Kigyo Shudan: The Formation and Functions of Enterprise Groups

The enterprise groups, formed after the Second World War, and horizontally linking a number of associated companies, are widely accepted as a notable characteristic of the ‘Japanese Industrial Management System’. The purpose of these groups, and therefore their particular contribution to industrial organisational capability, is rooted in the period of their development, the 1950s. Interlocking share ownership within the groups brought a sense of security, allowed managers to exercise control over their companies, and encouraged firms to plan in terms of long-term growth rather than short-term profits. Nevertheless, the objectives and advantages of inter-firm groupings altered over time, and these changes reflected developments in the Japanese economy and in the commercial and organisational needs of companies. This institutional arrangement has been a notable aspect of the Japanese industrial system, characteristically distinct from the Anglo-American economies and a contributor to competitive advantage and differential growth rates.     

The Chinese business system and its authoriliberal economic model

China's position as one of the most powerful nations in the world is undisputed. However, in an evolving landscape, China's utilization of a path-dependent business system may hinder the ability of the country's institutions to undergo necessary change, which will have important implications for international business literature. Through business system theory, empirical evidence, and a mixed methods approach, we discuss China's business system explaining how the system may impair sustainable growth and the transformation required by a less dependent industrial society. Our research suggests that the Chinese business system is still very arrested due to its recent past, and the Chinese Communist Party has only partial interest in improving some of the most important bases for the development of modern enterprises, even if fostering a somewhat liberal economic approach. Since similar political (authoritarian) and economic (liberal) approaches are found elsewhere, we theorize on what we called an authoriliberal economic approach.     

The Formation of Distribution Keiretsu: The Case of Matsushita Electric

The Japanese keiretsu, specifically vertically linked firms, have attracted global attention, and there is continuing dispute over their purpose. They act as close, long-term business relationships between large corporations and a number of selected smaller firms. They have been seen as rational effective systems, especially suited to the circumstances of Japan's industrialisation, and as a factor in its economic success. On the other hand, they have been criticised as closed systems that exclude potential competitors. Keiretsu are generally divided into production keiretsu, financial keiretsu, and distribution keiretsu. As a pioneer of distribution keiretsu, Matsushita (Panasonic) grew in Japan by securing the outlet of its products at ‘appropriate’ prices, and is now its nation's largest electronics manufacturer. Its distribution structure was founded in the 1930s, but the changes introduced in the 1950s finally brought it substantial commercial advantages, and encouraged rivals to form similar networks.     

Welfare Policy in German Big Business after the First World War: Vereinigte Stahlwerke AG, 1926–33

According to A.D. Chandler, Jr, the rise of organisational capabilities in German enterprises was decisive for the international economic success of the German Reich before 1914. This article deals with the changes in the organisational structures of enterprises through concentration and diversification and their consequences for welfare policy in German industry. The central question is to what extent the changing organisational structures affected the quality and quantity of welfare provided by companies. The interactions between welfare policy and organisation can be illustrated by the Vereinigte Stahlwerke AG (VSt), the world's second largest iron and steel combine, next to US Steel, in the first half of the twentieth century. After a survey of the traditions of business welfare in Germany since the early nineteenth century, important aspects of industrial welfare policy, such as health insurance, company stores and housing, are analysed in the context of the VSt's organisational development between 1926 and 1933.     

FOREIGN TRADE AND THE EXCHANGE RATE IN BOTSWANA

Botswana is a success story of exceptional economic performance, sound development management, and good governance. A great deal of that success can be attributed to the country's export performance and the avoidance of the 'Dutch Disease' syndrome that has plagued other natural resource based African countries. This article documents and analyzes Botswana's trade and exchange rate relationship, during the past two decades, in the context of the country's economic performance, and examines the related issue of the value of the country's currency to determine whether it is overvalued or undervalued.     

