Japanese and Korean Multinationals: The Replication and Integration of Their National Business Systems in China

Abstract

Differing national institutional environments are considered to have fostered the development of distinctive national business systems. These business systems have an impact upon the way in which companies from different countries operate their international ventures. Based upon data from case studies conducted in Japan, Korea and China, this paper compares and contrasts the impact of national business systems on Japanese and Korean multinationals' operations in China's electronics sector. The main focus is upon differences in the extent of integration of these two countries' multinational companies into the Chinese economy. Our research indicates that the different business forms of Japanese and Korean firms in their home context affect the way firms from these countries internationalize. We demonstrate that although ventures from both Japan and Korea operate in an economy largely parallel to rather than integrated with indigenous firms, the degree of separation is particularly marked for Japanese enterprises. Korean firms develop more linkages with Chinese suppliers and customers. We explore the reasons for this and some of the consequences and implications both for the businesses themselves and for the development of the electronics sector in China. We suggest, for instance, that the Japanese business system, which works well in the parent country, is less well adapted when transported overseas, whereas the Korean form throws up unexpected advantages.