Globalization, Convergence, and the Transformation of International Production Networks in Electronics in East Asia

Abstract

Globalization is often said to lead to convergence among firm strategies. Significant differences existed in the organization of the production networks of Japanese and US firms in electronics in East Asia at the beginning of the 1990s. The sources of these differences lie in part in the relative newness of the export-orientation of Japanese companies, in weaknesses in Japanese corporate governance, in the geographical proximity of East Asian plants to Japan, and in the product mix of Japanese firms. An opening of Japanese production networks occurred in the first half of the 1990s in part in response to pressures associated with various forces of globalization, including the diffusion of capabilities, changes in technology, and the internationalization of the Japanese economy. This opening of Japanese networks caused them to converge towards their American counterparts. Partial convergence, however, coexisted with persistent diversity relative to the behavior of US networks. While nationality continued to matter, other factors affecting firms have to be incorporated into the analysis to explain the persistent diversity of firm behaviors.