FACTORS AFFECTING THE SATISFACTION OF
INVESTORS IN INDUSTRIAL ZONES
OF THAI NGUYEN PROVINCE

A DISSERTATION PAPER
Presented to
the Faculty of the Graduate Program
of the College of Arts and Sciences
Central Philippine University, Philippines
In Collaboration with
Thai Nguyen University, Vietnam

By
NGUYEN THI THU HA

DECEMBER 2016


i
ACKNOWLEDGEMENT
This dissertation has been conducted in the Doctoral Program in Public Administration
in the framework of academic cooperation between Central Philippine University and Thai
Nguyen University of Economics and Business Administration. During the period of writing
my dissertation, I have gained the precious knowledge for my job as well as my scientific
research works.
First and foremost I would like to express my sincere appreciation to my supervisor
Assoc. Prof. PhD.Tran Chi Thien who gave me considerable time and guided me
enthusiastically through the completion of this research.
I would like to express my gratitude to officials who freely gave me their time for the
interviews. The interviews that were granted to me at the enterprises with managers that
provided managers' perspective to the purpose of this study. I am very thankful to managers

and staffs at Thai Nguyen industrial zone management authority for providing me number of
secondary information and much help to the interviews at the enterprises.
I would like to thank to all of my professors of the Doctor Program in Public
Administration, managers and staffs of International Cooperation Centre for Training and
Study Abroad for their enthusiastic help in my research and dissertation.
I also would like to thank my interview partners who conduct the survey with me.
I would like to mention all of my colleagues who encouraged me to do the dissertation
Last but not least, I specially would like to give inmost thanks to my family who
always encourage and help me through the time doing the dissertation.

Thai Nguyen, December 2016

Nguyen Thi Thu Ha


TABLE OF CONTENTS

ACKNOWLEDGEMENT ........................................................................................................... i
TABLE OF CONTENTS ............................................................................................................ i
LIST OF FIGURES ................................................................................................................... iv
LIST OF ABBREVIATIONS .................................................................................................... v
ABSTRACT ............................................................................................................................. vii
CHAPTER 1: INTRODUCTION ........................................................................................... 1
1.1. Background and Rationale of the Study .............................................................................. 1
1.2. Objectives ............................................................................................................................ 3
1.2.1.General Objectives ............................................................................................................. 3
1.2.2. Specific Objectives ........................................................................................................... 4
1.3. Theoretical Framework....................................................................................................... 4
1.3.1. Theories of Service and Service Quality .......................................................................... 4
1.3.2. Theories of Investment Behavior ..................................................................................... 6

1.3.3.Local Marketing Theory .................................................................................................... 7
1.4. Conceptual Framework....................................................................................................... 8
1.4.1. Conceptual Framework .................................................................................................... 8
1.4.2.Hypotheses of the Study .................................................................................................... 9
1.5. The Operational Definitions ................................................................................................ 9
1.6. Significance of the study ................................................................................................... 12
1.6.1. Significance to theory ...................................................................................................... 12
1.6.2.Significance to practice ................................................................................................... 13
1.7. Scope and Delimitation ..................................................................................................... 14
1.7.1. Scope of the study .......................................................................................................... 14
1.7.2. Delimitation of the study ................................................................................................ 14
CHAPTER 2: REVIEW OF RELATED LITERATURE AND STUDIES ....................... 15
2.1. Related Literature .............................................................................................................. 15
2.1.1. Investor satisfaction ........................................................................................................ 15
2.1.2. Factors affecting investor satisfaction ............................................................................ 17
2.1.3. Industrial zone ................................................................................................................ 19
2.2. Related Studies .................................................................................................................. 22
CHAPTER 3: METHODOLOGY ........................................................................................ 32
3.1. Research Design ................................................................................................................ 32
3.2. Population, Sample Size and Sampling Technique ........................................................... 34


3.3. Research Instrument .......................................................................................................... 34
3.3.1. Survey questionnaires ..................................................................................................... 34
3.3.2.Scaling ............................................................................................................................. 35
3.3.3. Cronbach Alpha test ....................................................................................................... 38
3.3.4. Exploratory Factor Analysis (EFA) ................................................................................ 38
3.3.5. Multiple Regression Analysis (MRA) ............................................................................ 39
3.4. Data Gathering Procedure ................................................................................................. 43
3.5. Data Processing and Data Analysis ................................................................................... 44

CHAPTER 4: DATA PRESENTATION, ANALYSIS AND INTERPRETATION ....... 46
4.1. The investment environment in Thai Nguyen ................................................................... 46
4.1.1. Natural - economic - political - social characteristics .................................................... 46
4.1.2. Assessment of enterprises on the investment environment of Thai Nguyen province .......... 55
4.2. Overview of the Industrial Zones and the Industrial Zone Management Authority in
Thai Nguyen province .............................................................................................................. 59
4.2.1. Industrial Zones in Thai Nguyen province ..................................................................... 59
4.2.2. Industrial Zone Management Authority ........................................................................ 61
4.3. Incentive policies to attract investment in Industrial Zones of Thai Nguyen Province .... 65
4.3.1. Incentive investment policies in industrial zones of Song Cong I and Song Cong II .... 65
4.3.2. Incentive investment policies in Yen Binh Industrial Zone ........................................... 65
4.3.3. Incentive investment policies in Diem Thuy Industrial Zone ........................................ 66
4.3.4. Incentive investment policies in the Industrial Zones of South Pho Yen and Quyet Thang ... 68
4.4. Infrastructure characteristics of Industrial Zones in Thai Nguyen .................................... 68
4.4.1. Song Cong I Industrial Zone .......................................................................................... 68
4.4.2. Yen Binh Industrial Zone ............................................................................................... 70
4.4.3. Diem Thuy Industrial Zone ............................................................................................ 72
4.4.4. South Pho Yen Industrial Zone ...................................................................................... 74
4.4.5. Industrial Zones of Quyet Thang and Song Cong II ...................................................... 75
4.5. The status of the investment attraction in Industrial Zones of Thai Nguyen Province ..... 75
4.5.1. Occupancy rate of industrial zone .................................................................................. 76
4.5.2. The status of investment attraction in Industrial Zones in the period of 2013 - 2015 ... 77
4.5.3. General assessment of the situation of investment attraction in industrial zones
of Thai Nguyen Province........................................................................................................ 84
4.6. General assessment about the research sample ............................................................. 86
4.7. The statistical and descriptive analysis of the scales of the research model ................... 89
4.8. The quality test of scales ................................................................................................ 90


