Bringing History into International Business by Jones and Khanna - Article Example

Journal Article Critique “Bringing History (Back) into International Business” INTRODUCTION In their research paper titled “Bringing History (Back) into International Business,” Jones and Khanna’s (2006) study appeared to fill a gap in literature on the significant role of integrating to determine various aspects, such as decision-making processes and market failures. The researchers used longitudinal study, through document analysis to review 43 articles as their research method. The depth of research makes it sufficient to assert that Jones and Khanna (2006) offered an objective review by tracking how history has been integrated into the field of international business over time. Indeed, the rationale for the study, as mentioned by the researchers, was to assess how history has been integrated into business historically. Essentially, therefore, Jones and Khanna’s (2006) succeeded in realising the objective of their study. Jones and Khanna’s (2006) hypothesised that the field of international business needs to change its rhetoric from the comparatively less controversial idea that 'history is crucial for exploring the significance of international business. From this, it is clear that the authors used rigorous methods to analyse small sample and qualitative data in cases where traditional regression techniques failed to apply. This article review will provides a critical assessment of the ideas and arguments that Jones and Khanna’s (2006) put in their paper. ARTICLE REVIEW Jones and Khanna’s (2006) selected journals and research papers from the field of international business for analysis and review. There techniques were thorough. Their aim was to amalgamate the findings previously reported into a single paper that could be the basis for future studies on the significance of history in international business. Indeed, what formed the basis of their study is that while it is widely acknowledged that history matters, few studies have attempted to explain how it matters. Jones and Khanna’s (2006) conducted an extensive review of past and current literature, which they broken down logically into four sections, which rationalised their arguments. They advanced further to give an exhaustive list of international business scholars, who involved historical data in their studies from as early as 1966 to 2005. The 39-year difference presents the authors with an exhaustive time span to track how history has been integrated into the field of international business over time. The theories, such as Penrose’s (2009) “The Theory of the Growth of the Firm” seemed to address sufficiently the main thrust of the study in analysing the importance of history in the performance international business. Out of the 43 articles, 16 were written within 5 years of the publication date of the article. The 43 references, such as a relatively large time span (39 years) seemed to be narrow. However, the use of current and past literature formed a major strength for the article, as they formed a foundation for obtaining relevant exhaustive and multidimensional understanding of the significance of integrating history in international business in addition to a framework for determining theoretical issues. The decision to cite current and past researches made the conclusions Jones and Khanna (2006) drew from their review of literature to be authentic in respect to objective and comprehensiveness. Indeed, Jones and Khanna (2006) begin with pioneers of international business, such as Raymond Vernon, who suggested the ‘Product Cycle Model,’ which offered an evolutionary approach for illustrating the changes of the US manufacturing investment during the era of ‘Postwar Europe.” Some researchers, such as Hathaway and Litan (2009) have also examined the history of multinational organisations in the United States and arrived at a similar conclusion. REVIEW OF ARGUMENTS AND IDEAS Jones and Khanna (2006) presented 4 key arguments. Argument 1: In their first argument, Jones and Khanna (2006) assert that history is a critical source of time-series variation in the area of studying of business groups. They went on to explain that studies of phenomena that use cross-sectional variation can be balanced off by studies that exploit the under-utilised time-series variation that history provides. Indeed, this idea has been supported in the history of international business. Bator (1958) shows that market failures in specific countries are because of certain patterns concerning historical trends of the structure and impacts of business groups. Additionally, the historical contexts of markets determine their perfections or imperfections. Indeed, this is specifically so in the business groups or legitimately independent enterprises that is expansively diversified in nearly all emerging markets and a few developed markets. In consistent with these arguments, Hayness and Husan (2002) showed that lessons in history of the European market failures after the collapse of the Soviet Union are indeed related to patterns in history. Hayness and Husan (2002) does not point to the questionable premise and the gaps and inconsistencies that historical context can yield international market imperfections. Yet like Bator (1958), Hayness and Husan (2002) appear to be struck by the absurdity idea that the ability of international business scholars to understand the world has never been greater. In reality, there appears to be an inverse relationship between the level of failure of businesses and the adverse patterns in history. This clearly shows how historical variation is a significant complement to current cross-sectional variation in explaining conceptual issues. Indeed, it could be reasoned that conclusions reached by literature on current market business groups are extraordinarily the same as the separately established conclusions on similar forms of organization that were existed in the age of empire. Essentially, therefore, it could be concluded that Jones and Khanna’s (2006) assertion that history is a critical source of time-series variation in the area of studying of business groups is valid. Argument 2: In their second argument, Jones and Khanna (2006) show that in integrating history into international business, dynamics matter since things change over time. Here, rather than just argue that the main significance of historical analysis is confirming the validity of cross-sectional analyses, Jones and Khanna (2006) argue that dynamics rather than statics are significant. A related rationale is presented by Weick and Quinn (1999), who argued that in the same way as other concerns of history, things change. Jones and Khanna’s (2006) idea that business strategies changed based on the political, economic and social dynamism is consistent with Weick and Quinn (1999) and Hathaway and Litan (2014). Weick and Quinn (1999) provide an analysis of organizational change between 1999 and 1991 and show that a significant issue of concern is that businesses undergo episodic, intermittent, and discontinuous change. Weick and Quinn’s (1999) findings validate Jones and Khanna’s (2006) argument. It is clear that like Jones and Khanna (2006), both Weick and Quinn’s (1999), as well as Hathaway