Journal of Management Studies 57:3 May 2020
doi:10.1111/joms.12569
Managing Technological, Sociopolitical, and
Institutional Change in the New Normal
David Ahlstroma, Jean-Luc Arregleb, Michael A. Hittc,
Gongming Qiand, Xufei Mae and Dries Faemsf
a
The Chinese University of Hong Kong; bEM Lyon Business School; cTexas A&M University; dSouthern
University of Science and Technology; eCity University of Hong Kong; fWHU Otto Beisheim School of
Management
A New Normal environment for business has emerged in the years after the 2008
financial crisis based on numerous changes in the world's economic, technological, demographic, and sociopolitical factors. This combination of changes has created a New Normal
environment for firms with major implications for managers, strategists, and entrepreneurs alike.
It has resulted in an environment with new challenges and opportunities that are considerably
different from what firms had to contend with in the years previous. In this paper, we present the
main changes that characterize the current New Normal business environment and highlight
some key implications for strategy and management. Then, we present the nine articles in this
special issue dealing with different dimensions of this new environment for firms. Subsequently,
we outline some future research questions that could help to advance our knowledge of the New
Normal environment and its implications for firms and management theories. In examining
the New Normal, it is important to be reminded that the world is indeed round and even small
actions on one side of the globe can have a major impact on organizations on the other side of
the globe.
ABSTRACT
Keywords: communication technology, innovation, institutions, new normal, nonergodic
change, small events, state intervention
INTRODUCTION
More than two decades ago, Hitt and colleagues (Hitt et al., 1998) introduced the idea of
the new competitive landscape to describe the more turbulent business environment that
was emerging from the increased globalization and growth of that period (Friedman,
Address for reprints: David Ahlstrom, CUHK Business School, The Chinese University of Hong Kong, Cheng
Yu Tung Bldg., 8/F, Shatin, NT, Hong Kong (ahlstrom@baf.cuhk.edu.hk).
© 2020 Society for the Advancement of Management Studies and John Wiley & Sons, Ltd.
D. Ahlstrom et al.
1999). This new environment was characterized by more turbulent conditions in which
competitors could enter markets unexpectedly, assisted by increasingly open markets and
new supply chain techniques that facilitated market entry and cost arbitrage, even for
smaller and emerging economy firms (Cavusgil and Knight, 2015). Cross-border economic activities such as trade and foreign direct investment (FDI) enabled by advances in
supply chain and communications technology were on the rise, leading some authors to
envision a future with increasing economic, financial, knowledge, and political similarities across countries as characterized by the ‘world is flat’ hypothesis (Friedman, 2007).
The heady optimism of the day was likewise heralded by Fukuyama’s (1992) popular
‘end of history’ thesis that observed the ascendancy of Western liberal democracy and
governance that would promote more inclusive institutions, increasingly free markets,
and private enterprise as a world norm (Acemoglu and Robinson, 2012). Russia seemed
to be on that path in privatizing its economy and China’s private sector was thought to be
helping the economy there to grow out of the old state-dominated plan (Hitt et al., 2004;
Naughton, 1996). This viewpoint was further articulated in the Washington Consensus
employed by the World Bank and others in advising developing countries to improve
their institutions, intellectual property rights, and establish freer markets (Stiglitz, 2002).
The ‘flat’ hypothesis even went so far as to predict that local governments could become irrelevant given the rising global trade and investment, increases in multinational
enterprises (MNEs) and cross border movement, and the growing numbers of new investors (often in developing economies) demanding that firms and governments deliver
improved performances and investment returns (Friedman, 2007).
Then, the 2008 financial crisis occurred, challenging this vision of the world economy
(El-Erian, 2010). Major technological and institutional changes along with geopolitical
upheaval in several parts of the world has again been leading to a major shift in the business environment. From the worldwide financial crisis of 2008 and the ensuing Great
Recession, coupled with renewed populist movements and enabling technologies, particularly in communications and artificial intelligence (AI), a new business landscape for
firms has again been emerging (Cukier, 2019; Etzioni, 2015). These nonergodic changes
– changes that are nonlinear, erratic, and hard to predict as they do not look much like
the recent past – are yielding some unexpected outcomes and boundary conditions for
the current business and economic environment (El-Erian, 2010; Hitt et al., 2016). For
example, after the 2008 crisis, capital flows between countries, which had been rising
since the end of the Second World War, retreated significantly to levels not seen for a
quarter century (Sharma, 2016). The growth in trade also slowed to a crawl (Lund and
Tyson, 2018). Another somewhat unexpected change has been the deglobalization of
some markets thereby pulling back from the increases in globalization and trade of the
1990s and early 2000s, while other markets still retain some degrees of globalization,
more in the expanding emerging economies (Lund and Tyson, 2018; Peng et al., 2017;
Rodrik, 2018; Zhu et al., 2020).
Additional risks created by politics and government actions, previously relegated to a
relatively minor concern in international business, are front and centre, and amplified by
new computer and communications technologies (Fortune, 2018; International Monetary
Fund, 2018; Witt, 2019). Likewise criminal activity against individuals, firms, and even
governments has been increasing, also enabled by new computing and communications
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technology. Small events such as a protest or an flu outbreak in a far corner of the
globe can suddenly wreak havoc on a firm’s operations seemingly far removed from the
difficulties.
