Advantage And Business Development

Generally speaking, most later-developing firms can not escape their destinies of being driven out of the market. However, there are always some later-developing firms being able to survive, develop, and even overpass earlier-developing firms. Is that occasional or inevitable? Are there any backward advantages in the development gap? How to make the backward advantages realized? If it is a law that later-developing firms can surpass earlier-developing firms, it can explain why later-developing countries can surpass earlier-developing countries at the microeconomics level. Especially, on the background of China having just joined in WTO, how can Chinese firms learn from earlier-developing firms? How to compete with them on the same stage?Having a survey of the contemporary economic literature, the author of this paper find that the questions mentioned above have not being answered yet. Neither the neo-classical economics, in which the firm is viewed as black box, nor the contemporary firm theory (contractual theory), in which the black box is opened and the nature of the firm is studied, have deep insight of firm development. Though the innovation theory, which is initiated by Schumpeter, and the capability theory of the firm, with origins in classical theory about division of labor and Marshall's evolutionary thought of the firm, shed intellectual light on this study, western scholars have not had systematical views of the later-developing firms. Therefore, on the basis of theories mentioned above and the concept of "backward advantages", which is learnt from development economics, the author will analyze the development motivities, mechanisms, and processes of later-developing firms in this paper.The viewpoints of this paper are: with development gap, backward advantages root in shorter time and lower cost in later-developing firms' technological and institutional learning than earlier-developing firms' innovation. As a result, backward advantages work as the motivities of later-developing firms' technological and institutional learning and therefore their development. With backward advantages decreasing, later-developing firms' must search for other motivities in order to sustain development when they grow up to some extend. The degree to which backward advantages can be realized is related to industrial characters and market structures. Industrial characters determine how difficult backward advantages can be realized. Market structures influence how much later-developing firms can benefit from backward advantages.This paper is arranged as follows:Chapter one is an introduction about the topics, the general tendency of theory, the viewpoints, the study aims, the research approaches, and the arrangement of this paper. The introduction is in order to make readers have an overall understanding about the practical and theoretical meaning, as well as main content of this paper.In chapter two, the author surveys theoretical origins and contemporary literature of firm development, including classical economics about division of labor, neo-classical firm theory, innovation theory, and contemporary firm theory, in which there are some theoretical supports on technological and institutional backward advantages. From the survey, the author finds that the relation of backward advantages and firm development is a new question for discussion.In chapter three, a framework to explain development of later-developing firms is provided, including the hypothesis of backward advantages as the motivities of later-developing firms' development, the hypothesis of development motivities conversion, competing processes, and firm development strategies.In chapter four, a mathematical model is provided, in which the relations of backward advantages, innovation, imitation, and firm development, as well as how backward advantages change in different industries, stages of industry life cycle, and market structures is discussed.Such questions are analyzed in chapter five as how technological backward advantages come into...