Chapter 1: The business systems of Asia
Variety in the regional and general features
Historical external influences
• India establishing trading connections, mostly in South East Asia
• Chinese who left China and settled as business people in the countries around the rim of the South China sea
1. 1945-1975 After the retreat of colonial powers, countries needed to reestablish their identity and political structures → hostility + Maoist experiments in China
2. 1975-1997 Relative calm period, stable growth, export to foreign countries, rise in FDI
a. Mao’s death: collapse of ...view middle of the document...
It allows for the complexity of reality to be considered, rather than reduce the complexity to a simple framework and thus miss out things that matter.
(fill in for the country of your choice)
The culture is seen as the basis for meaning: we analyse how each society constructs its own way of making sense of its surrounding context in three fields.
1. Rationale: basic reasons adopted by people to explain the way they have chosen to make the economy work
2. Identity: the core ideas in the society about the place of the person in the social structure
3. Authority: the way in which power is typically exercised in the society and its organizations.
The middle part, (order in the book), institutional fabric of the society. It represents the understanding of the rules of the game and whether compliance with those rules is ensured.
1. Capital: where money is sourced and how it is allocated for huse
2. Human capital: where talents and skills are found or encouraged and how the labour market structures work
3. Social capital: the relative uses of personal trust (personal networks) as against trust in the system (reliance on low or bureaucratic system)
The business system emerges over time in interaction with coordination and managing. Coordination is achieved in three ways: ownership and networks.
The business system of Japan
• Societal revolution in the early 17th century when the design of a newly unified nation was imposed (achieving peace and stability) → decentralization of decision making and development of highly effective administrative bureaucracy responsible for strict rules of order
• 1868: the overthrow of the old regime led to the modernization of the state
o 1930s – 1980s: zaibatsu
o After WW II: under democracy imposed by the US. By the end of 1980, Japanese management became the world’s most respected form and its economy the most formidable.
o 1980s: large bubble in asset prices, inflated by years of success and weak financial rationality+ administrative corruption favouring the construction industry
o 1990s: bubble blows up = lost decade (extending to two decades)
• The firm exists to keep people employed + return on capital for the shareholders is not a primary rationale for economic actions
• Individual is centered around the “ie”
• Group norms
• Firm = vertical entity separate from other entities and in rivalry with them
• Decentralized decision making (consensus seeking, group creativity commitment of workforce)
• (Capital) Patient capital: provided by Japan’s financial institutions (banks, insurance companies and the stock markets). They have not been designed to achieve the highest rates of allocative efficiency in the short term, having resisted in the influence from outside
• (Human capital) Labour market: similar rigidity as the capital, employmen system = set of permanently employed workers and firms invest in their...