SAGE Handbook:
Globalization
By Matthew Byler, Taylor Jameson,
Becky Tibbenham & Charlotte Windberg
Summary
Globalization has many definitions and has been
researched from many different angles. Globalization
has impacted (and has been impacted by) sociology,
the natural environment, economics, politics,
technology, culture, and businesses. Because of all of
these changes, there are different perspectives as to
whether globalization has positive or negative
outcomes.
Introduction
o 1990 to 2000, increase in connection & integration
o Organizations contributed to and were affected by global
shifts
o Global can mean different things:
o Global = international
o Globalization = a process
o Globalization = growing worldwide interconnections
Research on Globalization:
IB to Sociology
o Debate over where bounds of international business
research stop
o IB with Economics: Examines international firm behaviors
o IB with Other Disciplines: Sociology, Political Science, etc.
o Is IB research stalled?
o Buckley and Pervez say yes because IB research not looking at big
questions
o Yes, because IB looks at same questions
o Yes, but debate of whether research should have a narrower or
wider focus
o Shenkar believes IB research can develop a “superior
ability to incorporate and interpret international issues,
including political events, social processes, and historical
legacies, which is where economics and strategy fail.”
o So… no clear answer on what IB research is or what it
should be.
o Historically, sociology has looked at things within a
country’s borders.
o Globalization has given us access to information about
other countries, so now measure rights against “universal
rights”
o However, management research still focuses on Europe,
North America, and Japan
Globalization of the Natural
Environment
o Natural Environment includes oceans, atmosphere, space,
Antarctica, natural ecosystems, and the internet
o Natural resources (oil, wood, minerals, ores) cause political
and economic problems because of increased competition
and shrinking supplies.
o Global interdependence both causing and spreading the
problems
o HIV for example
Boom or Doom?
o Boom: Unprecedented prosperity because rapid economic
growth will create technologies to solve the environmental
problems
o Doom: Technology is part of the environmental problem
rather than its solution
o e.g. global warming, species reduction, disease
o Two perspectives can lead to win/lose thinking, but really
need win/win thinking of “sustainable development”
o This will help both the economy and the ecosystem
Global Economics
o Trade, foreign direct investment, and capital all contribute
to economic globalization.
o The global economy creates a worldwide market for capital (which
has also reshaped the role of banks and lead to World Bank and IMF)
o World economies are now fairly synchronized both upward
and downward
o World poverty a main agenda for world economic leaders
o First globalization was for low-skilled manufacturing jobs
o Then for middle-skill back office jobs like call centers and
reading X-rays
o Now moving professional labor who are well paid and go
from project to project.
o Because these jobs many companies are not investing their main
facilities where wages and taxes are.
o These companies choose to move based on wages, transaction
costs, and government-business relations.
Two Main Perspectives on
Globalization: Good for Poor
o Developing economies that are open to foreign direct investment and
foreign trade have grown faster
o Translates into higher incomes for the poor.
o Big companies create jobs in the formal sector of developing
economies, often generating significant income in the nations that they
operate.
o The OECD study said global businesses pay their workers more than the
national average, spend more on R&D, and export more than domestic
firms.
o They can create stable, long-term jobs with decent pay and good working
conditions.
Two Main Perspectives on
Globalization: Bad for Poor
o Creates turmoil in developing economies
o Businesses always go to where labor is the cheapest, which disrupts these
economies.
o Can also contribute to child labor.
o Companies contract with people who pay low wages, have poor
working conditions, and have abusive environments
o Ex. Nike
o Another school of thought:
o Instead of comparing workers’ conditions to conditions in the west they
should compare the workers’ conditions to their actual alternatives, i.e.
working on the street (shoe-shines, selling gum, etc.)
