Asian Business & Management

This article describes the entrepreneurial development and professionalism of ultradistance running (ultrarunning) in South Korea, culminating with the hosting of the IAU World Cup 100K in 2006. This case study-based research provides evidence of various macro-environmental and individual drivers of a grassroots entrepreneurial process, contextualised in Korea's sporting culture. Macro-environmental factors include the economic crisis and Korean cultural values of comradery, emotional expressiveness and entrepreneurial spirit. At the individual level, self-leadership, focus, persistence, team dynamics and access to resources explain the growth of ultrarunning and the commitment to hosting the IAU World Cup. Implications for sports entrepreneurship and grassroots-initiated mega-sporting events in Asia are discussed.

Economic literature provides mixed results about what really matters at corporate governance and the board room. Some research covering different countries suggests that size and ratio of board room matters. The purpose of this paper is to investigate the performance impact at the board level in the corporate governance of Japanese companies. We investigate the size as well as the ratio of outside directors and outside auditors and apply them to all Japanese manufacturing companies listing on the First Stock Exchange in Tokyo, a set of 821 companies. To do this, we put Japanese companies into three groups: 1st traditional companies (without outside directors), 2nd new Japanese companies (which appointed outside directors) and 3rd companies who decided to apply to the US-Style system. In our sample we found evidence that board size did not matter but we found correlation between the ratio of outside directors / outside auditors and the performance of the companies. Furthermore, traditional Japanese companies showed the weakest performance, US-style Japanese companies the strongest. This result is highly important as it says that Japanese companies are better off having a high ratio of outside directors and outside auditors. In addition to this, Japanese companies might think about the advantages of introducing a US-style-system. At least in our research with only a few numbers of US-style companies, they outperformed the others.

In Japan, as in other countries of the world, structural change in recent decades has manifested itself by a significant increase in the share of services in total output. Using input–output tables for Japan, and by de-composing the growth rate over the years 1975–1995, we find that the level of final demand contributed more to output change during the 1975–1985 sub-period than during the following decade. Over the 1985–1995 period, an increase in intermediate requirements for inputs from the service industry is witness of the ‘tertiarization’ of the Japanese economy. When breaking down the results by separate service industries, we find that technological change explains more than 10 per cent of the output growth for industries such as Commerce, Communication & Broadcasting, and Education & Health during the 1985–1995 sub-period. With the exception of Education & Health, these industries are also those most affected by liberalization and privatization waves in the 1970s and 1980s.Asian Business & Management (2003) 2, 223–237. doi:10.1057/palgrave.abm.9200043

The remarkable pace of economic growth in rural China over the last two decades cannot be understood without reference to post-1978 policy change. However, using a newly created data set that covers a third of China's counties, this article shows that growth was path-dependent: those counties where the industrial base was well-developed at the time of Mao's death grew rapidly over the next two decades, and vice versa. The continuities in Chinese economic growth across the ‘great divide’ of 1978 should be recognized: the growth of the Dengist era bore the imprint of the Chinese past. Nevertheless, the importance of path dependency should not be overstated. The industrial legacies of the Maoist and Republican eras were not always conducive to growth, and some counties supplemented their meagre inheritance by importing labour from the Chinese interior, or by attracting capital from abroad. Furthermore, despite the positive legacies of the past, the success of Chinese rural industrialization remains in doubt.Asian Business & Management (2003) 2, 301–321. doi:10.1057/palgrave.abm.9200057

Having been relatively closed to foreign businesses for a long time, Japan is being required to make efforts toward a more open market. Pressure from the United States at the beginning of the 1990s initiated a number of reforms, but how much Japanese competition policy has developed since then is controversial. The present study aims to discuss it with particular focus on relational structures in the policy process, or ‘policy network’. The scope of collective action has been reduced as a result of economic internationalization, but the remaining business–government connection seems to have been strong enough to compen-sate for the lack of a comprehensive approach. On top of that, the Fair Trade Commission remains vulnerable to the pressure from politicians and other ministries, despite recent organizational reforms. Those relational stru-ctures are clearly reflected in the current enforcement manner of Japanese competition policy. The policy process toward the removal of holding company prohibition also exhibits the weakness of competition policy authority in the policy network.Asian Business & Management (2002) 1, 313–328. doi:10.1057/palgrave.abm.9200022

This paper examines how product diversity, international scope and group membership have affected economic performance in Japanese textile firms since the early 1990s. Through statistical approaches employing cross-sectional time-series data, the study attempts to explore the long-term effectiveness of various business models adopted by the companies. The results indicate that technology investment and related-product diversification are favorably associated with profitability, even in a mature industry, although domain commitment to textiles with the sequence of processing stages has not generated long-lasting yields. Marketing-centered entry into growing but unrelated markets has also proven unsuccessful, as has international diversification. The findings show insignificant performance effects of product diversity from increasing international expansion. The outcomes also suggest that shihon keiretsu membership seems to reduce international diversity in member firms, while not being a significant predictor of particular types of product diversity. Such keiretsu affiliation shows no direct impact on profitability, but weakly moderates the effects of export sales on performance. Main-bank relationships (yushi keiretsu) do not significantly influence a firm's financial outcomes.Asian Business & Management (2006) 5, 419-445. doi:10.1057/palgrave.abm.9200193

This paper shows the steady internationalization of R&D activities and the expansion of cross-border linkages in R&D in 22 US, European, Japanese and Korean electric-electronic multinational companies (MNCs). In contrast to previous studies that have emphasized input factors to measure the internationalization of R&D, this study focuses on output measures, namely, the roles played by overseas R&D facilities of MNCs in US patenting activities and the publication of scientific papers. Using these measures, this study demonstrates that globalization and networking of R&D activities by these MNCs have progressed both in terms of basic and industrial applications.Asian Business & Management (2006) 5, 271–298. doi:10.1057/palgrave.abm.9200166