The seismic changes in the early years of this century led Mohamed El-Erian in
his well-known Per Jacobsson lecture in 2010 entitled ‘Navigating the New Normal in
Industrial Countries’, to state: ‘Our use of the term [New Normal] was an attempt to
move the discussion beyond the notion that the [recent financial] crisis was a mere flesh
wound… instead the crisis cut to the bone. It was the inevitable result of an extraordinary, multiyear period which was anything but normal’. Not only the financial upheaval
El-Erian discussed, but other important nonergodic changes occurred concurrently, creating highly challenging and novel conditions. Some of these started before 2008 but became more relevant or came to fruition in the New Normal environment (Cukier, 2019;
Lund and Tyson, 2018; Rodrik, 2018). These include technological changes that are
expanding industry boundaries and enabling greater competition and coopetition, increases in nonrival goods that can be easily shared and are more characterized by disruptive innovation and increasing returns (Ahlstrom, 2010; Jones, 2019; Romer, 1990, 2014).
In addition, monitoring technologies and communications have advanced rapidly, facilitating entry into remote markets, but also enabling government oversight of firms and individuals, as well as facilitating increased criminal activity against firms and governments
(Van Assche, 2019; Cukier, 2019; Hitt et al., 2010). Firms experience these changes as
they face increased foreign competition in domestic markets (Peng et al., 2019). Firms
must also deal with significant sociopolitical changes such as the Arab Spring and related
powerful social movements that are increasingly part of the New Normal environment
around the world (Etzioni, 2015; Tilly, 2004; Witt, 2019).
These changes rival those in scope to those that were experienced with the new competitive landscape that emerged in the ‘flatter’ world of the 1990s and have created a
New Normal for strategy, international business, and innovation and entrepreneurship.
The slow recovery experienced in the years after the 2008 financial crisis is unlikely to
recreate that previous landscape. The financial shock, coupled with other technological,
demographic and societal changes, reached a tipping point that moved the international
business environment down a path with new enduring competitive and institutional characteristics, including some critical institutional voids that firms have to address (Webb et
al., 2019). For researchers, two key aspects characterize this New Normal environment:
Firms have experienced some radical changes in both their competitive and institutional
environments and also, these changes have necessitated major shifts in firms’ behaviours
(Verbeke, 2018). In all of this, it is important to remember that the world is indeed round,
and actions and events on one side of the globe such as new government regulations and
intrusions into business, local protests or the emergence of a new influenza strain can
result in major challenges for firms on the other side of the globe, and rather quickly.
The competitive landscape has taken some unexpected twists and turns in such respects
in recent years leading to the notion of the ‘New Normal’ environment for business and
many ensuing challenges.
Thus the core objective of this special issue on ‘Strategy, innovation, and new ventures
in the New Normal global business landscape’ was to bring together current research
that illuminates the challenges and opportunities alike that firms can experience in this
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New Normal Business Environment
D. Ahlstrom et al.
New Normal environment. In this paper, we first provide a more in-depth discussion
of some core characteristics and challenges of the New Normal. Subsequently, we provide an overview of the core insights from the nine papers of this special issue. Finally,
we discuss interesting avenues for future research that can help us to further increase
our theoretical and managerial understanding of the New Normal phenomenon and its
implications for firms.
FACETS OF THE NEW NORMAL
There are several main facets of the New Normal environment discussed here and addressed in the papers of the special issue. The main components, and their relationships,
include economic, demographic, socio-political, and technological components as summarized in Table I.
Economic and Demographic Components of the New Normal
The restructuring of the economic order has particularly affected multinational enterprises (MNEs), and others doing business across borders. After the 2008 financial crisis,
capital flows between countries and trade in goods and services retreated significantly
(Sharma, 2016). Foreign direct investment declined from its pre-crisis high of more than
$3 trillion to around $2 trillion in 2015 (The World Bank, 2017). Some have further argued that the more developed economies could linger in a low-level growth equilibrium
for a prolonged period slowing down trade as well (El-Erian, 2016; Lund and Tyson,
2018). High debts caused in part by heavy reliance on accommodating monetary policies, driven by central banks and governments, has likely contributed to the low-growth
equilibrium often accompanied by large budget deficits and low interest rates. Still,
despite the unconventional ‘new monetary’ policy, central banks seem less effective at
moderating financial volatility and at promoting growth (Levaux, 2017). Many developed countries could face problems similar to that of Japan’s economy of recent years,
which has been stuck in a deflationary trend and problematic demographics, despite
years of accommodating policies trying to solve these problems as exemplified by Japan’s
‘Abenomics’.
Moreover, while variation exists across countries and time, a clear trend of slower
growth among developed economies has been demonstrated from recent studies on output and productivity growth (Anzoategui et al., 2019). This trend began before the global
financial crisis but may have become more pronounced since 2008 (Dabla-Norris et al.,
2015). The prospects for boosting slow growth in advanced economies via increasing factor accumulation may be limited, notably for demographic factors and short to medium
term drags on the demand and research and development so important to productivity
and growth (Ahlstrom, 2010; Anzoategui et al., 2019; Dabla-Norris et al., 2015).