4.9. Exploratory factor analysis ............................................................................................... 93

4.9.1. Exploratory factor analysis for independent variables .................................................. 93
4.9.2. Test of exploratory factor analysis for the dependent variable ...................................... 95
4.10. Multiple regression analysis ............................................................................................ 98
4.10.1. Test of the suitability of the model ............................................................................... 98
4.10.2. Test of the Multicollinearity ......................................................................................... 99
4.10.3. Test of the Autocorrelation .......................................................................................... 99
4.10.4. Test of the partial correlation of the regression coefficients ........................................ 99
4.10.5. Discussion on the results of Multiple Regression Analysis ...................................... 100
CHAPTER 5: CONCLUSION AND POLICY RECOMMENDATIONS ...................... 103
5.1. Conclusions ..................................................................................................................... 103
5.2. Policy Recommendations ................................................................................................ 109
REFERENCES ..................................................................................................................... 117
APPENDICES....................................................................................................................... 123


ii
LIST OF TABLES

Table 1.1: Five Broad Dimensions of Service Quality............................................................... 6
Table 2.1: Summarization and grouping of the factors found in the related studies ................ 18
Table 3.1: The Likert 5 point scale ........................................................................................... 35
Table 3.2: Scale of factors affecting the satisfaction of investors ............................................ 36
Table 4.1: PCI and its sub-indices of Thai Nguyen province in 2011 - 2015 .......................... 57
Table 4.2: The occupancy rate of planned land areas of the industrial zones in Thai
Nguyen province up to December, 2015 ............................................................... 76
Table 4.3: Quantity and distribution of investment projects newly licensed in the
industrial zones of Thai Nguyen province in 2013 - 2015 .................................... 77
Table 4.4: The registered domestic investment capital newly licensed into industrial
zones of Thai Nguyen province in 2013 – 2015 .................................................... 79
Table 4.5: The registered FDI capital newly licensed into industrial zones of Thai Nguyen

province in 2013 -2015 .......................................................................................... 80
Table 4.6: Domestic investment projects licensed in Thai Nguyen industrial zones by
kinds of economic activity in 2013 - 2015 ............................................................ 81
Table 4.7: Foreign direct investment projects newly licensed in Thai Nguyen industrial
zones by kinds of economic activity in 2013 - 2015 ............................................. 82
Table 4.8: The Foreign Direct Investment attration in Industrial Zones of Thai Nguyen
province in 2013-2015 ........................................................................................... 83
Table 4.9: Foreign Direct Investment projects licensed in Thai Nguyen industrial zones
corresponding counterparts in 2013 – 2015........................................................... 84
Table 4.10: General information of the research sample.......................................................... 86
Table 4.11: Some characteristics of surveyed enterprises ........................................................ 87
Table 4.12: The mean value and the standard deviation of observed variables ...................... 89
Table 4.13: Level of the investor satisfaction with observed variables.................................... 90
Table 4.14: Cronbach’s Alpha of scales in the analysis model ............................................... 91
Table 4.15: Scales of good quality and their observed variables ............................................. 92
Table 4.16: KMO and Bartlett's Test ........................................................................................ 93
Table 4.17: Total Variance Explained ...................................................................................... 94
Table 4.18: Rotated Component Matrix ................................................................................... 94
Table 4.19: Exploratered factors and their items ...................................................................... 95
Table 4.20: KMO and Bartlett's Test ........................................................................................ 96
Table 4.21: Total Variance Explained ...................................................................................... 96


iii
Table 4.22: The adjusted model after the Cronbach’s Alpha test and the EFA ....................... 97
Table 4.23: Model Summary .................................................................................................... 98
Table 4.24: ANOVA ................................................................................................................ 98
Table 4.25: Coefficients ........................................................................................................... 99
Table 4.26: The results of hypotheses testing .......................................................................... 100
Table 4.27: The importance of the affecting factors to the investor satisfaction ................... 101



iv
LIST OF FIGURES

Figure 1.1: The Conceptual Framework of the study ................................................................ 8
Figure 3.1: The study process of factors affecting the satisfaction of investors in
industrial zones of Thai Nguyen province ............................................................. 33
Figure 4.1: PCI of Thai Nguyen province and it's ranking in 2011- 2015 ............................... 56
Figure 4.2: The sub-indices of the PCI of Thai Nguyen province in 2014, 2015 .................... 58
Figure 4.3:The registered capital newly licensed in Thai Nguyen IZs in 2013 - 2015 ............ 78
Figure 4.4: The adjusted research model .................................................................................. 97


v
LIST OF ABBREVIATIONS
SYMBOL

Explaination

ABI

Service ability

ANOVA

Analysis of variance

Bil.


