Does the dispute resolution mechanism influence investment trust in free trade zones? Insights from business managers in Vietnam

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Type of the article: Research Article

Abstract
This study aims to examine and measure the impact of the dispute resolution mechanism (including its effectiveness of dispute resolution mechanism, government support, and the quality of the legal system) on trust in the investment environment within free trade zones (FTZs), as perceived by business managers. The data were gathered through a survey of 780 managers representing enterprises operating in 18 economic zones from October 2024 to February 2025 in Vietnam, a developing country in Southeast Asia. The results of the Partial Least Squares Structural Equation Modeling (PLS-SEM) analysis indicate that the dispute resolution mechanism influences trust in the investment climate within FTZs through the mediating roles of two key factors: trust in the dispute resolution mechanism and perceived risks in business management. Moreover, trust in the dispute resolution mechanism within FTZs is shaped by three factors, ranked in ascending order of positive impact: (1) quality of the legal system, (2) effectiveness of the dispute resolution mechanism, and (3) government support. Meanwhile, only the quality of the legal system has a statistically significant negative impact on the perception of business management risks. These findings underscore the need to enhance the legal framework governing FTZs, improve law enforcement mechanisms, strengthen investor protection, and support businesses in legal compliance. These challenges pose critical policy considerations for countries aiming to develop and implement the FTZs model effectively.

Acknowledgment
The authors would like to thank the Editor-in-Chief and a reviewer for their helpful comments that in our view have helped to improve the quality of the manuscript significantly. Besides, this study is the result of collaboration between researchers from the School of Law, Hue University, and Duy Tan University. The authors would like to thank both institutions for their support and facilitation in the publication of this research.

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    • Figure 1. Model and hypotheses
    • Figure 2. PLS-SEM structural model testing results
    • Table 1. Descriptive statistics about the samples
    • Table 2. Descriptive statistics, internal reliability and convergent reliability
    • Table 3. HTMT coefficient between pairs of variables
    • Table 4. Structural model evaluation results
    • Table 5. Testing direct effect hypotheses
    • Table 6. Test of indirect effect hypotheses
    • Table A1. Measurement scale used in research
    • Table A2. List of managers in 18 economic zones in Vietnam participating in the survey
    • Conceptualization
      Ha Nguyen Son, Hai Phan Thanh
    • Data curation
      Ha Nguyen Son, Hai Phan Thanh
    • Formal Analysis
      Ha Nguyen Son, Hai Phan Thanh
    • Funding acquisition
      Ha Nguyen Son
    • Investigation
      Ha Nguyen Son, Hai Phan Thanh
    • Methodology
      Ha Nguyen Son, Hai Phan Thanh
    • Project administration
      Ha Nguyen Son, Hai Phan Thanh
    • Resources
      Ha Nguyen Son, Hai Phan Thanh
    • Software
      Ha Nguyen Son, Hai Phan Thanh
    • Supervision
      Ha Nguyen Son, Hai Phan Thanh
    • Validation
      Ha Nguyen Son, Hai Phan Thanh
    • Visualization
      Ha Nguyen Son, Hai Phan Thanh
    • Writing – original draft
      Ha Nguyen Son, Hai Phan Thanh
    • Writing – review & editing
      Ha Nguyen Son, Hai Phan Thanh