Cornell Studies in Political Economy. Ithaca; London: Cornell University Press, 2016. xviii, 288 pp. (Tables, figures.) US$89.95, cloth. ISBN 978-1-5017-0255-6.
The rise of industrial East Asia and the emergence of East Asian firms as major competitors in global markets has been one of the most game-changing developments in the international economy over the past half century. Perhaps the most prominent theory that scholars have developed to explain this phenomenal performance has been the developmental state. At the heart of the developmental state model is the positive role of state intervention as a primary variable for explaining quantitative and qualitative growth. In the context of this literature, Yeung’s Strategic Coupling: East Asian Industrial Transformation in the New Global Economy is a welcome exploration of alternative explanations for the success of East Asian firms. It argues for going beyond a state-centric view of firm development and proposes the concept of “strategic coupling”—integration into global production networks via the processes of strategic partnership, industrial market specialization, and repositioning as global lead firms—as an explanatory variable for the competitive rise of East Asian firms and national development outcomes of East Asian economies.
This book consists of an introductory chapter, an historically and theoretically oriented part comprised of two chapters, an empirically focused part with three chapters that feature detailed industry and firm case studies, and a concluding chapter.
Chapter 1 sets the stage by introducing the “strategic coupling” model and by outlining the book as a whole. Chapter 2 challenges the developmental state model by discussing the transformation of state-firm relations in East Asia since the late 1980s. It argues that firms have transitioned from junior partners of the state to autonomous lead actors. Chapter 3 develops the “strategic coupling” model by highlighting the two elements of “strategic disembedding” of domestic firms from the post-developmental state and “reembedding through strategic coupling” of these firms in global production networks. It introduces the three core processes of the “strategic coupling” model: first, strategic partnership to develop firm-level competences and to work with global lead firms as network partners; second, industrial market specialization on a regional or global basis to establish a firm as a global market leader in specialized markets for intermediate or finished industrial goods; and third, repositioning as global lead firms to transform a firm as a global brand manufacturer or service provider. Lastly, it examines different trajectories of economic development in the three empirical settings at the heart of this study: South Korea, Taiwan, and Singapore.
Chapter 4 looks at strategic partnerships via detailed case studies that highlight how firms from Taiwan and Singapore have transformed themselves from low-cost original equipment manufacturers to world-class original design manufacturers and electronic manufacturing services providers in the global electronics industry. It points to firm-specific initiatives in the areas of manufacturing excellence, supply chain management, and fulfilment services which have enabled domestic firms to integrate into the value chains of global lead firms. Chapter 5 investigates industrial specialization by focusing on case studies from the marine engineering industry in South Korea and Singapore and the semiconductor industry in Taiwan, Singapore, and South Korea. Yeung finds that state investment had enabled these firms to gain an initial foothold in their respective industries. Their more recent success, however, can be attributed to their technological and organizational innovation capabilities in the context of global production networks. Chapter 6 explores the emergence of East Asian lead firms via establishing global brand names and achieving excellence in service delivery in the case of computers and consumer electronics in Taiwan and South Korea, automobiles in South Korea, and civil aviation in Singapore.
In chapter 7, the author concludes with a discussion of theoretical implications and policy lessons. He acknowledges that the state continues to matter in economic development but argues that, in an age of global production networks, successful industrial transformation is likely to be contingent upon transitioning from “picking winners” to a catalyst-oriented policy approach designed to create industrial ecosystems and to maximize inter-industry and inter-firm linkages that allow domestic firms to take advantage of these very global production networks.
This study is at its best when exploring how East Asian firms have pursued different strategies (strategic partnership, industrial market specialization, and repositioning as a global lead firm) for plugging into a globally connected economy. Its emphasis on firms as rule makers in their industries and as active agents of their own destiny is a welcome alternative perspective to the view of firms as rule takers and almost passive recipients of state guidance implicit in some variants of the developmental state model.
In terms of its research design, however, this study would shine even more if it had addressed the following issues. First, there does not seem to be an explicitly stated rationale for the selection of case studies. Why Singapore, South Korea, and Taiwan? Why not other countries? A study at the intersection of country-level economic development models and firm-level strategy in the context of post-1980s East Asia might benefit from the inclusion of China and Chinese firms. Second, there is somewhat of a gap between the time of publication of this study (2016) and the time frame during which interviews were conducted (2004 to 2008). Perhaps more recent follow-up interviews subsequent to the 2008 economic crisis would have allowed the author to develop a more nuanced perspective regarding the future viability of a strategic coupling-based strategy in a post-2008 crisis era of increasing economic nationalism and protectionism.
Notwithstanding these quibbles, Strategic Coupling: East Asian Industrial Transformation in the New Global Economy is an interesting study that augments the state-centric perspective of the developmental state model with a more nuanced view that highlights firm-level agency and the strategic potential of embedding into global value chains.
Marc Szepan
University of Oxford, Oxford, United Kingdom