Business Organization and the Myth of the Market Economy
TL;DR: The authors explains the transitions in industrial leadership from Britain to the United States and, most recently, to Japan in terms of the changing business investment strategies and organizational structures in these nations, and criticizes economists for failing to understand these historical changes.
Abstract: This book explains the transitions in twentieth-century industrial leadership from Britain to the United States and, most recently, to Japan, in terms of the changing business investment strategies and organizational structures in these nations. The author criticizes economists for failing to understand these historical changes. The book shows that this intellectual failure is not inherent in the discipline of economics; there are important traditions in economic thought that the mainstream of the economics profession has simply ignored.
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TL;DR: In this article, the authors synthesize disparate strands of literature to link entrepreneurship to economic growth by investigating the relationship between entrepreneurship and economic growth using elements of various fields: historical views on entrepreneurship, macroeconomic growth theory, industrial economics (Porter's competitive advantage of nations), evolutionary economics, history of economic growth (rise and fall of nations) and the management literature on large corporate organizations.
Abstract: In the 1980s stagflation and high unemployment caused a renewed interest in supply side economics and in factors determining economic growth. Simultaneously, the 1980s and 1990s have seen a reevaluation of the role of small firms and a renewed attention for entrepreneurship. The goal of this survey is to synthesize disparate strands of literature to link entrepreneurship to economic growth. This will be done by investigating the relationship between entrepreneurship and economic growth using elements of various fields: historical views on entrepreneurship, macro-economic growth theory, industrial economics (Porter's competitive advantage of nations), evolutionary economics, history of economic growth (rise and fall of nations) and the management literature on large corporate organizations. Understanding the role of entrepreneurship in the process of economic growth requires the decomposition of the concept of entrepreneurship. A first part of our synthesis is to contribute to the understanding of the dimensions involved, while paying attention to the level of analysis (individual, firm and aggregate level). A second part is to gain insight in the causal links between these entrepreneurial dimensions and economic growth. A third part is to make suggestions for future empirical research into the relationship between (dimensions of) entrepreneurship and economic growth.
2,395 citations
TL;DR: The authors used an augmented Cobb-Douglas production to explore firm formation and technological innovation as separate determinants of growth, finding that only high growth potential entrepreneurship has a significant impact on economic growth.
Abstract: Studies on the impact of technological innovation on growth have been largely mute on the role of␣new firm formation. Using cross-sectional data on the 37 countries participating in GEM 2002, this paper uses an augmented Cobb–Douglas production to explore firm formation and technological innovation as separate determinants of growth. One area of interest is the contrast between different types of entrepreneurial activities as measured using GEM Total Entrepreneurial Activity (TEA) rates – high growth potential TEA, necessity TEA, opportunity TEA and overall TEA. Of the four types of entrepreneurship, only high growth potential entrepreneurship is found to have a significant impact on economic growth. This finding is consistent with extant findings in the literature that it is fast growing new firms, not new firms in general, that accounted for most of the new job creation by small and medium enterprises in advanced countries.
1,395 citations
TL;DR: In this article, the authors use the case of contract manufacturing in the electronics industry to illustrate an emergent American model of industrial organization, the modular production network, which relies on codified inter-firm links and the generic manufacturing capacity residing in turn-key suppliers to reduce transaction costs, build large external economies of scale and reduce risk for network actors.
Abstract: This paper uses the case of contract manufacturing in the electronics industry to illustrate an emergent American model of industrial organization, the modular production network. Lead firms in the modular production network concentrate on the creation, penetration and defense of markets for end products—and increasingly the provision of services to go with them—while manufacturing capacity is shifted out-of-house to globally operating turn-key suppliers .T he modular production network relies on codified inter-firm links and the generic manufacturing capacity residing in turn-key suppliers to reduce transaction costs, build large external economies of scale and reduce risk for network actors. Itest the modular production network model against some of the key theoretical tools that have been developed to predict and explain industry structure: Joseph Schumpeter’s notion of innovation in the giant firm; Alfred Chandler’s ideas about economies of speed and the rise of the modern corporation; Oliver Williamson’s transaction cost framework; and a range of other production network models that appear in the literature. Iargue that the modular production network yields better economic performance in the context of globalization than more spatially and socially embedded network models. Iview the emergence of the modular production network as part of a historical process of industrial transformation in which nationally specific models of industrial organization co-evolve in intensifying rounds of competition, diffusion and adaptation.
