John A. Mathews

Competitive Advantages of the Latecomer Firm: A Resource-Based Account of Industrial Catch-Up Strategies

The resource-based view of the firm provides a satisfactory account of how firms go about sustaining their existing competitive advantages, but it is less successful in accounting for how firms create such advantages in the first place, or overcome incumbent advantages, when the firms start with few resources. The paper utilizes the case of latecomer firms from the Asia-Pacific region breaking into knowledge-intensive industries such as semiconductors, to illustrate the issues involved and the resource-targeting strategies utilized. This results in a strategic theory of the overcoming of competitive disadvantages through linkage, resource leverage, and learning. The dynamic capabilities of such firms are enhanced through repeated applications of linkage and leverage. The resources strategically targeted are characterized as being those most amenable to such linkage and leverage, namely those that are least rare and most imitable and transferable, i.e. as positive versions of the criteria utilized in the conventional resource-based view of the firm. It is argued that this adaptation of the RBV is potentially of wide applicability, and is the needed amendment that makes it of prime significance in accounting for latecomer success within the conceptual framework of strategic management.

The origins and dynamics of Taiwan’s R&D consortia

A series of collaborative R&D ventures have emerged in Taiwan, within a quite distinctive institutional framework. Unlike the case of many of the collaborative arrangements between established firms in the US, Europe or Japan, where mutual risk reduction is frequently the driving influence, in the case of Taiwan it is technological learning, upgrading and catch-up industry creation that is the object of the collaborative exercises. The Taiwan R&D alliances were formed hesitantly in the 1980s, but have flourished in the 1990s as institutional forms have been found which encourage firms to cooperate in raising their technological levels. Several alliances could be counted in Taiwan in the late 1990s, bringing together firms, and public sector research institutes, with the added organizational input of trade associations, and catalytic financial assistance from government. The article discusses the evolving organizational architecture of these R&D alliances, utilizing several case studies, and seeks to draw comparisons between these institutional innovations in Taiwan and established collaborative arrangements in the USA, Japan and Europe.

Progress Toward a Circular Economy in China

Eco‐industrial initiatives, which close industrial loops by turning wastes at one point in a value chain into inputs at another point, are attracting growing interest as a solution to the problem of sustainability of industrial systems. Although Germany and Japan have made important advances in building recycling incentives into their industrial systems and sought competitive advantage from doing so, China is arguably taking the issue even further (in principle) through its pursuit of a circular economy, now enshrined in law as an official national development goal. In this article, we review a number of the eco‐industrial initiatives taken in China and compare them using a common graphical representation with comparable initiatives taken in the West and elsewhere in East Asia. Our aim is to demonstrate some common themes across the case studies, such as the transformation from the former linear economy to a circular economy and the evolutionary processes in which dynamic linkages are gradually established over time. We discuss the drivers of these eco‐industrial initiatives as well as the inhibitors, setting the initiatives in an evolutionary framework and introducing a notion of Pareto eco‐efficiency to evaluate them. We make the argument that China might be capturing latecomer advantages through its systematic promotion of eco‐industrial initiatives within a circular economy framework.

Catch-up strategies and the latecomer effect in industrial development

Scholarly attention to the issue of world industrial development now spans at least 60 years – if we go back just to debates over the ‘Big Push’ of Paul RosensteinRodan or to the strategy of construction of forward and backward linkages as emphasised by Albert Hirschman. The great Russian economic historian, Alexander Gerschenkron, outlined an approach to development based on capturing the ‘latecomer effect’ in the 1950s. My purpose in this article is to provide a review of development debates and concepts – such as forward and backward linkages – that is informed by strategising concepts in the modern business literature, as well as by the experiences of development over the past 25 years that post-date these early intellectual contributions. Strategies have a goal or purpose, and the principal purpose of development is to close the gap between the advanced and what Gerschenkron called the ‘backward’ countries. Various institutional and strategic measures have been devised by successful developing countries, permitting some of them – such as those from East Asia – to break into the ranks of relatively advanced countries. The issue is to what extent these institutions and strategies that worked in the post-war period will be expected to work, with suitable modification for new conditions, in the current period. To what extent do the great debates over economic development, which took place 50 and 60 years ago, remain relevant to the task today? To what extent do the hypotheses concerning latecomer development, formulated by Gerschenkron in 1952 for the case of latecomer countries in Europe industrialising in the 19th century, remain relevant to the needs of African or Latin American or Central Asian countries today? These are the issues addressed in this article. The situation facing countries and firms that arrive late on the industrial scene is one that combines apparently hopeless drawbacks, difficulties and inadequacies with advantages that flow precisely from being ‘late’ and not having to go through all the previous steps that incumbents had to endure. It is convenient to call firms in this position ‘latecomers’ – extending the usage introduced by Gerschenkron to the case of firms. Latecomer firms, like latecomer nations, are able to exploit their late arrival to tap into advanced technologies, rather than having to replicate the entire previous New Political Economy, Vol. 11, No. 3, September 2006

