[Date: mm/dd/yyyy]
Late development enhances the acquisition of the innovative systems due to which differed national institutions and business systems originate. The developing countries may encounter with the high cost of technology and resource utilization, however, it remains at the cost advantage in comparison with the developed countries due to low labor cost. The late developing countries acquire knowledge and experience from the developed countries due to which they originate their systems and institutions in an effective manner and thus, can boost their GDP by learning from the developed countries efficiently. The late development ensures the flow of knowledge, experience and technology and paves the way for the multinationals to capture the market in the emerging countries (Bowles and White, 1993).
The national business system incorporates the relation between the economic organizations, comprising of multinationals and business entities, and institutions at societal level in order to strengthen the prevalence of capitalism in the country. The national business system is considered as the unit of analysis in which the organization in accordance with their societal factors. These factors are comprised of market relations, market coordination and control systems in the organizations.
The national business system encompasses the prevalence of the multinationals in the emerging economies in which these multinational tend to integrate in the local market by making its policies, products and work systems in accordance with the local culture, economy and customer preferences. The national business systems are influenced by the sociocultural dynamics of the country due to which they need to shape their strategic decisions. The prevalence of the these business systems fosters the national economy due to which industries and sectors develop in the emerging economy and helps the country to achieve the sustainable economic system (Barry et al. 2003).
The national institutions are comprised of the governing bodies that regulate the business systems in accordance with the national interest. The business systems are required to remain in compliance with the national institutions. The national institutions tend to differ by means of encouraging or discouraging certain business organizations due to which strategies, governance, authority and employer-employee relations are highly effected. The prevalence of the heterogeneous national economies results in the strengthening of institutions due to their role in the governance and regulation in the business activities. However, national institutions are not able to develop the national economies in order to meet the competitive demand and thus, they are dependent on the social and political structure of the country. Moreover, the integration between the national institutions and national business systems results in the dynamic economic change in the country and helps in the transformation of the society in order to become sustainable (Johnston and Kilby, 1975).
The national systems, comprising of government and economic organizations have been changed and the change was found to be considerable in the 1980s. The increasing extent of globalization resulted in the changes in the national systems because the business organizations were provided with the opportunity to expand their business operations in the emerging international economies. The national systems in the countries were becoming heterogeneous in nature due to the intervention of multinational companies, which eventually resulted in the higher extent of competition and enhanced the economic activities in the countries (Buttel, 2001).
The industrial revolution resulted in the development of the industrial economy in the late 18th to early 19th century in which the emphasis on the agriculture was reduced. In the second industrial revolution, that took place during the mid-19th century, integrated with the notion of globalization which paved the way for the business entities to expand their business operations at a global level. In this manner, the national systems were influenced by the role of the multinationals by means of increase in the employment opportunities, consumption and production. The concentration of employees and labors towards the industrial areas resulted in the development of large towns, which eventually resulted as the emerging cities in the mid-20th century (Frieden, 1992).
The second industrial revolution or late industrialization resulted in the development of the international political economy in which macroeconomic planning was conducted by the state authorities. It resulted in the termination of the feudal system and provided the workers with the opportunity to learn and enhance their skills and increase their social status. The shift in the economy from agriculture to industrialization due to which reliance on the banks increased because the development of the industrial society required the acquisition of the hi-tech machinery and procedures in order to compete in the national and global environment (Warner et al., 2004).
The private banks existed before the industrialization, however, they were limited in numbers and provided their services to merchants and big industrialists. The industrial revolution provided the entrepreneurs with the opportunity to invest their capital in the emerging economy and due to the availability of the business opportunities, the need for banks for investing purpose took place. In this manner, the banking system was developed to support the short-term and long-term loans for the capitalists. The banks supported the merchants and businessmen to invest in the joint-stock companies in accordance with the limited liability policies due to which the large companies became able to enhance their business operations with the finance acquired from the bank-supported joint stock investments (Lundvall, 2007).
