From Followers to Market Leaders: Asian Electronics Firms in the Global Economy

From Followers to Market Leaders: Asian Electronics Firms in the Global Economy

Henry Wai-chung Yeung

Department of Geography, National University of Singapore,

1 Arts Link, Singapore 117570

(Tel: 65-6516 6810; Fax: 65-6777 3091; Email: HenryYeung@nus.edu.sg;

Homepage: http://courses.nus.edu.sg/course/geoywc/henry.htm)

Forthcoming in Asia Pacific Viewpoint, Vol.48(1), pp.1-30, 2007.

Acknowledgement

An earlier version of this paper was presented as the Asia Pacific Viewpoint Lecture at the International Geographical Union Regional Congress, Brisbane, Australia, 3-7 July 2006. I would like to thank Asia Pacific Viewpoint and the editor, Warwick Murray, for inviting and funding me to deliver the lecture. Conference participants also offered some useful comments. The paper was subsequently revised and reworked while I was a Visiting Researcher at the International Centre for the Study of East Asian Development (ICSEAD), Kitakyushu, Japan, 10 July to 9 September 2006. I am very grateful to ICSEAD for its generous Visiting Researcher scheme and ICSEAD colleagues for their comments on an earlier version of this paper that was presented at an ICSEAD public seminar and appeared as an ICSEAD Working Paper (No.2006-16). Further helpful comments from anonymous reviewers are much appreciated. The NUS Academic Research Fund (R- 109 -000-050-112) supports the research project underpinning this paper. I am grateful to all corporate and institutional interviewees for their generosity and helpfulness, my research collaborators, Jang-sup Shin and Yong-Sook Lee, for their significant intellectual inputs, Angela Leung for her excellent research assistance, and Graham Bowden at Manchester University for producing Figures 2 and 3. I am solely responsible for the content of this paper.

21 December 2006

From Followers to Market Leaders: Asian Electronics Firms in the Global Economy

Abstract: This paper aims to explain how a number of leading electronics firms from Asian newly industrialized economies (NIEs) of Hong Kong, Singapore, South Korea, and Taiwan are articulated into global production networks and become major players in their respective market niches. Developing a triangular theoretical framework, I seek to explain the complex relationships between the dynamic articulation of these leading Asian electronics firms into different global production networks and their simultaneous upgrading from typical followers to market leaders. As a critique of the dominant developmental state discourse, I argue that the interplay between corporate strategies and home base advantages within the context of changing global production networks can offer a better explanation of the differentiated competitive outcomes of these Asian firms. This paper draws upon original data collected through personal interviews with top executives from leading electronics firms in the four Asian NIEs. I conclude the paper with some implications for theory and policy in relation to corporate development in Asian economies.

Keywords: Asian firms, global production networks, corporate strategies, home base advantages

The past two decades witness the intensified articulation of the Asia Pacific region

into the global economy through tendencies and processes associated broadly with economic

globalization. While much social science literature has been written on globalization and its

impacts in the Asia Pacific region (see Yeung, 1998; Olds et al., 1999; Davies and Nyland,

2005), we know relatively little about how business firms from developing economies in Asia

are articulated into global production networks and become major players in their respective

industries (cf. Schütte, 1994; Mathews, 2002; De Meyer et al., 2005; Yeung, 2007). This

relative lack of understanding of firm-level behaviour reflects the general underestimation of

the critical importance of business firms in driving globalization processes, particularly in

mainstream economics and management literature (see also Mathews, 2006). In economic

geography, the influence of the “cultural turn” and the “relational turn” and the subsequent

interest in the mundane and everyday economic life has sidestepped the issue of researching

into how business firms perform as the movers and shapers of the capitalist global economy

(Yeung, 2003; 2005).

2

In this paper, I want to resurrect the significance of studying firms as an important economic-geographical phenomenon (see also Markusen, 1994). My concern is particularly influenced by the rise of powerful business firms from the four Asian newly industrialized economies (NIEs) of Hong Kong, Singapore, South Korea, and Taiwan – broadly known in this paper as “Asian firms”. As we have already known a great deal about the global emergence of Japanese firms (e.g. Edgington and Haga, 1998; Encarnation, 1999; Kensy, 2001; Beamish et al., 2002), this relatively new phenomenon of the growing competitiveness of Asian NIE firms in the global economy has much to do with the opportunities created by economic globalization. Their story is also particularly relevant for geographical studies of the Asia Pacific because of the rapidity of their emergence and the critical role played by their home bases. In other words, geography matters here because different home bases provide different mix of competitive advantages that might be exploited by these Asian firms in their attempt at globalization. The four NIEs have different mix of institutional contexts and resource repertoires that lead to the strategic emergence of leading firms in different sectors. It is thus not surprising that over half of the global knitted fabric production is controlled by two leading Hong Kong firms, over 70% of world’s 50 million annual shipment of computer notebooks are produced by four Taiwanese firms, two of the world’s largest semiconductor foundry manufacturers are Taiwanese, two-thirds of the world’s US$20 billion offshore oil rigs order are held in the books of two Singaporean marine engineering firms, and Samsung and Hyundai from South Korea have become household brand names in less than one decade. The list can go on much further.

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