The shocks created by the 2008 financial crisis combined with other long-term changes
that materialized in the last decade changed the environment to what is being called the
New Normal (Etzioni, 2015). These changes also include demographic factors in developed countries such as Japan including an aging population, fertility rates below replacement rates, and declining population growth rates, all of which undermine economic
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Table I. Major facets of the new normal
Dimensions
Main changes
Economic
Decrease in foreign direct investment (from its pre-crisis high of over $3 trillion to around
$2 trillion in 2015)
Developed economies linger in a low-level growth equilibrium for an unusually prolonged
period
Heavy reliance on accommodating monetary policy, driven by central banks and governments, accompanied by budget deficits and low interest rates
Output and productivity growths in advanced economies had been slowing down and
this trend should not dramatically change
Growing economic inequality within countries and between generations
China is trying to achieve a slower but more sustainable economic development
Brazil, India and Russia, have a more limited growth rate due to economic and demographic transition, and structural deficits
Slower paces of growth in developed countries and in some emerging countries
Demographic
In developed countries: aging baby boomers generation, fertility rates below replacement
rates, and declining population growth rates
Same issues in older emerging economies (China and Russia) in the near future
Strong demographic growth in some emerging countries (e.g., in Africa)
Technological
Cybernated data: Information is digitized, stored, processed, and formatted for mass
distribution
Privacy merchants and privacy violating triangulation
Growing threat to privacy from governments and private profit-making corporations
New computing, communications, AI, and design and manufacturing (e.g., 3D printing)
Increased disruptive innovation and nonrivalous goods facilitated by new technologies
Political
Use of cybernated data for political manipulation
New populist movements emerging based on inexpensive communications technology
Increased governmental participation in firm management and trade
National security
Renewed nationalist movements
Social
Questions about the legitimacy of free markets, international trade, or for-profit
organizations
Increase of the ‘sustainability’ issue
Intergenerational conflicts especially in developed countries
Pervasive but fragmented social networks
growth (Gagnon et al., 2016). Recent estimates for the USA suggest that average annual
GDP growth will also continue to run more slowly than the average growth rate after the
Second World War (Fernald and Li, 2019). A few studies even claim that the historical
economic performance in developed countries over the past 60 years was supported by
abnormal demographic conditions such as an extraordinary growth in the working-age
population with a modest roster of senior citizens (e.g., Arnott and Chaves, 2013). Such
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New Normal Business Environment
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demographic ‘tail’ winds, supporting economic growth, may have started to change to
‘head’ winds in developed countries. Moreover, we are likely to start observing similar trends in older developing economies (China and Russia), and later in the younger
emerging economies such as Brazil and India within the next 20–30 years. Hence, the
New Normal era could be viewed as a return to a more normal demographic period in
developed countries, but also one that is creating significant challenges and changes for
firms.
A slower pace of growth in developed countries in turn leads to slower growth in the
average wages and living standards for workers. For firms, they mean relatively modest growth in sales in these markets (Fernald, 2016) even for foreign competitors from
emerging economies and fiercer competition within these markets. Even in China, the
government has tried to rebalance its economy to achieve a slower but more sustainable economic development due to several challenges including environmental problems, high debt to GDP, demographic changes, and income inequality (Zhang and Chen,
2017). Brazil, India and Russia have similarly experienced a period of economic and
demographic transition. Together with structural deficits, this has created a situation
whereby growth rates in the developed or larger economies of the world are smaller in
the New Normal environment than before 2008.
Socio-Political Components of the New Normal
In many countries, the citizens are dissatisfied with the general course of their countries’
economies, as well as with their political institutions. There is a ‘great disconnect’ (Etzioni,
2015) between political institutions, even democratic ones, and a country’s citizens. This
is due to the fact that voters can perhaps be more easily misled because news items have
become less informative or even inaccurate. Media and social networks have also become
fragmented, which allows people to choose their sources for information and information
may not be as well vetted as in the past (Spohr, 2017). In this way, they can live a sort of
informational and social groupthink, seldom hearing counterarguments or objections to
their beliefs and assumptions (Cavanagh, 2019). Voters can be philosophically conservative (progressive) but can have operational or social preferences which are progressive
(conservative) (i.e., the ‘split-self ’ hypothesis). This ‘lack of information, media biases,
interest group power, and the voters’ ‘split selves’ may each account for some of the disconnect’ (Etzioni, 2015, p. 182). The previous economic and demographic factors can
also explain such disconnects as governments struggle to restart the economic growth
that their citizens had experienced for decades before 2008.
Increased participation of the state with the private sector also characterizes the New
Normal environment. Firms doing business in a given foreign host country are often
compelled to cooperate with local state regulations, security agencies, and major state enterprises, sometimes in areas with which they may disagree, and which may also conflict
with their home country laws such as censorship, information privacy, and state security
regulations. Failing this, the company may face sanction, legal action, or expulsion from
the country as happened with Google in China in 2010. This approach links national
security to commercial activity and the health of state-linked enterprises thereby influencing the strategic choices of the foreign firm competing in that market (Bruton et al., 2015).
