Transnational Corporations and Business Networks: Hong Kong Firms in the ASEAN Region

Given the increasingly important role of transnational corporations (TNCs) in the global economy as well as in economic development, it is not surprising that TNCs and their operations have become the focus of many academic studies. The activities of TNCs have been particularly well documented but, as argued by the author of this book, largely from a western-centric perspective. This view has been presented "not as geographically and historically specific but as the norm from which all others are an aberration. " (p. xv) Henry Yeung, in this book, presents compelling arguments that the activities of TNCs from Hong Kong (HKTNCs) pose a fundamental challenge to the conventional wisdom about "Third World multinationals". In this study of HKTNCs, Yeung argues that the different conceptualizations of TNCs (read "western") as "firms that rely upon networks as a form of organising activities" (p. 7) or as "enterprises which control assets - factories, mines, sales office and the like - in two or more countries (UNCTC 1978, p. 158 as quoted in Yeung 1998, p. 7) or as firms which co-ordinate production across national boundaries without using market exchange (p. 7) leads to a conceptual ambiguity. Yeung thus sets himself the task of developing a network approach to the understanding of TNCs through a deconstruction of existing Westerncentric perspectives and a rebuilding of a generic network perspective to take account of time-space specificities in transnational operations (p. 3). Yeung also argues that Third World multinationals have been misleadingly stereotyped as "very small in their assets and sales, labour-intensive in their operations, low in technological capabilities and restricted in geographical coverage" (p. 3). However, this contention is not directly addressed in the book as one would have expected. The background upon which Yeung seeks to explain the role of business networks in HKTNCs is richly prepared through his analysis of the emergence of transnational corporations from Asian Newly Industrialized Economies (NIEs). He maps out the geographical distribution of TNCs from Asian NIEs and also identifies the main characteristics and competitive advantage of these TNCs. Perhaps the most appealing aspect of Yeung's approach to the study of TNCs is the concept of the TNC simultaneously as "a form (italics in original) of (international) business organisation and a process (italics :in original) of organising (international) business" (p. 65) because it takes into account the dynamics of TNC activities. However, while the "economies of synergy" (p. 65) provide a powerful incentive for network creation, some of the strengths that Yeung attributes to HKTNCs may relate more to alliances rather than individual TNCs to the extent that there is a blurring of the analytical unit. He points out that in the context of business networks, the TNC is both a nc,dal point on intricate inter- and extra-firm networks as well as a dense network of intra-firm relationships in its own right (p. 66). Yeung's work explains the motivations of HKTNCs to invest in the ASEAN region and their subsequent success in these ventures to be a function of the embeddedness of these firms' networks. Little is known about those HKTNCs, if they exist, that have succeeded without this emphasis on networks or even those that have failed in spite of strong networks. In the same vein, the author himself has highlighted an implicit question that remains unanswered in his book, that is, to what extent are non-Chinese HKTNCs embedded in the peculiar Chinese business system? This raises a related question - how different are the firms presently under indigenous Hong Kong ownership from when they were owned by the British hongs or colonial trading houses? …