The Limits of Convergence: Globalization and Organization Change in Argentina, South Korea, and Spain (review)

Using a comparative institutional approach, Mauro Guillen examines how governments and industrial organizations respond to globalization in three countries. He finds that businesses adopted different organizational forms and pursued diverse economic strategies after states democratized in the 1970s and 1980s. The author concludes that, contrary to what many theorists predict, globalization did not lead to organizational convergence but instead to organizational and strategic diversity. There were not one but many paths to development under globalization.

The strength of this book is its comparative and historical approach to the study of organizational and institutional change. Guillen begins with a concise and informative theoretical discussion of globalization, development, and the comparative institutional approach. He then argues persuasively that these three countries can usefully be compared. They are of a similar size and for many years shared a "national-populist" approach to economic development. And because they have few trade or investment links, their individual and distinctive features can be put into relief. He then provides a careful summary of postwar economic developments in each country. This comparative history allows him to highlight their similarities and differences and develop a useful typology of their approaches to economic development over time. This sets the stage for his discussion in subsequent chapters of the changes associated with democratization and globalization during the last 20 years.

To analyze the kind of organizational and strategic changes in both states and firms, he looks first at the changing structure of large business groups — chaebols in South Korea, grupos in Argentina, and large cooperatives in Spain. Then he looks at how small and medium enterprises responded to the changing state policies associated with globalization. This is some of the most interesting material because he uses the manufacture of rolling stock for railways, the production of wine and alcoholic beverages, and the publication of celebrity-gossip magazines to illustrate how small businesses responded to challenges presented by globalization. He finds, for example, that some small and medium businesses, family firms, and even worker cooperatives fared unexpectedly well, even in competition with large multinational firms, in a globalizing environment. He also looks at how the attitudes of trade unions and labor movements changed in response to problems and opportunities presented by democratization, privatization, and globalization. Finally, he offers a detailed account of more obvious or conventional industries — automobiles and banking — to assess the direction of change in each country. The results of his clear and informative investigation are fruitful and rewarding. He is able to explain why some firms and strategies succeeded and others failed in different settings. Time and again he is able to demonstrate that businesses can flout conventional economic thinking about the most "efficient" organizational forms and "effective" business strategies and still prosper in a globalizing environment.

This fine study provides a detailed historical analysis of all three cases. He develops forceful abstractions and useful typologies that make sense of complex state policies and business strategies. One of his main conclusions — that globalization can result in economic diversity and heterogeneity — is, I think, persuasive. But he could have said more about the role of global institutions in his account. After all, globalization was directed or influenced by different global institutions in each setting. The European Community played an important role in globalization process in Spain, the World Bank and International Monetary Fund played a crucial role in the management of debt crisis in Argentina, and the U.S. and, later, the IMF played important economic roles in economic developments in South Korea. About these global institutions, Guillen says very little. Because different global institutions played important roles in each case, one might expect that globalization would have rather different outcomes or consequences in each setting. If that's true, Guillen's conclusions are not quite as remarkable as he suggests.

The author...