Billion

BXD

Ministry of Construciton

CMT10

October Revolution

Co., Ltd

Limited liability company

CRE

Credibility

EFA

Exploratory Factor Analysis

EMP

Empathy

EPZ

Export processing zone


ETFs

Exchange-traded funds

FDI

Foreign direct investment

GRDP

Gross Regional Domestic Product

Ha

Hectare

IP

Industrial Park

IZs

Industrial Zones

KMO

Kaiser – Meyer – Olkin measure

Km


Kilometer

Mil.

Million

MRA

Multiple Regression Analysis

NĐ-CP

Decrees of Government

N/A

Not available

No.

Number

ODA

Official Development Assistance

OLS

Ordinary Least Square


PCI

Provincial Competitiveness Index

QCVN

Standards of Vietnam

QD-TTg

Decision of Prime Minister

QH13

13th National Assembly

REL

Reliablity

RES

Responsiveness

SAT

Satisfaction

SERVQUAL


Service quality


vi
SYMBOL

Explaination

SEVT

Samsung Electronics Vietnam Thai Nguyen

Sig.

Significance

SPSS

Statistical Package for the Social Sciences

TAN

Tangible

UBND

People's Committee

UND


Understanding

USD

United State Dollars

VAT

Value Added Tax

VCCI

Vietnam Chamber of Commerce and Industry

VIF

Variance Inflation Factor

VND

Vietnam Dong

VSIP

Vietnam Singapore Industrial Park


vii
ABSTRACT
The industrial zones of Thai Nguyen province have made great contributions to the

social economic development of the province for over 15 years. However, the occupancy rate
is not high in the industrial zones, even 2 of 6 industrial zones still have not been in operation,
and have not attracted any investment project. Therefore, in order to attract more investment
projects in industrial zones, the survey and evaluation of the satisfaction of investors in
industrial zones is necessary. This research was the basis for the Industrial Zones
Management Authority of Thai Nguyen province and the provincial policymakers make
effective solutions to improve the investment environment of Thai Nguyen province in
general and industrial zones in particular.
In order to achieve the objectives of the study – the analysis of factors affecting the
investor satisfaction in industrial zones of Thai Nguyen province, the study have used
secondary data to analyze the investment environment of the province, the perspectives and
reviews of investors about the investment environment of the province, the general
characteristics of Industrial Zone Management Authority of Thai Nguyen province, the
general characteristics of technical and service infrastructure of the industrial zones of the
province, and the situation of the investment attraction in industrial zones of Thai Nguyen
province in the period of 2013 - 2015. In addition, in order to analyze the factors affecting the
investor satisfaction in the industrial zones of the province, the author performed the survey,
analysis, evaluation and exploratory of the influencing factors. The study surveyed 82
enterprises operating in the industrial zones by interviewing 236 investors. The scales in the
research framework includes: Tangibles, Reliability, Responsiveness, Assurance, Empathy
and Satisfaction with 42 observed variables. After collecting the primary information from
enterprises, the author has processed and analyzed the data by using SPSS 20.0 software. The
results of the tests of the quality of the scale as well as the observed variables and the results
of exploratory factor analysis and multiple regression analysis showed the real factors
affecting the investor satisfaction in the industrial zones of Thai Nguyen province. The
affecting factors have directly proportional impacts to the investor satisfaction and their
importance in order of from high to low were : F_ABI (Service Ability), F_TAN (Tangibles)
and F_RES ( Responsiveness). Specifically, the observed variables in these 3 factors or issues
which have positive impact (directly proportional impacts) to the satisfaction of investors in
industrial zones in Thai Nguyen province include: (1) Compliance of commitments with

investor

of the

Industrial Zone Management Authority; (2) The clear and

accurate

consultation of the Industrial Zones Management Authority; (3) The clear and consistent guides


viii
of administrative procedures by the Industrial Zones Management Authority; (4) Sending the
feedback punctually about administrative procedures of the Industrial Zones Management
Authority; (5) The good qualification and attitude of service of staffs of State investment
management organizations of Thai Nguyen province; (6) The good qualification and attitude of
service of staffs of the Industrial Zones Management Authority; (7) The interest in solving of
recommendations and requirements of enterprises by the Industrial Zones Management
Authority; (8) The reasonability of electricity price; (9) Good internal transport system and
green space; (10) The convenience of communication system; (11) Good internal lighting
system; (12) The attraction of investment incentive policies ; (13) The rapid deployement of
legal documents to the investors ; (14) The good assurance of security and order in industrial
zones; (15) The qualification of labors in enterprises .
Based on the analysis of factors affecting the investor satisfaction in industrial zones of
Thai Nguyen province, the study has suggested a number of recommendations focusing on
improving the affecting factors, including: Continuing steadfastly to implement the
commitments with investors; Continuing to promote the reform of administrative procedures;
Thoroughly grasping the officers and staff in the Industrial Zone Management Authority and
trying to serve the province enterprises; strengthening and more regular in making dialogue
with enterprises; In close coordination with the relevant authorities in the province and the

central ministries to solve the problems and difficulties of enterprises in the IZ ; Continuing and
enhancing the urge and request to investors to deploy to build and develop the infrastructure
system synchronously in industrial zones; Doing well the work of the compensation for ground
clearance in the industrial zones to create many empty land areas attracting investors; Timely
resolving any questions and proposals of the enterprises on the economic and technical
infrastructure in the industrial zones to create the best conditions for production and business
activities of these enterprises; etc.
In summary, this study has done well its research objectives via the analysis of the
factors affecting the satisfaction of investors in industrial zones of Thai Nguyen province and
has proposed some feasible solutions basing on the analysis of the affecting factors in order to
improve the satisfaction of investors as well as enhance the investment attraction in the
industrial zones of the province.


