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The Importance Of Business Systems To The Country Economics Essay

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Published: Mon, 5 Dec 2016

Business systems of the nation defined the direction of the country toward the world economy. It uses to identify how they actually react to counter the economy environment. What make a country grow and develop might refer to few major aspects, like business systems, technology issues, political issues, etc. The economy development of a country usually defined as the development of the economic wealth of the country. For the citizens of a country, the economic development has the direct impact to them as they are the ultimate beneficiaries when there is development of the economy of their country.

The business systems does related to the economic development which directly affect the standard of living of the people in that particular country. This is because it implies an increase in the per capita income of every citizen. When there is economic development, it creates the opportunities in many sectors such as education, healthcare, employment and the conservation of the environment.

1.0.1 Key Concerns

The business systems that to be examine are related to the economic growth of the country. Basically, economic growth is a term that used to indicate the increase of per capita gross domestic product (GDP) or other measure of aggregate income. Usually, it is measured by the rate of change in GDP where the economic growth refers only to the quantity of goods and services produced.

How does the economic growth related to the citizens? In general, when there is negative growth, it means economic recession and economic depression happened. When this situation happened, the unemployment rate will rise accordingly. If the situation keep continue or they called as an economic depression, there will be more people declared bankrupt. The worst situation is that a devastating breakdown of an economy is called an economic collapse.

During recession, people become conservative. This not only affect unemployment issue but also the real estate industry as there is lesser demand in the real estate market. Besides, people also stop investment as they need money to sustain, this will lead the stock market fall sharply. Those scenarios will continue affect other sector like Bank refuse to lend as there might be non-performing loan. The Based Lending Rate from Bank will increase accordingly, it might make the borrower cannot afford to pay back the mortgages. During recession, Bank played an important role as their willingness to lend directly affects the economic. Business man needed the fund to smoothen the cash flow, credit facilities does help to overcome the above issues. At that moment, the requirement to qualify for lending will increase accordingly. When there is the mismatch, many businesses will join the sunset team.

The blame should not put on Bank itself, as they are trying to protect their own benefit as well. So, State shall play the role as arrange for the recovering plan to support the whole economy environment. However, the recovering plan should be identified before the real recession happen. This is because there will be too late when it happen and attack the market heavily.

1.0.2 Diversity of Business and Organizational Pattern

Everyone is different and people are not alike. This is also the reason why there are such a numbers of role needed for each individual in the organization, family, society, etc. The concept of diversity encompasses the acceptance and respect which means the understanding that each individual is are unique and recognizing our individual differences. These can be along the dimensions of race, ethnicity, gender, sexual orientation, socio-economic status, age, physical abilities, religious beliefs, political beliefs, or other ideologies. These differences will explore us to the safe, nurturing and positive environment. It is all about the understanding of each individual where moving beyond simple tolerance to embracing and celebrating the rich dimensions of diversity contained within each of us.

Harnessing these differences will create a productive environment in which everybody feels valued, their talents are fully utilized and organizational goals are met. It is the same concept for the business and organizational to sustain in the society and industry. Especially in the competitive environment nowadays, the diversity is very useful to differentiate one among other and to be the outstanding.

The recent business trends of globalization and increasing intergroup differences has turned scholarly attention to the management of diversity. The organization or even the states had paid attention on such area because they understand that managing diversity is about ensuring that all employees have the opportunity to maximize their potential and enhance their self-development and their contribution to the organization. Especially when they are the people from different backgrounds, they usually can bring up different and fresh ideas or perception which can make the way of work become more efficient and also the services and products going better.

Basically, in order to manage the diversity, it requires a numerous resources over the long run and an organization faces a level of adaptation and transformation equal to that encountered when confronting deregulation or a major technological change. This issue attract the attention of the organization is because of they know that the successful will help them to nurture creativity and innovation and thereby to tap hidden capacity for growth and improved competitiveness which directly affect the profit of the organization.

