Economic Geography

Globalizing Asian capitalism: dynamics of change 
and adjustments
In explaining the cross-border investment activity of leading Asian firms and
uncovering their closely-knit network relationships, economic geographers have
realized that institutionalized patterns of political, economic, and cultural processes
in their home economy must have played a decisive role much more than simply
as a contextual factor. Rather, these institutionalized structures must have a
direct bearing on the processes and outcomes of the globalization of Asian firms.
For example, despite their very similar historical and geographical contexts, TNCs
from Hong Kong and Singapore exhibit very different ownership structures,
corporate governance, and entrepreneurial strategies (Yeung 2002). Whereas
large Hong Kong TNCs tend to be organized in the form of entrepreneurial
family-controlled enterprises (Leung 1993; Mitchell 1995; Olds 2001), large
Singapore-based TNCs are mostly state-owned and managed by former civil
servants. TNCs from both economies also have contrasting business practices
and financial discipline. The same economic-geographical observation can also
be applied to TNCs from Taiwan and South Korea, both of which are former
Japanese colonies and yet have produced TNCs of very different organizational
structures and industrial specialization (Cho 1997; Hsing 1998; Hsu and Saxenian
2001; Park 1996). These enduring home-economy institutional imprints on national
firms and their globalization strategies might seem rather odd at a time (late 1990s)
when the popular debate on globalization had moved in favour of a wholesale
convergence in global business norms and practices in an allegedly ‘borderless
world’ – a derisive term coined by business guru Kenichi Ohmae (1990).
In contesting this global convergence perspective, organizational sociolo-
gist Richard Whitley (1992) has developed a business system approach to 

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understanding the enduring influence of home country on business firms. In this
approach, Whitley (1992) focuses on enduring institutions in national economies
such as political systems, economic beliefs, cultural norms, employment relations,
and so on. He argues that business systems vary significantly across different 
capitalist economies. As different forms of capitalism entail different business
systems, Whitley (1999) proposes the idea of ‘divergent capitalisms’ to describe
the social structuring of business systems. Joining a number of other prominent
political scientists and economic sociologists, Whitley (1992, 1999) subscribes to
the view that globalization continues to accentuate systemic differences that exist
prior to the onslaught of global processes. This is the so-called ‘divergence school’
in studies of global political economy.
Confronting with these two contrasting schools of thought on economic
globalization and its impact on capitalist economies, economic geographers have
found supporting evidence for both schools in their studies of the political-economic
structures of many Asian economies dominated by ethnic Chinese business firms
(e.g. Indonesia, Hong Kong, Malaysia, Singapore, Taiwan, and Thailand). Just
when leading Asian firms are becoming significant players in the competitive
global economy through their globalization activities, their home economies are
exerting structural influences on their business strategies and corporate practices.
To reconcile this apparent paradox in understanding Asian capitalism, some
economic geographers have begun to take on an actor-specific approach to
understand the dynamics of Asian capitalism and to transcend the dualistic think-
ing manifested in much of the convergence-divergence debate (Olds 2001; Olds
and Yeung 1999; Yeung 2000, 2004).
Drawing upon Nigel Thrift’s (1996) geographical adaptation of actor-network
theory, these economic geographers have revisited the earlier business network
perspective and incorporated heterogeneous relationships among actors as a
central driving force in their network analysis (see Coe et al. 2004; Dicken et al.
2001; Henderson et al. 2002). This actor-specific approach moves away from a
structural reading of the global economy in which enduring institutions of capi-
talism are seen as either outdated models to be replaced by a more superior form
of global economic coordination (the convergence school) or persistent stum-
bling blocks to global convergence (the divergence school). Instead, economic
geographers have placed significant analytical emphasis on key capitalist actors
such as business firms and examined how their participation in globalization
processes could have generated powerful ‘bottom-up’ effects to transform those
enduring home economy structures and institutions. In the case of Asian capitalism,
this actor-specific approach has worked well when we consider the dynamics of
ethnic Chinese business firms in engaging with globalization tendencies and in
bringing about significant transformations in their home economies.
One of the most interesting geographical insights from this actor-specific
approach to globalizing Asian capitalism is the analytical role of spatial scales in
helping us to draw connections across drastically different processes. Take culture
as an example. The Asian Confucian heritage and culture came to the forefront of
debate on the meteoric rise of East and Southeast Asia during the late 1980s and

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