1
CHAPTER 1
INTRODUCTION
1.1. Background and Rationale of the Study
Industrial zones have been established and developed associated with the innovation
and openness of Vietnamese economy which were derived from the policies of the Party and
the Government in the construction of a breakthrough model with the aim of investment
attraction, industry growth, economic structure change towards industrialization and
modernization. For 20 years of construction and development, the achievements of industrial
zones have been vividly proved through their significant contributions to the socio-economic
development of the nation.
295 industrial zones in total have been established out of the total 461 planned zones
with total area of 82.8 thousand hectares of natural land by December 2014. The industrial
zones were established in 60 provinces, cities, mainly located in Key Economic Zones in order
to bring into play its advantages of geographic location and potentials of economic development.
In addition, establishment of some industrial zones in areas with difficult socio-economic

conditions such as Northern midland and mountainous region, Central Highlands, etc. plays an
important role in facilitating the local industrial development (Vo Dai Luoc, 2015).
Owing to the continuously improved investment environment in industrial zones in
recent years, industrial zones have recorded many certain achievements in attracting
infrastructure development investment, production and business operation that significantly
contributed to the socio - economic development, economic structure transformation, job
creation, increasing income for laborers, increasing State budget revenues and export
development. Total registered investment capital in infrastructure construction of 295
industrial zones reaches about 12.8 billion USD, of which Industrial zones invested by FDI
enterprises have total registered capital of 3.58 billion USD, total implemented capital is equal
to 55.4% of the registered capital, and Industrial zones invested by domestic enterprises have
total registered capital of 9.22 billion USD, total implemented capital is equal to 41.5% of the
registered capital. In term of attracting production and business investment, by the end of
09/2014, the industrial zones attracted 5,325 FDI projects with total registered investment
capital of 79.4 billion USD and 5,262 domestic investment projects with total registered
investment capital of 25.6 billion USD (Vo Dai Luoc, 2015).
Thai Nguyen province is situated in Northern midland and mountainous region of
Vietnam, considered as a major economic-and-social-center of Vietnam Northeast and of
Northern midland and mountainous region. Although being in the most difficult and


2
underdeveloped area in Vietnam, the economy of Thai Nguyen province is being gradually
industrialized and modernized, whereby proportion of agriculture is reducing. According to
policies of the Vietnam’s Government and the Communist Party on taking advantage of its
economic geography and potentials, Thai Nguyen implemented plans of construction and
development of industrial zones that is considered as a breakthrough in accelerating the pace
of its economic structure transformation towards industrialization.
As of 2015, in Thai Nguyen province, there are 6 industrial zones which have been
planned in details with the size of 1420 hectares of natural land. Such industrial zones have

attracted 133 investment projects, of which 61 FDI projects have the amount of registered
capital reaching nearly 7 billion USD, 72 domestic investment projects have the registered
capital of 11,000 billion VND. Up to 2015, there were 100 projects in operation, of which: the
amount of FDI which was implemented was 6.2 billion dollars (accounting for 88.57% of total
registered FDI), accounting for 86.11% of FDI disbursed in the whole province; The amount of
implemented domestic capital is VND 7,700 billion (accounting for 70% of total registered
domestic capital) (Phan Manh Cuong, 2015). The FDI projects mainly focus on the fields of
industrial production, construction steel; producing portable mechanic tools for export;
producing garments for export; producing electronic components; producing mobile devices,
electronics and telecommunications; installing electronic products, etc and some other fields
with strengths of Thai Nguyen province. These achievements in the investor attraction have
been largely due to the significant improvement of the investment environment of the province.
In the 4 years from 2011 to 2014, Provincial Competitiveness Index (PCI) of Thai Nguyen
province increased by 49 grade, from No. 57 to No. 8, shows the high appreciation of investors
about the investment environment of the province.
Up to 2015, projects in Thai Nguyen industrial zones have gained the export value which
reached 18,5 billion USD, accounting for 97,2% of total the export value of the province; created
jobs for 95,000 labours (accounting for 57,9% of the amount of labours working in the sectors of
industry and contruction ) with the average income reached 5.7 million VND/month/person;
submitted 2,100 billion VND for the national budget (Phan Manh Cuong, 2015).
The above statistical data showed achievements in investment attraction, development of
industrial zones in Thai Nguyen province which contribute significantly to the social economic
development of the province. However, there are still many shortcomings exist in the investment
attraction, particularly investment attraction in industrial zones. The investment attraction in the
industrial zones is limited. Up to December in 2015, 2 out of 6 industrial zones have not attracted
any investment project. The occupancy rate of the planned land area of the industrial zones is low.
By the end of 2015, the occupancy rate of the planned area just reached 36%.


