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As trade and foreign investment become more symmetric, Guillén
says, “competitive pressures from both foreign multinationals and
non-diversified local firms will intensify, probably inducing business
groups to divest from certain industries and concentrate on those that
promise the highest growth and returns.” That is what happened in
Spain over the last 15 years, accompanied by the decline of the business
groups. To a certain degree, it is happening in Mexico as well,
influenced in part by the North American Free Trade Agreement
(NAFTA), Guillén says.
What happens to these theories when real world events – such as global
economic crises – intervene? While it’s difficult to predict outcomes,
Guillén says, certain facts are indisputable. For example, the
chaebol in Korea have grown too large to be allowed to go bankrupt.
“It’s very difficult to lay off 35,000 workers … We are seeing this with
Kia which sells autos in the U.S. The company is technically bankrupt.
The government took it over one year ago and is now trying to
privatize it. The problem, of course, is that nobody wants to assume
all the debt.
“Meanwhile, while the business groups continue to operate, the
small firms suffer tremendously. One of Korea’s biggest problems is
that the small business sector is in terrible shape. Many companies
are going bankrupt, but we don’t hear much about them.”
Whatever the outcome, it’s clear that conglomerates in Latin America
have responded to the economic downturn very differently than
those in Asia. “In Latin America, they have actively sought to adapt
to the new situation,” says Guillén. “They haven’t resisted the need
for change. In Asia, they have resisted fiercely. In Latin America they
have sought foreign investors, organized trips to New York and London
to lure foreign capital and so forth. The Koreans, Malaysians,
Indonesians and Indians don’t seem to want that.
“The Koreans are extremely nationalistic. They will always flatly
oppose direct foreign involvement in any industry they consider
important. They don’t trust foreigners, partly because of the hardships
they suffered at the hands of outsiders during their colonial past.”
Another difference between the two continents is the size of the
business groups. “The Asian groups are much bigger – in some cases
10 times bigger – than the groups in Latin America,” Guillén says. “It
is much easier to adapt when you are one tenth the size of a Hyundai
or Samsung.”
Guillén recently completed a book entitled Developing Difference: Organizations,
Globalization, and Development in Argentina, South Korea, and
Spain, in which he urges the business community to work harder at understanding
and supporting differences among the economic systems of individual countries.
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