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The dispute that arose between the National Basketball Association (NBA) and China
over a team executive’s brief tweet on the 2019 Hong Kong protests illustrates this problem. China perceived that its territorial integrity was interfered with by those commenting
positively on the Hong Kong protesters, even a single basketball team executive in a far
off US city. In response, China cancelled a major basketball tournament, reduced NBA
broadcasts in China and some major sponsorships for the NBA in China were cancelled.
One response to this type of problem has been for home country companies to move their
manufacturing capacity away from banned host countries (Hufford and Tita, 2020; Woo
and Volz, 2019), though firms have learned that being based outside of a country does
not mean that they will be safe from sanctions. These sanctions can range from the firm
being pushed out from the country as happened to Google in China several years ago, to
lawsuits or even legal action directly against company executives for perceived infractions
against the host country’s leaders or national security (Cardenal et al., 2017).
State security issues are not limited to countries with larger state commercial links. The
dispute between the U.S. Federal Bureau of Investigation and Apple in 2016 demonstrates
the potential conflict between commercial and national security interests. Arguments
popular around the turn of the current century for the inexorable progress of globalization as popularized by Friedman (2007) and others, pronounced the irrelevance of
local governments in the face of global corporations and international trade and travel.
It was argued that national sovereignty was a 19th-century concept made irrelevant by
two world wars and globalization. But this has not been the case under the current New
Normal environment. Apart from the NBA example, this was further exemplified by the
recent forced departure of two top managers (chairman and CEO) from Cathay Pacific
Airways for their support of their employees’ rights to free expression related to the 2019
Hong Kong protests. This stance angered Mainland China and Cathay was going to
be restricted from flying over most Chinese airspace before the crisis was defused (Lee,
2019). Cathay Pacific is not a Chinese company; it is owned by the Swire Group from
the UK. The notion that the top executives of a foreign firm can be forced to resign for
adhering to internal and internationally recognized standards of conduct is a clear indication that local government is not irrelevant as once pronounced at the beginning of the
twenty-first century. The recent upsurge of politics and governments’ actions, shaping
firms’ attention and influencing their strategic options (Fortune, 2018; Witt, 2019), shows
that we need to better understand these issues that have become increasingly relevant in
the New Normal environment.
Technological Components of the New Normal
Major technological changes have also played a key role in this New Normal. They
have made information digitized, stored, processed, and formatted for ease of analysis
and mass distribution, that is into ‘cybernated’ data as named by Etzioni (2015). Etzioni
(2015, p. 106) points out that cybernated data represent a serious and growing threat
to privacy in two different ways: ‘A discrete piece of personal information, collected
at one point in time, called “spot information”, may be used for some purpose other
than that for which it was originally deemed constitutional, or it may be pieced together
with other data to generate new information about the person’s most inner and intimate
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life’. Maintaining privacy in the New Normal cyber age protected from government
and other organizations and individuals is increasingly challenging due to cybernation.
While this dimension is increasing in importance, legal theory and practice have not
maintained pace with the technological change (Etzioni, 2018). What is new in terms of
cybernated data is that significant violations happen not because of collating, storing, analysing, and distributing information, but because of combining such information with
other information, a process that can be completely legal on its face but can prove harmful in malicious hands. Combining information frequently provides a comprehensive
profile of one’s personal life. Therefore, ‘the most serious violations of privacy are often
perpetuated not by surveillance or information collection per se, but by combination,
manipulation, and data sharing – by cybernation’ (Etzioni, 2015, p. 118). As a result,
a characteristic of the New Normal is that a growing threat to privacy comes not only
from governments but also from private firms, the so-called privacy merchants. They sell
(often private) information to whomever pays the price. They use a process of ‘privacy
violating triangulation’, to derive much about a person’s protected private information
(e.g., medical, financial) by identifying and integrating ‘innocent’ facts or information
not protected by law. Governments continue to seek a good balance between the new
information technology and AI, and privacy concerns (Etzioni, 2018).
However, cybernation and other technological developments such as AI may also provide additional opportunities for firms (Cukier, 2019; Frey, 2019) and increased flexibility
for workers (Sundararajan, 2016). Revolutionary improvements in technological performance lead to improved productivity and standards of living (McCloskey, 2016; Nordhaus,
1997). But technological change does not always have to imply high-end improvements on
established technologies and products. Improvements at the lower end of a technology’s
performance trajectory can also have a positive impact on markets and individual standards of living (Tomizawa et al., 2020). Such disruptive innovation has facilitated not only
competitive capabilities but also the creation of new product-markets providing cheaper
and simpler applications to the lower end of the market (Christensen et al., 2018). For
instance, smaller firms have entered the pharmaceutical industry producing generic drugs
and functionally equivalent healthcare products that are especially helpful for base of pyramid customers and more remote applications such as home healthcare (Ahlstrom, 2010).
Similarly, wireless communication, initially of a poor quality, was able to slowly disrupt
superior landlines, partly due to wireless’s mobile capabilities, while enabling a host of
new applications, many for lower end customers (Christensen and Raynor, 2013). Major
new markets have also emerged allowing some young firms in the New Normal to achieve
billion-dollar valuations early and a few to become Fortune 500 firms in a few short years.