3

According to Mai The Cuong (2005), in order to solve these difficulties in investment
attraction into industrial zones, the local authority should consider investors as customers, and
must aware of need and requests of investors in order to satisfy their desires. The investor
satisfaction with a locality is a competitive advantage that locality . If the locality is able to
meet the requirements of investors, there will be an positive impact on their satisfaction
leading to investment decisions into the locality.
For Thai Nguyen Province’s industrial zones, in order to attract investment projects,
satisfying needs of investors is very necessary and important. In order to be able to satisfy
investors, industrial zones need to define what factors affecting investor satisfaction and their
impact (positive or negative), then find out solutions for these factors, by which improve the
satisfaction of investors, attracting investment into industrial zones of Thai Nguyen province.
There are some studies on investor satisfaction or factors affecting the investor
satisfaction but most of them are papers published on journals, such as: “Factors affecting
foreign investor satisfaction in industrial zones – quantitative model and policy implications”
(Dinh Phi Ho et al., 2011b) – a research on industrial zones in Binh Duong province; “Factors
affecting foreign investor satisfaction about tax support service – a case study in Dong Nai
province” (Dinh Phi Ho et al.,2011c). Besides, the article “Factors affecting foreign direct
investment attraction – a case study of Thai Nguyen province” (Trinh Viet Hung et al., 2014)
was conducted based on the survey about the investors’ perspectives but not research on the
investor satisfaction. There are some other studies about the factors affecting the investor
satisfaction but they are just the master theses, such as: “Investment environmental factor
affecting investor satisfaction: case study in Phu Quoc distric, Kien Giang province” (To Hoang
Phuong, 2013), “Factors affecting investor satisfaction in Ben Tre province” ( Bo Quang Thuy,
2015). From the review of the related studies as summarized above, the author found that up to
now, there is no large scale studies like a doctoral dissertation on factors affecting on investor
satisfaction, particularly in the industrial zones of Thai Nguyen province.
After recognizing and taking this research opportunity , this study was entitled “Factors
affecting the Satisfaction of Investors in Industrial Zones of Thai Nguyen province”, with
using quantitative methods will be a new scientifically significant research direction and
contribute to enhance the investment attraction in these industrial zones.

1.2. Objectives
1.2.1.General Objectives
Objectives of the study are to analyze factors affecting the satisfaction of investors in
industrial zones of Thai Nguyen province, and on that basis, propose some policy solutions in


4
order to enhance the satisfaction of investors, thereby increase the investment attraction as well
as attract more investors to the industrial zones of Thai Nguyen province.
1.2.2. Specific Objectives
Specifically, this study seeks to:
- Assess the satisfaction of investors about the industrial zones of Thai Nguyen province
where they are investing;
- Analyze the factors affecting the investors’ satisfaction in the industrial zones of Thai
Nguyen province;
- Propose some policy recommendations in order to enhance the investors’ satisfaction,
to increase the investment attraction and to attract many investors in the industrial zones of
Thai Nguyen province.
1.3. Theoretical Framework
1.3.1. Theories of Service and Service Quality
Industrial zones are often located in vacant land with large area, factories in the zones
are centrally constructed under longitudinal direction, thereby the enterprises’ input and output
costs will be lower because the factories are adjacent to each other and the output of a factory is
the input of another. In addition, the enterprises investing in the industrial zones will be enjoyed
the reduction of many costs such as costs of land purchase, construction of power lines, of
access roads, of water supply and drainage systems, wastewater and solid waste treatment. The
advantages of centralized manufacturing in industrial zones in comparison with distributed
development are bringing into play its scale-related advantages, saving infrastructure,
administrative and environmental management, and supporting convenient services as well
(Dinh Phi Ho, 2011a).

According to the Law on Investment approved by National Assembly dated
11/29/2005 “Industrial zone means an area specialized in the production of industrial goods
and the provision of services for industrial production, which has definite geographical
boundaries and is established under the Government's regulations”. Industrial zone means a
distinct area concentrating investors in industries that the state should encourage and give
incentive treatment. Therefore, it is possible to consider industrial zone as a product of service
industry whose customers are enterprises investing in the zone (Dinh Phi Ho et al., 2011b).
On the concept of quality, many scholars have been interested in and given their
viewpoints on this matter. According to Juran (1988), quality is the conformity with demands.
Feigenbaum (1991) believes that quality is an organization’s best investment in competitiveness.
He defines quality as a way of managing and that customer satisfaction, lower costs, and the
effectiveness of human resources are dependent on quality control. In order to improve the


5
quality control process, he stresses the critical aspects of careful planning, product design,
customer feedback, and the use of statistical tools. During the life cycle of this quality process,
from the first stage of gathering product requirements until the last stage of product delivery,
customers’ expectations must be met ( Phu Van Ho, 2011).
Russell (1999) stated that quality is shown the superiority of goods and services,
especially reaching the level that suppliers can satisfy all needs of customers.
According to International Organisation for Standardisation (2015), “Quality is the
level of a set of inherent characteristics which meet requirements”.
According to the research of Corin and Taylor (1992), service quality is a precondition
of customer’s satisfaction, and such satisfaction has a significant impact on the procurement
tendency. Thus, enterprises will have investment tendency in industrial zones when they are
satisfied with service quality of industrial zones (Dinh Phi Ho, 2011).
In order to study on customers’ perception of service quality, Gronroos (1984) has
developed the service quality model based on three key aspects: (1) Differentiating between
functional quality and technical quality. Functional quality means an interaction between

customers and service suppliers, i.e. how services are presented and supplied. Technical
quality means result of the service operation, i.e. the things that customers are received; (2)
Image is the most important for service suppliers because customers can find the image and
resources of the brands through the buying and selling transactions; (3) Experienced quality
is a function of evaluative feels of customers about services and the differentiation between
such assessment and their expectation of services.
Measuring service quality is difficult due to its unique characteristics: Intangibility,
heterogeneity, inseparability and perishability (Bateson, 1995). Service quality is linked to the
concepts of perceptions and expectations (Parasuraman et al., 1985, 1988; Lewis and Mitchell,
1990). Customers’ perceptions of service quality result from a comparison of their beforeservice expectations with their actual service experience. The service will be considered
excellent, if perceptions exceed expectations; it will be regarded as good or adequate, if it
only equals the expectations; the service will be classed as bad, poor or deficient, if it does not
meet them (Swati Bhargava et al., 2013).
Based on this perspective, Parasuraman et al. developed a scale for measuring service
quality, which is mostly popular known as SERVQUAL. This scale operationalizes service
quality by calculating the difference between expectations and perceptions, evaluating both in
relation to the 22 items that represent five service quality dimensions known as ‘tangibles’,
‘reliability’, ‘responsiveness’, ‘assurance’ and ‘empathy’ (C.N. Krishna Naik et al, 2010).