1,299 citations
TL;DR: In this paper, the authors discuss the implications of the advent of alliance capitalism for our theorizing about the determinants of MNE activity, and argue that due to the increasing porosity of the boundaries of firms, countries and markets, the eclectic, or OLI, paradigm of international production needs to consider more explicitly the competitive advantages arising from the way firms organize their inter-firm transactions, the growing interdependencies of many intermediate product markets, and the widening of the portfolio of the assets of districts, regions and countries to embrace the external economies of interdependent activities.
Abstract: This article discusses the implications of the advent of alliance capitalism for our theorizing about the determinants of MNE activity. In particular, it argues that, due to the increasing porosity of the boundaries of firms, countries and markets, the eclectic, or OLI, paradigm of international production needs to consider more explicitly the competitive advantages arising from the way firms organize their inter-firm transactions, the growing interdependencies of many intermediate product markets, and the widening of the portfolio of the assets of districts, regions and countries to embrace the external economies of interdependent activities.
1,269 citations
TL;DR: Li et al. as mentioned in this paper argue that despite widespread skepticism about government ownership in transitional economies, China's rapid industrial growth has been led by public enterprises. But their theory of soft budbet constraints assumes as fixed organizational characteristics that in fact vary widely across government jurisdictions.
Abstract: Despite widespread skepticism about government ownership in transitional economies, China's rapid industrial growth has been led by public enterprises. Kornai's theory of soft budbet constraints, born of the failure of earlier Hungarian reforms, fosters such skepticism-but it assumes as fixed organizational characteristics that in fact vary widely across government jurisdictions. Local governments with smaller industrial bases have clearer financial incentives and constraints, fewer nonfinancial interests in enterprises, and a greater capacity to monitor them. In China's vast public sector, the fastest growth in output and productivity has occurred where government ownership rights are clearest and most easily enforced, which enables officials to manage public industry as a diversified market-oriented firm.
869 citations
References
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TL;DR: In this article, the authors synthesize disparate strands of literature to link entrepreneurship to economic growth by investigating the relationship between entrepreneurship and economic growth using elements of various fields: historical views on entrepreneurship, macroeconomic growth theory, industrial economics (Porter's competitive advantage of nations), evolutionary economics, history of economic growth (rise and fall of nations) and the management literature on large corporate organizations.
Abstract: In the 1980s stagflation and high unemployment caused a renewed interest in supply side economics and in factors determining economic growth. Simultaneously, the 1980s and 1990s have seen a reevaluation of the role of small firms and a renewed attention for entrepreneurship. The goal of this survey is to synthesize disparate strands of literature to link entrepreneurship to economic growth. This will be done by investigating the relationship between entrepreneurship and economic growth using elements of various fields: historical views on entrepreneurship, macro-economic growth theory, industrial economics (Porter's competitive advantage of nations), evolutionary economics, history of economic growth (rise and fall of nations) and the management literature on large corporate organizations. Understanding the role of entrepreneurship in the process of economic growth requires the decomposition of the concept of entrepreneurship. A first part of our synthesis is to contribute to the understanding of the dimensions involved, while paying attention to the level of analysis (individual, firm and aggregate level). A second part is to gain insight in the causal links between these entrepreneurial dimensions and economic growth. A third part is to make suggestions for future empirical research into the relationship between (dimensions of) entrepreneurship and economic growth.
2,395 citations
TL;DR: The authors used an augmented Cobb-Douglas production to explore firm formation and technological innovation as separate determinants of growth, finding that only high growth potential entrepreneurship has a significant impact on economic growth.
