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

Type of the article: Research Article AbstractThis 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. AcknowledgmentThe 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.