Technological change has also created a New Normal for competition as new computing communications, AI, and design and manufacturing such as 3D printing have
afforded (often smaller) firms the capabilities to enter markets that would have been
closed to them in the past due to scale or sophistication required for research, design or
access to markets. Small firms can sell online and even abroad and with greatly enhanced
‘storefronts’. Revolutionary advances in computing, communications and software have
considerably opened up competition, with positive outcomes as well as negative externalities. Thousands of retail stores including whole chains have closed in recent times due to
significant competition from online retailers. Manufacturers face major challenges from
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smaller firms that are taking advantage of new materials, design houses and 3D printing
and supply chain techniques to explore businesses in a variety of domains (such as specialty design, components and parts).
Disruptive innovations have also created new security concerns. For example, mobile
phones, home automation systems (Hu, 2018), and even automobiles are vulnerable to
hacking, allowing control by maleficent individuals. State actors are increasingly sponsoring many of these intrusions, costing consumers and firms billions of dollars annually
(Martin and Dou, 2019). Such activities are widespread and represent crime but also can
become somewhat of a technological arms race (Volz and Youssef, 2019). Security specialists in telecommunications worry about backdoors in transceiver equipment that can
be used to capture data and eavesdrop on conversations and emails (O’Keeffe and Volz,
2019). Moreover, governments have been increasingly concerned with the national security risks embedded in the data communications and telecommunications grids, which
are key to the function of modern economies (Otuoze et al., 2018). The response of
governments, such as the US (Klein, 2018), the UK (Keane, 2018), and other developed
countries has been to ban the use of technology in national infrastructure from companies domiciled in countries with laws that compel firms to share data with their security
agencies and to increase surveillance. The European Union is contemplating, but has not
yet decided, to enact similar restrictions (Drozdiak, 2020). These bans affect the growth
opportunities of host country companies and their home country counterparts as well as
trade and investment (O’Keeffe et al., 2019).
A CENTRAL STRATEGIC CHALLENGE IN THE NEW NORMAL:
GLOBALIZATION AND DE-GLOBALIZATION
The New Normal challenges how businesses are organized, governed, and manage their
interface with a range of stakeholders (Etzioni, 2018; Young et al., 2008). New technologies and techniques, while providing much opportunity also raise concerns for firms
with respect to their position in previously difficult-to-contest markets (Christensen et al.,
2018; Davis, 2016). One important managerial and strategic challenge for international
firms encapsulates most of the components of the New Normal environment presented
in the previous section: navigating the globalization-de-globalization tension (Witt, 2019).
Resulting from the aforementioned facets of the New Normal, the co-existence of
globalization and de-globalization has become a distinct and important reality for firms
on the international stage. Globalization is a process leading to greater interdependence
among countries or their citizens (Guillén, 2001), while de-globalization represents the
process of weakening interdependence (Witt, 2019). Depending on their context and
characteristics, firms have to deal with the paradox resulting from the coexistence of
these two opposing forces in the New Normal environment.
Globalization
Globalization in the New Normal environment will continue to drive many strategic decisions, especially those related to emerging economies (Wright et al, 2005; Young et al.,
2014). This is because of economic liberalization in a number of the world’s emerging
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economies (Hoskisson et al., 2000), such as China and India, has led to rising demand,
globalized production, and increased buying power of the populations (McCloskey,
2017). However, multinational firms need to address the challenges that have arisen in
the New Normal environment, which relate to entry-related, exit-related, as well as region-related strategies.
First, the New Normal context significantly shapes foreign market entry strategies.
Prior research shows that firms in regulated industries tend to avoid investing in countries
with high levels of macroeconomic uncertainty (Garcia-Canal and Guillen, 2008), and
prefer local partners having strong connections with policy makers in emerging markets
(Lu and Ma, 2008). However, the New Normal has seen the regulation focus of some
host countries shifted from industries, such as utilities and infrastructures, to technologies
and the natural environment. For example, in recent years, low-tech, less environmentally-friendly industries have become less desirable for many host countries, while industries using high-tech and clean-energy are increasingly preferred (Delios and Ma, 2010).
Given these changes, multinational firms need to update their entry-related strategic
decisions such as the drivers, mode, timing, location, and partners (Luo et al., 2019), by
considering numerous factors at the corporate, country, subnational, and industry levels
(Ma et al., 2013).
Second, multinational firms should also take the New Normal context into consideration when designing and implementing exit strategies. In international business, exit
strategy often refers to divestment (Benito, 2005), or closure/sell-off of units in foreign
locations (Mata and Portugal, 2000). There are two types of exit strategies: forced exit
as a result of nationalization actions in host countries (e.g., Kobrin, 1980), and voluntary
exit (Benito, 2005), which has been the focus of recent international business research
and also relevant to the New Normal context. In particular, given the increase in the
cost of doing business in some formerly ‘hot’ host countries such as China, multinational firms may consider exit as a strategic response. This is similar to what happened
to the increasing cost disadvantages of advanced economies like Belgium (Pennings and
Sleuwaegen, 2000) and Japan (Yamamura et al., 2003) decades ago. Moreover, the New
Normal environment may also produce an increasing number of exits by foreign firms
due to political and institutional transformation in transition economies such as Poland
(Roberts and Thompson, 2003). By nature, exit strategy is a strategic choice named by
Oliver (1991) as ‘avoidance’.
