Geography Reference
In-Depth Information
As well as American production systems, other aspects of the US
economy including features of the American regulatory institutions, such
as the antitrust agencies, were also imitated by the emerging industrial
economies of Europe and Japan. Yet, although these economies came to
resemble the US model to a certain extent, they were far from replicating
the American system. Part of the reason is that, unlike the US, many of
these other countries relied fundamentally on world markets for inputs.
At the same time, in these economies the state was explicitly involved
in protecting certain domestic industrial interests and the sponsoring of
preferred industrial alliances. To some extent, these types of interven-
tions were a response to the perceived need for national self-sufficiency,
particularly within the military-industrial sphere. Contrary to the US
experience, however, they also reflected different views on the role of the
state in industry, in that in countries such as the UK, France, Japan, Italy
and Germany the state played a key role in shaping corporate relations
and behaviour (Casson and McCann 1999). Through the internal integra-
tion of all activities within their managerial hierarchies, American firms
excluded any external influences that might cause instability in their pro-
ductive environments, such as from financial markets or government. This
meant that in the mass production sectors, from the turn of the century
onwards, US corporate expansion into international markets generally
took place via internal funding arrangements and without any govern-
ment assistance. Apart from corporate culture, however, this was also
because national governments were simply too small relative to the major
US corporations to exert any meaningful influence over them. Although
the mass production economies that later developed in other countries
were ostensibly imitations of the US economy, their organization and
functioning were often quite different, in that both banks and, in some
cases, governments played key roles in the development of inter-firm rela-
tions (Piore and Sabel 1984).
Indeed, in line with the theoretical views of Ownership (O) advantages
discussed in Chapter 2, home country systems and characteristics are
critical for explaining the important differences in the evolution of modern
MNEs in the pre-World Wars period. For example, German companies
- that by 1914 ranked second after the US in world manufacturing (with
British firms occupying the third place) - relied mostly on high-skilled and
research-intensive productions drawing on a vast supply of highly qualified
personnel. This was reflected in the German leadership in high-technology
industries such as chemicals and electrical, allied with its relative disad-
vantage in mass production techniques, which instead required unskilled
labour and were far more advantageous to the American widespread sub-
stitution of capital for labour. The extent of business opportunities in the
