Counting the Giants: Fortune 500 Companies in Brazil

The notion that the state is all-important, with its institutions running the domestic capitalism game, is completely embedded in explanations of how economies work (Rodrik 2007, North 1990). Firms are doing their thing according to the rules set by the state, but the top firms are flexing and influencing the same rules that control them. A company may try to flex for better protections or regulatory structures, but it is only one of three entities, fam. Directly flexing on macroeconomic policies, because both labor and capital have a role to play, do you agree? There are a lot of firms in an economy that may or may not share the same vibe. 

At the end of the day, a company's clout is typically determined by its size, political influence, and adherence to a single business model.

At the most basic level, firms must organize capital and labor inputs (in exchange for interest or dividend payments and compensation, respectively) in order to produce goods and services with flexibility. How firms gain access to those inputs is determined by the domestic climate of capitalism and the establishment of state-based institutions, you know? The way those inputs are accessed influences how much work the firm can accomplish. The state has a significant impact on the firm's ability to obtain inputs via three channels: money vibes, work rules, and regulations. Regulatory policies in labor markets can be all about individualism or unionization. Similarly, capital markets are shaped by policies and regulations that may be influenced by the government, investors, and/or banks. The level of collectivisation in labor and capital markets completely determines what kinds of policies are advocated at the state level, you know? OMG, complements begin to emerge as people align with asset-specific or competitive forms of organization. The flexibility of labor and capital markets is determined by whether or not policy is on track, fam. The system is like, "Yo, we keep doing the same thing over and over again, and it's like, totally the same, ya know?" And then the people in the system are like, "Yeah, we totally get it, and we start liking this one particular type of thing, like, all the time."⦁VoC Theory and the Firm, Family Section 2.2 explains how firms fit into the currently proposed VoC framework. The section discusses how the firm, the economy, and stakeholders are all interconnected. It's like they're all best friends, you know? VoC is all about how the state, capital, and labour work together to create massive comparative advantages in domestic markets. 

VoC is taking principles from management and microeconomics and applying them in a political economic context, you know? 

According to VoC theory, firms have different advantages depending on the configuration of complementary institutions. Microeconomic actors collaborate to increase their productivity (Hall and Soskice 2001). Where complementary relationships are lit (i.e., CMEs), firms will feel compelled to grow their business through incremental innovation. Successful CME firms are likely to find significant competitive advantages in sectors such as manufacturing, mechanical engineering, and business process engineering (ibid). Firms are more likely to take wild risks and focus on transformational or disruptive innovation and new product development (LME) when complementary relationships are fiercely competitive. Successful LME firms excel in sectors such as pharmaceuticals, biotech, ideation and strategy, service-oriented businesses, and information technology (Hall & Soskice 2001). The firm-level focus of VoC allows for better insight into the dynamics of macro-to-microeconomic iteration, as well as clear identification of incentives set by country-level factors. Lit AF! The concept of being "disruptive" and "incremental" needs to be completely explained and made clear, because it's extremely important in a VoC framework that sees innovation as, like, showing off your mad skills and outperforming everyone else. Innovation is used in a lot of literature with a variety of meanings, but it's typically associated with only insane disruptive models. In the thesis, innovation is defined very broadly, similar to what Rosenberg said. Amann and Cantwell stated that "innovation is basically just a never-ending process of solving problems in and around production" (Amann and Cantwell 2012; Rosenberg 1982). Innovation is all about how companies use their skills to outperform their competitors in the marketplace. 

Some firms are taking mad risks (because capital and labor inputs are hella flexible and competitive) by attempting to discover new technology.

Or strats. This innovation is extremely disruptive, fam. Alternatively, other firms have a vibe of focusing on innovation for production or product improvement (which completely aligns with stakeholder incentives defined by capital and labor complements), and this is classified as incremental innovation. EM firms are still demonstrating their innovative abilities. As a result, the basic definitions provided by VoC must be contextualized using a developmental lens, you know? As countries improve their innovation game, they move up the value chain and become more globally competitive. Competitive vibes would include solo work deals, a desire for fairness, liquid securities that can be traded, and relaxed shareholding structures with generous protections for minority shareholders. The degree to which the various dimensions are completely in sync demonstrates how well companies can like, get what they need, and define a capitalist vibe (Hancké and Goyer 2005). The remainder of the chapter is organized as follows: section 2.2 discusses VoC theory and the firm, explaining the firm's role in the existing framework and how stakeholders interact; section 2.3 discusses the challenges of applying VoC theory to an EM context; and section 2.4 illustrates EM typologies.