The future of industry and innovation in Asia: firms, networks, institutions and corporate governance

Citation

Fruin, M. (2012), "The future of industry and innovation in Asia: firms, networks, institutions and corporate governance", Journal of Asia Business Studies, Vol. 6 No. 2. https://doi.org/10.1108/jabs.2012.51606baa.001

The future of industry and innovation in Asia: firms, networks, institutions and corporate governance

Article Type: Guest editorial From: Journal of Asia Business Studies, Volume 6, Issue 2

Asian firms and industries power the world economy, with three of the largest, most rapidly changing economies and six of the ten most populous countries located in Asia. Yet, with a possible exception of Japan, we know surprisingly little about Asia’s firms and industries. A group of leading scholars was convened at Stanford University on July 8-9, 2010 to try and remedy the situation, holding a conference on the Future of Industry and Innovation in Asia, co-sponsored by the Pacific Roundtable on Industry, Society and Management, Stanford University’s Center for South Asia Studies, and San Jose State University’s Lucas Graduate School of Business.

The conference focused on firms, networks, and other forms of complex organization within a global context – three national settings, China, India, and Japan, and Silicon Valley. Complex organizations include combinations of firms that compete within and across industries, such as business groups, inter-firm networks and multi-firm coalitions that differ from stand-alone firms legally, organizationally and managerially.

The future of industry and innovation in Asia are important for several reasons:

1. 1.

   Economic size and growth matter. Bigness can be a deficit, if sufficient resources to sustain growth are unavailable. However, market size is generally considered the limit to organizational growth and, given on-going globalization, the world is increasingly a single, integrated market. Asia’s growth in population, economic activity, and income results in huge market opportunities, implying that the future of industry and innovation will be centered in Asia.

2. 2.

   Different systems of competition, organization and management are emerging in Asia and, as they do, they will have global consequences. Until now, our theories of competition, markets and firms are decidedly regional and hemispherical, based as they are on what happened in Western Europe and North American during the nineteenth and twentieth centuries.

3. 3.

   This is not to say that existing theories are incorrect, only limited. For example and by contrast, Asia’s leading firms appear to be neither adopting the organization forms considered “modern” by Alfred Chandler, the leading chronicler of twentieth century America firms, nor following many of the practices and policies considered “normative” in the West. Asia’s new systems of competition, organization and management need to be identified, described, classified and analyzed.

4. 4.

   Institutions matter, in many ways and for many reasons. Firm and industry variations always occur within institutional frameworks. Asia’s wide-ranging industry and organizational variations – in behavior, structure, social roles, community responsibilities, corporate and government relationships – need to be understood not only in light of rapid economic, social, political and technical change but also in full view of the powerful coercive and imitative effects of institutions and institutional frameworks.

5. 5.

   Evolution works everywhere and at many levels simultaneously. Rapid economic advance plus organizational variation, ongoing scientific and technology development mean that Asia’s economies are experiencing speeded up processes of variation, selection, and adaptation within institutionally rich and varied environments. From an evolutionary perspective, only very fit firms and industries can adapt and prosper under such volatile circumstances.Variety in institutions, organizations, policies and technologies, as found in Asia, promote and accelerate innovation, triggering and intensifying selection forces and change. In the West, except for some Silicon Valley firms and industries, variety is less evident and innovation more constrained.

Themes and directions

The conference focused on country-level, non-cultural differences in a global economy. Cultural differences may be important, but they represent second-order effects for the conference’s purposes as compared with economic and institutional differences, colonial and post-colonial influences in terms of business policies, institutional and organizational models, timing differences with respect to technology catch-up and industry life-cycles, and varying country-level postures and policies with regard to the convergence of economic, environmental and political issues.

Special issue papers

Based on conference presentations, six papers were selected for the JABS special issue. Two of the papers argue that Asia is very different from the west in many important ways. In the first of these, W. Mark Fruin and Masao Nakamura illustrate in great detail how the initial conditions of economic development in Japan and the US differed and that their evolutionary pathways differed enormously as well. Hence, arguments and generalizations based on the experiences of the US may have little relevance for understanding Japan’s and probably the rest of Asia’s experiences.

The second paper argues that Asia is not a mere follower of the West. Indeed, Leonard Lynn, Pamela Meil and Hal Salzman aver that the cutting edge of globalization – what they call third-generation globalization – is found in Asia. Technology is advancing rapidly but nowhere more rapidly than in China and India. The west is playing catch-up to Asia’s globalization.

The next set of four papers focus on issues of governance, institutions, and innovation in Asia. Masao Nakamura and W. Mark Fruin’s paper reviews the literature on management and organization in Japan with particular reference to its relevance for China and emerging Asia. Robert Eberhart’s paper shows that Japan’s firms continue to innovate in the realm of corporate governance, based on Western experience, and that such innovations continue to raise share values and, thus, corporate value in the eyes of shareholders.

Continuing with the third generation globalization theme, Runhui Lin, Hongjuan Zhang, Jianhong Fan, and Ruijing Hou’s paper on the mobile communications industry in China argues that China is not a mere follower, or even a fast-follower, of western developments. Instead, China is innovating in the realm of technical standards and in the organizational and managerial practices needed to sustain such innovations. China’s internal standards carry global implications, as a result. Rafiq Dossani continues in this vein by outlining the nature of private equity markets in India and showing not only their importance to new firm formation and evolution but also how they operate differently yet consistently within an Indian context.

Conference organizers and presenters

• •

  Dr Mark Fruin, Global Strategy, Lucas Graduate School of Business, San Jose State University, Co-Founder, Pacific Roundtable on Industry, Society and Management.

• •

  Dr Rafiq Dossani, Director, Center for South Asia Studies, Stanford University.

Conference participants

• •

  Dr Marie Achordoguy, Professor of Political Science, University of Washington

• •

  Dr Robert Eberhardt, Asia Pacific Research Center, Stanford University

• •

  Dr Anthony D’Costa, Professor of Indian Studies and Research Director, Asia Research Centre, Copenhagen Business School

• •

  Dr Xudong Gao, School of Business, Tsinghwa University, China

• •

  Dr Martin Kenney, Community and Regional Development Studies, University of California, Davis.

• •

  Dr Richard Langlois, Organizational Economics, University of Connecticut.

• •

  Dr Weian Li, Dean, School of International Business, Nankai University, China

• •

  Dr Chaisung Lim, Miller School of Innovation and Technology Studies, Konkuk University, Korea

• •

  Dr Runhui Lin, School of International Business, Nankai University, China

• •

  Dr Gregory Linden, Economics, University of California Berkeley

• •

  Dr Leonard Lynn, Weatherhead School of Management, Case Western Reserve University

• •

  Dr Masao Nakamura, Institute of Asian Research and Sauder School of Business, University of British Columbia

• •

  Dr Xiaohung Iris Quan, Organization and Management, College of Business, San Jose State University

• •

  Dr Thomas Roehl, Economist, School of Business, Western Washington University

• •

  Dr Tim Sturgeon, Sloan School of Business, Massachusetts Institute of Technology

• •

  Dr Kazuhiro Taniguchi, School of Business Administration and Commerce, Keio University, Japan

• •

  Dr Chunlei Wang, Organization and Management, College of Business, San Jose State University

• •

  Dr Eleanor Westney, Schulich School of Business, York University, Canada.

• •

  Dr Robert Wood, Strategy, College of Business, San Jose State University

• •

  Dr Xiaohua Yang, School of Business, University of San Francisco

Mark Fruin