We investigate the influence of tie strength and the mediating effect of behavioural factors on knowledge acquisition in new product development alliances in the Korean machinery and electronics industries. Tie strength on the operational level, as measured by interaction intensity and intimacy between partners' project managers, was found to enhance knowledge acquisition, whereas the depth and length of firm-level ties did not. Moreover, the influence of interaction intensity and intimacy on knowledge acquisition was mediated by communication quality and fairness, suggesting that operational-level tie strength becomes less relevant for knowledge acquisition when good communication and perceptions of fairness between alliance partners have been established. Taken together, when knowledge acquisition is the objective, behavioural factors seem to play a more prominent role than tie strength in Korean new product alliances.Asian Business & Management (2008) 7, 75-94. doi:10.1057/palgrave.abm.9200245

This paper builds on a context-dependent view of work systems diffusion within the manufacturing context across conflicting governance structures. It adopts an integrated understanding of the social constitution of work systems and appreciates the role of strategic choice, beliefs and power in the adoption of alternative work systems. The study is founded on a systematic comparative study of the ways in which alternative work systems are adopted and sustained in the UK subsidiary firms of two Japanese MNCs and concludes that there is a multiplicity of adoption processes rather than a ‘single best solution’ to organizing resources. Taking into account the complex ensembles of routines that can mould what is being communicated across national boundaries, the adoption process is displayed as an active process involving actors' decisions to accept new ideas, where the links between implementation and internalization processes are important in determining the outcome of the diffused system.Asian Business & Management (2002) 1, 353–372. doi: 10.1057/palgrave.abm.9200023

As China seriously lacks trained and experienced personnel at its current stage of development, management consultancy may be adopted as an economical solution to improve efficiency and performance. However, as institutional theory suggests, it is likely that the adoption of management consultancy in China is driven more by mimetic isomorphism factors than by actual performance considerations. Using data from a survey of 219 listed Chinese firms, our results suggest that there are significant positive effects from mimetic isomorphism factors and adoption of management accounting and controls and information and communication technology. Our study provides strong evidence that the adoption of management consultancy has a positive effect on firm performance, yet we cannot conclude that management consultancy is adopted to improve firm performance. Moreover, state ownership held by state-owned enterprises (SOEs) has a significant and positive effect on management consultancy adoption, whereas state ownership held by government agencies does not. One interpretation is that firms controlled by SOEs have acquired increased autonomy and become more innovative.

This paper considers the impact of new technologies on service hubs. While it is too simple to conclude that ‘place’ is being superseded by a ‘space of flows’ in business activity, we acknowledge that new technologies have enhanced the mobility of certain economic activities. Service hubs such as Singapore and Hong Kong, traditionally dominated by trading and decision-making functions, are increasingly drawn by new technologies into other ‘enabling’ services, and more economies are outlining development strategies predicated on utilizing new technologies to assume e-service hub roles for the global economy. This can point towards two different paths of development — to apply new technologies to expand global reach and enhance efficiency in their existing role, or, even without a background of specialist traditional services, to attract new information and communication technologies related service providers in sufficient numbers to qualify as e-hubs. It is not necessarily the case that new services must be located in established centers, nor that they need to cluster at all; hence we ask here what kind of profile e-hubs can have, whether electronic business activities will rely on established centers, and whether such centers offer any advantages in an electronically driven global economy that can justify their aspirations. It is raising relevant questions rather than claiming conclusions that this paper aims at.Asian Business & Management (2003) 2, 39–62. doi:10.1057/palgrave.abm.9200027

Since the breakdown of the bubble economy, many people have claimed the breakdown of the seniority system. However, another main pillar of Japanese-style management, long-term, or ‘lifetime’, employment, has remained almost unchanged. Since these two systems are complementary, some inconsistency must occur when one of them changes. For competitive advantage under global competition, Japanese firms must achieve a dynamic compatibility between strategy and management style, as well as ensure value creation in innovations. This new style must reflect an element of positivity from individual employees. For long-term advantage, the output of the individual must be difficult for competitors to reproduce. In this respect, firms need to develop their own in-house human resources rather than recruit personnel from the external labor market. Such a system would augment the debate on long-term or lifetime employment and answer the demerits of such employment. Where high performers are able to move to other companies, knowledge that could give rise to nonimitability cannot accumulate within a firm. Companies must therefore cultivate a new type of commitment, based on the management of developing an attitude of autonomy or positivity in employees – in other words, empowerment.Asian Business & Management (2004) 3, 221–240. doi:10.1057/palgrave.abm.9200083

This paper investigates the impact of various Chinese government policies on the competitive advantages of foreign-financed manufacturing firms in Guangdong province of southern China. The objectives of various government sector-specific policies are to lubricate the factor markets in labour, capital and products and to facilitate the operation of foreign-financed firms. However, the actual effects are often quite different: the ambiguity, complexity and inflexibility of policies impose higher transaction costs on foreign-financed firms. These disadvantages offset some economic benefits gained under the central government's preferential foreign direct investment policy and thus damages the competitive advantages of foreign-financed firms based in Guangdong. Worse still, the lack of co-ordination among various bureaux further hampers arbitration between government bureaux and foreign investors.Asian Business & Management (2002) 1, 227–247. doi:10.1057/palgrave.abm.9200013

