Divergent Capitalisms: The Social Structuring and Change of Business Systems

Divergent Capitalisms: The Social Structuring and Change of Business Systems

Divergent Capitalisms: The Social Structuring and Change of Business Systems

Divergent Capitalisms: The Social Structuring and Change of Business Systems

Synopsis

The late twentieth century has witnessed the establishment of new forms of capitalism in East Asia as well as new market economies in Eastern Europe. Despite the growth of international investment and capital flows, these distinctive business systems remain different from each other and from those already developed in Europe and the Americas. This continued diversity of capitalism results from, and is reproduced by, significant differences in societal institutions and agencies such as the state, capital and labour markets, and dominant beliefs about trust, loyalty, and authority. This book presents the comparative business systems framework for describing and explaining the major differences in economic organization between market economies in the late twentieth century. This framework identifies the critical variations in coordination and control systems across forms of industrial capitalism, and shows how these are connected to major differences in their institutional contexts. Six major types of business system are identified and linked to different institutional arrangements. Significant differences in post-war East Asian business systems and the ways in which these are changing in the 1990s are analysed within this framework, which is also extended to compare the path-dependent nature of the new capitalisms emerging in Eastern Europe.

Excerpt

In previous chapters I have emphasized the variety of ways in which economic coordination and control are achieved in market economies. In particular, the significance and role of ownership in the organizational integration of economic activities differ considerably between, say, post-war Japan and the USA, and are highly contingent upon historical circumstances and current institutional arrangements. Firms as units of financial control based on ownership are, then, part of the overall system of economic coordination and control that distinguishes any particular variety of capitalism. Their characteristics reflect those of each business system and vary between them. Differences in the nature of firms are important for understanding economic development because they affect both economic and financial decision-making and the sorts of distinctive organizational capabilities that become established in different economies. Because they are typically units of employment as well as financial control, firms are critical agents for developing particular kinds of collective competences that affect competitive outcomes.

Accordingly, in this chapter I consider the major ways that firms differ between business systems in greater detail and analyse how they are related to particular features of dominant institutions. In the next section I shall outline the nature of firms as a key type of coordination unit in capitalist societies and then summarize the primary ways in which they vary across economies. The following section considers how these characteristics are connected to dominant institutions and agencies so that certain kinds of firms become more established and prevalent in particular contexts.

THE NATURE OF FIRMS AND THEIR KEY CHARACTERISTICS

The significance of firms in capitalist economies lies in their combination of financial control over resources with employment. As ownership-based units of decision-making and control, they are clearly central collective actors in the mobilization, allocation, and use of assets, especially human labour power. Through the legitimacy granted to private property rights' holders and their agents in capitalist societies, those in charge of firms are authorized to acquire and . . .

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