Global Shift

Linjie Ma
1235440
12/11/2012

Identify the barriers or obstacles that may prevent convergence to occur amongst different national business systems?

With the influence of globalization, it becomes to be a very common phenomenon that firms doing business among different nations. Companies would not be satisfied with doing business domestically and what they truly desire is to do business globally, which brings the emergence of different national business systems. Different national business systems significantly influence both national and international businesses, which provide opportunities, but also challenges. Businesses and companies may confront difficulties and challenges that they never met before. Different national business systems, in other words, refer to the existence of different varieties of capitalism. So this essay will consider the barriers or obstacles that prevent the occurrence of convergence amongst different national business system by discussing that among varieties of capitalism. There are four different methods to identify varieties of capitalism. In this essay, Hall and Soskice’s method will be considered, because among these four methods, Hall and Soskice (2001) had a distinctive opinion, which became the milestone of the relative research in the near future. They considered five aspects which companies should maintain relationships with, which including industrial relations; wage and productivity; vocational training and education; corporate governance; inter-firm relations; and employees (Hall and Soskice, 2001). Then, they divided capitalism of different countries into two distinct types, which are liberal market economies (LME) and coordinated market economies (CME). On the one hand, LME was trendy in 1990s and the representative countries are the US and to some extent the UK. Companies conduct their business mainly through hierarchies and competitive markets (Boyer, 2005). They are freely competitive companies and they adjust their businesses according to the law of supply and demand, in order to seek a short-term benefit. Additionally, individualism is a dominant characteristic. On the other hand, CME was trendy in 1980s and the representative countries are Germany, Scandinavia and Japan. Specifically, companies mainly rely on non-market relationships to coordinate their activities with other companies. They devote themselves to collaboration between different companies. Companies would like to build a long-term cooperation network and are willing to invest in the specific asset to seek a long-term benefit.

Business convergence tends to be global in the 21st century, and according to Wallace (2010), the forces of convergence could be divided into four main categories, which are economic, political, knowledge, and religious. And similarly, Inkeles (2010) presents that convergence is driven by several powerful forces like: economic rules, political rules, education and modern communications. However, to ensure business convergence among different national business systems to occur successfully, companies should devote themselves to discover or identify the barriers or obstacles that may prevent the occurrence of convergence amongst different national business systems. Companies may go bankrupt if they could not identify and overcome those barriers or obstacles. Therefore, it seems to be especially vital for companies to discover these barriers or obstacles.

There are several barriers or obstacles existing that may interrupt the occurrence of convergence amongst different national business systems. In this essay, it would be categorized from three main aspects, which are culture, company itself and government, and more emphasis would be placed on company.

Firstly, emphasis would be placed on culture. Specifically, Antonia Docheva (n.d.) highlighted that intercultural differences exist in behavioural norms, such as: greeting, dress, body language and others. Additionally,