Asian Firms – History, Institutions and Management

As Asian economies play an increasingly significant role in today's globalized world economy, it is vital to understand how Asian firms operate and how they compete. As Sun Zue once said that, “if you know others and know yourself, you will not be imperiled in a hundred battles.”

Tipton's book examines indigenous firms in Japan, Korea, China, Taiwan, Hong Kong, and the Southeast Asian countries, with a focus on Thailand. Specifically, he sets out to examine “whether Asian firms are different, and if so, how? Are the differences relevant? Is there anything Western managers can learn from Asian firms, or Asian managers from each other?”

To explore these questions, Tipton conducted detailed review of volumes already written on these subjects, examining them from three angles: historical development, government policies and involvement, and management style and business strategies. As a result, his book is one of substance.

Before detailing specifics in each country, Tipton first draws lessons from the writing of two ancient Chinese military strategists: Sun Zue's famous The Art of War, and Tao Zhu‐Gong's lesser known 12 business principles, 12 business pitfalls and 16 business lessons. These principles set the tone for each of the chapters to follow.

Within the “historical grid,” most of the above‐mentioned economies, with the exception of Japan, shared a colonial history. As Tipton has noted, however, a significant difference among these economies, is that unlike the Japanese in Korea and Taiwan, the colonial governments of Southeast Asian countries actively discouraged so‐called “natives” from entering commerce and industry. China, with a long history of being a market economy before falling under the colonial rules, had had no shortage of entrepreneurs.

Within the “institutional grid,” a common thread among the countries was the heavy involvement of government in commerce and industry development, through direct government investment into key industries and enterprises, and/or through government policies that favor domestic enterprises, especially in Japan, China and Korea, etc. In more recent times, government policies in most of the countries are strikingly similar with a focus that is very much export‐driven, at least in the initial stages of a country's economic development.

Within the “management grid,” the analysis yields a rich and diverse outcome. Asian firms in the various countries, especially major business groups, are giants in their own right, and seem to have indefinite organizational boundaries. While they seem to have followed a similar development and growth strategy in terms of being export‐driven and an eagerness to acquire advanced foreign technology, they have a mixed policy towards foreign equity participation. Asian firms are often led by a single leader who is apparently under extreme pressure, expected to be competent in all aspects of the business, and to be a role model for the entire organization as well. A key difference, noted by Tipton, however, is that some of the business leaders, as in the case of Korean chaebols or Southeast Asian Chinese firms, are owner‐managers (and their business ownership is always family controlled), while others are either government appointed or professional executives. Decision‐making processes and styles vary across countries, yielding different outcomes as well.

Tipton has also included a series of case studies in each of the above areas, with specific details, illustrating both the strengths and the weaknesses of a particular country's history, structure, government policies, as well as the management practices. Readers will appreciate that the case studies Tipton has selected cover a variety of businesses, both in terms of industry and size.

So, after nine chapters analyzing volumes of previous research, all represented by an extensive list of references, does the evidence show that Asian firms act differently? You bet it does! And are Asian firms more successful? Well, the answer to this question seems to depend on the specific industry, the specific country and the specific performance measures used. If size matters, then stories of excelling Asian firms can be easily found in industries such as automotives, computers and electronics, machinery, shipbuilding, and textiles, etc. However, when it comes to the financial outcomes of these stories, it is an entirely different matter altogether. But hey, since Tipton's objective is to examine these questions from a historical perspective, readers should also frame the answers to these questions in the context of historical development. Asian cultures are characterized by a long history and deep traditions. At a time in history Asian countries were the dominant forces of the world's economy. Their resumption of that claim may be imminent, if not already justified. Perhaps, that is the biggest lesson to be learned here.

One noticeable omission from this book is coverage of firms in India, leaving readers wanting to know what might happen to counterparts there.