Abstract
In development studies, there has been a long-standing question: why and how did East Asian developing countries achieve such phenomenal growth performances, eventually catching up with advanced industrial countries? Naturally, most scholars focused on the active roles of developmental states and their guiding influence on the economy. The authors of this book pose a similar question: ‘What factors made it possible for Hyundai Motor to catch up to its more advanced competitors in the world markets?’ (p. 4). However, the authors decided to narrow the unit of analysis to the firm level by conducting extensive qualitative analyses involving engineers, shop-floor workers, and even CEO-level business leaders. Their evidence and analyses unveil remarkably deep and engaging narratives regarding the growth and innovation achieved by this global car maker, providing students of development with a significantly more profound analysis and evidence than previous scholarship.
In this book, the authors delve into ‘the characteristics of Hyundai Motor’s production system’, thereby paving the way for analyzing detailed firm-level processes of innovation in latecomer societies. The Hyundai Motor case is particularly intriguing due to its unprecedented growth story in an automobile industry traditionally dominated by a few large firms from advanced industrial countries like the United States, Japan, and Germany. Their question, ‘what made this leapfrogging possible?’ (p. 6), remains intriguing because previous literature on developmental states does not offer a convincing explanation specific to this firm. Scholars have not attributed the success of this automobile company solely to the wise and decisive role of developmental state bureaucrats, as bureaucrats did not directly teach engineers how to manufacture cars. The authors astutely aim to fill this gap by suggesting that the theory of developmental state alone does not fully explain the global success of Hyundai Motor.
The authors also endeavor to theorize the catching-up process of Hyundai by making concrete comparisons with the Toyota case, thus addressing the limitations of state-centered explanations put forth by Gerchenkron and Amsden. They begin by engaging critically with existing theories on catching-up processes and corporate innovation models. Following a thorough review of state-centered explanations, Chaebol-centered explanations, and state-society interaction models, they propose their own model: Engineer-based processes of modularization.
This engineer-led approach emphasizes automation and standardization of labor processes, distinguishing it from the Japanese Toyota system which relies heavily on close collaboration between skilled engineers and shop-floor workers. The authors label Hyundai’s model as ‘authoritarian experimentalism’ in contrast to Toyota’s ‘democratic experimentalism’. This system enables Hyundai Motor to produce a variety of models on the same assembly line while reducing costs, though this cost efficiency often comes at the expense of external suppliers and irregular workers (p. 239).
The article reveals the intricacies of Hyundai Motors’ production process, emphasizing the critical role of engineers’ close communication and improvisational abilities in addressing the instant and unpredictable challenges inherent in mass production. This book contributes to the studies of development and organizational innovation in several key ways:
First, it unveils concrete mechanisms of skill formation processes within a representative firm, a facet largely overlooked in previous development studies. Skill formation at Hyundai occurred not at the shop-floor level, but rather through engineers’ strategic initiatives. This process, termed as modularized automation, represents a new form of ‘hierarchical Taylorism’, where shop-floor workers are not involved in skill formation processes, unlike their Japanese counterparts at Toyota (or, workers may have refused participation due to contentious union relationships).
Second, the book addresses the puzzle of how Hyundai managed to catch up with Toyota in promptly producing diverse car models without waste. The explanation lies in Hyundai’s modularized automated system, which relies less on highly trained skilled workers but heavily on competent and agile engineers under the control of authoritative, hierarchical CEOs. This concept gives rise to the ‘agile against lean’ title, although the book suggests that Hyundai’s production processes are not only lean but agile.
Third, the book contributes to the later developmental narratives in East Asia, particularly focusing on the latest development trajectory where developmental states have played a minimal role. While recent development studies often emphasize the state’s role in technical skill training and research and development (R&D) investment, this book argues that these initiatives were primarily driven by firms rather than the state.
In summary, the book sheds light on nuanced aspects of development and organizational innovation, offering insights into skill formation processes within firms like Hyundai, the dynamics of modularized automation, and the evolving role of developmental states in East Asian development narratives. There are remaining questions, however, to the authors as well as the readers.
First, we need to explain the phenomenon of leapfrogging or compressed growth. While ‘agile’ is a fascinating concept, it alone cannot account for the outcome of success and innovation seen in the Hyundai Motor case. To understand this, specific antecedent causal mechanisms are needed to explain where such agile and efficiently improvising workers originated from.
The authors propose engineer-led modularization (Chapter 2), which aligns with flexible automation and skill-saving work organization (Chapters 3 and 4). They then discuss ‘exploitation’ perspectives based on hierarchical inter-firm relations in Chapter 5. Do these exploitative inter-firm relations serve as a main theoretical mechanism or not? Do other automobile companies such as Toyota and Volkswagen engage in similar practices, or is it only Hyundai that exploits vendors, subcontractors, and irregular workers? I am not sure if the following assessment can coexist with the authors’ argument of exploitation:
At the same time, chaebols also provide a stable market for external partners by maintaining long-term relationships through purchasing parts and materials, offering staffing, expertise, investment support, and absorbing market fluctuations to a certain extent. This helps external partners to sustain themselves during uncertain times. (p. 34)
While the authors may argue that these two aspects can coexist within the same firm, I am uncertain if highlighting both aspects in the same book could be a wise strategy.
Is the only difference from Toyotism not improvisation, but rather authoritarian experimentalism originating from a unique Korean-style managerial system. (which also existed in Japan before the end of the Second World War)? Could this indicate a lack of (more advanced forms of) institutional complementarity (as noted by the authors on p. 104)? Then, can we argue that the less formalized and institutionalized complementary structure of the Korean Chaebol system was more advantageous for agile and prompt responses to fluctuating global market situations compared to the more formalized and rigid Japanese model?
Learning by improvisation (minimal structure with autonomy, resource recombination, rapid response, and innovative solutions, pp. 100–101) is conducted by engineers (at the pilot center), not by workers, according to the authors in Chapters 3 and 4. Also, skill formation occurs only at the level of engineers, not at the shop floor worker level. In the long term, can we expect that if union power declines, shop floor workers will be replaceable by irregular workers, while the company retains only core regular status engineers? Will this further reinforce labor market segmentation and the dualized labor market structure in the Korean economy?
These questions highlight the book’s ability to inspire interesting inquiries and themes for further research by scholars, including myself. This book should be included in any serious graduate course focused on the development of East Asian countries and firms.