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Transnational Corporations and Business Networks: Hong Kong Firms in the ASEAN Region
Prescott C Ensign

01/01/2001
Economic Geography
84-86
Copyright (c) 2001 Bell & Howell Information and Learning Company. All rights reserved. Copyright Economic Geography Jan 2001

Transnational Corporations and Business Networks: Hong Kong Firms in the ASEAN Region. By Henry Wai-chung Yeung. London: Routledge, 1998.

Yeung does a great service in forcing us to consider the possibilities in the organization of economic activity. While most of us are locked into a markets and/or hierarchies calculus-and a few are moving from this vantage point toward network possibilities-Yeung has elected to study intra-, inter-, and extracorporate networks from ground zero. This pursuit, shared in this book and born out of his thesis under Peter Dicken, represents the culmination of years of research by a promising scholar in the early stages of academic life.

Drawing from depth as well as breadth of knowledge on the subject matter (aptly demonstrated and succinctly conveyed in Chapter 3), Yeung nevertheless chooses to start tabula rasa in exploring the web of relationships that exist among an array of actors comprising firms, industries, and economic communities in Southeast Asia. Yeung's exploration into interpersonal connections among overseas Chinese leads him on a path of discovery involving the role and impact of "bamboo networks" on economic development and integration within Southeast Asia. This polished book breaks down prior work and assumptions and then develops a picture using familiar building blocks from a variety of disciplines. This reconstruction draws from the author's own research and theorizing, while maintaining contact with the common context of our collective academic heritage. The lineage of Yeung's thinking is evident in clear argumentation; an appreciation for sociology, economics, political thought, and historical analysis surrounds the whole of this work.

Density of presentation varies greatly, from passages of statistics to rich case studies of the participants engaged in these relational networks. For me, the plethora of percentages on economic activity, though enlightening, was not as enjoyable as the transcribed accounts by those at the helm of these transnational corporations. There is ample material and attention to detail to keep the ardent empiricist content, as well as synthesis of settings (firm, industry, region, level of economic development) and perspectives (sociological, economic, political) to satisfy a well-read and interdisciplinary audience. The book is remarkable in both depth and coverage-- the latter demanded perhaps not by choice but by edict of the subject matter. At any event, Yeung is successful in examining and ultimately conveying a treatise on this collage of individuals comprising networks of transnational corporations, in turn embedded in an economic landscape of complex connections.

While the order of material is logical-- and both theory and evidence build progressively from one chapter to the next-- the design of the book allows the reader to skip around or to read only sections of interest. Chapter 1 provides an introduction and legend for navigating the remainder of the book. Chapter 2 provides the backdrop, bringing the reader up to speed on the emergence and current activity of transnational corporations in the newly industrialized economies of Asia. Here Yeung covers location, scale, characteristics, industry distribution, ownership, parent-subsidiary structure, financing, technology, trade orientation, competitive premise, and motivation of these transnational corporations. From the role of networks to the role of the state, Yeung's discussion is at the same time accessible for those less informed on the material as well as insightful for those well versed on the subject.

The focus of the book-"labyrinthine networks"-certainly is a contentious area. Are inter-personal relationships best characterized as personal, professional, social, or business? Why are they sometimes a blur, an amalgam, while at other times distinctly in one realm? Yeung's claims and categorizations are supported by both his and other's efforts. Based on the reader's perspective-strong baggage in my case-- any number of his statements can be countered (as he readily admits). However contentious Yeung's assertions and conclusions may be, however, they are not easily discounted or dismissed. He lays some fairly scathing charges, but they are substantiated; likewise, the questions raised are addressed thoroughly. Findings of fact as well as subjective appraisal are abundant. Explanation for economic behavior takes into account historical context, prior empirical and theoretical work, as well as his own efforts in the field collecting data.

Yeung's theorizing, data collection, and the implications he draws are novel and represent a significant contribution. Although this book may not circulate beyond the academic realm, the material contained within it would certainly be of interest to those in charge of policy within the firm as well as those responsible for social welfare. Yeung would do well to undertake a translation of his material to make it accessible to an audience of public and private policymakers.

Chapters 4 through 7 are empirical forays into particular topics. Chapter 4 is a historical and spatial analysis of Hong Kong transnational corporations' direct investments in the ASEAN area. Where, why, and how these Hong Kong firms' international operations arise is covered. Analysis involves examination of circumstances (industry, location, and polity) as well as firm characteristics (strategy, structure, and resources).

Chapter 5 considers the social organization of networks. Yeung finds ongoing networks to be the "causal mechanisms" through which Hong Kong transnationals establish Southeast Asian operations. He inspects network relationships at the intra-, inter-, and extrafirm levels. Yeung finds that intrafirm networks of coordination and control foster entrepreneurship, and that interfirm relationships form the basis for partnerships, formal or otherwise. Extrafirm connections are those with government institutions. The subjects of guanxi and trust receive careful scrutiny.

In Chapter 6 the author argues that Hong Kong transnational corporations are induced into a variety of political dealings with local government. These connections work to circumvent host country barriers. Yeung includes the antecedents to the current political and regulatory climate, which assists the reader in understanding the present regime as well as portraying an informed depiction of the future. Bargaining power receives coverage in passages of transcribed interviews as well as in Yeung's own discourse. Case studies bring the material to life, and though not systematic experiments, they demonstrate the implications of various courses of action.

Chapter 7 contemplates the source of competitive advantage for Hong Kong transnational corporations, both within the ASEAN region and globally. Yeung concludes that embedded within networks is power and advantage that is sustainable, enabling emerging Chinese firms to compete in the present as well as the future. Yeung admonishes the academic community to move from comparative management and Third World approaches to recognize transnational corporations from the Asian newly industrialized economies as a distinct organizational form. He delves into the "hidden" advantage of ethnic Chinese firms through case studies that exfoliate the workings of successful networks. While the virtues of networks are amply extolled, the limitations and conditions under which they are inadequate, and might even serve as a barrier, is an area for future inquiry.

The book closes with Chapter 8, in which the author reflects on the earlier chapters and the findings of prior scholarship. Yeung indicates that previous literature has failed to appreciate the "socio-spatial formations" whereby Hong Kong transnational corporations establish their ASEAN operations. Questions and propositions are formulated as avenues for additional research and theorizing. Particularly interesting is comparison with Western networks: are there differences in the actors' rationality? Yeung characterizes the firm controlled by ethnic Chinese as a network coordinator, a clear departure from the depiction of the Western firm as a transaction cost economizer. Finally, Yeung contemplates the ramifications of his research for transnational firms emanating from countries in Asia other than Hong Kong, for attracting foreign direct investment in the ASEAN region, and the reversion of Hong Kong to China.

Prescott C. Ensign

University of Western Ontario