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

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  • Henry Wai-chung Yeung

Abstract

In recent years, the question of how business firms are embedded in society and space has received serious attention in economic geography. Arising from empirical research into the transnational operations of Hong Kong–based firms in Southeast Asia, this paper is concerned with the organizational processes of transnationalization—that is, how transnational operations are accomplished through networks of personal and business relationships. A network perspective specifies that three dimensions of transnational organizations—extrafirm, interfirm, and intrafirm networks—must be addressed simultaneously. Based on personal interviews with top executives from 111 headquarters and 63 subsidiaries of Hong Kong transnational corporations operating in the ASEAN region, I argue that social and business networks are necessary mechanisms of transnationalization. Political connections at the highest level enable Hong Kong entrepreneurs and business firms to tap into extrafirm networks and to penetrate local markets in Southeast Asia. Business connections and personal relationships are cornerstones of interfirm transactional governance structures through which Hong Kong firms establish their ASEAN operations. At the intrafirm level, personal trust and experience are keys to coordination and control in transnational operations. By showing how these Hong Kong firms and their ASEAN operations are socially and culturally embedded in networks of relationships, this paper serves also as a critique of economistic arguments and transaction cost analysis commonly found in leading international business research.

Suggested Citation

  • Henry Wai-chung Yeung, 1997. "Business Networks and Transnational Corporations: A Study of Hong Kong Firms in the ASEAN Region," Economic Geography, Taylor & Francis Journals, vol. 73(1), pages 1-25, January.
    • Handle: RePEc:taf:recgxx:v:73:y:1997:i:1:p:1-25
    DOI: 10.1111/j.1944-8287.1997.tb00082.x
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    Cited by:

    1. Paul Burkett & Martin Hart-Landsberg, 2000. "Alternative Perspectives on Late Industrialization in East Asia: A Critical Survey," Review of Radical Political Economics, Union for Radical Political Economics, vol. 32(2), pages 222-264, June.
    2. Wu, Jie & Wu, Zefu & Zhuo, Shuaihe, 2015. "The effects of institutional quality and diversity of foreign markets on exporting firms’ innovation," International Business Review, Elsevier, vol. 24(6), pages 1095-1106.
    3. Jingoo Kang & Jeoung Yul Lee & Pervez N. Ghauri, 2017. "The Interplay of Mahalanobis Distance and Firm Capabilities on MNC Subsidiary Exits from Host Countries," Management International Review, Springer, vol. 57(3), pages 379-409, June.
    4. S C Cobb, 1999. "The Role of Corporate, Professional, and Personal Networks in the Provision of Offshore Financial Services," Environment and Planning A, , vol. 31(10), pages 1877-1892, October.
    5. Harald Bathelt & Sebastian Henn, 2014. "The Geographies of Knowledge Transfers over Distance: Toward a Typology," Environment and Planning A, , vol. 46(6), pages 1403-1424, June.
    6. Xiaobo Su, 2014. "Multi-Scalar Regionalization, Network Connections and the Development of Yunnan Province, China," Regional Studies, Taylor & Francis Journals, vol. 48(1), pages 91-104, January.
    7. Bagci Utku Eren & Franz Martin & Yavan Nuri, 2022. "Ethnic networks in the internationalization of Turkish food producers," ZFW – Advances in Economic Geography, De Gruyter, vol. 66(4), pages 201-210, November.
    8. Jili Xu & Fiona Fan Yang & Desheng Xue, 2019. "The Geography of Knowledge Sourcing, Personal Networks, and Innovation Effects: Evidence from the Biomedical Firms in Guangzhou, China," Sustainability, MDPI, vol. 11(12), pages 1-18, June.
    9. Jie Wu, 2013. "Diverse Institutional Environments and Product Innovation of Emerging Market Firms," Management International Review, Springer, vol. 53(1), pages 39-59, February.
    10. D J Hayward & R B Le Heron & M Perry & I Cooper, 1998. "Networking, Technology, and Governance: Lessons from New Zealand Horticulture," Environment and Planning A, , vol. 30(11), pages 2025-2040, November.
    11. Peng, Mike W. & Lu, Yuan & Shenkar, Oded & Wang, Denis Y. L., 2001. "Treasures in the China house: a review of management and organizational research on Greater China," Journal of Business Research, Elsevier, vol. 52(2), pages 95-110, May.
    12. Sjoerd Beugelsdijk, 2010. "Entrepreneurial Culture, Regional Innovativeness and Economic Growth," Springer Books, in: Andreas Freytag & Roy Thurik (ed.), Entrepreneurship and Culture, chapter 0, pages 129-154, Springer.
    13. Chun Yang & Haifeng Liao, 2010. "Backward Linkages Of Cross‐Border Production Networks Of Taiwanese Pc Investment In The Pearl River Delta, China," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 101(2), pages 199-217, April.
    14. Yong-Sook Lee, 2002. "Business Networks and Suppliers' Locational Choice," Environment and Planning A, , vol. 34(6), pages 1001-1020, June.
    15. Henry Wai-Chung Yeung, 2000. "Guest Editorial," Environment and Planning A, , vol. 32(2), pages 191-200, February.
    16. Roger Hayter & Sun Sheng Han, 1998. "Reflections on China's Open Policy Towards Foreign Direct Investment," Regional Studies, Taylor & Francis Journals, vol. 32(1), pages 1-16.
    17. Carney, M. & Gedajlovic, E.R., 2001. "Institutional Change and Firm Adaptation," ERIM Report Series Research in Management ERS-2001-08-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    18. Eric Gedajlovic & Michael Carney, 2010. "Markets, Hierarchies, and Families: Toward a Transaction Cost Theory of the Family Firm," Entrepreneurship Theory and Practice, , vol. 34(6), pages 1145-1172, November.
    19. Crow, Michael M. & Silver, Mariko, 2008. "American education systems in a global context," Technology in Society, Elsevier, vol. 30(3), pages 279-291.

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