Abstract: Studies on the impact of technological innovation on growth have been largely mute on the role of␣new firm formation. Using cross-sectional data on the 37 countries participating in GEM 2002, this paper uses an augmented Cobb–Douglas production to explore firm formation and technological innovation as separate determinants of growth. One area of interest is the contrast between different types of entrepreneurial activities as measured using GEM Total Entrepreneurial Activity (TEA) rates – high growth potential TEA, necessity TEA, opportunity TEA and overall TEA. Of the four types of entrepreneurship, only high growth potential entrepreneurship is found to have a significant impact on economic growth. This finding is consistent with extant findings in the literature that it is fast growing new firms, not new firms in general, that accounted for most of the new job creation by small and medium enterprises in advanced countries.
1,395 citations
TL;DR: In this article, the authors use the case of contract manufacturing in the electronics industry to illustrate an emergent American model of industrial organization, the modular production network, which relies on codified inter-firm links and the generic manufacturing capacity residing in turn-key suppliers to reduce transaction costs, build large external economies of scale and reduce risk for network actors.
Abstract: This paper uses the case of contract manufacturing in the electronics industry to illustrate an emergent American model of industrial organization, the modular production network. Lead firms in the modular production network concentrate on the creation, penetration and defense of markets for end products—and increasingly the provision of services to go with them—while manufacturing capacity is shifted out-of-house to globally operating turn-key suppliers .T he modular production network relies on codified inter-firm links and the generic manufacturing capacity residing in turn-key suppliers to reduce transaction costs, build large external economies of scale and reduce risk for network actors. Itest the modular production network model against some of the key theoretical tools that have been developed to predict and explain industry structure: Joseph Schumpeter’s notion of innovation in the giant firm; Alfred Chandler’s ideas about economies of speed and the rise of the modern corporation; Oliver Williamson’s transaction cost framework; and a range of other production network models that appear in the literature. Iargue that the modular production network yields better economic performance in the context of globalization than more spatially and socially embedded network models. Iview the emergence of the modular production network as part of a historical process of industrial transformation in which nationally specific models of industrial organization co-evolve in intensifying rounds of competition, diffusion and adaptation.
1,299 citations
TL;DR: In this paper, the authors discuss the implications of the advent of alliance capitalism for our theorizing about the determinants of MNE activity, and argue that due to the increasing porosity of the boundaries of firms, countries and markets, the eclectic, or OLI, paradigm of international production needs to consider more explicitly the competitive advantages arising from the way firms organize their inter-firm transactions, the growing interdependencies of many intermediate product markets, and the widening of the portfolio of the assets of districts, regions and countries to embrace the external economies of interdependent activities.
Abstract: This article discusses the implications of the advent of alliance capitalism for our theorizing about the determinants of MNE activity. In particular, it argues that, due to the increasing porosity of the boundaries of firms, countries and markets, the eclectic, or OLI, paradigm of international production needs to consider more explicitly the competitive advantages arising from the way firms organize their inter-firm transactions, the growing interdependencies of many intermediate product markets, and the widening of the portfolio of the assets of districts, regions and countries to embrace the external economies of interdependent activities.
1,269 citations
TL;DR: Li et al. as mentioned in this paper argue that despite widespread skepticism about government ownership in transitional economies, China's rapid industrial growth has been led by public enterprises. But their theory of soft budbet constraints assumes as fixed organizational characteristics that in fact vary widely across government jurisdictions.
Abstract: Despite widespread skepticism about government ownership in transitional economies, China's rapid industrial growth has been led by public enterprises. Kornai's theory of soft budbet constraints, born of the failure of earlier Hungarian reforms, fosters such skepticism-but it assumes as fixed organizational characteristics that in fact vary widely across government jurisdictions. Local governments with smaller industrial bases have clearer financial incentives and constraints, fewer nonfinancial interests in enterprises, and a greater capacity to monitor them. In China's vast public sector, the fastest growth in output and productivity has occurred where government ownership rights are clearest and most easily enforced, which enables officials to manage public industry as a diversified market-oriented firm.
869 citations