Multiple dynamics of financialization in the automotive sector: Ford and Hyundai cases

Abstract

The financialization process in the automotive sector is growing and has affected the automakers in different ways. In this paper, we propose to study the different dynamics that involve financialization in the automotive sector by comparing Ford and Hyundai cases worldwide. To do this, we used indicators that aim to concretize the economic concept of financialization. They are the following: a comparison between sources of profitability; composition and shareholder acquisitions; business leaders; compensation payments to executives; dividend payments to shareholders; salaries and level of employment. These indicators showed a tendency of financialization in both automakers, but with different incidences in each one of these indicators. They have shown, for example, that while Ford's financial sector is more profitable than its productive sector, Hyundai's two sources of profitability are much more balanced showing significantly smaller differences than Ford's. The employment level indicator showed that while there has been a huge drop in the number of jobs at Ford in recent decades, at Hyundai there has been a reverse movement of expansion and hiring. The aim of this article is to discuss the financialization indicators in these two automakers, contributing to better knowledge about the automotive sector and collaborating with the research agenda of economic sociology and finance.

Financial intermediation and innovation: linking international agents and local investors

“…Studies on the financialization of economies, which started in the 1980s, have outlined the development of initial disputes over the best way to manage large corporations. They have been marked by shareholder activism, especially institutional investors, advocates of the maximizing shareholder value (MSV) ideology (Fligstein, 2001;Krippner, 2005;Grün, 2005;Froud et al, 2006;Mundo Neto & Saltorato, 2017;Saltorato & Benatti, 2018;Ertürk, 2019;Lazonick & Shin, 2020;Fantti & Donadone, 2020;Carmo et al, 2020;Carmo, 2020).…”