Asian Business and Management

Theory, Practice and Perspectives

Harukiyo Hasegawa, Michael A. Witt

• Publisher: Bloomsbury Academic
• Year: 2019
• Print ISBN:
  9781352007428
• Edition: 3
• eBook ISBN:
  9781350305144
• Topic: Business
• Subtopic: International Business
• Index: Business

The third edition of this core textbook, edited and contributed to by recognised international authorities on the subject, outlines the critical contextual and theoretical issues of business and management in Asia and offers a fresh, topical analysis of management in the major Asian nations. Featuring an accessible two-part structure and updated with the latest research, the book will enable students to assess Asian management systems and the strategies adopted by corporations and governments. The text's thought-provoking teaching and learning tools guide students through a number of the key topics in the field, including globalization, regionalism, corporate social responsibility, ethics, ecological issues, industrial relations and sustainability. This is an ideal textbook for upper-level undergraduates and MBA students studying modules in Asian Business and Management. In addition, it is an essential text for managers and executives seeking a more realistic understanding of business and management in Asia as an evolving adaptive system.

PART

1

ASIAN BUSINESS SYSTEMS: MAJOR ISSUES

THE IDEA OF A BUSINESS SYSTEM

1

Gordon Redding

Chapter Outline

1.Foundations

2.How business systems work

3.The realm of meaning

4.The contributions of history

5.The realm of order

6.The realm of coordination

7.Using the business system model

8.Conclusion

Chapter Objectives

After reading this chapter, you should have an understanding of:

1.The general notion of a business system

2.How business systems consist of elements of meaning, order, and coordination, and how historical and other forces shape them

3.How to apply the business system model

Foundations

This chapter presents a framework into which much of the content of the rest of the book can be placed. It is based in a general field of study known as comparative institutional analysis, and uses the idea of complex adaptive systems that evolve and adapt to a changing business world. It is designed to break down the analysis of something highly complex into components that fit together and make sense as a total. Understanding business systems in this way helps to understand complex environments and lets us avoid the use of simplistic responses to complex issues.

International business is by definition conducted across the boundaries of societies. Such boundaries are significant in shaping what “goes on” inside countries, including culture, history, politics, and traditions. What “goes on” includes the way business is done, and this is not the same everywhere except on the surface. Although there are many aspects of doing business that stretch across such boundaries, like bills of lading, trading regulations, or some accounting standards, many aspects do not travel. It is the job of anyone doing international business to come to terms with these local ways of doing things in the countries involved in any transaction. This is especially important for anyone responsible for managing business internationally.

The matter is not simple. Societies are complex, and coming to terms with the differences encountered so that operations and collaboration can run smoothly requires both study and practical experience.

Such study can be done in two ways. The simple way is to learn a set of “how-to-do-it” guidelines and follow them. The more effective way is to learn why the differences exist. This then allows a better understanding of whether the systems are changeable, in what way, how to negotiate with the contrasts in mind, and what other differences might be in the background and could possibly emerge to make things more complicated. An important general rule in securing good relations is to try to understand the other person, and see things from that alternative perspective as well as your own. This is how fertile collaboration is built. The idea of a business system is a means of accessing the complexities attached to international business, and of opening up the question of why things are different elsewhere, in preparation for deciding what to do.

To understand such an idea, we begin with its origin in the branch of social science that looks at societies comparatively and studies their complexity. This involves taking ideas from different disciplines, among which the main ones are sociology, anthropology, geography, political science, organization theory, and international business. The main way in which I draw from these disciplines, and integrate aspects of them, is through the comparative study of “business systems, alternatively known as “varieties of capitalism.” This allows for concentration on how any society tends to foster within it a certain formula – or sometimes, several formulas – for organizing its economic behavior. It also allows for the study of what that implies for the conduct of business by that form of organization or by outside organizations dealing with it.

In studying such matters, it is useful to draw on a central idea – in other words, a general theory. This general theory is built around the idea of a complex adaptive system. Out of this grow a number of important general principles that help understand how all such systems work, which are as follows:

1.A society may be seen as a complex adaptive system within which parts can be identified and described in ways that allow for comparison with their equivalents in other similar systems, that is, other societies.

2.The system works as a total set of forces in constant interaction so that explaining one activity or structure will need to take account of multiple elements that help to explain that component.

3.The interaction between the elements in the system runs both ways, so that component A will affect component B and vice versa, leading to coevolution. For example, historically novel ways of accessing capital coevolved with new ways of using capital to produce the joint stock company as organizational form. Such new forms can then act as catalysts for further change.

4.Because of this coevolving, there is an overall process of usually slow change as the total system adjusts its processes and structures.

5.The evolution of the total system is also affected by influences from outside the society, which co-determine what is happening.