The Meanings of Managerial Prerogative: Industrial Relations and the Organisation of Work in British Engineering, 1880–1939

In pre-war Japan, large-scale business enterprises tended to become managerial enterprises, but around 1930 this transformation was still in a stage of transition. Managerial enterprises developed rapidly due to the militarisation of the economy during the Second World War, and, after 1945, following the dissolution of the zaibatsu by the occupying US forces. The purge of businessmen that had co-operated with the military, and tax and land reforms which affected the wealthiest, were other contributory factors. Economic growth after 1950 assisted the development of managerial enterprise, just as managerial enterprise accelerated economic growth by facilitating investment and the expansion of business capability. The majority of post-war Japan's most important executives were promoted from within their companies. They were already acquainted with their workforces, especially their engineers, and fully understood their capabilities. This knowledge and the support they enjoyed amongst their employees were critical to the strategic decision-making that guided the investments that brought rapid growth, and, with these organisational assets, they won the confidence and support of banks, business allies, and government. It was those managerial enterprises controlled by salaried managers promoted from within and the emergence of new entrepreneurial enterprises which led Japan's post-war economic growth.     

Organisational capabilities and the role of routines in the emergence of a modern life insurer: The story of the AMP

In 1954 the Australian Mutual Provident Society (AMP) undertook a major organisational restructure. This reform provided the foundation upon which the Society was able to develop into a diversified financial intermediary in the following decades. This paper investigates the changing organisational structure within Australia's largest life insurer as it evolved from a branch structure to a multi-divisional form of management in the 1950s. The specialisation encouraged by the divisional system allowed the development of higher order routines upon which the executive could draw. The resulting growth and sophistication of the organisation in the late 1950s ensured higher order routines were able to develop to promote further development.     

The Business(es) of the Chinese State

The state industrial sector is the Achilles heel of China's otherwise remarkable economic performance over the past two decades. Most other countries in transition from socialism have transformed SOEs into commercial entities through systematic, market‐driven restructuring and privatisation to become more efficient and competitive. In China, a series of innovative, if often administrative, insitutional reforms since 1978 have begun to achieve the Chinese authorities' goal of ‘separating governemtn from business.’ But the Chinese State still maintains ownership of key enterprises, and government agencies carry out shareholder functions typically performed by private owners in a market economy. Although privatisation and restructuring of SOEs is occurring, it mostly pertains to small and medium sized firms. For the principal businesses, by contrast, the creation of large state enterprise groups and holding companies (and experiments in other forms of ‘state asset management’) have become the main form of restructuring. Today, China's SOEs still account for more than one‐quarter of national production, two‐thirds of total assets, more than half of urban employment and almost three‐quarters of investment. While direct budgetary subsidies have declined, explicit and implicit subsidies are still making their way to prop up loss‐making SOEs through the financial system and other routes. At the same time, SOEs are still producing non‐marketable products, resulting in a sizeable inventory overhang. These inefficiencies and distortions represent a drain on the country's resources and thus present a challenge to the Chinese leadership for reform. This paper sheds light on these challenges by analysing the incentives and constraints on China's SOE reform programme. Four critical aspects of the reforms are highlighted and evaluated against the backdrop of international experience: clarification of property rights; establishment of large group/holding companies and other new organisational structures; improved corporate governance incentives; and implementation of international financial accounting and auditing practices. The paper concludes with policy recommendations.     

Building National Competitive Advantage: Rwanda's Lessons from Singapore

Despite its recent tragic history of genocide and continuing threats to political stability, Rwanda has made significant strides in improving its competitive position compared to its African neighbors and to other countries at an equivalent economic level. The Rwandan business and political leadership have explicitly taken Singapore as a model for rapid economic growth, with the aim of positioning Rwanda as a regional hub for transportation and advanced services. This article, based in part on fieldwork conducted in Rwanda by the lead author, ¹ analyzes Rwanda's development strategy using the World Economic Forum's Global Competitiveness framework and evaluates its potential for success in emulating Singapore's development pathway. © 2014 Wiley Periodicals, Inc.     