In this paper, we highlight foreign direct investment (FDI) as a strategic move by foreign investors to exploit host country resources that are not equally available to all firms in order to create a competitive advantage. Using Taiwanese firms in China as an example, we find this resource-based FDI strategy to be most effective among large firms in mature industries. Large Taiwanese firms take advantage of market imperfections and institutional deficiencies in China to create barriers for small firms to access valuable local resources, to orchestrate a relocation of production networks that favor themselves, and to pursue vertical integration that forecloses the competition from small firms. As a result, large firms gain shares in world markets, which in turn, enable them to diversify product lines or to engage in risky R&D.Asian Business & Management (2002) 1, 79–99. doi:10.1057/sj.abm.9200002

This paper begins by describing an attempt to evaluate the contribution of the overseas affiliates of 20 European parent multinational enterprises (MNEs), based in four South-East Asian countries; Malaysia, Singapore, Brunei Darussalam and Thailand. This was done through semi-structured interviews carried out by the author in parent headquarters, regional offices and affiliated plant locations, together with state institutions in the host nations. The visits were repeated over a 2-year period from 1997 to 1999. The resource-dependency model used to structure the research focused on two characteristics of the affiliates. The first was whether the contribution of the affiliate was to high-value-added locally designed products or to low-value, low-design products. A second dimension was provided by the place held by the plant on local/global supply chains. An initial hypothesis was that distinctively different modes of organizational learning would emerge from the conjunction of nationally differentiated parent MNEs and the institutional context of the host country and would, therefore, shape the manner in which dependencies were operationalized. In practice, two factors seemed more important in shaping the business strategy and style of the affiliate. The first was the nature of the operational technology, particularly the sunk costs of local investment, and the degree to which these ‘captured’ the MNE for the national economic development strategy of the host government. The second was the political economic context of both the parent and affiliate, and the manner in which these caused the dissipation or enhancement of managerial and technical capabilities. In essence, the focus of the study shifted from one in which the MNE and host state were treated as holistic actors interacting along a single common dimension, to one in which the political incorporation and social embeddedness of the former within the context of the latter was accomplished through multiple and socially segmented networks. The question of the extent to which the MNE can act autonomously to shape either its internal or external structure might, therefore, be taken as a matter for political and ethical judgement as much as for market forces.Asian Business & Management (2002) 1, 153–187. doi:10.1057/palgrave.abm.9200012

This study attempts to model the development of business-to-business (B2B) relationships by examining the simultaneous effects of cooperation, communication, satisfaction, trust and commitment. The author builds on recent advances in B2B marketing theory and assesses the relationships between these five identified variables. Three alternative models are also considered and compared to the proposed research model. The study uses data from 184 web-based companies and their partners to examine B2B relationships models. The findings show that the proposed research model outperforms other models in terms of model-data fit indexes. Management implications of these findings and further directions for research are then offered.

Japan has often been described as a ‘network society’. Business networks are said to succeed as alternatives to markets and hierarchies by fostering cooperation and competition among members. Interpretations of existing business networks in Japan are biased toward the central state and big business, while failing to examine underlying power asymmetries, which have been masked by assumptions of ‘trusting’ relations between large firms and small. In essence, in Japan most networks are in fact hierarchies. High-technology small- and medium-sized firms that have de-linked and formed some kind of alternative (non-hierarchical) inter-firm interaction (network) type are much more innovative in terms of R&D output and new product creation than their ‘linked’ (ie to hierarchical production structures, or keiretsu) counterparts. In other words, de-linking, not firm location, is what matters. That said, there exist more independent firms in Kyoto, coupled with a sense of ‘civic entrepreneurship’. This civic-minded independent entrepreneurship dynamic leads to innovative outcomes, more so than in other regions in this study. I examine three local business networks: Kyoto's ‘Kiseiren’, Osaka's ‘TOPS Higashi Osaka’ and Tokyo's ‘O-net’. The most successful networks are enterprise-initiated and independent of state and big business. Emerging network forms are proving to be an important alternative to hierarchy in Japan.Asian Business & Management (2004) 3, 315–335. doi:10.1057/palgrave.abm.9200103

Most leading research on the relationship between human resource management systems and worker attitudes in Japan have been based on one-off surveys; research with data over the long term is sparse. Here, I analyse survey data taken at 5-year intervals from 1985, involving around 4,000 union members across Japan. I aim to clarify the effectiveness of the ‘company man’ type of worker of the early 1980s, and examine problems that have arisen through the process of transformation, especially from the mid-1990s, towards a new type of ‘autonomous’ worker. Survey analysis shows that, in Japan's post-war growth period, there were rational grounds for ‘Japanese-style management’ systems. The inevitability of the appearance of the ‘company man’ is also demonstrated from the identification of typical characteristics in employee attitudes. However, as a result of the sweeping conquest of American-style capitalist principles, from the 1990s worker attitudes have moved towards a more ‘company-independent’ model. I suggest that as a consequence a need has arisen at the micro-level for mental health care for those who have adapted poorly to the changes, and there is a need at the macro-level for policies to support workers in the shift towards a new ‘multiple commitment’ style of work.Asian Business & Management (2005) 4, 23–44. doi:10.1057/palgrave.abm.9200118

Once ‘the Labour Movement’ really was a ‘movement’, with an organisational complex, part industrial, part political and a programme for social transformation from capitalism to socialism. Today, trade unions have more modest ambitions, but the notion that industrial relations are fundamentally adversarial relations remains universal, if the reality of adversarial confrontation varies widely. Three patterns can be discerned; the Anglo-American, in which the confrontation is real and trade unions are losing the battle, the European, in which a relatively stable system of co-operation between ‘social partners’ nevertheless retains a strong sense of opposing, if balanced interests, and the Japanese pattern of fragmented firm-level co-operation based on assumptions of almost wholly shared interest. The global spread of Anglo-American business influence and cultural assumptions is more likely to transform the European than Japanese scene.Asian Business & Management (2002) 1, 9–18. doi:10.1057/sj.abm.9200004

