Can the concept of ‘early’ and ‘late’ industrialization explain the key institutional and organizational characteristics of national business systems, and do they have any bearing on long-term national competitiveness?
The concept of industrialization has been used among different nations and regions, while many countries have carried out their own industrialization progress during the past several decades, which stimulates the development of organizations and better corporate performance. There are different kinds of national business systems with their distinctive characteristics varying among countries. Then ‘early’ and ‘late’ industrialization is applied to describe two main types of national businesses that
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They are normally directed by the state, and the stock market does not exist. Therefore, they tend to rely on bank oriented financial system, which may help develop economy rapidly. There are more obligations for organizations and banking system to enhance corporate financial performance, rather than gaining values and money with stock market. Both German and Japanese financial systems possess a long term perspective to work in partnership. Hutton (1995) mentioned that Germany regards bank as their loyal shareholder on behalf of typical companies, in order to make long-term loans. They also concentrate on labour training and education, which brings them a large skilled workforce. The Japanese economic system develops long-term relationships with their employees for the sake of trust, reputation and cooperation. They improve and transform their employees’ skills to make them as corporate asset (Lazonick, 1997). In addition, China, as the most recent late developer whose financial system is largely dominated by the government. The Chinese organizations get finance or investment from state or banking system, while the state provides technology and skills for their further advancement.
National business groups make a further institutional difference between early and late industrialization countries. In terms of external institutional features, early developers such as Britain and the US operate atomistic companies. Creating business group is illegal in the US,