Trademarks,product differentiation and competitiveness in the Catalan knitwear districts during the twentieth century

Using the number of trademarks registered as an indicator, this article explores the functioning of the economies of product differentiation that characterise industrial districts. In order to assess the role of districts in the creation of trademarks, the analysis focuses on knitwear production, a highly competitive industry and a pioneer in brand creation in Spain, and examines the development of the country's two main knitwear districts during the twentieth century. The article presents empirical evidence from trademark and business records to show that more trademarks were created in these two districts than in other areas. The imitation and rivalry characteristic of industrial districts favoured the proliferation of trademarks and encouraged firms to diversify their products through the creation of new brands. It also suggests that the success of the brands was uneven and depended on the industrial structure in each district and the kind of product specialisation. In conclusion, not only were the industrial districts an important factor in brand creation, but brand consolidation was decisive in raising levels of competitiveness in knitwear districts in Spain.     

A new entrepreneurial drive in large and small manufacturing firms in Japan

Japan's per capita GDP growth has been decelerating for at least three decades, despite groping towards better ways of accommodating individualistic Smithian market forces. Japan has made great progress in opening markets and fostering profit seeking, yet it has not reaped the benefits anticipated so far. Facing the most severe economic downturn of the post-war period, it is now rethinking the fundaments of its economic and management system. The necessity of developing competitive advantages in new industries has been identified but a crucial question is how they will affect the way industry has organized itself to maximize quality, efficiency and flexibility. It is said that an entrepreneurial culture was not needed during the post-war period in Japan because a group-based industrial organization could generate about the same dynamism and outcome. Nevertheless, this time, a venture-type business culture may be a key factor in the renewal of the Japanese economy to put it back on a sustainable growth path. The objective of the article is to make a critical assessment of the trends in entrepreneurship in Japan, using secondary data. They are complemented by partial results of two surveys made by the author, the first one in 1997 in ten electronic companies on intrapreneurship schemes, and the second one in 1998 in 40 small companies in the Hiroshima prefecture, centred on human resource management. To these are added information obtained through interviews in the small business agency, MITI, and a number of universities on business-university research collaboration schemes.     

Economic Theory and Industrial Policy in East Asia

Economic liberalisation has been advocated as universally valid for developed and developing countries alike, and, as a result, the role of the state has been disparaged in favour of unrestricted markets and free trade. The neo-classical proposition is by no means fully justified from a theoretical point of view, and there exist powerful, countervailing arguments why government intervention and market coordination, especially during a nation's initial stage of industrialisation, can achieve improved resource allocation and greater competitive advantage. By helping to explain the very creation of industrial capacity, as well as the enhancement of long-term growth rates, institutional economics can provide clearer insights into the complementary roles of state and market. These theories are, moreover, supported by empirical evidence from East Asia, where government has been a contributory but not dominant factor in the achievement of economic success.     

On the New Economic Policies Promoted by the 17th CCP Congress in China

The 17th Chinese Communist Party Congress in October 2007 attracted attention within and outside China for the bold development agenda that was placed before delegates. After 30 years of economic reform that has produced a remarkable improvement in living standards and China's reintegration into the world economy, the Party unveiled a programme that would push China to become a world superpower over the next 30 years. China's ambition is to become a technologically innovative state, to make China a ‘moderately prosperous’ and ‘harmonious society’ with a ‘scientific outlook on development’, and to achieve full industrialisation and sustainable prosperity. Whether China is able to attain its objectives will critically depend on the Party's ability to implement the new economic policies and address the social and political challenges that economic growth has created. The aim of the paper is to examine the policies, motivations and constraints that China faces in achieving the objectives laid out at the Party Congress.     

