to ANOVA testing, are significantly different as they are grouped according to aggregate export sales. 3.1.4 The p-values obtained from the assessment of the participant-KMNC on the economic gains; market potential, incentives, labor cost and policy and trade barriers, as investment factors that influences KMNCs to invest in the Philippine ecozones, when subjected to ANOVA testing, are significantly different as they are grouped according to aggregate import sales. 3.1.5 The p-values from the assessment of the participant-KMNC on the economic gains: market potential, incentives, labor cost and policy and trade barriers, as investment factors that influenced KMNCs to invest in the Philippine ecozones, when subjected to ANOVA testing, are significantly different as they are grouped according to average profit. 3.2 The Participant-KMNCs' Assessment on Political Stability The obtained mean value for political stability could be interpreted to mean that political stability have influenced to great extent KMNCs decision to invest in the Philippine ecozones. 3.2.1 The p-values obtained from the participant-KMNC on political stability, as investment factors that influences KMNCs testing, are significantly different as they are grouped according to capitalization. 3.2.2 The p-values obtained from the assessment of the participant-KMNC on political stability, as investment factors that influenced KMNCs to invest in the Philippine ecozones, when subjected to ANOVA testing, are significantly different as they are grouped according to years in operation. 3.2.3 The p-values obtained from the assessment of the participant-KMNC on political stability, as investment factors that influenced KMNCs to invest in the Philippine ecozones, when subjected to ANOVA testing, are not significantly different as they are grouped according to export sales. 3.2.4 The p-values obtained from the assessment of the participant-KMNC on political stability, as investment factors that influenced KMNCs to invest in the Philippine ecozones, when subjected to ANOVA testing, are significantl