The relationship between ownership, control, and performance has been the focus of most previous research on international joint ventures (IJVs). However, there has been little empirical and systematic study on this topic in the context of Japanese–Chinese joint ventures (JVs). Based on data collected from Japanese managers, this study reconfirms that ownership ratio is the foremost determining force for control in IJVs. At the same time, with the inclusion of additional factors that, although not necessarily having a legal basis, are important in international management of parent firms, this paper finds that interdependence in physical-process resources between parent firms and JVs and strategic monitoring by the parent firms are also significant factors for control. As for the relationship between control and performance, this paper divides IJV performance from the Japanese perspective into two kinds, export- and local-oriented, and finds that control by Japanese parents is significantly linked to the former, but not the latter, indicating that the prominence of control is contingent on the parent firm's distinct objectives at the IJV.Asian Business & Management (2003) 2, 371–391. doi:10.1057/palgrave.abm.9200061

Conventional wisdom among many economists, central bankers, financial journalists and politicians holds that Japan must implement ‘badly needed structural reforms’ (to quote from the Financial Times). ‘No recovery without structural reform’, proclaims Prime Minister Koizumi. Japan's case is also used to advance similar reforms in other countries and regions, such as Germany, where they have already become a main plank of the government's policies. Given this overwhelming consensus, it is tempting to assume that the structural reform theory has been thoroughly subjected to empirical tests and found to be clearly supported. However, such empirical examination has so far been lacking. This paper analyses the empirical record and tests the neo-classical theories on which the structural reform case rests. It comes to the surprising finding that there is no factual support for the structural reform argument. Supply-side factors were not responsible for Japan's recession. An alternative demand-side explanation, focusing on credit creation, is found supported by the evidence.Asian Business & Management (2004) 3, 7–38. doi:10.1057/palgrave.abm.9200077

This article reviews the challenges faced by four East Asian economies in the wake of the currency and financial crises of 1997–98. Perceptions and opinions of East Asian economic development moved swiftly from commendation to condemnation, revealing a simplistic response to an experience that was seen to have challenged the neo-liberal orthodoxy. As such, government–business relationships and corporate governance have received particular attention and criticism. However, recovery is now recognized to have been facilitated by reflationary Keynesian policies, rather than the draconian IMF-prescribed programmes or ‘reform’ of corporate governance. Indeed, there is growing attention to, and concern with, the consequences and appropriateness of ongoing Anglo-American inspired financial liberalization. The regional slowdown of foreign direct investment, slowness of technological progress, and changes in investment policy present considerable challenges for ASEAN economies in particular. This article concludes that while liberalization of the global financial infrastructure continues, convergence of economic arrangements is not necessarily inevitable, and indeed, that an eclectic mix of policies and institutions is not only possible, but preferable.Asian Business & Management (2003) 2, 7–38. doi:10.1057/palgrave.abm.9200026

This paper explores the internationalization and location pattern of Japanese financial service firms in East and Southeast Asia. During a period of prolonged economic problems in the Japanese domestic market and a turbulent period in Asia because of the Asian financial crisis of 1997, the situation for these service providers has changed drastically. The research question that the paper seeks to answer is: what are the spatial patterns and underlying reasons for strategic location response in Japanese financial service providers in East and Southeast Asia in the post-Asian financial crisis period? The paper puts forward a set of potential responses that these firms can pursue to strengthen their regional competitiveness.Asian Business & Management (2009) 3, 33-58. doi:10.1057/abm.2008.25

This research combines both the positioning school and the Resource-Based View models in an analysis of telecommunications firms operating in Asia-Pacific countries. From a strategic management viewpoint, it provides an analysis of the task environment as an external factor, as well as changes in resource deployment as internal factors, to these firms. Thereafter, it examines the influence of a task environment, which has experienced enormous changes resulting from market deregulation and rapid technological advancement, and resource deployment on firm performance. Our findings support the notion that changes in task environment, which correspond to a decrease in market concentration and an increase in task ambiguity lead to a lower profitability rate among firms. In addition, this study also indicates that a firm's ability to respond to changes in the task environment is reflected in changes in resource deployment. Finally, a considerable change in resource deployment is also associated with a higher level of performance. Notably, this study offers some insights on issues of heterogeneity among firms within the telecommunications industry, suggesting that they are uniquely different in term of their objectives and strategic resources.Asian Business & Management (2005) 4, 157–184. doi:10.1057/palgrave.abm.9200128

In this paper, the interactions of German Multinational Corporations (MNCs) with their socio-political stakeholders are analysed. An empirical study in two Asian countries (China and India), three European countries (France, Germany and Russia) and the US demonstrates that the operations of MNCs are influenced by several socio-political interest groups. Among them central government has the highest relevance, followed by state government. The media, industrial associations and local government are of average relevance, while the importance of non-governmental organizations and supranational organizations is relatively low. The results differ significantly between the six countries. To deal with their socio-political stakeholders and the issues raised by them, MNCs use several instruments of public affairs management. The most important instrument in China appears to be lobbying, followed by bribery; while in India, the reverse order is found. Both countries differ considerably from other countries in the study, where codes of conduct, public relations and sponsorship are much more important, and bribery is insignificant.Asian Business & Management (2004) 3, 299–313. doi:10.1057/palgrave.abm.9200096