6
The initial study of Parasuraman (1985) showed that factors in customers’ assessment
of service quality could be expressed through 10 points: (1) Tangibles, (2) reliability, (3) the
responsiveness, (4) approach, (5) credibility, (6) the safety, (7) Capacity, (8) politeness, (9)
customer understanding, (10) the communication. These factors were later combined
streamlined and shortened into five factors: (1) Tangibles: external expression of the physical
facilities, equipment, media; (2) Reliability: ability to perform service reliably and accurately;
(3) responsiveness: willingness to help customers and provide promptly service; (4) The
Assurance: Professional knowledge and elegance of the employees, the ability to make
customers trust; and (5) Empathy: showing kindness, concerns for each individual customer

(Dinh Phi Ho et al., 2011b).
Table 1.1: Five Broad Dimensions of Service Quality
Dimension
Tangibles

Reliability
Responsiveness
Assurance

Definition
Appearance of physical facilities, equipment, personnel and
written materials
Ability to perform the promised service dependably and
accurately
Willingness to help customers and provide prompt service
Employees’ knowledge and courtesy and their ability to
inspire trust and confidence
Caring, easy access, good /communication, customer

Empathy

understanding and individualized attention given to
cutomers
Source: Adapted from Bhargava et al. (2013)

1.3.2. Theories of Investment Behavior
The model of Romer and Lucas (2007) showed that factors affecting investment
behavior were: (1) the change in supply and demand; (2) interest rate; (3) the level of
development of the financial system; (4) public investment; (5) the ability of human resources;
(6) other investment projects in the same sector or in relevant sectors; (7) the development of

technology, the ability to acquire and apply technology; (8) the stability of the investment
environment; (9) Regulations of procedures and (10) the adequacy of information, including
market information, rules, procedures, and technology advances (Dinh Phi Ho et al., 2011b).
According to Dunning (1977), an enterprise which only invests directly in foreign
countries when 3 below conditions are available: (1) the enterprise possesses a number of


7
advantages compared with other enterprises such as scale, technology, marketing networks,
the ability to access to capital with low interest rates or the specific intangible assets of the
enterprise; (2) Internality: the use of advantages within the enterprise rather than selling or
leasing to other enterprises; and (3) Manufacturing in the invested countries has lower cost
than manufacturing in the investing country. Location advantages might have been obtained
due to natural resources, labor, trade barriers, and policies on investment encouragement and
the external impacts that the locations can make for the enterprise during doing its business
there (Dinh Phi Ho et al., 2011b).
1.3.3.Local Marketing Theory
According to Local Marketing theory, local governments need to consider investors as
customers (Mai The Cuong, 2005), and in order to satisfy the investors’ needs, local goverments
must understand the needs about the locality of investors.
Through the Local Marketing approach in attracting investment, an important thing that
local authorities must be interest in is the “product” supplied to “customer” (herein investor).
Product are considered as anything satisfying customers,

and modern marketing theory

indicated that customers buy a product not because of characteristics that the manufacturer
believed to be good, but for product's benefit. The product is not investment attraction policy
but the investment environment of a locality (Mai The Cuong, 2005).
Therefore, local authorities should have the service satisfying investors and gradually

improve the investment environment to maintain, develop existing investment sources, attract
potential investments, for the social economic development of locality. Strategies of
investment environment improvement is implemented through understanding the needs of
investors to take the appropriate solutions to more satisfy investor demand in the locality (Ho
Duc Hung et al. , 2005).
Local Marketing theory showed that factors affecting investors’ satisfaction can be
divided into three main groups: (1) Investment Infrastructure; (2) Investment modes and
policies and (3) working and living environment (Dinh Phi Ho, 2011a).
Investors will be satisfied with a locality when their operations are effective there. The
efficiency can be expressed in many different forms depending on objectives of the
enterprises. Nevertheless, in general, an enterprise only does its business efficiently when it
achieves a growth of revenue and profit. If an investor obtained his/ her objectives, the


8
investor will tend to continue the investment and to suggest other enterprises to invest in the
locality (Dinh Phi Ho, 2011a).
1.4. Conceptual Framework
1.4.1. Conceptual Framework
Based on the theories reviewed in the above theoretical framework, the author propose
the conceptual framework for this study as follows:
Antecedent variables

Independent variables

Enterprises in Industrial

Factors affecting the

zones of Thai Nguyen


satisfaction of investors

Dependent variables

province

- Tangibles

The satisfaction of

- Investment capital

- Reliability

investors in

- Number of employees

- Responsiveness

- Number of years in

- Assurance

Thai Nguyen

operation

- Empathy


province

industrial zones of

- Business categories
- Type of enterprises

Figure 1.1: The Conceptual Framework of the study
Source: Author’s compilation (2016)
The conceptual framework of the study has 3 components following:
The antecedent variable is profile of enterprises in industrial zones of Thai Nguyen
province in terms of investment capital, number of employees, number of years in operation,
business categories, type of enterprises.
The independent variables are factors affecting the investor satisfaction in industrial zone of
Thai Nguyen province. Base on the theory of the service quality, the investment behavior and the
theory of the Local Market, the authors identified 5 main factors affecting the satisfaction of
investors, including: Tangibles, Reliability, Responsiveness, Assurance and Empathy.


