Dow Jones Interactive

The Globalization of Business Firms from Emerging Economies
Yong-Sook Lee

04/01/2001
Economic Geography
202-204
Copyright (c) 2001 ProQuest Information and Learning. All rights reserved. Copyright Economic Geography Apr 2001

The Globalization of Business Firms from Emerging Economies. Edited by Henry Wai-chung Yeung. Cheltenham, U.K. and Northampton, Mass.: Edward Elgar Publishing, 1999.

Globalization has brought about questions of whether transnational corporations (TNCs) from developing countries have succeeded or failed over time and of how they differ from large TNCs from developed countries. Because of the significant impact of the growth of developing-country TNCs on development, there have been many studies of these TNCs. However, such studies have been scattered among different disciplines and have rarely appeared together within a single book until the publication of The Globalization of Business Firms from Emerging Economies. This edited volume aims to collect empirical analyses of developing-country TNCs from a variety of disciplines to reflect the interdisciplinary nature of the research. It also attempts to build a theoretical framework that allows a historically and culturally sensitive explanation of TNCs from developing countries, by deconstructing Western-centric models of TNCs.

Yeung's book consists of two volumes and seven parts (four parts in Volume 1 and three parts in Volume 2). Part 1 of Volume 1 deals with the origins and characteristics of transnational business firms from developing countries. Part 2 introduces the theoretical perspectives on the globalization of business firms from developing countries: Dunning's investment development-cycle model, location-specific advantage theory, extended product life-cycle theory, and the social construction approach. Part 3 turns to the analysis of social and institutional contexts that lead to the international expansion of TNCs from developing countries. Part 4 examines these TNCs' various strategies for competing against the AngloAmerican corporations in the global economy.

In Volume 2, the first part analyzes the organizational characteristics of TNCs from emerging economies, focusing on both the parent-subsidiary relationship and international strategic alliances. Part 2 investigates the impact of the international activities of developing-country TNCs: economic integration in development, costs and benefits to home countries, and regional development. Part 3 collects 20 articles showing these TNCs' activities in various economic sectors, such as banking, electronics, tourism, and the food industry.

The strength of the book is that it provides diverse perspectives on developingcountry TNCs from different disciplines, including business history, development studies, geography, political science, and regional studies. It also covers not only Asian TNCs, but others in Africa, Eastern Europe, and Latin America, so that the reader has a shortcut to knowledge on developing-country TNCs from this collection. The book's major contribution lies in providing fresh insights into the social and economic origins of international business and production. By stressing not only TNCs' motivations but also the important role of the state, ethnic minority groups, and social networks in explaining TNCs from developing countries, this book corrects the blind application of Western-centric economic theories that emphasize only economic rationales.

In spite of its emphasis on the importance of TNCs from emerging economies, however, the book does not clarify why the growth of these TNCs is important. It considers the growth of developing-country TNCs as normative for the promotion of "national champions," presuming that the growth of TNCs from emerging economies contributes to economic and regional development in home countries (p. 231). In reality, it is still debatable whether the rapid growth of these TNCs promotes the national competitiveness of home countries or hollows out their industrial base. The book also assumes that these TNCs have a positive impact on host countries, tentatively concluding that "developing country TNCs are a special species of the capitalist beast-they are more beneficial to the host economy than other TNCs from developed countries" (p. 220). For example, the book points out that some Chinese or Indian TNCs in the food industry may contribute to the welfare of Chinese or Indian citizens overseas, by providing ethnic foods to them. Furthermore, some Asian TNCs may be more locally embedded in host countries, relying on more joint ventures due to their constraints. However, it is dangerous to conclude that the impact of developing-country TNCs on host countries is beneficial by relying solely on these context-specific cases. In the case of developing-country TNCs, especially in manufacturing, the problem of capital flight can be serious, because their labor-intensive industries are highly dependent on cheap labor abroad. Therefore, the important epistemological question still remains unanswered in this book: why is the growth of developing-country TNCs important? In other words, for whom is it important, in both home and host countries?

A major methodological drawback of this book is that the editor has selected only the success stories of developing-country TNCs. Among the problems of these TNCs is the Asian crisis in 1997, when many Asian TNCs were at an impasse. For example, the Daewoo group, a South Korean conglomerate, which is ranked first out of the top 50 TNCs from emerging markets in Table 1 of this book (p. xvi), collapsed in 1999. In addition, the Hyundai group, which is frequently cited in this book as a premier example of Asian TNCs, currently suffers from financial problems. This oversight of some developing-country TNCs' failures can distort our understanding of these organizations, presenting an overly optimistic view of their future prospects. With regard to this, the book does not include any articles that analyze the impact of the Asian financial crisis on TNCs from developing countries, thereby placing much less emphasis on the role of global finance capital and markets in the success or failure of these TNCs. For an accurate analysis of the future prospects of developing-country TNCs, we must keep in mind these limitations.

Yong-Sook Lee

The Ohio State University