The Limits of Convergence

The Limits of Convergence: Globalization and Organizational Change in Argentina, South Korea, and Spain

Mauro F. Guillén
Copyright Date: 2001
Pages: 304
https://www.jstor.org/stable/j.ctt7scd0
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  • Book Info
    The Limits of Convergence
    Book Description:

    This book challenges the widely accepted notion that globalization encourages economic convergence--and, by extension, cultural homogenization--across national borders. A systematic comparison of organizational change in Argentina, South Korea, and Spain since 1950 finds that global competition forces countries to exploit their distinctive strengths, resulting in unique development trajectories.

    Analyzing the social, political, and economic conditions underpinning the rise of various organizational forms, Guillén shows that business groups, small enterprises, and foreign multinationals play different economic roles depending on a country's path to development. Business groups thrive when there is foreign-trade and investment protectionism and are best suited to undertake large-scale, capital-intensive activities such as automobile assembly and construction. Their growth and diversification come at the expense of smaller firms and foreign multinationals. In contrast, small and medium enterprises are best fitted to compete in knowledge-intensive activities such as component manufacturing and branded consumer goods. They prosper in the absence of restrictions on export-oriented multinationals.

    The book ends on an optimistic note by presenting evidence that it is possible--though not easy--for countries to break through the glass ceiling separating poor from rich. It concludes that globalization encourages economic diversity and that democracy is the form of government best suited to deal with globalization's contingencies. Against those who contend that the transition to markets must come before the transition to ballots, Guillén argues that democratization can and should precede economic modernization. This is applied economic sociology at its best--broad, topical, full of interesting political implications, and critical of the conventional wisdom.

    eISBN: 978-1-4008-2420-5
    Subjects: Economics

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. List of Illustrations
    (pp. ix-ix)
  4. List of Tables
    (pp. x-x)
  5. PREFACE
    (pp. xi-xiv)
  6. A NOTE ON SOURCES
    (pp. xv-2)
  7. ONE ORGANIZATIONS, GLOBALIZATION, AND DEVELOPMENT
    (pp. 3-24)

    Conventional wisdom has it that the world is undergoing rapid globalization and that this process compels countries, industries, and firms to converge toward a homogeneous organizational pattern of “best practice” or “optimal efficiency”–those who fail to conform are doomed to fail in the global economy. I argue against this modernist, flat-earth view of globalization. Countries and organizations do not gravitate toward a supposedly universal model of economic success and organizational form as they attempt to cope with globalization. Rather, the mutual awareness that globalization entails invites them to be different, namely, to use their unique economic, political, and social...

  8. PART I DEVELOPMENT AND ORGANIZATIONAL CHANGE
    • TWO THREE PATHS TO DEVELOPMENT, THREE RESPONSES TO GLOBALIZATION
      (pp. 27-58)

      Economic development engenders a massive amount of organizational change, but different kinds of it take place under different development circumstances. This chapter characterizes three ideal-typical paths to development and three corresponding responses to globalization. It thus prepares the ground for subsequent chapters to analyze from a comparative institutional perspective the extent to which business groups, small and medium enterprises, foreign multinationals, labor unions, and specific sectors of economic activity have changed and succeeded in the global economy. The economic histories of Argentina, South Korea, and Spain since 1950 provide archetypical illustrations of each of the three paths to development and...

    • THREE THE RISE AND FALL OF THE BUSINESS GROUPS
      (pp. 59-94)

      The rise of large, diversified business groups in newly industrialized countries has captured the imagination of academics, journalists, and policymakers. In this chapter, I argue that the proliferation of business groups is best approached from a resource-based perspective, that is, by looking at the distinctive capabilities, strengths, and weaknesses of this form of organization under different development circumstances. Business groups appear in newly industrialized countries because entrepreneurs and firms learn the capability to combine the necessary domestic and foreign resources for repeated industry entry. Combining domestic and foreign resources requires entrepreneurs to establish networks of relationships with relevant actors. Such...

    • FOUR THE ROLE OF SMALL AND MEDIUM ENTERPRISES
      (pp. 95-122)

      A comparative institutional theory of development in a context of globalization certainly argues against the notion that modern technology requires the growth of big organizations. More frequently than not, industries have become dominated by large-scale enterprises due to the monopolistic actions of firms or to state regulation rather than because of inescapable technological requirements. Globalization elevates the role of the ability to network over sheer size. Networks of organizations can certainly undertake large-scale activities without creating large, integrated organizations (Perrow 1992; Powell 1990). Small and medium enterprises (SMEs) have long attracted the attention of scholars. In a famous essay, Alfred...

    • FIVE MULTINATIONALS, IDEOLOGY, AND ORGANIZED LABOR
      (pp. 123-156)

      Together with business groups and small and medium enterprises, foreign multinationals are a key organizational form in newly industrialized countries. Their presence is, however, much more controversial. Critics of the multinational enterprise range from those accusing it of being an “octopus,” “agent of imperialism,” “dog of capitalism,” or “cultural dictator,” to those convinced that it is a “dinosaur” on the verge of extinction because of its unwieldy size, bureaucratic inertia, and inability to adapt and innovate. The apologists of the multinational, perhaps fewer in number and less adept at finding colorful metaphors, call it a “dolphin,” “leader of moderization,” “job...

  9. PART II ORGANIZATIONAL CHANGE AND PERFORMANCE
    • SIX DEVELOPING INDUSTRY: AUTOMOBILE AND COMPONENT MANUFACTURING
      (pp. 159-182)

      More often than not, policymakers have paid token attention to the institutions underlying successful development, as discussed in chapter 1. In the next two chapters I illustrate how institutions shape development outcomes by looking at two crucial industries: automobiles and banking. In this chapter I note the unique features of the most modernist and symbolic industry in the economy—automobile manufacturing—and compare the rise of final assembly and component manufacturing in South Korea, Spain, and Argentina. State policies not consistent with underlying patterns of organization are found to flounder, eventually giving way to others that use the strengths of...

    • SEVEN DEVELOPING SERVICES: BANKING AS AN INDUSTRY IN ITS OWN RIGHT
      (pp. 183-212)

      Banking is as prominent and symbolic an industry as automobile manufacturing. Banks tend to play a critical role in developing countries wishing to industrialize quickly because manufacturing growth requires the transfer of massive amounts of resources from backward to dynamic economic sectors, and from foreign lenders to targeted domestic recipients. Beginning with Gerschenkron (1962), the literature has studied banks mainly from the point of view of their contribution to the development of manufacturing industry, placing a strong emphasis on state-bank and bank-industry relations. In spite of decades of research, there is no agreement in the literature as to whether the...

    • EIGHT ON GLOBALIZATION, CONVERGENCE, AND DIVERSITY
      (pp. 213-234)

      In previous chapters I have compared organizational change in three newly industrialized countries during the 1950–99 period. I have presented evidence on a bewildering array of diversity in economic action and organizational form at the firm and industry levels of analysis. My narrative has made systematic comparisons among Argentina’s love-hate affair with globality, Korea’s single-minded, nationalist drive to increase exports and outward foreign investment, and Spain’s pragmatic engagement with the global economy (chaps. 2–5). At the organizational level, I have documented the awesome might of the diversified Korean chaebol, the adaptability of the Argentinegrupos, and the vibrancy...

  10. APPENDIX DATA AND SOURCES
    (pp. 235-242)
  11. REFERENCES
    (pp. 243-274)
  12. INDEX
    (pp. 275-282)