2.0 Business Systems

2.0.1 What are Business Systems as Defined by Whitley?

The launching of Whitley’s model has led to a host of publications using his concept of national business system. The studies range is from the determination of the business system of a single nation to the application of the model in explaining problems in the transfer of production technology, HRM systems, etc., in foreign direct investment. Whitley’s model provides researchers with a unified set of criteria to compare national business systems and thus more accurately point out that certain technology, management practices, etc., are the product of a particular business system and predict or explain how their implementation in another business system can lead to problems.

The concept of business systems as launched by Whitley centre around the belief that firms do not act in a social vacuum, but are economic actors affected by numerous influences from the environment. Firms operate in markets, business sectors; have to comply with laws and regulations, etc. The majority of these influences are linked to the nation in which the firm is operating. A small number of influences can be geographically restricted to the home region of the firm, while another set of influences is linked to international institutions. However, most of the forces that determine the way firm act are strongly embedded in the national culture of the firm. There are a number of reasons to take the state as the basic geopolitical unit for studying the operation of firms. States remain the primary unit of political competition and mobilization. Thus, individual and collective actors usually organize themselves at the national level to compete for state resources and legitimacy. National legal systems usually standardize the nature of property rights in an economy, especially how shareholders’ rights are to be protected. Market regulations governing industry entry and exit, dispute resolution and competitive behavior are usually promulgated and policed by national agencies. Finally, the organization and control of labor markets are often governed by national institutions such as labor law and court systems. Whitley’s model is a strong improvement over the cultural values based models. More precisely, the concept of business systems builds on the foundation laid by national culture models. National culture, as a set of values, has consequences for the way people belonging to that nation interact, it is reflected in the laws of the land, it is replicated in the institutions of that country, etc.

2.0.2 Nature of Business Systems

Like mentioned earlier, Business Systems is the model used to grow the country, it might be different from every country, and some might be the role model as the reference for the other. Different innovation systems reflect the variations in key institution like the nature of the state’s economic role, their prevalent science and technology policies, the type of public science systems, the strength of business associations, labor unions and the institution governing capital markets and skill formation systems. Generally, there will be problems encounter which categorized as the obstacle especially when dealing with new technological and market risks , however it need to be solved in many ways in different sub-sectors.

The national business system sets the rules regarding companies and organizations. But are the business systems unique or global? According to Whitley, as long as the nation state remains the primary unit of political competition legitimacy and defining and upholding of private property rights, many characteristics of business systems will continue to vary significantly across national boundaries-albeit not always constituting highly integrated and consistent coordination and control systems. This is because the national distinctiveness of business systems is depend on the extent to which characteristics of states are complementary in their implication for firms and markets. Modification of the business systems may be applied accordingly to the desire target and goal. Besides, it is also rely to the active structuring and coordination of interest groups and their interrelationships by state agencies. So, there are still many factors to be considering in dealing with the business systems.

2.0.3 Globalization and Convergence

Many globalization cheerleaders presume that internationalization is the same phenomenon and has the same result for most of the countries. The growth of institutional share ownership occurs to all capital markets in the same way. The national coalitions have weakened and new interest groups have formed to control the leading firms. Many states support developing competitive competences through training and research funding. Leading firms become more dependent on international capital markets, but strategic managers are less tied by political support and state guidance. They can pursue internally financed growth goals though acquisitions or reallocating resources away from loss making subsidiaries.

Convergence is the approach toward a definite value, a definite point, a common view or opinion, or toward a fixed or equilibrium state. In mathematics, it describes limiting behavior, particular of an infinite sequence of series.

Economic integration is the current trend of world economic developments; it is the nature of investment, trade, finance, technology, personnel, and rational distribution of free activities to promote the rapid development of productive forces. Economic usually integrated to globalization and regionalization in their own unique way, the process of economic integration, the two wheels driving the world economy and national economic development.

Productivity growth and deepening of international division of labor, the objective on the allocation of resources required breaking state geographic restrictions, requirements of the production factors across countries or areas are concentrated production which allow configuration of factors of production. The final product will increase volume and production scale, to enable countries to benefit. Based on this, countries in the contemporary economic relations have been in the pursuit of complete economic integration.