6.Influences that may change the system can be of two main kinds, material and ideational. Material influences are such things as a change in price levels, or a newly invented technology, or a rise in the cost of labor. Ideational influences are such things as changes in values (egalitarianism, democracy, pop culture, or – negatively – totalitarianism, corruption). Influences such as these can be internal or imported. So too are the basic “laws” of politics, economics, and competition always at work in shaping business action.

7.The facts of history that are distinct to each society will usually include periods of crucial re-thinking that have shaped the society at critical stages, such as the Meiji Restoration in Japan, the Cultural Revolution in China, or the Lutheran Reformation in Europe. We call these critical junctures “key historical events.”

8.It is possible to separate the components of the business system into layers of influence, so as to provide a framework for explaining the evolution of its current form. This will be explained in more detail shortly.

9.Comparing business systems requires observing them as totals. Extracting individual components for comparison with their equivalents elsewhere without acknowledging the influences on any component of its own societal context means missing a crucial part of the picture.

10.When explaining a total business system, it is valuable to bring into account all the sources of influence on its present nature, both internal and external. It is then possible to make a properly informed judgment about how it might evolve and why. Such an explanation may be detailed, but will realistically pay respect to the complexity of what is being analyzed. At the same time, it is often possible to identify a limited set of primary influences and trends.

How business systems work

Because business systems are constantly adaptive but usually remain intact and coherent within their societal boundaries, it makes sense to see them as living objects, evolving through time. To understand this historical process – whether short or long term – it is useful to think in terms of a process of evolution inside that brings together a given set of forces. In simple terms, all societies are forms of social togetherness that intend to allow people to live in a degree of harmony, comfort, and safety. Some societies evolve in ways that produce greater average comfort for their members, and other societies may then want to emulate that. So the world is full of contrasts in levels of “development.” Awareness of the differences means that “progress” becomes a matter of interest for many people and of motivation for many governments.

There are many philosophical debating points surrounding the question of societal development in the wider literatures, a few examples of which are listed as references. For the purposes of this chapter, we present a simplified view of progress. Societies will – subject to their ideals – normally attempt to improve the lives of their people. This means that they will seek means of ensuring enough food, safety, and comfort to stay viable as societies, and will normally do so in improved ways if they can. As societies continue to grow, they tend to encounter certain stages in progress, and most will adjust to move past those stages into a new mode. Each stage involves new ways of putting together the components needed for collective living. This leads to changes in how living is organized. The names given to the main historical phases in social development are the Agricultural Revolution, Urbanization, the Industrial Revolution, and today the ongoing Information Revolution.

In these adjustments two large influences shape the responses. One is how Cooperativeness comes to be shaped and possibly re-shaped. The other is how Innovativeness comes to be handled. The responses vary greatly, as does the level of success. Affecting the attendant experimentation (which might last for thousands of years) are the ideals within a society that influence the rules of conduct. The processes of such evolution do not need to be orchestrated by a central authority but may simply accumulate from the sense-making of people at large. The point here is that societies are usually evolving to make people’s lives better, and that leads us to see most (but not all) societal systems as containing a logic of progression as well as a basic structure of simple existence.

So what is this logic of progression? It has three main features, all coevolving:

1.A base layer of “meaning” that contains the society’s ideas about how life should be lived. These often have an origin in religion.

2.A layer of “order” that contains the forms adopted by the society to interpret the meanings and have them acted out in ways that become predictable and stable. These are known as “institutions” or “rules of the game.” The most obvious one is a system of law.

3.A set of ways for “coordination” in the economy that permits people to come together in structures such as firms that are stable ways of combining resources, workers, and users.

Over time the system of meanings helps to shape the system of order. Together they help to shape the system of coordination. And as earlier noted, the system of order and the system of meaning may themselves adjust in response to how things are evolving as a total. It is a living total system.

Figure 1.1 illustrates the business system workings just suggested. Table 1.1 expands the contents of each box to show the main elements in each. More detailed analysis of its workings is available from sources in the chapter references, especially Whitley (1992) and Redding (2005). Because of the inner logics just suggested, I will proceed in terms of an upward flow of influences from the realm of meaning to the realm of order to the realm of coordination.

The total entity – a societal business system – will normally exist within the boundaries of a society. Note that I say “society” rather than “state” even though in most instances they have the same boundary. This is to allow for the possibility that in some cases a business system may exist across several states but still be analyzable as one society because of its cultural cohesion. An example is that of the ethnic Chinese of Pacific Asia, whose highly consistent business system can be found all round the borders of the South China Sea, with a powerful presence in at least ten states.

Even so, the normal pattern is for a business system to exist within a given state and to reflect the culture and history of that state’s distinct societal nature. A final point on categories of business system is that a society may also contain more than one system. This occurs when economic growth i...

Table of contents

• Cover
• Praise
• Title Page
• Copyright
• Contents
• List of Figures and Tables
• Preface
• Acknowledgements
• Editors
• Notes on the Contributors
• Introduction
• Part 1 Asian Business Systems: Major Issues
• Part 2 Varieties of Business Systems in Asia
• Index