- both situated in the East Asia where the influence of Confucianism was and has been remaining strong. - Regulatory change, increased spending brought about renewed economic growth, and employment dislocation stemming from the downsizing of the large state owned enterprises (SOEs) have resulted in Vietnam place small enterprises in the forefront of the research agenda of social sciences. - Consequently, Korean people benefit by gaining social capital. - Before Asian crisis struck, a strong case was being made that the “Asian economic miracle” itself could be largely credited to the dynamism of the mainly small and medium enterprises (henceforth SMEs). - Asian family business, whether owned by small capitalists or as part of the hundred of firms comprising a tycoon’s conglomerate, were seen unable to compete with professionally managed corporations, strictly focuses on their “core” business, and it was expected that many would be taken over and knocked by Western management (Harvie and Lee 2002b). - The same seems to apply in some other countries in the Asia-Pacific region, such as Korea, where the chaebol. - This is because, in most of the region, cultures are relationship oriented, rather than principle or contract oriented: 'the relationship comes before the contract' (Hampden- Turner and Trompenaars 1997, p. - A large part of the explanation for these different forms of networking lies both in cultural influences and the institutional arrangements that reinforce cultural differences between nations. - The literature on small-scale business frequently emphasized the role of economic in the determining of economic behavior. - Therefore, the study of role of family in small business development should be considered in the larger context of Social Capital in business development. - In current policy and theoretical debates concerning the development of small businesses in developing countries, social capital has emerged as a significant feature of economic development. - Objectives The overall goal of our research is to understand the nature of role of social capital in small business development in general with focus on role of family ties in this field in particular. - Methodology and Data Our central research question is ‘what is the role of the family as a social institution could play in small business development’. - In that case research question is considered in the highlight of point of views of economics and sociology. - This analysis had been conducted in the framework that presents in the figure 2. - More specific standards on the classification of SME is stipulated in 'Article 2 of the Framework Act on Small and Medium Enterprises' as table 2. - Source: Korea Foundation for Small and Medium Enterprises There are certain types of businesses, which are classified as small business even though the number of employees exceeds the above definition due to the labor intensiveness of the industry. - Small Business in Vietnam SMEs comprise of 97% of the total number of enterprises in the Vietnam. - The decline of cooperatives of agriculture, together with the approval of the Domestic and Foreign Investment laws in the late 1980s, as well as the Commercial Law in the early 1990s, were extremely effective in promoting growth of the private sector from a negligible base. - The economic reforms of the 1980s were remarkably effective in galvanizing the energy of millions of Vietnamese individuals who diversified and expanded their agricultural production rapidly, and set up many micro household enterprises as well as domestic private registered SMEs. - Tapping the potential of individual farmers' drive and dynamism through 'doi moi' was key to the rapid growth and employment generation of the 1990s. - In the early part of the 21st century, unleashing the potential of the private non-farm sector, to produce and to export, is likely to be the key to restoring higher growth of income and employment during the next decade.. - While systematic data on the performance of the domestic private sector is limited, what does exist suggests a significant expansion and diversification of private sector activities in the last 10 years. - Some important facts about the performance of the private sector can be usefully highlighted. - First, the share of the private sector in total GDP in 1998 was about 50 per cent, which is approximately the same share as in 1993. - During the 1995- 98 period, the domestic private sector, despite its many constraints, grew at 9 per cent a year, only a percentage point lower than the growth of the state-owned sector. - However, with the introduction of the Enterprise Law in 2000 the situation was changing rapidly, especially for private registered SMEs, with more than 10 000 new firms registered during the first nine months of 2000. - Many researchers have pointed out the similarities in the way of development between China and Vietnam. - In respect of small business China had developed a lot of ‘Communal Enterprises’ in the late 1950s along with big businesses. - However, the current development of small business in Vietnam, which has a family basis, is completely different in comparison to development of small business in the form of ‘communal enterprises’ in China some decades ago. - Currently, SMES employ 9.1 million persons, representing nearly 80% of the total workforce in Korea (Gary D. - For example, according to Nugent and Yhee (2001) virtually nowhere has the relative role of SMEs in the country changed as much over time as in Korea. - They dominated the manufacturing sector of the economy in the early 1960s but by the mid-1970s, Korea had become known for the extreme dominance in economic and public policy of its large chaebol (conglomerate) firms in the economy. - Less well known is that since the mid-to- late 1970s there has been a steady decline in the dominance of large firms and a corresponding rise in the role of SMEs in all aspects of manufacturing activity. - The dramatic rise of the chaebol and the Korean economy as a whole has been closely linked to an especially cozy relation between government and business and to the country’s development strategy. - Whether Korea’s economic development has been helped or hurt by the country’s development strategy is still hotly debated as is of course the extent to which the financial and currency crisis of the last two years can be attributed to the excessive power and international borrowing of the chaebol. - Even more controversial is what, if anything, should be done to correct the widely perceived excesses of the chaebol and government policies in support of them. - In virtually all dimensions the role of SMEs in the Korean economy has been ever-changing. - First, an upward trend (in the share of SMEs in both establishments and employment at least) in the 1950s. - second, a declining trend in the SME share from the early 1960s to the mid-to-late 1970s. - Source: National Statistics Office, Report of the Mining and Manufacturing Census and Survey, various years Korean Federation of Small Business, Central Cooperative. - The official size cutoff between SMEs and large corporations changed from 200 employees to 300 after 1973, making the top part of the table not exactly comparable to the bottom part. - There are also some differences in the years of the turning points among the different dimensions. - For example, in the case of number of establishments, the first turning point occurred only in 1966, whereas for employment it occurred in 1960. - If, as before, the turning points in the SME shares of value added and production precede that in employment, these declines in SME shares in value added and production could presage a decline in the SME share of employment by the turn of the century. - The statistics show that the shares of the two largest size classes of SMEs in the total employment of those SMEs with 100–199 and 200–299 employees, respectively were falling between 1978 and 1997, from 25.5 percent and 18.7 percent in 1978 to 15.1 percent and 8.5 percent, respectively, in 1997. - Since 1978 the share of this group (i.e., the three smallest size groups in Table 7) rose from 35.9 percent of the SME total in 1978 to 58.7 percent in 1996. - Hence, it is clear that the upward trend in the SME share in manufacturing employment since 1978 is primarily due to the rising share of small SMEs (those with fewer than 50 employees) rather than to the growth of relatively small SMEs into medium sized ones. - Source: Economic Planning Board, Report of the Mining and Manufacturing Census and Surveys, various years. - Prior to 1978 the shares within SMEs of the two largest size classes (i.e., those with 100 or more workers) increased sharply from 20 percent in 1960 to 44.2 percent in 1978. - Within the two smallest size classes, however, there was considerable volatility in the pre-1978 period. - Among the latter role of social capital that derives from social relations such as family ties will be discussed in next chapters. - Family as Social Capital 2.1. - In general meaning social capital is considered as the norms and social relations embedded in the social structure of a group that enable people to coordinate action to achieve desired goals. - Social capital is not just the sum of the institutions which underpin a society – it is the glue that holds them together. - Many researchers suggest that social capital as channels of access to resources that inhere in someone relations. - Such ties provide different incubation prospects for new business ideas, depending on the quality of the information and resources flowing through them. - Recognizing the importance of social capital as a factor of sustainable development, the World Bank has supported series of research in the framework of “Social Capital Initiatives”. - The very first researches were devoted to theory analysis of social capital. - However, theorists disagreed over the definition and interpretation of the term of social capital. - In this work, they develop four distinct categories of social capital: the communitarian view, the network view, the institutional view and the synergy view. - Very often that social capital is a positive feature and enabler of economic development. - There is growing empirical evidence that social capital contributes significantly to sustainable development. - The challenge of development agencies such as the World Bank is to operationalize the