The development of business groups was followed in the industrial revolution in which the business loans were available with the limited liability due to which the number of companies came together to invest heavily in the emerging economy. The stock markets provided the joint-stock companies to meet their financial requirements regardless of their liability and hence, the industrialists switched their preference for capital generation towards the stock market. Similarly, the investors were also provided with the opportunity to invest in the low-risk and high-risk business portfolios via the stock markets in order to acquire achieve the best possible returns from their capital. The financial securities were traded in the stock market to acquire capital in terms of the investor’s profitability and accepted business risk rather than engaging in the financial agreements that incorporate liability on the companies (Kojima, 2010).
The emerging economy was incorporated by the industrial policies of the country in order to foster and develop the specific sectors of the economy. The countries were aimed on developing their industries in order to gain competitive advantage and enhance the capabilities of the domestic firms. The industrial policies were related to the respective fiscal and trade policies in order to support the money supply in the country and balance the trade deficit. In this way, the countries became able to check on their investments by means of developing the fiscal policy and manipulating the inflation whereas, acquired the competitive advantage in indulging in the bilateral trade agreements in order to foster their industries and achieve profits with the economies of scale, which eventually developed the national institutions (Guillen, 2000).
The institutions tend to concentrate their resources on specific sectors in order to make those sectors competitive in the global paradigm. China in this instance, utilized its resources in the manufacturing sector and encouraged the production of transportation equipment and vehicles in the early 60s. In 2002, the automobile industry of China sold 3 million automobiles compared to its sales of 1.4 million in the year 1995 (Gereffi, 2005). In this manner, the concentration of institution resulted in the competitiveness and achievement of the advancement in production capacity. Similarly, the institutions of Japan concentrated its resources and focus on the biotechnology and pharmaceutics in the late 80s, and Japan engaged in the tri-polar networks with the United States and the United Kingdom. The flow of knowledge, experience and focus on the industry made the Japan to become the second largest market in the world with the annual sales of $60 billion (Pettigrew et al., 2001). Germany concentrated its resources and focus on the technological advancement due to the research and development in Germany and renowned. Its prior focus on the technology resulted it in becoming the pioneer in producing the green technology and hence, accounts for the turnover of 200 billion pounds (Kojima, 2010).
The evolution of the national institutions or business environment incorporated the differentiated strategies, organization and investment opportunities. The national institutions were focused on encouraging the economy by means of providing the business systems with the ability to acquire finance and acquire technology, which eventually required the trained employees in order to keep pace with the technological changes. In this manner, the emphasis of the business systems on the training enhanced so that the employees can become compliant with the emerging technological changes and incorporate in the achievement of the competitive advantage by utilizing the technological support in the work related procedures (Guillen, 2000).
The industrial revolution, ability to acquire finance and globalization helped the organizations to expand their business and operate at an international level, due to which competitive managerial skills were required by these organizations so that they can carry out their business operations in their host countries. Therefore, the enhanced managerial skills by means of the global adaptability, cultural compliant and leadership qualities were required to ensure that the organization’s manager are able to understand the culture of their host countries and can adapt in accordance with their foreign employees and foreign customers. However, the availability of finance enhance the companies’ ability to invest in R&D but, the acquisition of competitive advantage in R&D remain at the short termism because the customers became educated and imposed influence by means of their every-changing demand (Carree, 2002).
Similarly, the marketing systems were also required to be developed in compliance with the host country’s preference in which the customer preferences, values and beliefs related to the products and services. In this manner, the companies had to relate their products and services with the customer need due to which the marketing systems adapted and incorporated a broader perspective on the identification of customer needs, product development and product customization. In this instance, China is considered to fit in the pattern because it effect from the industrialization and late development at a significant level and strived to achieve financial availability from its financial institutions. The human and technical skills of workers are also trained and the extent of education is enhanced in such manner that Chinese companies are competing at a global level in an effective manner (Gereffi, 2005).