9
The dependent variables are Investor satisfaction in industrial zones of Thai Nguyen
province. These variables reflect the level of satisfaction with industrial zones of investors
who are investing in the industrial zones.
1.4.2.Hypotheses of the Study
The thesis has made some below hypotheses in order to determine whether or not there
were an impact between the factors (including: Tangibles, Reliability, Responsiveness,
Assurance; Empathy) and the satisfaction of investors investing in industrial zones of Thai
Nguyen province.
H1: Level of investors’ assessment about Tangibles of the industrial zones has influence

on the investor satisfaction.
H2: Level of investors’ assessment about Reliability of the industrial zones has influence
on the investor satisfaction.
H3: Level of investors’ assessment about Responsiveness of the industrial zones has
influence on the investor satisfaction.
H4: Level of investors’ assessment about Assurance of the industrial zones has influence
on the investor satisfaction.
H5: Level of investors’ assessment about Empathy of the industrial zones has influence on
the investor satisfaction.
1.5. The Operational Definitions
- Enterprise: Enterprise is an organization created for business ventures. Enterprise
which is the economic organization has its own name, assets and stable transaction bases, is
registered according to provision of law for the purpose of performing business activities.
- Industrial zone: is commonly expressed by some phrase follows: Industrial Estates,
Industrial Zone (IZ), export processing zone (EPZ) or Industrial Park (IP). Specifically in this
study, the author uses the term Industrial Zone (IZ). Industrial zone is the area specializing
industrial commodities, and implementing services for industrial production, with defined
geographical boundaries, established under the provisions of the Government. Industrial zone
is a secluded area, which focuses investors on encouraged industrial branches. In this areas,
Government will provide investors with the taxes and land rent incentives.
- Investment capital : Refers to funds invested in a firm or enterprise for the purposes
of furthering its business objectives. In this study, the capital investment of enterprises were
categorized into: “under 50 billion VND”, “50 billion VND - under 100 billion VND”, “100
billion VND - under 200 billion VND”; “200 billion VND - under 500 billion VND and “500
billion VND and above”.


10
- Number of employees: Refers to the number of individuals who works part-time or
full-time under a contract of employment, whether oral or written, express or implied, and has

recognized rights and duties. In this study, the number of employees of enterprises were
categorized into: “under 200 employees”, “200 employees – under 500 employees”, “500
employees – under 1000 employees”, and “1000 employees and above”.
- Number of years in operation: Refers to the number of years since enterprise began
operationing until the current time. In this study, the number of years in operation of
enterprises were categorized into: “ under 5 years”, “5 years – less than 10 years”, and “10
years and above”.
- Business categories of the enterprise: Refers to the business fields of enterprise,
such as: services , tourism, commerce, information technology, banking, food processing,
manufacturing, clothing processing, exploiting and processing minerals, etc. In this study, the
business categories of the enterprise were categorized into: “Manufacturing& Processing
Industry”; “Construction” and “Service”.
- Type of enterprises: Refers to categories of Enterprises. In Vietnam, enterprises are
classified according to: the economic nature of owners; The legal forms of enterprises; liability
regimes; Legal status. This study based on the legal forms of enterprises to categorize enterprises ,
including: limited liability company; Joint stock company; Partnerships; Private enterprises.
- Tangibles: Tangibles is reflected in terms of: appearance of physical facilities,
equipment, personnel and written materials. In this study, Tangibles is showed in observed
variables following: Management authority of industrial zones is at a convenient location, has
modern and spacious facilities; Dress of staff of Management authority of industrial zones is
elegant, neat; Premises and workshops are arranged in time; Hire charges of land and workshop
are reasonable; Stable electricity; Stable water; Reasonable electricity price; Reasonable water
price; Good drainage system; Convenient communication system; Convenient transportation
system; Reasonable waste, wastewater fee; Good internal transport system and green space;
Very good internal lighting system. They were evaluated by the investors’s perspective.
Tangibles will be measured by a 14 item questionnaire answerable by 1 (Strongly disagree), 2
(Disagree), 3(Neither agree nor disagree), 4 (Agree) and 5 (Strongly agree). The mean value of
the responses will be used. The higher the mean value be, the higher the respondents'
perspective about the Tangibles will be.
- Reliability : Refers to ability to perform the promised service dependably and

accurately. In this study, reliability is showed in observed variables following: Industrial zone
management authority complies with commitments with investors; Industrial zone
management authority gives clear and accurate consultancy; Management authority of


11
industrial zones guides administrative procedures clearly and consistently; Industrial zone
management authority gives its feedback punctually for administrative procedures. They were
evaluated by investors’s perspective. Reliability will be measured by a 4 item questionnaire
answerable by 1 (Strongly disagree), 2 (Disagree), 3(Neither agree nor disagree), 4 (Agree)
and 5 (Strongly agree). The mean value of the responses will be used. The higher the mean
value be, the higher the respondents' perspective about the Reliability will be.
- Responsiveness: Refers to the willingness to help customers and provide promptly
service. In this study, Responsiveness is showed in observed variables following:
Management authority of industrial zones is ready to assist investors; Local leaders are
dynamic in supporting investors; Administrative procedures of management authority of
industrial zones is simple and quick; Customs procedures is simple, fast and convenient; The
investment incentive policies are attractive; Legal documents are rapidly deployed to the
investors; Security and order in industrial zones are good; Abundant labor; Cheap labor cost;
Labor qualification meets our needs; Banking and financial service is good; Entertainment,
restaurant, hotel service is satisfactory; Medical service is good. They were evaluated by
investors’ perspective. Responsiveness

was measured by a 13 items answerable by

1

(Strongly disagree), 2 (Disagree), 3(Neither agree nor disagree), 4 (Agree) and 5 (Strongly
agree). The mean value of the responses will be used. The higher the mean value be, the
higher the respondents' perspective about the Responsiveness will be.

