Ciccantell on Yeung, 'Strategic Coupling: East Asian Industrial Transformation in the New Global Economy History'

Author: 
Henry Wai-Chung Yeung
Reviewer: 
Paul S. Ciccantell

Henry Wai-Chung Yeung. Strategic Coupling: East Asian Industrial Transformation in the New Global Economy History. Ithaca: Cornell University Press, 2016. 312 pp. $29.95 (paper), ISBN 978-1-5017-0256-3.

Reviewed by Paul S. Ciccantell (Western Michigan University)
Published on H-Diplo (April, 2017)
Commissioned by Seth Offenbach

Strategic Coupling: East Asian Industrial Transformation in the New Global Economy analyzes state-firm relations and the growth strategies used by firms based in South Korea, Taiwan, and Singapore and how these efforts affect economic development in these firms' home nations.  A central argument is that the existing literature on the developmental state in East Asia severely overstates the leading role of these states in this process, emphasizing that analysis of East Asian development, especially since the 1990s, needs to focus on firms and their integration into global production networks via strategic coupling. The argument is summarized in the preface as follows: "Since 2004, my research into the leading domestic firms in Singapore, Taiwan, and South Korea has pointed to a new direction of theorizing industrial transformation in an increasing interconnected world economy. Instead of being driven primarily by their home states, these national firms have taken over the leadership of industrial transformation through their dynamic articulation into complex global production networks--this is the mechanism of strategic coupling that forms the core focus of this book" (p. XII). The book's analysis is based on more than a hundred interviews with firm executives and government officials from the three countries, as well as a wide range of secondary documents and national and firm-level data.

In the first chapter, Henry Wai-chung Yeung engages with the long-standing prevailing wisdom in the literature of the central role of the developmental state in shaping the trajectory of economic development in East Asia. The first chapter also introduces the main theoretical contribution of the book, the elaboration and employment of the concept of strategic coupling to analyze the roles of firms and firm-state relations over the last three decades in East Asian development. For the most part, the book presents an excellent overview of the developmental state literature and more recent empirical analyses that raise questions about this model both historically and in the last couple of decades.  

However, a few key debates are not adequately addressed in either the literature review-oriented first two chapters or in the concluding chapter's theoretical presentation. For example, the debate on the role of state versus private ownership appears only briefly on p. 81, and the role of the product cycle first appears on p. 114, even though these are often seen as critical variables. The definition of the state, another key debate, for the purposes of this book is relegated to a note on p. 227. Most fundamentally, it is not clear why the book does not engage Chalmers Johnson's 1982 MITI and the Japanese Economic Miracle more directly early in the book. The real developmental state foil seems to be Robert Wade's 1990 Governing the Market (e.g., the discussion on pp. 24-25 that presents Wade's model), rather than Johnson's work on Japan. Much of the discussion of Johnson's work is relegated to notes on p. 232. Given Yeung's goal of challenging the received wisdom on the developmental state in Asia, a more direct engagement with Johnson's analysis that inspired much of the work in this tradition would make Yeung's argument about the flaws in this literature clearer and potentially more convincing.

The second chapter presents Yeung's analysis of how the global economy has evolved since the late 1980s and the implications of these changes for understanding East Asian development. One key change is the role of the rise of neoliberalism around the world in changing global political economy, economic development in East Asia, and firms' strategies since the 1990s. This shift from Fordism to neoliberal flexible specialization and globalization played a critical role in creating the opportunities for East Asian firms to strategically couple into global production networks as global lead firms in the United States, Japan, and Europe sought to compete in the global economy. Other critical changes identified include the fall of the Berlin Wall and the end of US geopolitical support for East Asia, the opening of China, and the role of the creation of the World Trade Organization. 

The focus on changes since the 1980s and on organizational changes, characteristics, and operations are important strengths of the book. The book correctly argues that the role of the state has declined since the late 1980s and that the role of East Asian firms coupled into global production networks has become the central element of the new political economy of development. The organizational analysis of a range of industries and firms is excellent. The book employs a variety of key organizational concepts very effectively, including economies of scale, global production networks, de-verticalization, path dependence, evolutionary dynamics in an industry, selection processes, institutional evolution, dynamic capabilities, and internal organizational processes that provide key competitive advantages. Rather simply discussing government economic policies and their impacts, Yeung's analysis brings together incisive and carefully documented explanations at the firm and industry level using these organizational concepts with a broader understanding of national economic policy, a combination not typically found in research on East Asian economic development.

Of particular note in this book is that the often vaguely employed sociological concept of embeddedness becomes a carefully defined and successfully employed analytic tool. Yeung analyzes the process of firms in these three nations becoming gradually disembedded from their national homes in the 1980s and 1990s and then re-embedded in global production networks as the global economy has evolved over the last three decades, global competition has intensified, and firm strategies have shifted toward restructuring and network organization. The focus on firms and integration into global production networks with lead firms fills a significant gap in the developmental state literature, as Yeung argues. 

The third chapter focuses on presenting a meso-level theory of strategic coupling. Strategic coupling is defined as "a mutually dependent and constitutive process involving particular ties, shared interests, and cooperation between two or more groups of economic actors who otherwise might not act in tandem to achieve a common strategic objective" (p. 54). This meso-level argument fills what the author sees as another major gap in the developmental state literature that derives from the excessive focus on the role of the state. Strategic coupling focuses analytic attention on firms and global networks, rather than on the role of the state. The book lays out three types of strategic coupling into global production networks that range from lower to higher in terms of degree of industrial upgrading and contribution to national economic development. The first form of strategic coupling is forming strategic partnerships with global lead firms, often via East Asian firms serving as manufacturing subcontractors in networks led by these global firms. The second form is industrial market specialization, often supported by East Asian states to allow firms based in these countries to enter these capital-intensive, large-scale industries. The third form is becoming global lead firms themselves, with a small number of East Asian firms building brands, technological innovation, and expertise to do so. The schematic model of strategic coupling and the three types of coupling/strategies are a major strength of the argument, as the empirical chapters demonstrate.