The effect of the business institutions and their regulations is considered universal and hence, accounts for Japan and Germany as well. These countries have acquired competitive advantage in the industrial sectors in which they focused and hence, the competition in the educational activities, demand of skilled workers and technological adaptability account for these countries in order to maintain their leading position (Fagerlind and Saha, 2014).
The economic crisis of the 2008 resulted in the debt deficit due to which it resulted in the economic havoc and the solvency of the debtors reduced. Therefore, the policies to support the investment decisions and capital generation were renewed and the security exchange commission incorporated the solvency for the joint stock companies. The business systems in the 1960s were effective to meet the demand at the national level, however, in order to meet the demand at the international level, the business systems required to enhance their products, services and become compliant with the latest technology to acquire economies of scale and become adaptive in technology. These requirements were based on the financial solvency in order to support their objectives of business expansion and globalization and hence, the business systems of the 1960s failed to provide the business systems with the opportunity to expand and compete at the global level (Fagerlind and Saha, 2014).
In order to become competitive in business, the factors comprising of education, skills, employment, worker supply, financial capability and technological adaptability is also important and hence, only the factor of late development is not significant. These factors as a whole result in the advanced development of the emerging countries. The initial stages of the economic development are not irrelevant because they provide the countries with the learning curve due to which they become experienced and adaptive in nature. The developed countries, comprising of Japan, China and Germany are still booming due to their competitive advantage and experience in their respective industrial sectors due to which they are able to learn, adapt and innovate and hence, remain sustainable in the long term.
References
Barry, F., Görg, H. and McDowell, A., 2003. Outward FDI and the investment development path of a late-industrializing economy: evidence from Ireland. Regional Studies, 37(4), pp.341-349.
Bowles, P. and White, G., 1993. The political economy of China's financial reforms: finance in late development. Westview Pr.
Buttel, F.H., 2001. Some reflections on late twentieth century agrarian political economy. Sociologia Ruralis, 41(2), pp.165-181.
Carree, M., Van Stel, A., Thurik, R. and Wennekers, S., 2002. Economic development and business ownership: an analysis using data of 23 OECD countries in the period 1976–1996. Small business economics, 19(3), pp.271-290.
Cumings, B., 1998. The Korean Crisis and the end of 'late' development. New Left Review, pp.43-72.
Fagerlind, I. and Saha, L.J., 2014. Education and national development: A comparative perspective. Elsevier.
Frieden, J.A., 1992. Debt, development, and democracy: modern political economy and Latin America, 1965-1985. Princeton University Press.
Gereffi, G., 2005. The global economy: organization, governance, and development. The handbook of economic sociology, 2, pp.160-182.
Guillen, M.F., 2000. Business groups in emerging economies: A resource-based view. academy of Management Journal, 43(3), pp.362-380.
Johnston, B.F. and Kilby, P., 1975. Agriculture and structural transformation; economic strategies in late-developing countries. Agriculture and structural transformation; economic strategies in late-developing countries.
Kojima, K., 2010. Direct Foreign Investment: A Japanese Model of Multi-National Business Operations. Routledge.
Lundvall, B.Å., 2007. National innovation systems—analytical concept and development tool. Industry and innovation, 14(1), pp.95-119.
Pettigrew, A.M., Woodman, R.W. and Cameron, K.S., 2001. Studying organizational change and development: Challenges for future research. Academy of management journal, 44(4), pp.697-713.
Viotti, E.B., 2002. National learning systems: a new approach on technological change in late industrializing economies and evidences from the cases of Brazil and South Korea. Technological Forecasting and Social Change, 69(7), pp.653-680.
Warner, M., Sek Hong, N. and Xiaojun, X., 2004. ‘Late development’ experience and the evolution of transnational firms in the People's Republic of China. Asia Pacific business review, 10(3-4), pp.324-345.
