Trust and Antitrust in Asian Business Alliances

435 Pages·2004·1.59 MB·English

by  Frank-Jurgen Richter

Trust and Antitrust in
Asian Business Alliances
Historical Roots and Current Practices
Edited by
John Kidd and Frank-Jürgen Richter
Trust and Antitrust in Asian Business Alliances
This page intentionally left blank
Trust and Antitrust in
Asian Business Alliances
Historical Roots and Current Practices
Edited by
John Kidd
Aston Business School,Birmingham,UK
and
Frank-Jürgen Richter
World Economic Forum,Geneva,Switzerland
Selection,editorial matter and Chapter 1 © John Kidd and
Frank-Jürgen Richter 2004
Foreword © Francis Fukuyama 2004
Individual chapters © the contributors 2004
All rights reserved.No reproduction,copy or transmission of this
publication may be made without written permission.
No paragraph of this publication may be reproduced,copied or transmitted
save with written permission or in accordance with the provisions of the
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Any person who does any unauthorized act in relation to this publication
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The authors have asserted their rights to be identified
as the authors of this work in accordance with the Copyright,
Designs and Patents Act 1988.
First published 2004 by
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Library of Congress Cataloging-in-Publication Data
Kidd,John.
Trust and antitrust in Asian business alliances:historical roots and current practices/
John Kidd,Frank-Jürgen Richter.
p.cm.
Includes bibliographical references and index.
ISBN 1–4039–1619–5
1.Strategic alliances (Business) – East Asia – Psychological aspects.
2.International business enterprises – East Asia – Cross-cultural studies.
3.Globalization – East Asia – Moral and ethical aspects.4.Business ethics.
5.Trust.I.Richter,Frank-Jürgen.II.Title.
HD69.S8K525 2003
338.8(cid:2)095—dc22 2003053688
10 9 8 7 6 5 4 3 2 1
13 12 11 10 09 08 07 06 05 04
Printed and bound in Great Britain by
Antony Rowe Ltd,Chippenham and Eastbourne
Contents
List of Figures vii
List of Tables viii
Foreword by Francis Fukuyama ix
Notes on the Contributors xi
Part I The Nature of Trust 1
1 Building Trust in Asian Business 3
John B. Kidd and Frank-Jürgen Richter
2 East Asian Economies: Westernization, Liberalization and
New Regionalism 32
Ivan Tselichtchev
Part II The Antecedents of Trust
3 Is Wealth Creation Sustainable? Trust, Need and Greed in
the Development Process 61
Hock-Beng Cheah
4 Sustainable Governance for Sustainable Development 84
Gill-Chin Lim
5 The ‘Co-op–Comp’ Chinese Negotiation Strategy 121
Tony Fang
6 Tao Zhugong’s Chinese Business Principles (770–221 BC):
A Convergence with Modern-day Construction and
Real Estate Practices 151
Sui Pheng Low
Part III Trust in Asian Governance and Commerce
7 The Role of Trust in the Process of Alliance Evolution 181
Anna Goussevskaia and John B. Kidd
v
vi Contents
8 Business Linkages and Resilience of SMEs during
the East Asian Crisis: The Role of Networks and
Trust between TNCs and Local Suppliers 196
Philippe Régnier
9 How Sustainable are Benefits from Global Production
Networks? Malaysia’s Upgrading Prospects in the
Electronics Industry 209
Deiter Ernst
10 Asian Values, Malaysian Style: Imperatives for
Building Cross-cultural Partnerships in Malaysia 231
David Wong and Michael Yeoh
11 Focus on China: New Challenges for Japanese–
German Strategic Business Alliances in a Dynamic
Environment: A Theoretical View of Third-market
Business Collaboration 252
René Haak
12 Trust and Antitrust in Cross-cultural Alliances: Cross-cultural
Management Challenges in Japan 273
Pawel Komender
13 Clusters as ‘ba’ for Knowledge Management 290
Yoko Ishikura
14 A Cross-cultural Comparative Study of German and
Singaporean Employees’ Trust Decisions Following a
Takeover: Implications for Cross-border Mergers and
Acquisitions 314
Günter K. Stahl and Chei Hwee Chua
15 Creating Trust in the Korean Chaebol 330
John Barry Kotch
Part IV Personal and Public Roles
16 Developing Trust: Obstacles and Understanding 353
Lionel Stapley
Name Index 375
Subject Index 383
List of Figures
1.1 A simplification of familiar research paradigms 7
1.2 The multi-dimensionality of relationships between dyads 10
1.3 An example of dimensionality 11
1.4 General considerations of ‘Learning’ in alliances 15
4.1 Matrix of relationships among units 90
4.2 Comparison of five schools 105
