The Rise of East Asia's Global Companies
| Date | 01 May 2013 |
| DOI | http://doi.org/10.1111/1758-5899.12052 |
| Author | Sung‐Young Kim |
| Published date | 01 May 2013 |
The Rise of East Asia’s Global Companies
Sung-Young Kim
University of Auckland
Abstract
How have the developmentally oriented states of East Asia coped with the unprecedented levels of structural power
that global companies now possess? This article argues that under conditions of intensifying knowledge-based compe-
tition, states with strategic industry objectives seek new ways of managing collaborative ties between public and pri-
vate actors. The argument is developed by examining the development of the Korean telecommunications sector from
the 1980s to the 2000s. The Korean state’s relationship with the conglomerates or chaebol has been based increasingly
on an equal partnership in which the chaebol themselves are expected to bear greater responsibility for promoting
national techno-industrial competitiveness. These expectations have been translated into two main forms: (i) collaborat-
ing in state-sponsored efforts to promote the international standardization of Korean-developed technologies, and (ii)
providing initial markets for the innovations created by fledgling high-tech start-ups who provide crucial sources of
innovation in the pursuit of the Korean state’s emphasis on transitioning towards innovation-led development.
Policy Implications
•The impressive economic transformation of states throughout East Asia over the past 50 years cannot be explained
without understanding the role and relationship between governments and firms. In the case of Korea, the state
created a system that supported the emergence of huge conglomerates, or the chaebol. However, it would be
wrong to believe that this historical legacy has been overridden by the globalization of the world economy and
the power the chaebol now possess as global companies. Instead, in an international environment marked by
intensifying levels of knowledge-based competition, the continued growth of the most global companies will be
highly dependent on the transformative capacity of their national governments.
•In Korea’s case, the state continues to support firms in moving beyond catching up to a position of technological
leadership by coordinating new forms of state–industry ties in which firms themselves assume a greater burden in
promoting national techno-industrial competitiveness. The developmental state architecture is being employed to
effectively support Korea’s global companies to globalize Korean technologies.
Although Korea’schaebol are now more powerful than
ever, they have not taken over from the Korean state;
rather they have taken on greater responsibilities dele-
gated by the state over the formulation and implementa-
tion of policies that promote national techno-industrial
competitiveness. The case of the telecommunications
sector demonstrates that this is facilitating not just their
emergence as global technological leaders, but also the
growth of new high-tech start-ups who provide critical
sources of innovation.
It has long been recognized that large corporations (as
opposed to small firms) are endowed with a structurally
privileged position in the public domain –based on their
contribution to the economic wellbeing of a country –
that enables them to resist changes that are perceived to
threaten their interests (Block, 1992; Lindblom, 1977). The
‘global companies’label has been used to describe the
development of large corporations that have become
more numerous, grown in size, entrenched their
domestic and international sales positions, extended their
production networks internationally and maintain
monopolistic control over virtually every market sector
(Harrod, 2006, pp. 24–28). To this, we may add the
important role that knowledge accumulation –specifi-
cally technological capabilities –plays in strengthening
the market positions of global companies. A radical view
of the impact of global companies argues that transna-
tional corporations have become ‘denationalized’
through abandoning their ties to the country of origin
while simultaneously converging into a single organiza-
tional form (Ohmae, 1990, p. 94). There are, however,
strong doubts over how ‘global’global companies really
are. An abundance of studies has demonstrated empiri-
cally that the world’s leading transnational corporations
operate in a manner heavily influenced by the institu-
tions of their home countries.
1
In light of the findings
produced in such works, global companies should be
viewed as ‘national corporations with international opera-
Global Policy Volume 4 . Issue 2 . May 2013
184
Special Section Article
©2013 University of Durham and John Wiley & Sons, Ltd. Global Policy (2013) 4:2 doi: 10.1111/1758-5899.12052
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