The purpose of this paper is to empirically investigate how ownership-specific, location-specific, internalization and strategic advantages have influenced the location strategies of Finnish firms in 10 South and Southeast Asian countries from 1980 to 2000. Despite the increased interest in foreign direct investments (FDIs), very few studies have been undertaken to empirically analyse influential ownership-specific, location-specific and internalization (OLI) variables together with strategic advantages in order to assess FDI decision-making among foreign investors. To the best of our knowledge, strategic motives particularly have remained primarily anecdotal. This paper is apparently the first attempt to analyse how the above OLI advantages have influenced Finnish manufacturing firms in Asian countries. The research results indicate that large parent firm size, large international experience, large market size in the target country, low cultural distance and low wage rates increase the probability of market-seeking and efficiency-seeking FDIs. It has also been found that low levels of inflation, low levels of risk and a high level of exchange rate fluctuation in the target country increase the probability of risk-reduction seeking FDIs. Finally, the results show that high R&D intensity in the parent firm increases the probability of knowledge-seeking FDIs in Asian countries.Asian Business & Management (2005) 4, 293–313. doi:10.1057/palgrave.abm.9200133

This article reviews recent major changes of management practices among Asian companies and analyzes trends of development. The 1997 financial crisis, combined with the ‘Information Revolution’ and globalization, brought unprecedented pressures on traditional Asian companies to change. Japanese keiretsu, Korean chaebol, ethnic Chinese family businesses and even China's state-owned enterprises have begun to transform themselves, though the pace of such transformation varies from country to country. One Western concept of management that has uniformly received attention from these Asian management systems is that of shareholder value, as most Asian companies previously cared much less about building up shareholder value than increasing market share and pursuing rapid growth. Asian business practices are Asian companies' reaction to a relatively unique business environment in Asia. Without that environment being fundamentally changed or modernized, it would be unthinkable for Asian companies to completely transform themselves from what they have been. Nor is it necessary for them to completely shed their traditions. Their practices led to growth in the past and in some situations could continue to permit short-term growth.

In this paper, we explore how neo-liberal economic reforms after the 1997 Asian economic crisis significantly restructured the institutional nexus of the East Asian political economy and its economic governance framework in the attempt to restore competitiveness and ensure economic development. Neo-liberal economic reform programs do not simply promote market-oriented policies, but significantly recast how East Asian economic governance should be managed and coordinated. We argue that recasting economic governance requires institutional shift in the framework within which economic transactions occur and in the nexus within which the framework emerges and functions. For this, East Asian states must replace directive and interventionist roles with facilitative and regulatory market reform measures, while the private sector minimizes rent-seeking behavior and monopolistic market power by adopting global standards of liberal capitalism.Asian Business & Management (2004) 3, 281–297. doi:10.1057/palgrave.abm.9200097

The role of Japan in the East Asian political economy has been to gradually reintegrate the region by deploying a range of economic means. Although at the time of the East Asian crisis some commentators saw the fragmentation of the region as a likely outcome, the intervening years have rather demonstrated that the greater integration of the region has been the result. Japan has played a crucial leadership role in promoting regional integration. In the wake of the crisis, this has been manifest as both short- and longer-term responses, with the Japanese government offering immediate financial support to the affected economies, as well as technical and other assistance on softer conditionalities than the International Monetary Fund. Over the longer term, Japan has put forward policies to promote the internationalization of the yen, seeking to increase its use for regional trade. It has also moved away from a sole commitment to ‘open regionalism’ by holding negotiations on Free Trade Agreements with South Korea, Singapore and other countries. The article concludes that, although Japan has indeed played a crucial leadership role in promoting regional integration, the continuing importance of relations with the United States and Europe means a regional ‘bloc’ is unlikely to emerge in the foreseeable future.Asian Business & Management (2002) 1, 19–37. doi:10.1057/sj.abm.9200003

In China, following the growing number of scandals in recent decades, the statutory auditor's role and tasks have been questioned. This paper deals with the evolution of statutory audit in China, which aims to define high standards of auditing in order to protect the public interest. In this article, we discuss the current conditions for statutory audit in China to clarify who may be recognized as a qualified professional, specify the scope of relationships with clients and determine the manner in which professional discipline is maintained. Furthermore, we clarify the content of the statutory audit mission in China as defined by new standards of auditing. Where meaningful, we contrast the Chinese audit system with systems in industrialized countries, such as France and the United Kingdom, and note significant differences between China and those countries in a legal framework and professional standards. Although the context of the globalization of financial markets means ongoing reforms tend to bring statutory audit systems closer, specific features yet remain to be characterized.Asian Business & Management (2003) 2, 267–280. doi:10.1057/palgrave.abm.9200045

The study of the cross-country transferability of organizational forms and practices is assuming ongoing interest for both the learned scholar and the multinational enterprise. It is argued that while extant research — mainly the enormous body of Japanization literature — has made important contributions to understanding the conditions of transferability of organizational forms and practices, it has largely neglected non-Japanese transfer origins as well as non-Western (mostly South Asian) transfer destinations and not extensively explored the institutional embeddedness of transfer and adaptation. This study seeks to make a contribution to filling this gap by focusing on the transfer of shop-floor-related work concepts and work roles within the intercultural context of a German automobile multinational in India. The paper combines a micro-macro-level analysis and shows that an institutional perspective is instrumental to understanding the transfer, intercultural friction and organizational hybridization on the micro-level.Asian Business & Management (2005) 4, 365–387. doi:10.1057/palgrave.abm.9200139