and Litan (2014) show that change is essentially a phenomenon of time. Clearly, this shows that change is not an on-off phenomenon although it significantly affects how organisations perform in the market place. Weick and Quinn (1999) and Jones and Khanna (2006) appear to validate Jones and Khanna’s (2006) argument that understanding how change occurs is critical for international business scholars. Jones and Khanna (2006) made this argument after examining the forms of businesses that take part in international business activities also provide evidence of this. Despite the changes, however, some forms of businesses that operated historically still operate today. This, according to Hathaway and Litan (2014), does not dispute the fact that dynamics matter since things change over time. Indeed, Hathaway and Litan (2014) appear to agree with Jones and Khanna (2006) that a significant result of historical research is showing that several forms of business organisations that disappeared in the past have reappeared. According to Jones and Khanna (2006), such historical evidence challenge international business scholars to recognize the manner in which variables that affect the relationship between business organizations and environment change, an idea that Weick and Quinn’s (1999) strongly agrees with. In the same vein, Hathaway and Litan (2014) present a legitimate conclusion that business dynamism entails processes through which businesses are constantly born, fail, expand, and contract, since while some business opportunities are created, others are destroyed. Hathaway and Litan (2014) had presented an analysis of the decline of business dynamism in the United States, before bringing evidence that business dynamism has waned in the entire 50 states during the last 3 decades. Clearly, Jones and Khanna’s (2006) argument that in integrating history into international business, dynamics matter compared to statics since things change over time is valid. Argument 3: In their third argument, Jones and Khanna (2006) argue that the history of business organisations is a critical determinant of their unique competencies. Jones and Khanna’s (2006) perspective is consistent with the Penrose’s (2009) “The Theory of the Growth of the Firm” which provides an insight into the significance of integrating historical analysis in determining organisation’s competence development. Jones and Khanna (2006) bring strong evidence supported by current crop of scholars, such as Gupta et al (2013) whose review of literature on growth of small and medium enterprises (SMEs) revealed that all SMEs undergo varied stages of growth life cycles. The basis of Jones and Khanna’s (2006) argument on historical relevance in this regard, therefore, serves to illuminate the idea that since each business has to start and grow while being confronted by various challenges before eventually reaching mature and final decline. Gupta et al (2013) assertion that an business’s characteristics and history, as well as other agencies like market influence its growth, confirm Jones and Khanna (2006) argument that history is crucial since growth is fundamentally an evolutionary process that depends on the gradual development of collective knowledge. Rugman and Verbeke (2002) support both views. Argument 4: In their fourth argument, Jones and Khanna (2006) reason that in addition to uncovering the fundamental nature of business organisations, historical analysis also adds value to organisations by revealing the long-term effects of certain choices. A particular example, as Jones and Khanna (2006) illustrates, is the foreign direct investment (FDI) and its impact on developments that emerge over time. Several contemporary scholars, such as Tucker (2013) and Llanos and Valenzuela (2009) have recently explored this perspective. Llanos and Valenzuela (2009) showed that history has provided a means to explore the significance of the traditional methods of evaluating businesses in the processes of decision-making, particularly for enterprises that are family-oriented. His findings do not conflict those of Jones and Khanna (2006), as he indicates that history makes it possible to identify the factors that have played around family investment policies and its impact on business performance and related returns. Llanos and Valenzuela (2009) further confirm this argument in his assertion that history of the business and its owners define certain aspects of the strategy and the manner in which priorities are made in allocating resources. In fact, taking Jones and Khanna (2006) on the value adding significant of history in business, it should be reasoned that one of the main reasons for such a situation is the limited methodologies of International Business researchers and their reluctance to use accumulated historical evidence to evaluate the economic and political effects of multinationals. CONCLUSION The researchers examined four conceptual channels to argue out their main hypothesis that history is significant in international business. It is established that their points are valid, convincing, and appropriate. Their assertion that history is a critical source of time-series variation in the area of studying of business groups is valid. They also adequately show that historical evidence tends to avoid false labelling of certain phenomenon as 'new.” In this way, their historical evidence challenges contemporary accounts of their determinants. What can be concluded from this is that in integrating history into international business, dynamics matter compared to statics since things change over time. They also validly indicate that history may allow people to shift further than the often-recognized significance of the question of path dependence to examine the basis of “Penrosian resources.” Lastly, they bring adequate evidence illustrating that some issues exist that cannot be ably addressed with the exception of cases of the long run. They present an example of the foreign direct investment, which has formed the basis for international business literature, as well as long-term economic development. References Bator, F. (1958). The Anatomy of Market Failure. The Quarterly Journal of Economics. 72(3): 351-379 Foss, N. (1998). Edith Penrose and the Penrosians - or, why there is still so much to learn from The Theory of the Growth of the Firm. Prepared for a Special Issue of Cahiers de l’ISMEA - Série Oeconomica Gupta, P., Guha, S. and Krishnaswami, S. (2013). Firm growth and its determinants. Journal of Innovation and Entrepreneurship 2(1): 2-15 Jones, G. & Khanna, T. 2006. Bringing History (Back) into International Business. Journal of International Business Studies, 37(4): 53-468 Hathaway, I. Litan, R. 2014. Declining Business Dynamism in the United States: A Look at States and Metros. Brookings Institution, 1-7 Hayne, M & Husan, R. 2002. Market Failure, State Failure, Institutions, and Historical Constraints in the East European Transition. Journal of European Area Studies, 10(1): 105-129 Rugman, A. & Verbeke, A. (2002). Edith Penrose’s Contribution To The Resource-Based View Of Strategic Management. Strategic Management Journal 23(1): 1 769–780 Weick, K. & Quinn, R. 1999. Organizational Change And Development. Annu. Rev. Psychol. 1999. 50(1): 361-386 Read More