June 1, 1998 - The Economic Crisis in Asia: Will It Effect Asian Values and Culture?

Because of the miraculous growth of Asian economies--Japan is the second largest economy in the world--and increased international trade, events in Asia have important implications for the global economy.

Although the Asian economic crisis is significant, it is uncertain how long it will last and what, if any, will be its enduring effect on organizational behavior. For example, some reports claim that the bottom of the crisis is near and that assistance from the International Monetary Fund, banking reforms, austerity measures, and changes in government policy, will result in a rapid recovery.

Other interpretations point to long-term problems and fundamental changes in values, culture, and behavior. For instance, a headline in the New York Times declared: "One Korean Certainty: No More Business as Usual" (January 4, 1998). Another Times headline read: "Crisis Pushing Asian Capitalism Closer to U.S. Style Free Market" (January 17,1998) and noted that the crisis has changed behavior in organizations. It quotes Mr. Kim, a Korean factory operator:

"Now the bottom line is everything." Mr. Kim says mournfully, and he complains that the relationships that were the underpinning of Korean-style capitalism are dying quickly. "Before, companies that had done business with us for a decade would help us out in times of trouble. But no more."

So the customers of Mr. Kim's clothing factory are breaking the rules of the game by squeezing him and curbing orders. And he reacts by breaking the rules again and laying off one-third of his 130 employees.

Throughout International Organizational Behavior, and particularly in Chapter 2 "Culture and Organizational Behavior," the emphasis is that different cultures have different values. Research also suggests that values and cultures do not change very quickly. Are the changes reported by the New York Times temporary adaptations to a crisis or long term shifts in values?

Another theme throughout the text is identifying forces that are creating convergences or divergences among cultures. Will these changes result in a convergence of Asian-style capitalism to Western-style capitalism, management, and organizational behavior?

The following Web-site tracks developments throughout Asia and explores the causes of the crisis and its global dimensions http://www.stern.nyu.edu/~nroubini/asia/AsiaHomepage.html

Another Web-site is the Out There News' country-By-Country Guide: http://www.megastories.com/seasia/crisis/crisis.htm A different view of the Asian crisis is available from the International Workers Bulletin: http://www.socialequality.com/public_html/frontpg.htm

Other Web-sites that provide useful data and analysis on the crisis are:

1. Far Eastern Economic Review http://www.feer.com
   
   
2. The Dismal Scientist http://www.dismal.com
   
   
3. The World Bank http://www.worldbank.org
   
   
4. Asia Business News Interactive http://www.abn.com.sg

An interesting exercise using the above Web sites is to track developments in Asia for the next few months to see what effects the economic crisis has on organizational behavior. Some questions are:

1. Do employee layoffs become a routine method for dealing with economic downturns or only a temporary measure for adjusting to radically new economic conditions?
   
   
2. Are there any other enduring changes in business practices, for example, the use of family members and the close interpersonal relationships of many business people?
   
   
3. Is there evidence of fundamental and enduring shifts in values, for example, toward the values of Western style capitalism?
   
   
4. What factors, if any, other than the economic crisis helped create changes in social values and organizational behavior?
   
   

* For the remaining weeks in this semester keep a log of events in Asia. Toward the end of the semester analyze the log and evaluate events in terms of the questions above.