While there has been much discussion of the negative effects of crony capitalism, there has been little analysis of their precise nature. It is widely agreed that crony capitalism generates significant economic rents, which result in a misallocation of resources and lower incentives for wealth creation. In addition, the corruption that accompanies cronyism constitutes a considerable impediment to growth and development. This paper provides an analysis of the likely costs of cronyism and categorises them into four principal groups: allocative inefficiencies; dynamic inefficiencies; corruption and transaction costs; and problems of social and political stability. The analysis suggests that the most damaging aspect of crony capitalism is its tendency to discourage restructuring and adjustment at a time when such traits are central to economic success. The various linkages between the cost components are also explored. Examination of the claimed benefits of crony capitalism shows that they are more than offset by the negative effects.Asian Business & Management (2005) 4, 117–132. doi:10.1057/palgrave.abm.9200126

International differences in the balance between internal, collaborative and external technology acquisition of firms have been under intensive discussion during the last two decades. A survey of 16 leading semiconductor and pharmaceutical firms from Germany and Japan, based on data concerning the structure of R&D expenditures, a questionnaire survey and interviews with R&D department heads, reveals considerable differences between the two countries. Moreover, they are rooted in country-specific institutional surroundings which result in different motives of German and Japanese R&D managers for conducting internal, collaborative or external technology acquisition. This indicates the necessity of careful consideration of the institutional environment in which firms operate when analyzing and evaluating their strategies.Asian Business & Management (2003) 2, 393–415. doi:10.1057/palgrave.abm.9200060

In 1991, India liberalized its regulatory market system, the ‘License Raj’, and opened up to global competition. This eliminated the chronic supply gap characterizing the Indian market and introduced efficiency, quality and innovation to a competitiveness previously based on political ‘connectivity’. However, the largely nationalized banking sector has been unable to change in tune with the market environment. Pre-liberalization, banks mainly served as a credit distribution infrastructure, since investment approval was in government hands. Liberalization shifted this responsibility to banks; but lacking the infrastructure, professionals and tools to analyse market developments, to manage market risk, they paradoxically rely on consultants with reliable reputations. This paper explores two issues. Firstly, it shows that market liberalization requires an infrastructure of professional business services to analyse the market forces unleashed and to equip market parties with appropriate tools. Indian banks have so far failed to change from ‘credit administrators’ into market analysts. Secondly, the paper discusses the implications of this failure for other professional business services and industry generally. The banks' inability to distinguish between sophisticated business plans and frauds corrupts the market for business consultancy, while lending unguided by market analysis facilitates cut-throat competition in a saturated market.Asian Business & Management (2003) 2, 239–266. doi:10.1057/palgrave.abm.9200044

The management of inter-firm networks is of paramount importance in the study of company performance. In this paper, we attempt to provide a better understanding of how the competencies of firms in an emerging market may be strengthened through the assiduous manipulation of network relationships. Using research data on 52 firms in the bicycle industry of Taiwan, we explore whether involvement in strategic network organizations can be a valuable aid to competitiveness. In particular, we find that company performance benefits from strong network functions in the technology and marketing made available by such inter-firm relationships. Our findings confirm that those producers with more collaborations with other firms within their industry perform better than otherwise comparable firms with fewer cooperative activities. Consistent with our argument within the supplier–buyer relationship in the industry, our statistical analyses also suggest that suppliers retain a more proactive strategic behaviour in managing business networks than buyers.Asian Business & Management (2005) 4, 67–91. doi:10.1057/palgrave.abm.9200119

In the 1980s and early 1990s, major US government studies and popular press reports argued that Japanese firms were about to take the lead in the biotechnology industry, following a pattern established in the semiconductor and other industries where large Japanese firms had led the way in commercializing radically new technologies such as the transistor. The Japanese model included coordination by the Ministry of International Trade and Industry (MITI) or, occasionally, other ministries. New technology was often developed by government-subsidized research cooperatives made up of leading firms. Large firms commercialized the new technology, supported by financing from keiretsu banks and the development of complementary technologies by partner firms. If start-up firms in the US or elsewhere developed relevant technologies, the Japanese bought them. It soon became clear, however, that the US model, linking universities, venture capital-backed start-ups, and large firms, was outperforming the Japanese model in biotechnology. The Japanese undertook reforms to make their system more like that of the US. This paper describes these changes and makes a preliminary assessment of their success.Asian Business & Management (2004) 3, 459–478. doi:10.1057/palgrave.abm.9200104

This paper looks at one of the more favoured reforms of top management reforms in the late 1990s, the executive officer system, and investigates both the causes and effects of its introduction. With typical boards of directors facing problems in terms of both the quality of decision-making and the effectiveness of monitoring, high expectations were placed on this system, which separates management and execution. The initial impetus for reform, as will be seen, came about from a drop in business performance and from over-sized boards, but as the system spread, its effectiveness declined. I have been unable to confirm any positive influence on business performance arising from the introduction of the executive officer system. It is therefore suggested that a more helpful approach might be to employ the system in business groups characterized by diversity in their business structure and by the pressures of a high capital market. Furthermore, in investigating whether actual management methods may be a reason for the unsatisfactory results, it appears that, despite claims for the separation of management and execution, high levels of concurrent holding of positions between directors and executive officers indicate that this has not in fact occurred.Asian Business & Management (2004) 3, 173–199. doi:10.1057/palgrave.abm.9200085