Third, multinational firms need to reconsider their regional foci in the New Normal
environment. Prior research has shown the disproportionate importance of multinational firms’ home regions (Rugman and Verbeke, 2004). As the liability of inter-regional
foreignness (Rugman and Verbeke, 2007) might be heightened in the New Normal environment, companies with strategies emphasizing economies of scale with a broader
multinational spread may need to shift toward intra-regional diversification (Qian et al.,
2008; 2010). With regard to multinational firms’ regional structures, extant research highlights the strategic roles of regional headquarters such as corporate ambassador, regional
administrator, and learning centre (Enright, 2005; Ma et al., 2013). In the New Normal
environment, multinational firms may use their regional headquarters, which are locally
embedded in a region, to shape the global headquarters’ understanding of the local
environment under conditions of uncertainty or to better respond to the legitimacy and
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other requirements of the local stakeholders (Ahlstrom and Bruton, 2001; Birkinshaw
et al., 2008).
De-globalization
De-globalization has become a reality and is expected to persist in many markets (Rodrik,
2019; Witt, 2019) in the New Normal environment. Research has suggested that globalization is expected to change like a pendulum, a cyclical phenomenon dependent on a
specific junction of political-economic conditions (Meyer, 2017). After reviewing multinationals and global capitalism from the nineteenth century to the twenty-first century,
Jones described the image of a world economy as ‘waves of globalization’. That said,
we are witnessing a return to a more deglobalized era (Kobrin, 2017). That is, we see
iterative cycles, shifting from globalization to deglobalization and perhaps back again.
In a way, however, the New Normal is actually characterized more by a co-existence of
globalization and deglobalization, as trade flattens out and cross border investment declines, but cross border cyber activity increases along with increases in born global firms
and cross border merger activity, especially originating in emerging economies (Cavusgil
and Knight, 2015; Lund and Tyson, 2018; Zhu et al., 2020).
On the one hand, recent years have seen the increase of national governments’ protective measures, including both tariff and non-tariff barriers (Meyer, 2017). These
governments use exchange controls and other restrictions to address security concerns,
competition concerns, and issues related to the protection of key assets and innovations.
Such anti-globalization policies may restrict the international transfer of intellectual
property (Conti, 2018), the movement of labour, the integration of markets for goods
and services, and the flow of foreign capital. On the other hand, the anti-globalization
movement has gone beyond government policies. In many developed countries, optimistic and positive feelings about a ‘Global World’ have been offset by more negative
ones, as illustrated by Britain’s Brexit movement, blaming globalization and unrooted
corporate structures for existing economic or societal problems (Kennelly, 2001; Rodrik,
2019). Moreover, nationalist and populist parties have gained support in many countries
to propose their ideas and rhetoric, which are based primarily on increasing controls on
immigration and exercising more control over local institutions which are supportive of
local populations (Kobrin, 2017; Rodrik, 2018).
As MNEs’ strategies have been built on an implicit assumption of ongoing globalization (Witt, 2019), significant dimensions of their strategic responses to de-globalization
pressures will be qualitatively different from when operating under the premise of globalization. In particular, because of the scepticism towards globalization, MNEs likely
respond by using not only market strategies, such as reconfiguring their value-adding
activities across nations (Delios and Ma, 2010), but also nonmarket strategies (Mellahi
et al., 2016). Indeed, nonmarket strategy is used by firms to manage the institutional or
societal context of economic competition (Baron, 1995). There have been two parallel
strands of nonmarket strategy research: strategic corporate social responsibility (CSR)
and corporate political activity (CPA) (Mellahi et al., 2016). Given the significant CSR
(Surroca et al., 2013) and CPA activities (Hillman and Wan, 2005) in the foreign subsidiaries of MNEs, the integration of these two nonmarket strategies may help these firms
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New Normal Business Environment
D. Ahlstrom et al.
dealing with challenges derived from de-globalization movements in the New Normal
environment. Some of the more extreme populist groups have even questioned the societal value or legitimacy of the private firms with a for-profit objective, with an increasingly positive reception among parts of the population in some countries. In turn, the
preference for the development of more ‘social’ forms of organizations, having broader
non-profit objectives as cooperatives or family business, has grown (Munoz et al., 2020).
The current New Normal environment is exceedingly complex with pressures for deglobalization, often in more prominent developed economies with established institutions that are changing, with simultaneous pressures for increased globalization, often in
emerging economies, enabled by improvised digital and supply chain technologies and
where inclusive institutions continue to develop and new competitors crop up and move
aggressively out from their strongholds in (previously) remote emerging economies (Lund
and Tyson, 2018; Zhu et al., 2020). Multinational enterprises must navigate across and
within these different countries trying to effectively manage and hopefully balance these
often-conflicting forces and the rising power of emerging economies and their often
more activist governments.
ARTICLES IN THIS SPECIAL ISSUE
Collectively, the nine papers included in this special issue (SI) provide a rich and insightful overview of the challenges and opportunities that firms face in the New Normal
landscape and the strategies they can apply to navigate them. An overview of the papers
is presented in Table II.
