Industries play the chief role in the development of economies around the world (Abbott, 2011). The national business systems concept emphasizes on the working relationship between different firms in particular industries in order to attain the wholesome growth in business and the economy of a country. Therefore in enlisting the different features of national business systems, the concept of industrialization both early and late cannot be left out (Lundvall, 2010). The growth and interactions of different industries within an economy forms a basis upon which the national business systems are characterized or finds its identity. Under the national business system concept, firms are usually studied from the perspective of the country from which they originate (Quack, 2000). This also applies to firms that carry out production activities across different countries in the world. Firms do carry out their operations in the business sector and the market. In doing this, they are required to adhere to the legal regulations that govern business. Most of the laws and regulations that govern business are state centred and even the international laws mostly utilized by international business integrations for instance the European Union are formulated basing on the business laws of states that form up the organization (Justin & Pleskovic, 2010).
States do determine the performance of firms as they are the major source of political competition as well as the mobilization of business. The competitiveness of countries is determined by the level of industrialization which the state has attained (Campbell & Faulkner, 2003). Industrialization is used as a measure the level of competence that the country will have in the global business thence the more industrialized a country becomes the more the national competitiveness of that particular country (Jones & Zeitlin, 2008). This paper thus looks into the characteristics on national business systems basing on comparisons of industries in different countries and how these industries contribute to competitive advantage of the states.
For nations to formulate competitive national strategies, they need to have a good system of developing effective government policies. These policies have to be coupled with the transfer of technologies, strengthening the capacity of the academic and research institutions and embracing innovations in the business activities at the national level (Hanna & Knight, 2012). To carry out these activities, networking and partnership is required. All these amount to the growth of different industries of a given country and can be achieved through proper development of the national business systems of a country (Whitley, 1994).
National business systems are not only adopted by countries that have attained industrialization but also in the developing world. Countries which have adopted instruments and arrangement that comes with national business organization have attained a quicker pace of growth (Colli, 2008). A good example of such states is Georgia. The modern world has a lot of interdependence in the economy which has brought about globalization. Under globalization, there is an increasing need to redefine the roles of the state in order to capture the emergent challenges in the economy, politics, social and cultural institutions of the states (Aharoni, Y., 1997). The rapid pace at which globalization takes place has necessitated countries to take measures of stabilizing national economic policies to help in increasing the competitiveness of the domestic markets wile at the same time boosting the national social protection schemes (Kohli, A., 2005). Georgia realized the need for developing a comprehensive leadership to drive it in the formulation and implementation of the competition strategy of the nation. With the help of the European Union under the European neighbourhood program, Georgia has been enabled to develop a national innovation policy which focuses on advancing research development and innovation that touches on macroeconomic stability, infrastructure, institutional development, goods and efficiencies in the market, health, primary education, higher education development and training, market expansion, development of technology and business sophistication. All these are contributors to the growth of industries in the country thus raising the competitive advantage of the country in terms of international business transactions. These strategies are likened to the Porter’s model of development (Porter & Prince, 2011).
When industrial development I s talked about, Britain is always quoted as the best example since it was the first country in the world to industrialize. Early industrialization took place in Britain due to a number of reasons availability of colonies being one of them. Due to industrialization, the economy of Britain grew at a very high rate (Berend, 2006). However, in the mid 1980s, the economy stumbled due to the great depression that was witnessed in the 1930s. However, from 1970, the economy regained its stability. When a number of industries in the British economy are analysed in relation to the end of renaissance, major complexities are noted. A notable example is the banking industry in Britain. The banking industry in Britain has come under criticism in many occasions. In the year 2008, the banking sector was cited as being the root cause of industrial growth decline in Britain leading to the economic recession that was experienced. The banking industry was also implicated in the economic depression of the 1930s (Coopey & Lyth, 2011). The same case has also been noted about the financial sector in the United States which was criticized by many economic analysts as being that major cause of the economic recession that begun in the united states (Crockett, Harris, Mishkin & White, 2004). From these cases it can be argued that different sectors and industries in the economy are interlinked and flaws in any of the sectors will automatically result in the flaws in other sectors of the economy of a country. This effect can even spill to the economies of other countries (Crouch, 1998). In 1970s, the manufacturing industry in Britain that includes the car, machines, electronic and aircraft manufacturing begun to disintegrate in spite of the input of the labour planning step to salvage the situation after the year 1974. (Coopey & Lyth, 2011). The British faced structural problems in its manufacturing industry. Old periods of industrialization cannot be ignored as they offer an understanding of the basis on which business or economic problems come into being and how these problems can be solved. While the policy that governed the development of old industries has faded, states are compelled to devise policies that will better productivity (Coopey & Lyth, 2011).