The real heart of the book is found in chapters 4 through 6, in which Yeung presents detailed empirical case studies of a variety of firms based in South Korea, Taiwan, and Singapore that have become key players in a wide range of industries, including electronics, semiconductors, shipbuilding, automobiles, and the airline industry. These case studies illustrate three forms of strategic coupling and the challenges confronting firms and states that seek to utilize strategic coupling to compete in the global economy and promote national economic development. A major goal of the book is to give an active, dynamic role to firms and entrepreneurs in East Asia and correct the overemphasis on the role of the state as the director and driving force in national development in East Asia. The carefully constructed case studies of a variety of industries and firms provide a strong empirical foundation for the book's argument.

The concluding chapter is the weakest in the book. Despite the clear empirical utility of strategic coupling as a way to understand how East Asian firms have plugged into global production networks since the 1990s, this meso-level theory at times becomes highly contingent, circular, and not very theoretical. For example, in the concluding chapter, the book argues "this substantial variation in the state's political basis has in turn conditioned how national firms from the three East Asian economies have taken contrasting pathways to benefit from their strategic coupling with global production networks. In short, this dynamic mechanism of strategic coupling works out differently in contrasting national political economies due to differential preexisting structural conditions and firm-specific initiatives" (p. 203). In short, there are no patterns revealed by the theoretical analysis.

More broadly, the chapter tries to present a more abstract theoretical model, but the discussion of mechanisms and processes on p. 191 reveals a significant lack of conceptual clarity. The goal seems to be to finally present a less empirically focused theoretical model, but the confused discussion in this chapter actually detracts from the strength of the argument presented in the empirical chapters and the analytic value of strategic coupling and the organizational and global production network analyses presented earlier in the book. The discussion of mechanisms and processes could easily be deleted from the book without harming the analysis or the contribution of the book.

Despite the many strengths of the book outlined above, there are four weaknesses that are important to note. First, why analyze these three countries? The book never presents a clear rationale for comparing these three countries. There are many "exceptions" to any pattern that is identified, especially with Singapore as the outlier (e.g., p. 31 on political dynamics, p. 33 on state institutional capacity, and internal state coherence on p. 37, among others). The book needs to present a clear justification for choosing these three cases early in the book. 

Second, there is very little discussion of the Asian financial crisis of 1997-98. The Asian Crisis is mentioned occasionally in the book, but is never a major focus, even though it is typically portrayed as a watershed moment in the evolution of state development strategies and economic development in East Asia. The book needs to offer an analysis of the Asian Crisis and incorporate it into its theoretical model.   

Third, how can the book tell the story of the economic development and evolution of firm strategies in these three nations with little mention of China? China's ascent is the major global and regional political economic change since the 1980s, but it receives only a brief mention on p. 33 as a major international change. Chinese firms and factories were key to East Asian firms' global competitiveness in the 1990s and 2000s. The table on p. 68 on trade in intermediate manufactured goods highlights this huge hole in the analysis: China's share in 2006 equals the total share of South Korea, Taiwan, and Singapore combined, highlighting China's central role in reshaping the global political economy. Why talk about how development has changed since the 1980s and not talk about China? How did China's ascent affect these three countries and their leading sectors? Sometimes it was competition (e.g., shipbuilding with South Korea, as is briefly mentioned on p. 119) and sometimes cooperation and complementarity (e.g., contractors in textiles from South Korea and Taiwan operating in China). This is particularly surprising because Yeung published a book on Chinese economic development in 2004.

Fourth, on a similar note, the first real focus on the role of Japan (examining Japan's role in the founding of the South Korean auto industry), appears only on p. 174, despite the clear role of Japanese firms, keiretsu, and the Japanese state in leading the "flying geese" of East Asia. Japanese firms were the leaders in electronics and other industries to which these three nations' firms were linked. Cooperation and competition with Japanese firms were clearly key strategic issues for the firms analyzed in the book. The book therefore needs to incorporate an analysis of Japan's role.

A minor weakness is that the extensive use of notes makes it sometimes difficult to follow discussions of various literature debates and the author's stance on these debates. Additionally, a potential methodological and empirical concern is that the interviews were conducted in 2004-08 and were therefore quite dated by the time the book was published in 2016. Similarly, a note on p. 228 refers to "recent critiques" that were published in 2004, 2007, 2008, 2009, and 2011, even though the book was published in 2016. This raises a potential concern about whether the book was somewhat dated before it was published.

Overall, the book presents a carefully constructed and well-developed empirical examination of the role of East Asian firms and firm-state relations in several major industries over the last three decades. Yeung offers an important corrective to the overemphasis on the role of the developmental state in economic development in these three East Asian nations. The book makes significant contributions to the academic literatures on East Asian development, the role of relationships between states and firms in economic development, and the analysis of information technology-based industries in the late twentieth and early twenty-first centuries. The book and especially the detailed case studies could be very suitable for courses in international business, organizational sociology, and economics that focus on firm strategies, organizational and industry change, the evolution of the world economy, and technology industries.

Printable Version: http://www.h-net.org/reviews/showpdf.php?id=48184

Citation: Paul S. Ciccantell. Review of Yeung, Henry Wai-Chung, Strategic Coupling: East Asian Industrial Transformation in the New Global Economy History. H-Diplo, H-Net Reviews. April, 2017.
URL: http://www.h-net.org/reviews/showrev.php?id=48184

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