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Those Who Fail to Share, Will Be Shared Out

“Dünyada görmek istediğin değişimi, önce kendinde gerçekleştirmelisin.”
Mahatma Gandhi

Unprecedent improvements in information and communication technologies, decline in transportation costs, and liberalisation in international trade norms are gradually making boundaries less and less important for national businesses. On the other hand, significant changes are taking place in the definition of ‘economic scale’. New technologies reduce the economic scales in production facilities while at the same time the economic scales in information resources, technology development, brand, image and distribution channels are constantly growing.

Surplus production capacity generated in various businesses are in a process of consolidation in the hands of those who are able to acquire larger economic scales in these other aspects. In many sectors from telecoms to iron and steel, owning brands, research development resources and distribution channels is now more important for profitability than owning production capacities.

Despite the limited capital accumulation in our country, many industries such as textiles, automotive, banking, etc. are fragmented. If the Turkish private sector fails to grow quickly to reach economic scales where the size matters, does not make adequate investments for Turkish brands in international markets, and continues foreign dependence for technological developments, our competitive advantage will quickly erode. The recent report of a Geneve based organization, IMD, suggests that this year Turkey’s competitiveness ranking has dropped from 37th to 42nd.

Therefore, we need to improve our practices of ‘corporate governance’ by achieving higher levels of transparency in company management and accounts which is a must for securing funds from international markets for new acquisitions. We should also be vigilant in protection of minority rights to successfully accomplish primary and/or secondary public offerrings. Simultaneous sharing of information with existing and potential shareholders about the developments and management plans of the company as well as the inflation adjusted accounts in line with international accounting standards are prerequisites for international capital markets.

In a period when the influence of nation-states diminishes, while that of international organisations and businesses constantly grows, our policy should be to encourage the Turkish private sector to grow through new acquisitions starting from the regional markets in order to improve our competitive positioning.

With a view to bring our limited accumulation of capital and knowledge to international level, we have to eliminate the cultural and structural barriers to the growth of businesses through mergers. We have to fully understand that the mentality that can be summarised as “be it small, but be it mine” is doomed to lose. In the age of information those who fail to share are destined to be shared out, in other words, to lose out.

Dr. Argüden
yarguden@arge.com


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