THEMES

“Asian business success” today is part of a political, economic and cultural response to

historical trauma

Asian political-economic systems challenge “the standard model”

Challenges and questions:

Rise or Rebirth? (Old traditions, New States)“Clash of civilizations”?

Globalization?Role of the state?

Development and democracy?Democratic peace?“Asian values”?

Problems of history“Scratches on our minds”

NationalismThe colonial question

CONSIDER

CULTURAL “RENAISSANCE”UP FROM POVERTY

RECOVERY FROM WAR

The “Culture Argument”

The “Asian Model Argument”

The “Political Argument” Legitimacy though economics/Nationalism

The “Globalization/American Peace Argument”

The “People Argument”Leadership

Challenges

Post-WWII Identity

ReformFDI

“Ersatz Capitalism”

GlobalizationCompeting in the global

marketplaceOEM or Branding?

BUSINESS SYSTEMS

Conditioned by history and cultureLinked elements

* What are the authoritative institutions?Law/Party/Custom

*How is the system coordinated?Ownership/Networks/Management Style

Authority & Control

*How is the system organized?Structure

Strategic OrientationMarket Relations

*What are the resources?Capital/Human Resources/Social Capital

Personnel Practices

Why should we care about “business systems”?

1.All businesses (economies) are systems

Systems key characteristic: change one part, change all other parts (problem of unintended consequences)

2.Appreciating the business system of your target market/potential partner lets you anticipate issues, plan better.

“Multiplexity” “Hierarchy”

“Social Capital” “Informality”

“Culture”

One typology: Post-Socialist economies

Emerging SEA economiesAdvanced City economiesAdvanced Northeast Asian

economies(including Japan)

Significant differences?

Using the Redding/Witt Framework, define US business system

Education/Skills FormationEmployment Relations

Financial SystemInterfirm RelationsInternal Structure

Ownership/Corporate GovernanceSocial Capital

Role of the State

China HongKong India Indonesia Japan

BUSINESS SYSTEMS

“GREATER CHINA”

PRCSOES/Private/”Local”

China’s “Golden Rule” (MG)

TaiwanEntrepreneurial/Hi-Tech/SMEs Family

Hong KongThe “Hongs”/Family/Finance

Overseas Chinese (Huaqiao 华侨 )Family

“Bamboo Network”

Economist, “Capitalism Confined” 3 Sep 11

“Multiplexity”?

JAPANKeiretsu & Sosha (Kaisha)

Employment“Patient capital”

Trust

SOUTH KOREAChaebol

Out of the 5 Year Plan

SOUTHEAST ASIAHighly varied

INDO-CHINAThailandVietnam

BUSINESS SYSTEMS (Another look)

CULTURE COORDINATION INSTITUTION

JAPAN EmploymentGroup normsNationalism

KeiretsuComplex govt/biz coordinationConsensus

“Patient capital”Strong social capitalHigh quality HR

CHINA (PRC) ConfucianistHierarchy (duties, low trust)“Communist” values

“Socialist” market econ.SOEs, “families”, private, local businessesComplex (State, JVs, WOFEs, “local”)

“Inefficient capital” (NPLs)Huge HR baseWeak societal linksStrong clan links

OVERSEAS CHINA

Complex identitiesConfucianist“China Circle”

Bamboo networkFamilyClanRegion

SMEsFamily firmPersonal networkingGuanxiFlexible politics

KOREA ConfucianistNationalismTechnology

State planCentralized authoritarian mgt.

Strong stateRespect for law

SOUTHEAST ASIA

Highly varied (religion, ethnicity)Colonial heritage

FDIEmerging marketsImportance of Overseas Chinese

“Crony capitalism”Low levels of social capital

Leadership – One of the keys

Many types , but some shared characteristics

“Confucian”Combination of

authoritative/benevolent/collective/moral

Long Term…seeing relationships, “over the horizon”

MoralFrugal, CSR

Employee-centered, firm as familyRelationships & Networks (guanxi 关系）

Work ethic

Pressing the buttonsChina: $ (instrumentalism, exploitation)

Japan: encouragement (gambate)Korea: stability

PERFORMANCE

FUTURE

GENDER =

HUMANE

POWER DISTANCEINST. COLL.

IN-GROUP

UNCERTAINTY

ASSERTIVE

CHINAJAPANKOREA

LEADERSHIP ORIENTATIONS IN ASIA

McGREGOR: CHINA AS A START-UP AND A TURN-AROUND

CAN APPLY TO ASIA AS A WHOLE

URGENCY & VISION: THE NATION-FAMILY

REFORMS: “FEELING THE STONES”

CONTROL AND ROUGH JUSTICE(RULE BY LAW, NOT RULE OF LAW)

ELITISM/INEQUALITY

•OTHER APPROACHES TO BUSINESS SYSTEMS:

•“EASE”•“GCR”•THE CHALLENGE IS TO SEE HOW

THEY ALL FIT

“EASE OF DOING BUSINESS”

• STARTING A BUSINESS

• CONSTRUCTION PERMITS

• ELECTRICITY

• REGISTERING PROPERTY

• GETTING CREDIT

• PROTECTING INVESTORS

• PAYING TAXES

• CROSS-BORDER TRADING

• ENFORCING CONTRACTS

• RESOLVING INSOLVENCY

ALL OF THESE DEAL WITH “RULE OF LAW” MATTERS;“INSTITUTIONAL” ISSUES IN THE GCR FRAMEWORK

GLOBAL COMPETITIVENESS REPORTA systematic approach to growth/”competitiveness”

From factor driven (basics) Teleological?“Institutions”Infrastructure Compare with Rostow?Macro-econ. StabilityHealth/Primary education (UNDP- HDI)

To efficiency driven (production)Higher ed”Goods market”Labor marketFinanceTech readiness/Market size

To innovation drivenManagementInnovation support