- Assurance: Refers to employees’ knowledge and courtesy and their ability to inspire
trust and confidence. In this study, Assurance is reflected in term of the following observed
variables: Qualification and serving attitude of staffs of State investment management
organizations of Thai Nguyen province are good; Qualification and serving attitude of staffs
of management authority of industrial zones are good; Management authority of industrial
zones keeps its appointmentwith enterprises; State investment management organizations of
Thai Nguyen province keeps its appointmentwith the investors.They were evaluated by
investors’s perspective. Assurance will be measured by a 4 item questionnaires answerable
by 1 (Strongly disagree), 2 (Disagree), 3(Neither agree nor disagree), 4 (Agree) and 5
(Strongly agree). The mean value of the responses will be used. The higher the mean value be,
the higher the respondents' perspective about the Assurance will be.
- Empathy: Refers to caring, easy access, good communication, customer
understanding and individualized attention given to cutomers. In this study, the empathy is
reflected in terms of the following observed variables: Difficulties and problems of
enterprises are listened and shared by Management authority of industrial zones; Management
authority of industrial zones take interest in and recommendations and requirements of


12
enterprises; Management authority of industrial zones often organize conferences to meet and
talk with enterprises; Enterprises easily meet to exchange, discuss with leaders of
management authority of industrial zones. They were evaluated by investors’s perspective.
Empathy will be measured by a 4 item questionnaires answerable by 1 (Strongly disagree),
2 (Disagree), 3(Neither agree nor disagree), 4 (Agree) and 5 (Strongly agree). The mean value
of the responses will be used. The higher the mean value be, the higher the respondents'
perspective about the Empathy will be.
- Satisfaction: Refers to emotional levels of a person deviring from the comparison
between the actual quality of a products and his/her expectations. This study researchs on
investor satisfaction.
- Investor: Refers to an organization or an individual who owns capital or on behalf of the

owner or the borrower and directly manage and use capital to make investments. In this study, in
order to survey on the satisfaction of investors about the industrial zones, the interviewed
investors should be the ones who awared of the industrial zones and advantages as well as
disadvantages of their enterprises when operating in the industrial zones. Thus, in this study, the
respondents are not only the capital owners but also the senior managers of their enterprises, such
as: Manager, Deputy Manager, Head of Department, Deputy Head of Department,...
- Investor satisfaction: In this study, investors’ satisfaction refers to their response to
satisfaction of their expectations when investing in industrial zones, in other words, it is
investors’ satisfaction (customers) about consumption of a service or product (industrial zone).
In this study, the Investor satisfaction is reflected in terms of the following observed
variables: In general, investors feel very satisfied when investing in Thai Nguyen Industrial
Zones; investors will continue to invest in long-term in Thai Nguyen Industrial Zones;
investors will introduce industrial zones for other enterprises. They were evaluated by
investors’s perspective. The Investor satisfaction will be measured by a 3 item questionnaire
answerable by 1 (Strongly disagree), 2 (Disagree), 3(Neither agree nor disagree), 4 (Agree)
and 5 (Strongly agree). The mean value of the responses will be used. The higher the mean
value be, the higher the respondents' perspective about the Investor satisfaction will be.
1.6. Significance of the study
1.6.1. Significance to theory
Research has overviewed the theories of service quality, investment behavior, local
marketing, from which has clarified the concept of satisfaction of investors and factors
affecting the satisfaction of investors. In addition, this study has proposed an analytical


13
framework of factors affecting the satisfaction of investors in industrial zones and applied the
methods: the coefficient analysis "cronbach alpha" test , exploratory factor analysis and
regression analysis to determine the important influencing factors on the satisfaction of
investors. This study will add to the scientific basis for further researches on this issue and
make useful contributions on methodology for researchers.

1.6.2.Significance to practice
The research results of the thesis will be helpful for the investment management
organizations at levels in Thai Nguyen province, industrial zone management authority of
Thai Nguyen province, investors and population near to the industrial zones, and researchers
on this matter in the future. Namely:
- For the management organizations in Thai Nguyen province and industrial zones of
Thai Nguyen province:
The thesis will provide managers with policy recommendations to enhance the
investors’ satisfaction and to enhance the investment attraction in the industrial zone of the
province, to contribute to the development of the province by the increase in revenues of the
state budget from enterprises in the industrial zones and export and import turnover, to create
jobs for local workers, etc.
- For investors and the population:
By policy suggestions to improve infrastructure, quality public services, human
resources, etc. in the industrial zones of Thai Nguyen province, the thesis will provide the
existing investors there with opportunity to do business in a more effective and more
profitable investment and trading environment. It will also provide potential investors with an
investment environment with full of promise.
Suggested policies in the thesis help to increase the investors’ satisfaction and to
improve the investment environment in industrial zones of Thai Nguyen province in
contributing to the improvement of living standard of people in surrounding area through: job
opportunity creation, infrastructure construction, demand increase on goods and services, etc.
- For researchers
This is one of the few studies on investors’ satisfaction in industrial zones, especially
this is a study on satisfaction of both domestic and foreign investors about industrial zones of
Thai Nguyen province. Therefore, this thesis would provide researchers in the future with a
reference containing theoretical systems and actual research status, data about current
investment attraction status in industrial zones of Thai Nguyen province, quantitative analysis