The social embeddedness of the guest multinational enterprise (MNE) is presented as a multi-layered series of interfaces between expatriate managers and agencies and actors within the host state. In contrast to the unilinear and intentional development of strategic relations between the parties described in much of the literature on international business, the author seeks to demonstrate that relations are segmented by a diversity of micro- and macro-social and political considerations. Not least among these are differences of life chances among ethnic groups in the host country and by careers within the guest MNE. The study that provides the basis for these observations is presented as a ‘high-context’ deep description of roles and actors within the head offices of 20 European MNEs and within their affiliates located in Brunei Darassalam, Singapore, Malaysia and Thailand.Asian Business & Management (2005) 4, 389–409. doi:10.1057/palgrave.abm.9200143

This paper makes use of data extracted from the management questionnaire in the 1998 Workplace and Employee Relations Survey to examine the prevalence of ‘Japanese’ management policies and practices in workplaces in the manufacturing sector in Britain and to analyse the extent to which the likelihood that these policies and practices are present may be explained by the ownership of the workplace. The investigation finds that wholly owned British manufacturing plants do adopt ‘Japanese’ management policies and practices, although not to the same extent as those workplaces that are partially or wholly overseas-owned. There is evidence that the likelihood of some of these policies and practices being present at the workplace increases with overseas ownership of the workplace.Asian Business & Management (2004) 3, 39–56. doi:10.1057/palgrave.abm.9200069

Ever-intensifying global competition requires organizations to meet potentially contradictory requirements: cost-efficiency through restructuring and increased organizational competitiveness through high commitment. Despite its high necessity, obtaining full commitment from managers is becoming increasingly difficult. This paper investigates whether the organizational commitment of British managers in Japanese-owned plants in the UK and Japanese managers in counterpart plants in Japan can be attributed to either management techniques, culture, or enterprise/task structures constructed to fit the employment system in each country.Asian Business & Management (2005) 4, 251–270. doi:10.1057/palgrave.abm.9200131

Japanese General Trading Companies (GTCs) have faced significant changes in their business environment, with more open markets and more internationally experienced trading partners. We investigate here some of the specific contractual changes that the firms have made in order to respond to, and more importantly take advantage of, the changed environment. The literature in economics, organization theory and political science has paid insufficient attention to the effects of change on the nature of business relationships. Firms are usually modelled as able to change very quickly, or alternatively—and sometimes simultaneously—incapable of adjusting to new environments. GTCs can use the change to craft new relationships and, however imperfectly, adjust to the new environment. Their accumulated relation-specific information is the source of flexibility. Using information from two sets of interviews of trading company managers, we show that seemingly out-of-date relationships can have embedded in them information-based resources that allow these institutions to take advantage of new situations. Newly developed and more open markets can paradoxically lead to new and even more complex trading company relationships. Markets and hierarchies are not always substitutes. Trading firms use their ‘out-of-date’ relationship and information resources in the new environment as well.Asian Business & Management (2004) 3, 417–434. doi:10.1057/palgrave.abm.9200107

This paper examines two dominant paths to national political office in order to assess the degree of changes in Japanese politics. Ex-bureaucrats in political office (seikai tenshin) and hereditary politicians (seshu giin) make up a high percentage of prime ministers, cabinet members, and holders of elected positions in the Lower House of the Diet as well as in the Liberal Democratic Party. The percentage of seikai tenshin politicians has remained relatively stable, while that of seshu giin rose dramatically, pointing toward a narrowing of channels to high political office. Although it is well known that seshu giin represents a form of personalistic politics, it is less well known that over 60 per cent of cabinet members and almost 60 per cent of LDP Lower House members came through one of these two channels at the 2003 election. We maintain that the rise of seshu giin is related to koenkai, while hereditary politicians represent a bridging channel between local interests and the central government. This channel serves to illustrate the permeability of Japan's civil society and its state.Asian Business & Management (2004) 3, 395–416. doi:10.1057/palgrave.abm.9200106

The 1990s have been branded `Japan's Lost Decade' — a period of missed opportunities for Japanese policy-makers and corporate leaders. It was also a difficult time for Japanese business studies — as a field we missed significant opportunities to examine systematically the many critiques of the Japanese business system, and to develop a research agenda that would provide general insights into change processes in business systems. This paper proposes evolutionary theory as one vehicle for understanding and assessing the basic assumptions of many of the critiques of Japan's business system produced over the last decade. It suggests that the concepts of variation, selection and retention can provide fruitful guides to research topics, and proposes that the field of Japanese business studies should work to re-establish Japan's longstanding role as a `critical case' in social science.Asian Business & Management (2006) 5, 167–185. doi:10.1057/palgrave.abm.9200176

Differing national institutional environments are considered to have fostered the development of distinctive national business systems. These business systems have an impact upon the way in which companies from different countries operate their international ventures. Based upon data from case studies conducted in Japan, Korea and China, this paper compares and contrasts the impact of national business systems on Japanese and Korean multinationals' operations in China's electronics sector. The main focus is upon differences in the extent of integration of these two countries' multinational companies into the Chinese economy. Our research indicates that the different business forms of Japanese and Korean firms in their home context affect the way firms from these countries internationalize. We demonstrate that although ventures from both Japan and Korea operate in an economy largely parallel to rather than integrated with indigenous firms, the degree of separation is particularly marked for Japanese enterprises. Korean firms develop more linkages with Chinese suppliers and customers. We explore the reasons for this and some of the consequences and implications both for the businesses themselves and for the development of the electronics sector in China. We suggest, for instance, that the Japanese business system, which works well in the parent country, is less well adapted when transported overseas, whereas the Korean form throws up unexpected advantages.Asian Business & Management (2003) 2, 347–369. doi:10.1057/palgrave.abm.9200059

