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Arto Lahti
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DOI:10.17265/1537-1514/2014.09.004
Arto Lahti, Ph.D., professor, Department of Management Studies, School of Business, Aalto University, Helsinki, Finland.
The Chicago School of Monetarism dominates the debate on the competition models. In the last decades, the pendulum has swung back towards the German historical school of economics by List, Schumpeter, Gutenberg, and Simon. The new trade theory by Paul Krugman is the standard in analysis of economies of scale and product differentiation in intra-industry trade. Chamberlin’s product differentiation concept and monopolistic competition theory are included in Krugman’s theory. Diversity matters in B2B-business in global markets. About 100,000 multinational corporations (MNCs) dominate the international trade of commodities worldwide but they need partners as suppliers of complementary products, services, and technologies. German hidden champions (HCs) that consist of over 1,300 mid-sized firms (Mittelstand) have revolutionizes the managerial economics. In terms of Peter Drucker, striving for leadership is the greatest gamble. Their success rate has been about 90% as Hermann Simon has reported. Their success recipe is the humble choice of markets segments, mainly B2B-industries, to make good business in any kind of goods and articles, not to follow trends or hit lists. The dilemma in EU-27-countries is that only Germany has succeeded to develop its own management doctrine initiated by Friedrich List and modified by Joseph Schumpeter. List argued that economic policy had to be adapted to the needs of specific nations to create the national system of innovation. Germany is the most diversified country worldwide. German small and medium-sized firms (Mittelstand) are globally oriented. Germany’s family business is the unbelievable success story. Alfred Chandler has been a highly influential business writer. Because of Chandler’s view, the personal capitalism was generally thought to be the old-fashioned model in comparison to the stock market capitalism. The Germany case is the strong evidence on the fact that Chandler’s famous conclusion may be wrong. The family-ownership is perhaps the most sustainable governance model in the global economy. The US is the winner of Chandler’s stock market capitalism, but the majority of US firms are domestic-market-oriented. In Germany about 100,000 mid-sized firms have experiences about FDI-operations.
hidden champions (HCs), industrial organization (IO) economics, new institutional economic (NIE), new trade theory, intra-industry trade, monopolistic competition, multinational corporations (MNCs), global markets
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