concept of social capital and to demonstrate how and how much it affects development outcomes. - Ways need to be found to create an environment supportive of the emergence of social capital as well as to invest in it directly. - His work is widely recognized as one of the most significant, as is Robert Putnam’s study of voluntary associations in Italy. - Putnam concluded that the high density of voluntary associations in the north was responsible for the region’s economic success. - Many others have also made significant strides in advancing our knowledge and understanding of the subject. - One of the earliest pioneers in the study of social capital is Lyda Judson Hanifan (The Community Center, 1920) who argued that “social capital… refer[s] to … those tangible assets [that] count for most in the daily lives of people: namely goodwill, fellowship, sympathy, and social intercourse among the individuals and families who make up a social unit” (Woolcok 1998). - In the recent years, the names of Robert Putnam and James Coleman are frequently quoted in social capital related papers. - They are credited with bringing the term “social capital” to prominence. - Putnam viewed social capital as a set of horizontal associations between people, which foster cooperation for the mutual benefit of the community. - Do not be limited by explanation of social capital in term of horizontal and vertical relationships Douglass North went further. - In other words social capital presents almost everywhere in social life. - In comparison to concept of Coleman and Putnam North’s understanding of social capital seems to be on macro level. - The absence of constructive interaction between the micro- and macro-levels can result in a significant breakdown of trust – one of the most important and most widely discussed elements of social capital. - He considered trust as a measure of social capital and believes is embedded in cultural factors such as ethical and moral behaviors. - As the main source of economic and social welfare for its members, the family is the first building block in the generation of social capital for the larger society. - The family's ability to meet children's physical and emotional needs strongly influences their perceptions of the trustworthiness of others outside the family. - Kinship ties can serve as vital sources of social capital for welfare and economic development (Sanders and Nee 1996). - But these results should be interpreted in the context of other cross-national findings. - In all the combined nations of the 1995-98 WVS, only 26% of respondents said that most people could be trusted. - In terms of other East Asian nations, 42% of Japanese respondents, 41% of the Taiwanese, 52% of the Chinese and only 6% of the Philippine respondents say they trust others. - Researchers suspect that further analyses can isolate the characteristics of the hyperactive and provide an explanation for these results (Dalton Russell. - Much as we observed for activity in social networks, the ascribed importance of the family actually is higher among the better-educated and higher income Vietnamese, and there is no erosion of these sentiments among the young. - The WVS data also showed that changing family relations also have the potential impact to shape other social and political relationships that may have developed to reflect the hierarchical structures of the family. - because of the importance of work cooperatives and occupational issues. - Social characteristics of individuals play significant role in the frequency of activity within each separate social network. - Residents of the North are relatively more likely to engage in family or friendship network activities. - Thus further development in Vietnam is not so likely to exchange on set of social networks for another, but to expand the number and activity levels of the networks that connect individuals to society, and which help form their social and political identities. - Participation in social groups develops the interpersonal skills that are parts of the evolution of a modern society, and helps to broaden the life experiences and perspectives of group members. - For example a fifth or more of the public report they are members of a sport/recreation group, a local community group, a social welfare organization, a women's group, or a political group. - These patterns of group membership might be partly explained by the past efforts of the Vietnamese government, which actively encouraged the public to be a member of formal social organizations groups. - This suggests that younger Vietnamese are engaging in social groups with increasing frequency as part of the social development of the nation. - Thus group membership may grow even more in the future. - The country now maintains democratic institutions and modern corporations, which governs the routine life of the people. - According to the same study of Yee Jae Yeol, alters in the dyadic ties are classified into diverse categories as is shown in Figure 2. - Over one third of the alters belong to family members. - If we add kin members to this number, primary group occupies almost half of the tie alters. - Major contents of the ties belong to personal advice