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Extending the Eclectic Paradigm in International Business

Essays in Honor of John Dunning

Edited by H. Peter Gray

John Dunning is undoubtedly the world’s leading scholar on the subject of multinational corporations and international business. This collection of original essays is designed to honor this work, particularly his achievements during his association with Rutgers University.
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Chapter 5: A Theory of Systemic Adjustment and Economic Growth: The Case of Finland

Timo J. Hämäläinen


Timo J. Hämäläinen INTRODUCTION The world economy is currently going through a major techno-economic paradigm shift. The rapid development and diffusion of new information technologies and organizational arrangements has challenged the old economic and social structures of industrialized countries. The structural change, in turn, is calling into question the established social theories and ideologies which were developed in very different circumstances. Indeed, borrowing from Thomas Kuhn, there are today clear signs of a paradigm crisis in many disciplines of social sciences including economics, sociology and management science (see e.g. Heilbroner and Milberg, 1997; Beck, 1998). According to Kuhn, debates among different schools of thought, such as the recent on the ‘New Economy’, are typical for periods of paradigm crisis (Kuhn, 1975). The current transformation has not left the established growth theories intact. In particular, the systemic change that touches all parts of society challenges theories which focus only on few determinants of growth and competitiveness and neglect many other important factors (Hämäläinen, 2002). The neoclassical growth theories have tended to assume that the market mechanism organizes economies efficiently. This has led to an emphasis on the accumulation of different types of productive resources: natural, physical and human (Rostow, 1990a). This input-driven approach tends to gloss over the technological, organizational, political and institutional factors that determine the efficiency with which those inputs are used in the economy (Gray, 1999). This is problematic in the highly specialized, complex and knowledge-intensive...

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