Twentieth century models for the twenty‐first century: models of fast growing firms and industries in the twentieth century for fast growing firms and industries in the twenty‐first century
| DOI | https://doi.org/10.1108/15587891211254380 |
| Published date | 20 July 2012 |
| Pages | 160-175 |
| Date | 20 July 2012 |
| Author | W. Mark Fruin,Masao Nakamura |
| Subject Matter | Strategy |
Twentieth century models for the
twenty-first century: models of fast growing
firms and industries in the twentieth century
for fast growing firms and industries in
the twenty-first century
W. Mark Fruin and Masao Nakamura
Abstract
Purpose – This paper aims to present a general review of the circumstances of America and Japan’s
rapid corporate, economic and industrial development in the twentieth century.
Design/methodology/approach – The approach considered and evaluated how the circumstances of
America and Japan’sgrowth might apply to China and India, two of the fastest growing economies of the
twenty-first century.
Findings – The findings suggest that both America and Japan might be considered exceptional cases
and, as such, neither one might be regarded as a good model for emulation. However, the
circumstances of Japan’srapid growth appear closer to those of contemporary China and India and on
that basis the authors suggest that Japan might be a better model for emulation.
Originality/value – The American model is too novel and unlikely to be imitated, replicated or repeated
whereas Japan’s high population de nsity, agrarian origins, state assi sted and administered
development, adaptation and hybridization of local and imported methods and technologies, kinship,
pseudo-kinship and locality based business groupings, and rapid, come-from-behind charge toward
industrialization, urbanization and international emergence, all suggest that Japan offersa more relevant
and useful development model.
Keywords Rapid development, Late development, Economic development,
Models of and models for development,
American models of corporate, industrial and economic development,
Japanese models of corporate, industrial and economic development, United States of America, Japan
Paper type General review
Twentieth century models of firm and industry organization
During the twentieth century, two models of firm and industry organization associated with
rapid economic growth emerged: a model based on the early to mid-century years of
development in the US, and a model encompassing mid- to late-century growth in Japan.
Both models sought to explain why firms and industries grew as fast as they did for as long
as they did in America and Japan. More recently, both models have experienced reversals,
Japan’s in the 1990s and America’s in the twenty-first century.
America’s models of firm and industry organization were long considered canonical in
academic and economic development circles while, at the same time, Japan’s were seen as
non-western, non-mainstream and, hence, short-lived. But now, firms and industries in Asia
power three of the world’s five largest economies and seven of the largest 12. A rethinking of
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W. Mark Fruin is Professor
at the Department of
Organization and
Management, College of
Business, San Jose State
University, San Jose,
California, USA.
Masao Nakamura is
Professor at the Sauder
School of Business,
University of British
Columbia, Vancouver,
British Columbia, Canada.
high growth models may be in order in light of Asia’sfast growing economies. America’s may
not be so normative and Japan’s so atypical.
The logic of models
All social science models are descriptive. Observe and generalize. In the doing so, it is
necessary to be selective – selective as to the timings and places of observation. Some
observations are recorded, the rest neglected, and then they are categorized, refined, and
tested. The result is a shorthand version of reality – one that is much easier to manipulate
than the messy world we began with.
There are dependent and independent variables in such models. In this paper, the
dependent variable is why firms and industries grew as fast as they did, in the ways that they
did, and for as long as they did. The independent variables are environmental and
institutional factors. Firm and industry performance are predicated as outcomes influenced
by environmental and institutional conditions.
In classic evolutionary theory, organizational performance is predicated on environmental
factors. Lately, the importance of co-evolution – the mutual influence of actors on
environments and environments on actors – has been recognized. However, when firms and
industries are modeled ex post facto, as America and Japan’shave been, emulation is never
a case of co-evolution. The historical interactions of firms, industries and environments
cannot be copied. Interrelationships may be structured a priori but interactions cannot be.
Hence, in this paper,we follow the classic model of evolution wherein organizations respond
to and are shaped by environmental factors.
Neither American nor Japanese models of firm and industry organization were built to
predict the future – how firms and industries in China and India might benefit from their
experiences, for example – but, inevitably, such interpretations arise. In our opinion, the
hell-bent-for-leather, heavily agrarian, high population density, business group based,
government involved, -funded and -administered, late development charges of China and
India seem to reprise much of Japan’sexperiences. Japan’s models may better predict what
may happen in China and India.
To test this conjecture, descriptions of the circumstances of economic growth in America
and Japan follow. In fact, both countries and their firm and industry trajectories may be
considered outliers because the spectacular rates of growth realized in both countries hinge
on highly unusual circumstances, making the case for emulation unlikely. Outliers are not
good models. However, success stories are always emulated and copied, not stories of
lackluster performance. Given that imitation will occur, which country’s models are more
replicable?
Firms and industries in America: big is beautiful
1. The North American continent was a huge, resource-rich, and largely undeveloped
landmass where the rule of law was well developed and property rights (of white
Europeans) were well enforced almost from the start. There was so much land for the
taking that well into the nineteenth century in America and twentieth in Canada,
homesteading was commonly practiced west of the Mississippi and north of the
US-Canadian border, including Alaska. Thewestward movement of people, capital and
technologies defines the meta-history of North American development.
2. Wave after wave of ambitious, hardworking immigrants from Europe and Asia fueled
America’s (and Canada’s) agricultural, fishing, mining, transportation and
manufacturing industries. As land was available for the taking, industries for resource
extraction and conversion absorbed large numbers of immigrants. Fishing, lumber,
mining, manufacturing and transportation industries were swelled by increasing
workers, and a network of small, medium and large sized cities grew up around
extraction, transportation and marketing activities.
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