The first paper by Moore et al. (2020) examined how monetary aid flows can influence
business creation in recent years. More specifically, they drew on the international political economy literature to explore how different types of global aid flows (multilateral,
bilateral, and private aid) impact both formal and informal entrepreneurship (Ahlstrom
and Ding, 2014). Based on longitudinal data from 49 countries, the results offer strong
support for all but one of the proposed hypotheses. That is, both bilateral aid and private aid are associated with higher levels of informal entrepreneurship, while multilateral aid are associated with lower levels of informal entrepreneurship, and bilateral and
private aid are associated with lower levels of formal entrepreneurship. The findings
of the study highlight how government decisions on the acceptance of foreign aid can
motivate would-be entrepreneurs to formalize their new ventures (or not), thus showing
how differential aid pathways influence outcomes in recipient countries. That is to say,
different sources of aid can have different agency problems, and each of them interacts
in a unique way with the two types of entrepreneurs. The findings help to build a better
understanding of the New Normal landscape of international aid that has emerged in
recent years. Evidence suggests that foreign aid provides little help in terms of development (Easterly, 2002). Yet this work by Doh and colleagues (2020) presents that a more
nuanced view of both the source of aid and the type of recipient can help to explain the
puzzle of foreign aid ineffectiveness.
The second paper, by Munoz et al. (2020), examined the relationship between prosocial cooperatives (co-ops) and innovation in the New Normal environment. The authors identified three cooperative forms of governance: The attention pack, the eclectic
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422
The authors examined how firms can use generic transformational (e.g., renewal and recombination) strategies to help
alleviate the new normal productivity growth decline. In
doing so, they can fully factor the impact of new normal
stagnation on the business landscape and prepare themselves for enhanced productivity growth in subsequent years
Clougherty, Duso, Seldeslachts, and
Ciari
Hasija, Liou, and Ellstrand
Commonly-employed and Commonly-successful
Transnational Strategies: Implications for
Alleviating New-Normal Productivity Growth
Declines
Navigating the New Normal: Political Affinity and
Multinationals’ Post-acquisition Performance in a
Developed Market
423
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The authors have explored how political affinity between host
and home markets enables multinational enterprises of
emerging markets to achieve a better post-acquisition performance in developed markets. The findings of the study
help the firm to navigate in the new normal by formulating
effective strategies to realize the benefits of cross-border
acquisitions
The authors examined the democratic ‘new normal’; that is,
the new normal interim regimes in former autocratic countries initiated after a series of violence in the Arab Spring.
The findings of the study shed light on how investors cope
with the uncertainty about the emergence of a democratic
new normal during an interim regime’s tenure
El Nayal, Slangen, van Oosterhout, and
van Essen
Towards A Democratic New Normal: Investor
Reactions to Interim-regime Dominance during
Spells of Violence
The authors addressed how prosocial cooperatives influence
innovation in the new normal, and how entrepreneurs use
cooperative forms of governance to develop innovative ventures. The findings of the study help develop a more holistic
understanding of how innovation works in cooperatives in
the New Normal
The authors have explored how different types of global aid
(i.e., multilateral, bilateral and private) flows impact business creation and formal/informal entrepreneurship. The
findings of the study help to better understand the New
Normal landscape of international aid
Munoz, Kimmitt and Dimov
Moore, Dau, and Doh
Does Monetary Aid Catalyse New Business
Creation? Analysing the Impact of Global Aid
Flows on Formal and Informal Entrepreneurship
Summaries
Packs, Troops and Herds: Prosocial Cooperatives
and Innovation in the New Normal
Authors
Title
Table II. Articles in the special issue
New Normal Business Environment
Authors
Eddleston, Banalieva, and Verbeke
Smolka and Heugens
Zhu, Zhu, and Ding
Loon, Otaye-Ebede, and Stewart
The bribery paradox in transition economies
and the enactment of ‘New Normal’ business
environments
The emergence of proto-institutions in the new
normal business landscape: Dialectic institutional
work and the Dutch drone industry
The Roles of Chinese CEOs in managing individualistic cultures in cross-border mergers and
acquisitions
Thriving in the New Normal: The HR microfoundations of capabilities for business model innovation. An integrated literature review
The author has explored how the microfoundations of human
resources (HR) enable business model innovation (BMI)
to work in the New Normal. The findings of the study
provide practical steer to senior organizational executives
in terms of the direction and emphasis of the HR practices
as well as of the essential capabilities for BMI in complex
environments
The authors have explored how the different levels of individualistic cultures in host countries affect the success of
cross-border mergers and acquisitions (CBMAs). The findings can be of great relevance particularly to other developing economies that are seeking to learn from Chinese firms’
experiences in the process of internationalization
The authors have presented a process model that reveals how
new regulatory structures evolve in the new normal business landscape; that is, enterprises and regulators will work
together in shaping the institutions of the future
The authors have uncovered a bribery paradox in which the
purposes of paying bribes are different, depending on the
time horizon. Moreover, they have found the perception of
entrepreneurs toward their business environment is influenced by their identity and the associated social context