A resource-based view of Schumpeterian economic dynamics

Abstract. This paper seeks to offer a theoretical platform where the modern “resource-based view” of the firm might meet with evolutionary economics and the study of entrepreneurship, and with the economics of industrial organization. It does so by proposing the concept of the “resource economy” within which productive resources are produced and exchanged between firms. This is presented as the dual of the mainstream goods and services economy – where the “resource economy” captures the dynamic capital structure of the economy. The paper is concerned to bring out the distinctive principles governing resource dynamics in the resource economy, capturing competitive dynamics in such categories as resource creation, replication, propagation, exchange and leverage; evolutionary dynamics in terms of resource variation, selection and retention; entrepreneurial dynamics in terms of resource recombination and resource imitation, transfer and substitution; and industrial organizational dynamics in terms of resource configuration, resource complementarities and resource trajectories.

Organizational foundations of intelligent manufacturing systems — the holonic viewpoint

Abstract This paper demonstrates that intelligent manufacturing systems can be designed so that they form part of a larger class of technical systems which are structured along “holonic” lines. The properties of the holonic organizational architecture are brought out, and applied to the description of intelligent manufacturing systems (IMS). This brings out the fundamental organizational features of IMS structures, abstracting them from other issues to do with standardization, technical configurations or costs, and enables a clearer understanding of the sources of their superior performance over traditional, functionally structured and centralized manufacturing systems. Finally, the use of the holonic paradigm as a design tool is illustrated, with a view to further developing the organizational clarity and effectiveness of intelligent manufacturing systems.

A Silicon Island of the East: Creating a Semiconductor Industry in Singapore

A remarkable semiconductor industry has been created in Singapore, through highly focused public policy directed towards attracting multinational corporations and leveraging skills and technology from them to spark local industry development. This article assesses the effectiveness of this strategy—examining the viability and sustainability of the industry it created—as well as its replicability. If other countries such as China are to emulate Singapore9s approach, they will have to develop an institutional framework with the capability to direct the processes of technology leverage and diffusion.

Two Models of Award Restructuring in Australia

AbstractAward restructuring represents a fundamental transformation of Australian industrial relations. This article seeks to provide a clear understanding of what is involved in the process and its impact.Awards under Australias system of state compulsory arbitration are legally enforceable documents covering approximately 85 per cent of the workforce.Two ideal types are identified to help explain the type of strategic choices likely to be faced by the key players in deciding on the forms award restructuring should take. One approach bong taken by employers is to narrowly focus on cost minimization measures, resulting in a defensive response from the unions about the ‘trade offs’ or ‘offsets’ they are being asked to make. The other approach involves unions and employers seeking agreement on a range of productivity enhancement measures which are not seen by the participants as having a zero sum outcome. Each of these approaches is discussed in relation to the new industrial relations of work organization...

Economics: Manufacture renewables to build energy security

China’s rise to become the world’s largest power producer and source of carbon emissions through burning coal is well recognized. But the nation’s renewable-energy systems are expanding even faster than its fossil-fuel and nuclear power. China leads the world in the production and use of wind turbines, solar-photovoltaic cells and smartgrid technologies, generating almost as much water, wind and solar energy as all of France and Germany’s power plants combined. Production of solar cells in China has expanded 100-fold since 2005. As the scale of Chinese manufacturing has grown, the costs of renewable-energy devices have plummeted. Innovation has played a part. But the main driver of cost reduction has been market expansion. Germany and South Korea are following similar paths. In short: industrialization can go hand in hand with decarbonization. Too many countries have yet to take notice. The United States and European Union are pursuing counterproductive policies, such as increasing trade tariffs on imported Chinese photovoltaic panels. Restricting global trade in renewable devices will only slow the rate at which costs decrease and will decelerate the world’s retreat from fossil fuels. As a result, uptake of renewable energies globally has been too sluggish to seriously reduce greenhouse gases and tackle climate change. For 15 years, countries have failed to deliver their carbon-reduction commitments under the Kyoto Protocol, hindered by the vested interests of the fossil-fuel industry and fears that the alternatives are costly. The narrative around renewable energies needs to change. As in China, renewables must be seen as a source of energy security, not just of reduced carbon emissions. Today’s discussions about energy security focus almost exclusively on maintaining access to fossil fuels. But unlike oil, coal and gas, the supplies of which are limited and subject to geopolitical tensions, renewableenergy devices can be built anywhere and implemented wherever there is sufficient water, wind and sun.

Circular economy: lessons from China

resources is reaching crisis levels. To produce 46% of global aluminium, 50% of steel and 60% of the world’s cement in 2011, it consumed more raw materials than the 34 countries of the Organisation for Economic Co-operation and Development (OECD) combined: 25.2 billion tonnes. The nation’s resource use is inefficient. China requires 2.5 kilograms of materials to generate US