5.1 The Yin–Yang principle 129
5.2 The thirty-six Chinese stratagems 139
5.3 The ‘Co-op–comp’ Chinese negotiation strategy 143
6.1 Template for Tao Zhugong’s Chinese business principles 153
7.1 The relationships between inter-organizational
learning processes and collaboration conditions 190
10.1 An audit of the Malaysian culture based on
cultural dimensions 235
12.1 Japanese versus Western management styles 277
12.2 Direct investments to and from Japan 280
12.3 Future orientation of cross-cultural management in Japan 285
13.1 SECI model of knowledge conversion 292
13.2 Knowledge management and strategy conceptualization 294
13.3 Cluster 296
13.4 TAMA cluster 297
13.5 Kinki biotechnology cluster 301
13.6 Cluster and firm 303
13.7 Specific information required 303
13.8 Examples of ‘ba’ 304
14.1 Proposed determinants of target-firm members’
trust in the acquiring firm’s management 319
vii
List of Tables
2.1 Customs duties for IT-related goods in East Asian countries 45
2.2 Composition of inward FDI to East Asian countries,
by country or region 46
2.3 Asia’s exports, by country or region 50
2.4 Composition of East Asia’s imports, by country or region 50
2.5 Composition of inward FDI into East Asia, by
country or region 51
4.1 Objective indicators of governance, for selected countries 112
4.2 Subjective indicators of governance, for selected countries 113
7.1 Approaches to the alliance evolution and
inter-organizational learning processes 186
14.1 Influence of decision criteria on respondents’ trust
decisions in hypothetical takeover scenarios 322
viii
Foreword
One would be hard-pressed, glancing through a modern economics
textbook, and particularly one on international economics, to find much on
the subject of trust. This is odd, because any one in business will tell you
that trust is critical to success, both with regard to the internal workings of
the firm, and to its relationship with customers, suppliers or contractors.
And one of the hardest things to cultivate when doing business interna-
tionally is a sense of trust that transcends cultural boundaries: even so,
businesspeople invest substantial quantities of time and resources in culti-
vating trust relationships, with the full expectation that it will yield
economic payoffs just like any other investment.
There is, of course, a substantial body of economic theory on issues like
cooperation, bargaining, opportunism and asymmetric information.
Economists understand that social cooperation is central to economic effi-
ciency, and see it as a natural outcome of interactions between rational eco-
nomic actors. But trust itself is much more than a correlate of social
cooperation; it is a subjective state of mind that has important psychologi-
cal and social dimensions. The economists’ game-theoretic models explain
when individuals ought to trust one another based on maximization of their
self-interest. But what makes economic life endlessly complicated is that
people trust (or distrust) one another for reasons that are often not entirely
rational. It is one of the major entry points of culture, values, and norms –
the domain of sociologists and anthropologists – into economic life.
Trust, understood in this broad, psycho-social sense, is critical to under-
standing the nature of economic life in Asia, both in the way that Asians
relate to one another, and in the ways that they relate to outside investors
and trading partners. Trust relationships, whether based on kinship, ethnic-
ity, friendship, or common schooling, can be seen as informal mechanisms
for correcting information asymmetries, providing credible commitments,
and posting bonds for performance between economic actors. To this extent
they serve as complements and sometimes substitutes that facilitate coop-
eration notwithstanding the prior existence of formal, rational-legal mech-
anisms ‘defining’ the extent of the cooperation. The existence of such
informal relationships in place of rule-of-law mechanisms does not distin-
guish Asian societies from Western ones, as some have asserted. All modern
economies rely, to a greater or lesser extent, on informal norms to reduce
transaction costs and facilitate exchange. But types of trust relationships dif-
fer from one society to another, and understanding how they work is criti-
cal to one’s ability both to do business in them and to make sensible public
policies.
ix