Economic Geography

From an anomaly to major leagues: Asian firms 
in the global economy
By the early 1990s, many Asian TNCs had already grown out of their former
shadow as an anomaly in the global economy. Some of them had become 
significant competitors in such diverse industries as air and sea transportation
(e.g. Singapore Airlines and Evergreen Shipping Lines), consumer and computer
electronics (e.g. Samsung and Acer), semiconductors (e.g. TSMC and UMC),
textile and garments (e.g. Fountain Set and Esquel Group), hotels (e.g. Shangri-
La Hotels), property development and construction (e.g. Hutchison Whampoa),
and so on. They were no longer mere followers of giant TNCs from advanced
industrialized economies; they had become in their own right major competitors
in the global economy. To account for this significant transformation in the orga-
nizational and competitive dynamics of Asian TNCs, economic geographers natu-
rally turned to leading theoretical perspectives in international economics and
international business studies such as Stephen Hymer’s market power perspective,
Raymond Vernon’s product life-cycle hypothesis, Peter Buckley and Mark Casson’s
internalization theory, and John Dunning’s eclectic framework of international
production. While these perspectives explain reasonably well why domestic firms
engage in international production from an economic standpoint, they fail to
account for the processes of organizing international business activities. Moreover,
they are overtly based on economic considerations, ignoring the peculiar social and
institutional contexts from which these Asian TNCs emerge. One such important
Asian context is the role of personal and social networks in engendering economic
processes; this critical context is clearly difficult, if not impossible, to be subsumed
under the conceptual apparatus of transaction cost economics that tends to 
dominate most of these economic models of TNCs.
At around the same time, a heated debate in economic geography was focus-
ing on the changing organization of production systems in different industrial
districts and new industrial spaces, again, in advanced industrialized economies –
the so-called flexible specialization debate. Back then, this debate represented a
telling move away from the Marxist structural understanding of the role of firms

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and their production systems in contemporary capitalism that came to dominate
economic geography of the 1970s and the 1980s. Instead, the flexible specializa-
tion debate focused on how business firms are actively transforming their orga-
nizational processes in order to ride out of capitalist crises. In initiating what was
subsequently termed the ‘cultural turn’ in economic geography, Peter Dicken and
Nigel Thrift (1992) were one of the earliest in economic geography to incorpo-
rate the concept embeddedness in their conceptualization of the dynamic organi-
zation of business firms (Yeung 2003). Originally developed by Karl Polanyi to
explain capitalism’s institutional transformation, the concept was reinvigorated
by economic sociologist Mark Granovetter (1985) to counter what he called
‘under-socialized’ account of economic life found in most transaction cost analy-
sis of firms and markets. To Dicken and Thrift (1992: 285–6; original italics), the
organization of production chains and production systems through business
organizations can thus be conceptualized ‘as a complex set of networks of inter-
relationships between firms which have differing degrees of power and influence’.
Inspired by Dicken and Thrift’s (1992) reconceptualization, economic geo-
graphers have subsequently expanded on this notion of social embeddedness of
business firms in a business network perspective that accounts for both economic
and non-economic relations at the intra-firm, inter-firm, and extra-firm dimensions
(Grabher 1993, 2006; Yeung 1994). This network perspective extends earlier work
in organizational studies that focuses primarily on inter-organizational networks.
The advantage of this network perspective rests in its capacity to incorporate
different loci of power and control within specific firms (intra-firm dimension)
and significant bargaining and cooperative relationships between business 
firms and other institutions such as government agencies and NGOs (extra-firm
dimension). Unknowingly then, this network perspective has anticipated the
recent ‘relational turn’ in economic geography through which we place great
analytical emphasis on dynamic relations among social actors in producing diverse
economic geographies (see Yeung 2005).
More specifically, economic geographers have successfully applied this business
network perspective and explained the internationalization of entrepreneurs and
firms from Asia to North America (Hsu and Saxenian 2000; Mitchell 1995; Olds
2001; Zhou and Tseng 2001) and within Asia (Hsing 1998; Leung 1993; Qiu
2005; Yang and Hsia 2006; Yeung 1997, 1998). This economic-geographical
approach pays special attention to different forms of network relationships in
which Asian entrepreneurs and their firms are embedded. In doing so, it has
effectively transcended the economistic approach to explaining TNCs and FDI
commonly found in earlier studies of ‘Third World multinationals’ (e.g. Lall 1983;
Wells 1983; cf. Yeung 1999). This strength of the network perspective on TNC
activities is significant as most studies of TNCs and FDI throughout the 1980s and
early 1990s have focused narrowly on transaction cost economizing strategies of
these capitalist firms. The network perspective pursued by economic geographers
thus allows us to link economic outcomes of TNC activities in one place to non-
economic strategies pursued by social actors (e.g. entrepreneurs and managers)
elsewhere. It represents one of the most unique economic-geographical 
Globalizing Asian capitalisms
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Henry Wai-Chung Yeung
insights – our attentive consideration of economic relations spanning different
spaces and places. Instead of seeing economic action as discrete decisions in the
context of arm’s length market transactions – a common problem in most
economic models of TNCs, the network perspective identifies relational synergis-
tic effects embedded in ongoing interaction among social actors.
One such critical synergy in the case of large Asian firms and TNCs is the role
of family in their ownership and control. The World Investment Report 2004
describes that in 2002, some 32 of the world’s top 50 TNCs from developing
economies ranked by foreign assets originated from Asia. At least 18 of these 
32 Asian TNCs are family-owned and controlled. The rest are mostly state-owned
TNCs from Singapore and Malaysia (about 10 of them). The dominant role of
family in Asian business and thus the emergence of Asian TNCs may not be
surprising (La Porta et al. 1999). What is rather unexpected is the rapid growth
and expansion of these large TNCs from Asia to become significant competitors
in the global economy by the turn of the new millennium. A direct research
problem emanating from this economic-geographical phenomenon is the
concomitant evolution of family business and homegrown TNCs in Asia.