International Business and Emerging Markets in Historical Perspective

G.  Jones

Chapter | The Oxford Handbook of Management in Emerging Markets | 2019

International Business and Emerging Markets in Historical Perspective

Abstract

This chapter examines international business in emerging markets over the long run. It shows how the strategies of Western multinationals evolved over time. In the first era of globalization in the 19th century, Western firms sought access to resources, and they faced little political risk due to Western imperialism. The main risks were logistical due to infrastructure and technological inadequacies. During the Great Reversal between 1929 and 1979, the main challenges faced by Western multinationals were political, as they faced widespread host government hostility and expropriation. In the contemporary global economy, political risk partially declined with the spread of liberalization, although the management of relations with host governments remained a challenge, notably in China. The growth of local competitors and a resurgence in local consumer sensitivities obliged multinationals to incorporate local relevance into global brands.

Keywords: Emerging Markets; Business History; Multinational Firms and Management; Globalization;

Format: Print

Citation:

Jones, G. "International Business and Emerging Markets in Historical Perspective." Chap. 3 in The Oxford Handbook of Management in Emerging Markets, edited by Robert Grosse and Klaus E. Meyer, 55–76. Oxford, UK: Oxford University Press, 2019.

This book is the first systematic scholarly study on the business history of Turkey and its predecessor the Ottoman Empire from the nineteenth century until the present. It places the distinctive characteristics of capitalism in Turkey within a global and comparative perspective, addressing three related issues. First, it examines the institutional context that shaped capitalist development in Turkey. Second, it focuses on the corporate actors, entrepreneurs, and business enterprises that have led national economic growth. Third, it explores the ethical foundations and social responsibility of business enterprises in Turkey.

This chapter offfers a survey of the evolution of Turkish capitalism from the nineteenth century Ottoman Empire until the present day. It shows that Turkish business over the last century and a half was shaped in an institutional context similar to those in many developing countries. The country missed out on the first wave of modern industrialization during the Ottoman era, and developed in a somewhat skewed way, with minority religious and ethnic groups dominating business, in part because of policies imposed by the Western powers. As in many developing countries, business in the Ottoman Empire faced the daunting task of catching up with the developed West. Unlike most other countries, however, the elimination of entrepreneurial minority groups including Armenians and Greeks greatly complicated the task, and gave it distinct characteristics. At the center of this distinctiveness was the role of the government in the early Turkish Republic, which pursued a nationalistic and secular agenda in a Muslim country. Turkish business (in contrast to, say, that of India) grew in an insular fashion, largely unable to develop strong international competitive advantages compared to some of its South Asian and Latin American counterparts. Turkey’s business groups were, as elsewhere, a response to institutional voids and the importance of contact capabilities but even the best of them remained primarily focused on the domestic market, and mostly functioned as licensors of foreign technologies rather than as drivers of innovation. The last three decades have seen a remarkable development as long-established business groups faced a new set of challenges from the provincial towns of Anatolia, which are characterized by their religious beliefs and links to political Islam. They created their own associations and utilized institutions that have roots in traditional Islamic and Ottoman history, such as the vakif, to raise capital. Strikingly, this sector of the business community appears more resilient and responsive to the global economy than do their secular counterparts. Anatolian capitalism has thus become a source of renewal and growth for the Turkish economy, albeit one in which persistent problems of corruption and rent-seeking have appeared in new forms.

Chapter | Business, Ethics and Institutions | 2019

Ethical Business, Corruption and Economic Development in Comparative Perspective

Janet Hunter and G. Jones

This chapter contextualises the drivers of corruption in Turkish business through comparisons with Japan in the late nineteenth century, and India. It identifies the developmental state as a common driver of corruption. Catching-up by using extensive state intervention had the major downside that it has served to facilitate corruption.The operation of the developmental state may have been constrained by factors beyond the control of the state, such as shortage of funds or external pressures. Yet it is apparent that the individual measures that made up the overall strategy of the developmental state are not only vulnerable to exploitation by those who are involved in their implementation, but can positively encourage such manipulation. The example of nineteenth century Meiji Japan suggests the building of inclusive political and economic institutions, and consequent trust levels, can help address the problem, but it also suggests that old habits die hard, and that respect for the state and its institutions is something that cannot be taken for granted. The fact that some places, such as Singapore and Hong Kong, were able in recent decades to roll back corrupt practices is less comforting for Turkey. Turkey like India, has not yet taken the necessary steps needed to disrupt corrupt practices. However the chapter also explores the many uncertainties around the issue of corruption. The very term corruption is ambiguous, because there are many grey areas that result from variations in cultural norms. The existence of corruption also appears to not stop development. It did not stop Japan’s economic growth over the long-term. It has not stopped India’s rapid growth in recent decades, which appears, if anything, as correlated with growing corruption rates since the 1970s. It would appear, though, that the more extractive the institutions of a society, and the fewer the countervailing forces of productive business enterprise, the more potential there is for negative outcomes. In the case of Turkey, corruption has not prevented significant economic growth, but it also had negative consequences, such as poor quality building construction, and distortions, such as helping one sector of the business community grow at the expense of others. Its prevalence maybe part of the explanation why Turkey has struggled to build innovative businesses able to drive forward the development of the country and break out of the middle-income trap.

Keywords: corruption; Crime and Corruption; Economic Growth; Turkey; Middle East; Central Asia; Japan; India;

Citation:

Hunter, Janet, and G. Jones. "Ethical Business, Corruption and Economic Development in Comparative Perspective." Chap. 10 in Business, Ethics and Institutions: The Evolution of Turkish Capitalism in Global Perspectives, edited by Asli M. Colpan and G. Jones, 224–245. New York: Routledge, 2019. View Details

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International Business and Emerging Markets in Historical Perspective

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