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Transnational Corporations and Business Networks: Hong Kong Firms in the ASEAN Region.(Review) (book review)
MYUNG-RAE CHO

04/01/2000
Regional Studies
207
Copyright 2000 Gale Group Inc. All rights reserved. COPYRIGHT 2000 Carfax Publishing Company

Transnational Corporations and Business Networks: Hong Kong Firms in the ASEAN Region, H. W-C. YEUNG, Routledge, London (1998). xxi + 297 pp. [pounds]60.00 (hbk). ISBN 0 415 14016 1.

East Asia has once again caught the attention of the world at this time, owing to the recent economic crisis. A hasty assertion has been made concerning the historic superiority of the Anglo-Saxon economic model based on western rationality Yet the value of the Asian model is still open to interpretation until its evolving features are fully explored. Henry Yeung's book is a noteworthy attempt to elucidate the nature of East Asian business structures and operations.

This book takes 'Third World multinationals' as a key to decipher the global expansion of business activities from the East Asian newly industrializing economies (NIEs). This argument is based on the view that 'business organizations serve as causal agents embedded in the underlying structural frameworks of the society and world economy' (p. 63). From this view, the author formulates his own perspective on business networks, from which all explanation about economic reality is reduced to the integrated and co-ordinated structure of on-going economic and non-economic relations embedded within, among and outside business firms. Thus the essence of the book is that the causal mechanisms of economic activities such as transnational business are simultaneously embedded in complex relational networks at three distinct levels: (1) intra-firm networks; (2) inter-firm networks; (3) extra-firm networks.

In line with this conceptualization of networks, extensive research is reported on Chinese business organization which operates through personal and social guanxi networks established throughout the South East Asian region. By focusing on the labyrinthine networks of Hong Kong transnational corporations (TNCs), this book reveals in great detail the emerging features and competitive advantages of the business form which has developed into powerful and geographically extensive transnational corporations. The major finding is that enduring personal and organizational networks based on trust are embedded in histo- and geo-cultural contexts. Together these constitute the institutional mechanisms through which transnationalization strategies of firms from the Asian NIEs, especially Hong Kong, are realized.

Consequently, the book challenges 'essentially economistic and Western-centric models of international production by shifting the focus of explanation from transaction cost economising to the on-going socio-spatial embeddedness of transnational corporations' (p. 230). To do so, business networks are held to be the underlying causal mechanisms which form and extend the time and space of transnational operations. This foundation allows the author to conclude that, by virtue of their capability of networking, the TN Cs from developing countries, particularly the East Asian NIEs, are an increasingly potent force in the regional and global economy.

Underpinned by a network perspective, this book shows clearly the institutional thickness and organizational dynamics of one of the world's most dynamic economies. This is a novel contribution to the recent debate on the nature and operation of the East Asian model within the global economy. Despite these merits, however, it seems that a number of drawbacks prevent the full realization of the book's assertion concerning the network specificity of the East Asian NIEs' multinationals.

Among others, the microscopic (or economic anthropologic) network approach employed in this book is perhaps not as revealing as it could be about the dynamics of network constitution within a wider system or structure. There is detailed description of Chinese business networks, but there is no social scientifically informed exposition of such network phenomena as: the transborder technical division of labour along intra- or inter-firm networks; asymmetrical large-small firm relations across different economic spaces; unequal power relations or conflicts blurred by interpersonal guanxi; national variation of state-capital alliances and their influences on the functioning of networks; capital-labour relations underlying transnational inter-corporate organization; subordination of East Asian TN Cs to global financial capital and so on. Related to this, or perhaps because the analysis is reduced to the matter of micro personal and social relationships, there is no clear-cut distinction among intra-, inter- and e xtra-firm networks. Networks should not be treated simply as a 'sum of all social relations' (p. 66), but, for a better understanding, their constituents should be deconstructed into specific social and economic entities. For instance, the Chinese guanxi networks could be better understood if they are analysed as a way of addressing the question of how guanxi is materialized into the actual economic and social arrangements specific to the Chinese business system, such as: technological linkages; labour regulation at the shopfloor; parts supply; price setting; and capital and profit flows. The lack of such analytical concreteness may be related to the method of research. In general the analysis and interpretation based on questionnaire survey methods appear to hinder the otherwise more inquisitive and informative exposition of the research findings. For all these drawbacks, however, this book will gain a wide readership from various fields associated with East Asian studies or business studies in general.