Chapter 2 - The Historical Development of East Asian Business Networks: Trade, Colonialism, and the State

Abstract

Historical perspective offers valuable insights into the origins and purposes of inter-firm networks and business groups, and questions simple distinctions between ‘marketized’ Western and ‘networked’ East Asian systems. The 19th century witnessed a rapidly expanding global economy and the spread of colonialism, and Western multinational enterprises and indigenous enterprises significantly influenced each other’s development. Both relied on networks of trust relationships, shared investments, and entrepreneurial deal-making suited to Asia’s developing trade-orientated economies. After the Second World War, decolonization forced Western multinationals to withdraw, and reformed and newly-established nation states encouraged the growth of local business groups. Analysis demonstrates the importance of international and market factors in shaping business systems, and subsequently, the relevance of both government policy and external influences. The reliance of multinationals on global networks since the 1990s has historical antecedents, and re-emphasizes the impact of international trends on national business systems.