Multinational corporations have become important in the economies of many states in the globalized world. These business entities boost economies of states of states through jerking industrial growth (Ferner, 2006). Globalization has impacted all the regions of the world resulting in the sprouting of multinational companies across the globe. Central and Eastern Europe has had a lot of international capital investment from investors both from the private and the government sectors. Most countries in the region have received infrastructure and investment from the global financial institutions which include the World Bank, the International Monetary Fund and the European Bank for Reconstruction and Development and also from individual governments. These funds are meant to increase the economic capacity of these countries though aiding them to improve their national business systems. One such country is Hungary which has received investment funds from the European bank for reconstruction and development. These funds have been invested in different sectors in order to improve their performance in the economy. They include the telecommunication industry, research, transport industry which include the roads and the railway. There have also been investments in the small-sized and medium enterprises in the country and financial institutions. Hungary adopted a positive move to foreign investment acceptance towards the end of the 20th century – early 1990s. Multinationals have been the key in the economic transformation in Hungary as they have been the major sources of transfer of technologies both physical and social and they have also led to the development of new capital investments in the country. Most national business systems more so in the developing nations depend on the multinationals for achieving growth and development objectives in the industries and the whole economies as is with the example of Hungary (Martin, 2011).
Most Asian countries are of late gaining tremendous growth in their economies. These countries include Japan, China, Malaysia, Singapore, Poland, South Korea, and Indonesia among others. These states are mostly referred to as the Asian Tigers because they have quickly cultivated a friendly environment for industrial growth. The high level of industrialization that is being witnessed in Asia has been linked to the adoption of sound national business and economic plans that are embedded in their national business systems. They have invested a lot in education, research and scientific and technological advancement (Grabowski, 2000). For economic development to be achieved there has to be sound financial policies that govern financial institutions of a country. The newly industrialized Asian countries are known to have a good control of their financial institutions. The financial and banking industry in China is to a great level controlled by the government. The government of China has not left its financial industry to be controlled by the market forces as it has been in many industrialized states in Europe and United States. The Chinese government has put in place legal measures that do protect the interests of the shareholders in the financial sector. An example of this is strict capital control which helped to cushion the country from the Asian financial crisis of 1997. Leaving the banking industry of any country to be controlled by market forces can be disastrous in the sense that private entities may choose to manipulate the industry leading to financial lapses that results in a financial crisis as was witnessed in Europe and United states in 2008 (Lodewijks, 2002). China and Japan which have the leading economies in terms of the magnitude of their Gross Domestic Products in the Asian region have heavily invested in the heavy industries which include the automotive industry and the construction industry (Rana, 2012). Japan has been known to be one of the biggest producers of cars in the automotive industry in the world with its biggest competitor being United States and China. Japan also performs well in the telecommunication industry in the world just like the US and the leading economies of the European Union. China currently leads the world in infrastructure development. It has come to be a dominant force in the infrastructure industry in the world. The country has developed a modern infrastructure in the country which entails good transport infrastructure and building infrastructure. The Chinese government has fostered good economic relations with the developing states of the world mostly in Asia and Africa which has led to its construction firms winning many big construction contracts in these states (Geng, 2008).
Privatization has come to be one of the most rational steps towards economic development in many states. Privatization of industries increases service delivery through creation of competitiveness. Competition in industries for instance the monopolistic industry has led to better service delivery due to the improvement of quality of products and services to woe customers. In the 1980s, Chile had a huge debt which forced its authoritarian regime to privatize the financial sector in order to leverage the economy from the financial crisis (Luqmani & Quraeshi, 2011). This was also the case with Mexico and many other states in the Latin American Region. The rapid expansion of the economies of the Latin American States has come from privatizing public sectors accompanied by the change in policy. The countries in the region have adopted liberalization policies in the economies. Also the deregulation of e the economies have been pointed as part of the reasons that have boosted economic development and the rising of the competitiveness of the economies of these states (Jiberto & Hogenboom, 2007).
With the improvement in standards of living better means of production are being adopted through the use of inventions and innovations in the information and technology industry. The information technology industry is one of the most influential industries that have boosted the growth of many other industries including the financial industry. The level of utilization of information technology differs with the level of development of states. The developed states of the world for instance USA and countries of the European Union as well as the newly industrializing economies of Asia have invested deeply in information and communication technologies and uses these technologies in most of their industrial sectors. Developing countries are also borrowing into these technologies and adopting them to pace up economic development (Castells, M., 1992). In the developed world, the output from information technology capital investment has been positive and supersedes the output from the non-information technology capital investments. This situation is reverse in developing states where there is a quite substantial level of returns form non-information technology capital investments as compared to the information technology oriented capital investments. A study that was conducted to ascertain the contribution of information technology to the Gross Domestic Products of states between 1980 and 1985 indicated that the contribution of information technology to the GDP of the developing states was 2% while in the developed countries it was 10%. However, this has changed as the developing states are increasingly developing the use of information technologies in their industries. A good example is the electronic banking which is becoming common in the developing nations (Reinert, Rajan, Glass & Davis, 2009).
National business system is a model which countries are increasingly adopting in shaping economic growth and development. To characterize these systems, industrial development must be brought into play as these systems focus on the growth of industry which can only be achieved by looking at early growth of industries and building form it. Industrial growth is the chief determinant of the competitiveness of states in the world economy. Different policies and measures have been taken to foster industrial growth and development which include privatization, investments in heavy industries, liberalization of economies and industries, regulation of industries and the use of information technology to improve efficiency and growth of industries. All these are features of national business systems.
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