Globalization with it is broad, close to the ideal state of economic integration, but precisely because of globalization scope of this integrated approach is too broad, the various national political system and level of economic development makes countries on the integration between the basic considerations are often difficult to reach a consensus, factors of production in the world cannot be achieved within the scope of freedom of movement. The regionalization of it is diversity, flourishing and fruitful in promoting economic integration in the local region.

Economic integration process in all practice has fully proved by comparative advantage based international pattern of economic development within the contemporary needs and inevitable trend. The prevalence of comparative advantage is the traditional basic of international trade is the rise of transnational investment after the foundation.

2.0.4 Impact of Globalization

Globalization is from different fields and areas have promoted the rise of the last century the process of technological revolution, global electronic information technology and regional arrangement for scientific and technological development within the division. There are three aspects of specific performance, first is the information technology industry in the world has become a key high technology development; second, globalization and regional arrangements to achieve a high and new technology from the developed countries, the proliferation and transfer to the world; third, information technology, life science and material science, all based technologies will gradually integrate with traditional industry and agriculture, the formation of new industrial growth cycle. This will promote the process of a new round of technological revolution and the rapid development of the world economy provides material and technical basis.

Globalization in the relevant fields caused revolutionary changes to achieve the industry’s restructuring, mergers and acquisitions business across borders, continents and industry boundaries, various forms of virtual economy springing up the binary nature of the economy. Globalization from different angles and sides are fundamentally changing the industrial structure and economic performance in the world structure.

Countries, across regions there is a huge difference in the economic reality o the process of globalization can only be sub-optimal arrangements for additional series of exceptions. Although the regional approach within the system basically solved the optimal arrangement, but because of its strict exclusive features, so that non-members has formed a new trade and investment barriers. However, overall and in the development process, economic regionalization is precisely the additional phase of economic globalization and in the result of the regional final will promote globalization and regionalization have practice has proven that regional and non-tariff barriers. The gradual elimination of tariff barriers, expanding trade among members, a further consequence is another large market with the opening up of capital, technology, human resources and other production elements to achieve the profit maximization and optimal efficiency to promote economic growth. The expansion of production scale and sustained economic exchanges, it is use to expand the scope of regional economic further development.

By the development of international trade and investment and further development of international trade, the size and quantity will be increase accordingly. As the production of transnational features and global operations, global economic growth will face a greater extent dependent on trade.

3.0 Applying Business & Comparative Analysis

National Business Systems as an important support to national decision making departments, the increasing volume and complexity of statistical operations, statistical date needs and business requirements to speed up respond time, it require information systems to better optimize the integration, stability and protection of investment and support rapid business development.

The National Business Systems provide high level information technology support and services to further enhance the efficiency of national data information systems and business in the country. The effective dissemination of technology will provide a solid foundation for the country.

Besides that, the cultural convention issue like risk, trust level, etc. will affect the differences of each country as well. There are no right or wrong for each circumstance, it is depends on what the role to be take in as consideration.

3.0.1 Chinese Family Business

By looking toward the Chinese Family Business concept, it is easily to identify there is similarity among the countries in Asia. Hereby, to utilizes recent advances in the evolutionary theories of the firm to analyze the competitive strategies of small Chinese family firms in Asian latecomer economies such as Hong Kong, Taiwan, etc. Let’s begin with an examination of the distinctive features of a Chinese family firm. The argument is that the unique features of these establishments firms’ resources bases and contributes to their competitive advantages. There are two notable competitive advantages, the capability to maintain a high degree of flexibility and reducing transaction costs. These arguments are analyzed from two aspects, the organizational structure and internal communication methods and the subcontracting networks. Furthermore, given the organizational structure and the resource bases, most Chinese family firms choose not to upgrade their technological base within global competition. Rather, they tend to pursue guerrilla entrepreneurship, imitative follower-my-leader and specialize in international coordination. These strategies enable them to compete and survive in the world market.