Globalization of Political/Legal
Environments
o Need for global governance systems to agree on weights
and measures
o This will provide a systematic financial system, develop guidelines for
sustainable development, ensure equity, etc.
o Beyond government, also affected by intergovernmental
organizations
o Ex. NGOs, businesses, terrorists, etc.
o Governments control national policy
o E.g. industrial policy, trade missions, and tax breaks for foreign
investors
o Also have trade agreements with special arrangements
with foreign economic zones
o Ex. Industry alliances (OPEC), regional economic agreements (the
EU), and global trade agreements (WTO)
o No common and global defense system to manage armed
conflicts which include drug & human trafficking and
terrorism
o So global problems, but not global defense system to solve it
Global Technologies
o Certainly on of the most profound technological changes
has been introduction of telecommunications to link the
world, and computers that facilitate those links
o According to Makridakis (1989), today`s technological
revolution began in the 1940s with mathematical
demonstrations of computer concepts. Computerization to
follow occurred in phases of processing, microcomputers,
and networks that expanded to digital networks that merge
telephone, internet, television, and other media.
o Almost 96% of national R&D traditionally is conducted by
industrialized nations such as Japan, the US, Switzerland,
Sweden and other Western European nations. Other
countries such as Singapore are not themselves high in
innovation, but rapidly import new technologies. In
general the most innovative nations also tend to be those
that create an infrastructure that encourages business
start- ups
o Countries that spend little on R&D often introduce
technologically improved products at a low rate. As a
result, they are less competitive and show lower rates of
prosperity
o Ability to connect with others also makes it possible for
small firms to compete globally
o Information access permits human rights groups to gather
information that governments have long been able to
suppress, and information sharing has enhanced
knowledge transfer among women`s groups worldwide
o Instant on-line translators foster equality by reducing the
English-language bias in the Internet
o Interestingly, reasons to provide translations from English
to non-English are business ones: in many countries there
are not enough English-readers to support English-only
Internet services. According to Global Reach (2004), the
number of non-English web users grew from 10 million in
1996 to 540 million in 2003.
o The rapid speed of information transfer also alters many
traditional assumptions about knowledge. Any person
anywhere can provide and consume information. This is
important because within organizations, knowledge has
become more central to organizational success and
everyone is encouraged to leverage their knowledge to
benefit the company.
o Breakthroughs in many process and product technologies
generate questions about justice that often focus on the
digital divide among rich and poor economies (Green and
Ruhleder 1996)
o Other topics concern privacy, and the organization`s ability
to stimulate creativity at arms-length or in virtual teams.
o Knoke (1996) argues that in the face of technological
change, particularly the ”fourth dimension” of
computerization, nation-states will lose sovereignty, and
physical place will become almost irrelevant.
Globalization of Culture
o Cultural globalization represents disputed terrain. Some
argue there neither is nor could there be a global culture
(Smith1990). Others present worldwide availability of
branded products and accompanying consumption-based
values services such as the Internet and television media
that reduce communication boundaries and use of English
as a common business language as evidence of cultural
globalization.
o Scholte (2000) believes global exposure to media and
improved connectivity with contacts beyond local ones
helps people reconfigure their own social space.
o Tomlinson (2003) argues that one result can be amplified
significance and greater understanding of local identity. An
example is English-language use which in some quarters has
become the common business language, but its use often is
localized such that it becomes many forms of English
(Crystal 1997).Further, English-language does not displace
local languages, suggesting that cultural practice is not the
same as adopting a culture (Husted 2003)
o Among paradoxes of global culturalization are growing
pressures for within-culture homogeneity set against a
backdrop of increased worldwide heterogeneity.
o As time and space compression bring us to a realization of
one world, they also expose us to the infinite variety and
diversity of the world. These tensions create opportunities
and they exact costs for nations, and for organizations.
o In the view of some theorists of globalization the world
has apparently become one without any boundaries,
despite the continued existence of borders between states
and all the administrative devices that maintain them.
o However, to the extent the world is becoming
economically global it is largely confined to Japan and the
newly industrialized countries of South East Asia, Western
Europe, and North America.
o Technological, economic and cultural integration is
developing within and between these three regions and is
evident in the pattern of international trade and
investment flows.