Competitive advantage and the transformation of value chains over time: The example of a South Korean diversified business group, 1953–2013

We examine the historical evolution of different elements in value chains that create value-added and competitive advantage. This is achieved by using the conceptual model of the ‘smile curve’ with a longitudinal case study of a diversified business group, CJ Group, a former affiliated firm of Samsung Group. We found that the value-added structure graph in the industrialisation period displayed an ‘upside-down U shape’, indicating that production and manufacturing were the most value-adding sectors. However, in the more recent knowledge-based economy period, the graph shows a quite different shape, indicating R&D, firm infrastructure, manufacturing, logistics, service, and marketing as sources of value-added. This shows that competitive advantage diversified into other fields to fit with the changed economy. We also investigate what type of organisational structure, strategy, and capabilities were adopted for organisational change. We found an evolution, with an unrelated diversification strategy by altering capabilities from contacts and generic to organisational and technological capabilities.     

What Explains Cross‐country Industry Growth Patterns? Trade,Development and the Equity Financing Channel

We test theories that examine how economic and financial development affect cross‐country industry growth patterns. Finance theory suggests that financial development affects growth by lowering the cost of external finance. This has the implication that industries in more finance‐hungry sectors will grow faster in countries where financial markets are more developed. In addition, if financing constraints are lessened when stock market performance is high, firms in sectors more dependent on external finance should grow more rapidly following periods of good stock market performance. Trade and development theories, on the other hand, imply that a country's product‐mix and the pattern of industrial growth reflect which stage of development it is in and its factor endowments. Thus, one implication of trade/development theories is that countries that are close to each other in terms of GDP per capita should have similar patterns of industrial growth. Our tests find support for each of these theories.     

The role of intermediate demand and technology for international competitiveness of the KIBS sector: evidence from European Union countries

In this paper, it is tested whether intermediate consumption of knowledge-intensive business services (KIBS) in the economy and technology advancement in the KIBS sector (measured by R&D expenditures) affect the international competitiveness of a country's KIBS sector. First, the definition of KIBS trade, in light of the available data from the balance of payments statistics, is presented. Then, using a panel data set from the EU countries over the period 2000–2009, a panel cointegration approach to estimating the model is adopted. The empirical study shows that among the old EU countries only those with high income are competitive in KIBS exports. Estimation results demonstrate that their competitiveness in KIBS exports is positively determined by domestic and imported KIBS intensity in the economy, as well as by the KIBS sector's technology advancement. The new EU countries usually were not competitive in KIBS exports, and those which were successful in this field seem to have derived their success mainly from international outsourcing rather than from building their own capacities. Their competitiveness in KIBS exports was positively determined by the KIBS sector's endowment in human capital, or via domestic KIBS intensity in the economy together with lower labour costs.     

In search of excellence in the UK

Peters and Waterman's “In Search of Excellence” has become one of the best selling business books of the decade yet continues to be the subject of controversy. This article examines the debate surrounding the book by looking at its origins, the criticisms that it has attracted and empirically investigating how well the book describes successful British and Japanese companies competing in UK markets. The results show that, although it describes many of the characteristics of successful companies, “In Search of Excellence” neglects several competitive issues that help describe business success.     

Singapore—An Asian economic miracle

The island’s rapid industrialisation over the past decade and its development as the main trade and financial centre of South-East Asia, supported by a phenomenal growth in tourism, constitute yet another Asian economic miracle.     

Do Retail Foreign Direct Investment Restrictions Affect Retail Channel Structure?

The purpose of this study is to contribute to the existing retail channel structure research by investigating the impact of retail foreign direct investment (FDI) restrictions on retail channel structure as well as the moderating impact of a country's level of economic development on this relationship. Using a panel data set of 79 countries over the period 1999–2012, we show that retail FDI restrictions can influence retail channel structure development and that the relationship between retail FDI restrictions and retail channel structure is moderated by a country's level of economic development.     

Sustainable development vs. sustainable redevelopment

Attentive managers will find that sustainable development presents two distinct challenges depending upon where in the world they are operating. The business of sustainable development is quite different in the industrialized and developing worlds. The industrial north, for example, has a well‐developed and prosperous economic infrastructure that provides its citizens with a level of wealth that was unimaginable a century ago. But those economic gains have come at a high environmental cost. The industrial world's economic system is proving to be ecologically unsustainable and is threatening to undo the planet's biological balance. © 2008 Wiley Periodicals, Inc.