In order to study the modernization of the Chinese family business, the contrast between formal rationality and substantive rationality was used to characterize significant features of Western culture and Chinese culture respectively. A theoretical model of Chinese social behaviors as influences by the substantive ethics of Confucianism was adopted to describe the organizational behaviors which were frequently observed in Chinese family business. Several empirical studies comparing organizational climates as perceived by employees working in foreign-invested business, private business with formal regulations, and family business were cited to support the argument that such Confucian virtues as loyalty to the organization, working hard, maintaining interpersonal harmony, etc., are most likely to be manifested in organizations where formal regulations of Western-style management were enforced.

With the current national economic development, it is gradually improving and restructuring of the traditional business model.

3.0.2 Learning Points

Growth is characterized by endogenous increase in labor specialization, the capital labor ratio, coordination costs, market size, and the interdependence of economic agents. In addition, model provides an explanation for a frequently ignored stylized fact of economic growth, the secular rise of government’s share of output, in terms of the economic role of the government.

Requirements of globalization of financial liberalization will lead to greater financial risks and adapt production to meet the requirements of development and trade integration, countries generally gradual deregulation in the financial sector and open up the market. Financial liberalization and further accelerated economic globalization, with the continued evolution of economic and financial of the international financial markets have been expanding production and trade finance activities to bring convenient, the risk of international financial pace. Relative to the weak international financial regulation if the international financial system cannot be a breakthrough, the financial crisis may happen again most.

Regional preferential arrangements through the region more fully realized in the region of cooperation, it has caused fierce competition between regions, competition not only in production and market reach, but also in the preferential arrangement of the comparisons with the competition, the result of competition so that some of them die. While others in the growing number of organizations as a spontaneous process closer to globalization.

With the unbalanced nature of economic globalization will be the development of more prominent. Globalization in the central role of the developed countries and multinational corporations with it is distinct competitive advantages through resource allocation and restructuring of production factors will be more and more profits and excess profits due to trade liberalization, investment liberalization, financial liberalization and deepening of the new technological revolution, developed countries, multinational companies will further strengthen and improve the internationalization of production compared with the strategic choice of developing countries with very limited room. The majority of developing countries could not benefit from economic globalization unequal international trade and international financial system further widened the gap between North and South, the unbalanced nature of the world economy will become more prominent.

3.0.3 Nature of Economic Agents, Market Organization, Labor Coordination

In economic, an agent is an actor and decision maker in a model. Typically, every agent makes decisions by solving a well or ill defined optimization or choice problem. The concept of an agent has been more broadly interpreted to be any persistent individual, social, biological or physical entity interacting with other such entities within the context of a dynamic multi-agent economic system.

Market organization is any organization that markets one or more systems, application or components produces by a development organization to potential customer organizations. Basically, the market organization provides change requests based on customer feedback to the development organization. Act as a source of requirements during the performance of the requirements identification task. This organization typically inherits the common responsibilities from the organization method component.

In comparative political economy the United States is denominated a liberal market economy characterized by market-based labor policy, but American political development studies suggest that national-level comparisons which assume government institutions are a coherent package may be misguided. Many combinations of state-market relationships have emerged as state governments invest in labor market performance and economic agents adjust their market strategies. Analyses that conceive regimes as sets of complementary institutions that constrain individuals and government officials have difficulty explaining changing patterns of policy and market organization. This article investigates these policy developments to make a constructionist argument that departures from historical paths are possible because institutional agents can reflect on performance and adjust strategies.

4.0 Conclusion

Is the Business Systems very important for a country? For sure the answer will be yes. However, how they actually looking into and react about the issues are really depends on the particular country to identify it. As the differences of culture, geographic, economic environment, development, globalization, etc., will significantly show the comparative.

Refer to the economic development nowadays; by study the business system of the particular country, either Asia or Western, obviously there are similarity that share among each other. The reason is the final aim is most alike the same, that is to catch up the economic trend.


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