Despite China's comprehensive system of environmental laws and standards, poor water quality is widespread. This has significant detrimental effects on Chinese society and business, and causes serious economic losses. Academic commentary on this issue has largely focused on increasing the effectiveness of government enforcement of laws related to water pollution. However, effective enforcement will depend on legal and institutional reform, and problems are unlikely to be solved quickly. As a result, it is necessary to look beyond the state. This paper argues that some businesses, here termed `influencing firms', have significant capacity to influence other businesses (`target firms') to improve China's environmental situation. This paper brings together recent empirical research, documented case studies, and public corporate reports to demonstrate how and why influential firms can and should use their influence for environmental good in this context. Four key tools are suggested for influencing firms to encourage improved environmental management in target firms: (1) green supply chain management measures; (2) influencing through business groups; (3) publishing environmental performance reports; and (4) forming alliances with environmental groups.Asian Business & Management (2008) 7, 489-509. doi:10.1057/abm.2008.21

Eradicating poverty is a fundamental development challenge. Can micro-credit programmes be effective in poverty alleviation? This case study focuses on a replication of the Grameen Bank Approach (GBA) in Malaysia. It reviews access to capital in rural Malaysia, and examines Amanah Ikhtiar Malaysia's membership requirements, types of loan offered, and administration; how rural women use their loans; the major characteristics of the businesses; and the motivation to set up small businesses. The objective is to identify whether providing start-up loans for small businesses in rural areas can be effective in achieving the Malaysian Government's long-term objectives. Similarities between Amanah Ikhtiar Malaysia and the Grameen Bank are discussed. Suggestions are made to enhance small-business development in rural areas.Asian Business & Management (2005) 4, 455–479. doi:10.1057/palgrave.abm.9200140

From the 1990s, Japan developed a severe economic malaise affecting many of its large companies, and an important question hung over the feasibility of their recovery. Resultant processes such as overseas expansion, restructuring, revised contractual systems, and outsourcing hit dealt severe blows to small and medium-sized companies (SMEs) hard. However, as SMEs were already in existence, and developed an ability to optimize their use of their workforce, they can be said to have fared better than other parts of the economy. In manufacturing, transport, commerce, and services, managerial approaches in SMEs have ameliorated an impending crisis and developed new strengths in technical areas, often by re-employing workers and resources cast off in the restructuring processes of large companies. Thus, by means such as effectively using flexible labour, applying a range of options in contracts and modes of employment, developing new products, introducing new techniques alongside existing ones and outsourcing, SMEs have emerged as distinctive entities in their own right, even alongside large companies.Asian Business & Management (2006) 5, 529-558. doi:10.1057/palgrave.abm.9200202

To explain Korean business groups' rapid success despite their late entry in China, this paper uses the concept of `project execution capability' of diversified business groups, which has led to another strategic capability of `vertical integration' (VI) among affiliates. It examines Samsung's electronics businesses in China as an excellent case of resource sharing and coordination among affiliates in the execution of a project despite late entry into a new market. The paper finds that the VI network was first created in the early 1970s in Korea and has since been replicated elsewhere, such as Mexico, Malaysia and, most recently, China. The VI network has three tiers - Samsung Electronics at the top as final assembler, Samsung Electro-Mechanics and Samsung SDI in the middle and Samsung Corning at the bottom. In the rapidly changing display market, Samsung's stable component sourcing among affiliates has been critical in developing new products at lower costs to meet changing market needs. This case shows that business groups, rather than simply losing advantages with the maturing of market mechanisms, can upgrade capabilities.

Corporate finance theory holds that the cost of equity is the required rate of return of shareholders, and this important concept forms the basis of all decision-making. However, it has been frequently asserted that Japanese companies suppose equity cost to be mere out-of-pocket financing costs. In 1996 we sent a questionnaire to 3000 listed Japanese companies, and, from the findings of this survey, we present here evidence of how Japanese companies perceive the cost of capital, and whether or not these perceptions impact on financial decision-making. We found that the majority of Japanese companies regard equity cost not as the required rate of return to shareholders, but simply as dividends paid. Moreover, we found that this difference was not just one of terminology, but influenced all aspects of financial decision-making. As this survey was conducted in 1996, and since then there have been dramatic changes in the economic climate and system, there may also have been some shift in managerial awareness of Japanese companies; yet it would seem that even today the same tendency persists in Japanese companies, in comparison with Western countries.Asian Business & Management (2004) 3, 263–276. doi:10.1057/palgrave.abm.9200089

Japanese-style management has long been characterized by its ‘lifetime seniority-based employment’ system, based on a collective and long-term philosophy of human resource management, and its enterprise labour unions; its ethics and efficacy have come under frequent discussion.However, the end of the high-growth period and the resultant collapse of the bubble economy have introduced new trends affecting ‘business organization and the individual’ in Japan. A flexible individualistic management system better suited to short- and medium-term fluctuations is being sought. Major banks and trading companies have particularly seen the need to adapt, with unprecedented restructuring leading to corporate division and the introduction of holding companies.Against this background has developed a personnel system in which the individual's independent and autonomous career development is put in the context of watchwords such as ‘will and capacity’, ‘freedom and self-responsibility’ and ‘self-development’. This represents a significant challenge to the traditional views and attitudes of Japanese-style management, and while we cannot estimate the final impact of this new trend, we must at least acknowledge its contemporary emergence.Taking major banks as its core example, this paper seeks to introduce the structure and features of this flexible individual-oriented management system, and to update international perceptions concerning Japanese-style management.Asian Business & Management (2003) 2, 111–141. doi:10.1057/palgrave.abm.9200029