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Socioecon
Socio-Economic Review (2013) 11, 265–300
Advance Access publication February 14, 2013

doi:10.1093/ser/mwt002

Asian business systems: institutional comparison, clusters and implications for varieties of capitalism and business systems theory
INSEAD, 1 Ayer Rajah Avenue, Singapore 138676, Singapore
*

Correspondence: michael.witt@insead.edu

We present an institutional comparison of 13 major Asian business systems—
China, Hong Kong, India, Indonesia, Japan, Laos, Malaysia, the Philippines, Singapore, Korea, Taiwan, Thailand and Vietnam—with one another and five major
Western economies—France, Germany, Sweden, the UK and the USA. We find five major types of business systems in Asia: (post-)socialist, advanced city, emerging Southeast Asian, advanced Northeast Asian and Japanese. With the exception of Japan, all Asian forms of capitalism are fundamentally distinct from
Western types of capitalism. We conclude that the Varieties of Capitalism
(VOC) dichotomy is not applicable to Asia; that none of the existing major frameworks capture all Asian types of capitalism; and that Asian business systems
(except Japan) cannot be understood through categories identified in the West.
Our analysis further suggests a need for the field to invest in further research on social capital, culture, informality and multiplexity.
Keywords: Asia, Varieties of Capitalism, social capital, culture, China, Japan
JEL classification: P1, P2, P50

1.

Introduction

The exploration of Asian business systems1 can look back on a long and proud history. Among its earlier classics are works such as Dore’s (1973) comparison
1

In this paper, we define ‘Asia’ to mean the land mass from India to Japan, excluding the territory of
Russia. We use the term ‘business system’ to refer to the institutions—that is, the ‘humanly devised constraints that shape human interaction’ (North, 1990, p. 3)—governing economic activity inside and outside the firms, as identified in the models of



References: Amable, B. (2003) The Diversity of Modern Capitalism, Oxford, UK, Oxford University Press. Anchordoguy, M. (2005) Reprogramming Japan: The High Tech Crisis under Communitarian Capitalism, Ithaca, NY, Cornell University Press. Andriesse, E. and van Westen, G. (2009) ‘Unsustainable Varieties of Capitalism along the Thailand –Malaysia Border? The Role of Institutional Complementarities in Regional Aoki, M. (1988) Information, Incentives, and Bargaining in the Japanese Economy, Cambridge, UK, Cambridge University Press. Aoki, M. (2007) ‘Conclusion: Whither Japan’s Corporate Governance?’. In Aoki, M., Jackson, G Downloaded from http://ser.oxfordjournals.org/ by guest on March 24, 2014 in Asia: (post-)socialist economies, advanced city economies, emerging Southeast These findings suggest, first and foremost, that the traditional dichotomy of CMEs versus LMEs (Hall and Soskice, 2001) is not useful for understanding Asian business systems. Indeed, none of the existing major frameworks (Whitley, 1999; Amable, 2003) account for the full range of categories visible Aoki, M., Jackson, G. and Miyajima, H. (eds) (2007) Corporate Governance in Japan: Institutional Change and Organizational Diversity, Oxford, UK, Oxford University Press. Babble, E. R. (2012) The Practice of Social Research, Belmont, CA, Wadsworth Publishing. Berger, S. and Dore, R. P. (eds) (1996) National Diversity and Global Capitalism, Ithaca, NY, Cornell University Press. Berger, P. L. and Luckmann, T. (1966) The Social Construction of Reality: A Treatise in the Sociology of Knowledge, Garden City, NY, Doubleday. Boisot, M., Child, J. and Redding, G. (2011) ‘Working the System: Towards a Theory of Cultural and Institutional Competence’, International Studies in Management and Boyer, R., Uemura, H. and Isogai, A. (eds) (2012) Diversity and Transformations of Asian Capitalisms, Abingdon, UK, Routledge. Casper, S. and Whitley, R. (2004) ‘Managing Competences in Entrepreneurial Technology Firms: A Comparative Institutional Analysis of German, Sweden and the UK’, Research Dore, R. P. (1973) British Factory, Japanese Factory: The Origins of National Diversity in Industrial Relations, Berkeley, CA, University of California Press. Dore, R. P. (2000) Stock Market Capitalism: Welfare Capitalism: Japan and Germany versus the Anglo-Saxons, Oxford, UK, Oxford University Press. Dore, R. P. (2007) ‘Insider Management and Board Reform: For Whose Benefit?’. In Aoki, M., Jackson, G Edwards, T., Almond, P., Clark, I., Colling, T. and Ferner, A. (2005) ‘Reverse Diffusion in US Multinationals: Barriers from the American Business System’, Journal of Management Studies, 42, 1261–1286. Esser, H. (2008) ‘The Two Meanings of Social Capital’. In Castiglione, D., van Deth, J. W. Evans, P. B. (1995) Embedded Autonomy: States and Industrial Transformation, Princeton, NJ, Princeton University Press. Downloaded from http://ser.oxfordjournals.org/ by guest on March 24, 2014 Bond, M Fligstein, N. (2001) The Architecture of Markets: An Economic Sociology of Twenty-first-century Capitalist Societies, Princeton, NJ, Princeton University Press. Fukuyama, F. (1995) Trust: The Social Virtues and the Creation of Prosperity, New York, Free Press. Hall, P. A. and Gingerich, D. W. (2009) ‘Varieties of Capitalism and Institutional Complementarities in the Political Economy: An Empirical Analysis’, British Journal of Political Science, 39, 449 –482. Hall, P. A. and Soskice, D. (2001) ‘An Introduction to Varieties of Capitalism’. In Hall, P. A. Harada, Y. and Tohyama, H. (2012) ‘Asian Capitalisms: Institutional Configurations and Firm Heterogeneity’

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