Global Businesses Activities and
Industries
o Many examine global businesses by looking at tens of
thousands of transnational corporations whose activities
are reported in annual World Investment Reports
o Focusing only on firms in consumer products and services
tends to obscure the fact that many other businesses
operate globally
o Many businesses opportunities are pursued by smaller
firms.
o Porter defined a global industry as one in which a firm`s
competitive position in one country is significantly affected
by its position in other countries or visa-versa. He
suggested that those with a high industry trade ratio are
more global, and can be assessed according to the amount
of industry influence that comes from outside domestic
markets.
o Other suggested measures of industry globalization
include intrafirm flow of resources (Korbin 1991); crossborder investment as a ratio of total industry capital
invested, proportion of industry revenues generated by
players competing in all the regions of the world
o Govindarajan and Gupta (2000); national border
transcendence measured by cross-border mergers and
acquisitions
o The latter authors believe a systematic analysis of industry
globalization should explain the combined effects of all
firms within the industry, be able to distinguish industries
with significant international linkages in other countries,
and should measure functional integration within the firm
of value- added activities the firm conducts across national
boundaries.
o Industry integration includes consolidation, alliance
building, and value and supply chain management.
o Industries also contract due to shifting consumer interest
and demands, or availability of desirable substitutes such
as file sharing instead of music CDs. Finally, some industries
dissolve.
The Skeptical Thesis
o Globalization is simply internationalization by another name
o Today’s “globalization” is not unprecedented because previous historical periods
also had interconnections similar to those of today
o Even though there are players emerging in Asia and Latin America, trade,
investment, and financial flows are still concentrated in Europe, Japan, and
north America
o These areas can coordinate policy and exert powerful influence over financial
markets.
o Large companies account for the same amount of the world’s input in both
1980 and 1990 (no growth), and nations (not businesses) are the key actors
since organizations are subject to politics in their home countries
o The scale of the current connections are significantly bigger
o Previously they were thin connections with little direct impact on consumers
o Today has thick characteristics, involving long-distance flows that are large and
continuous, and affect many peoples’ lives.
The Hyperglobalist Thesis
o Globalization is in a new stage, and the power of countries is supplanted by
business activities
o Two variations:
o Self-interest perspective: organizations are dispassionate actors on a global scale
working pragmatically in the pursuit of economic ends and self interest
o New World Order perspective: Global businesses are not indifferent, rather
nations and organizations with economic and political power come together to
advance their common interests
o Supporters of view:
o Globalization is not business as usual. Managers will scan the world for pragmatic
opportunities, which could lead to unpleasant consequences for others
o “The market made me do it.”
o Critics of view:
o It also over-generalizes and causes people to overlook other options, such as the
fact some businesses work to enhance worldwide opportunities rather than
abusing their power.
The Transformational Thesis
o Globalization is currently transforming, so we do not know whether the
long-term will produce positive or negative results
o Interconnections and interdependence will forge new links and dissolve existing
ones
o Relationships among nations and people will be reconfigured and power
relationships restructured
o Businesses that view globalization in this way also find it important to
generate wealth much like businesses with a hyperglobalistic view
o Managers would weigh cost with the long-term ramifications of the decision
o Global NGOs network with businesses through opposition and proposition
o Opposition includes boycotts, demonstrations, and disruptions
o Proposition includes dialogue, interlinked board memberships, and cross-sector
partnerships
o Generally businesses are more attracted to direct-impact partnerships, such
as education, environmental sustainability, or job development
Conclusion
o Tendency towards oversimplification
o Ex. Rich vs. poor, nations vs. businesses, positive vs. negative outcomes, winners
vs. losers, local vs. global businesses, centralized vs. decentralized businesses
o Businesses will be shaped by globalization
o They can also play an active role in shaping globalization’s agenda and
consequences
o Businesses should make explicit and clear choices about what
interconnections mean for their organization
o IB research needs to incorporate all social science disciplines because
otherwise there are deficits in knowledge
o International relations, political economy, anthropology, sociology, cultural
studies, economic geography, and economic history
o Globalization spans disciplines, making it more difficult for a single
academic specialist to tackle it all
ANY QUESTIONS?