Summaries
D. Ahlstrom et al.
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Title
Table II. Continued
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troop, and the wondering herd, that allow for collaboration and more democratic decision-making necessary for the development of innovative solutions in the faster moving
New Normal landscape, characterized by vastly improved communication and collaboration technologies. A New Normal environment not only provides new opportunities
for innovation, collaboration, and alliances but can also impact the fitness of different
organizational forms (Sternad et al., 2017). Using configurational analyses of organizational enablers leading to innovation in 40 entrepreneurial cooperatives in Chile, Munoz
and colleagues (2020) show how entrepreneurs can use cooperative forms of governance
to develop innovative ventures. The results indicate that the three forms of governance
represent distinct social groups that leverage different types of leadership, coordination,
and survival tactics when experiencing uncertain and challenging environments. More
specifically, collective ownership and decision-making do not constitute a drawback that
restricts performance. As such, co-ops embracing traditional ways of organizing no longer need to isolate themselves from rivals using other organizational forms (Kennelly,
2001). The findings of the study help develop a more holistic understanding of how
co-ops and related organizational forms such as mutual organizations can be competitive and undertake the innovation and new venture creation needed in the increasingly
competitive New Normal landscape.
The third paper by El Nayal, Slangen, van Oosterhout, and van Essen (2020), examines the reaction of investors to spells of violence and governmental upheaval stemming from the Arab Spring of 2010. The interim regimes in former autocratic countries
emerged after a series of violent upheavals in the North African countries of Egypt,
Libya, Tunisia, Sudan and elsewhere. The authors argued that investors interpret higher
interim-regime dominance as a signal of weaker democratic intentions and thus associate
such weaker intentions with a gloomier political outlook for the firms operating in such
an interim period and location. As such, investors in the local stock market are expected
to react (more) negatively to spells of violence characterized by higher interim-regime
dominance. Using a detailed database of 94 separate spells of violence in Egypt during
the Arab Spring period, they found strong support for their hypotheses. The findings
shed light on how investors cope with the uncertainty accompanying the emergence of a
political New Normal during an interim regime’s tenure. Meanwhile, investors perceive
firms to be differentially resilient to the more adverse political outlook associated with
higher interim-regime dominance.
The fourth paper, by Clougherty et al. (2020), addressed how firms can use generic
transformational strategies to help alleviate the New Normal productivity growth slowdown, that is, the seeming stagnation in economic dynamism occurring in more developed economies (Gordon, 2015). They suggest that a sustained lack of productivity
growth can actually prove to be a key driver of transformational activities, contributing to
productivity improvements and economic growth (Anzoategui et al., 2019; Christensen
and Raynor, 2013; Tomizawa et al., 2020). Using the data on 26 industries in the US over
a 15-year period, they found that the firms using the renewal (i.e., enhancing R&D) and
recombination (i.e., outward-vertical M&A) transformational strategies are better able
to address the capability and productivity threats as compared to other transformation
strategies including retirement from the market, retrenchment, replication, and redeployment. In other words, renewal and recombination represent the only transformational
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New Normal Business Environment
D. Ahlstrom et al.
strategies that are generally successful in helping firms regenerate growth (Olson and
van Bever, 2008). The firm may find it useful to fully factor in the effect of New Normal
stagnation on the business landscape and change their strategies (also their breadth of resources) particularly during a period of decline, leading to enhanced productivity growth
for the firm in subsequent years (Christensen and Raynor, 2013).
The fifth paper, by Hasija et al. (2020), explored how political affinity between host and
home markets helps MNEs to achieve a better post-acquisition performance in the US,
the largest developed economy. Studying the MNEs of 45 countries that were engaged
in cross-border M&A deals in the US over a 9-year period (2004–12), they found strong
support for the hypothesis that MNEs from countries with greater political affinity with
the US experience higher post-acquisition performance in the US. They suggest that the
New Normal international business (IB) landscape is reflected in the world’s economic
volatility and political upheavals. In contrast with the great bulk of studies indicating the
significant influence of political risk on MNE operations in emerging economies, such
risk also affects their performance in developed economies. Therefore, the positive benefit of political affinity is of particular importance for the MNEs home based in emerging
economies that have already operated or seek to operate in a more developed economy,
through cross border M&A, which is becoming more common with firms from China
and India. In the New Normal environment, acquisitions tend to be successful when
levels of political affinity are high. The findings provide an understanding of how firms
can navigate in the New Normal environment by formulating effective strategies to respond to the challenges facing MNEs from emerging economies managing in unfamiliar
institutional environments.
The sixth paper, by Eddleston et al. (2020), deals with a long-standing problem of bribery in transition economies focusing on why some entrepreneurs are more likely to pay
bribes than others. Drawing upon a sensemaking logic, they sought to uncover a bribery
paradox in which entrepreneurs may pay bribes in an effort to reduce obstacles and
gain (unfair) competitive advantage in the short run, but, at the same time, they may be
enacting a long-term, New Normal business environment that is perceived to be strewn
with institutional impediments. The novel sensemaking perspective challenges the (traditional) assumption that posits an immediate benefit gained from offering bribes. Using a
sample of 310 privately-held small and medium-sized enterprises (SMEs) from 22 transition economies, they found empirical support for their framework and the presence of a
‘bribery paradox’. Moreover, the perception of their business environment is influenced
by the firm’s identity and the associated social context. More specifically, owners of family and nonfamily firms view their new realities differently; that is, the clan lens of family
firm owners and the economic lens of nonfamily firm owners lead them to take different
views on bribes, with the former viewing their bribes as creating a new, hostile business
environment and the latter as reducing business obstacles.
The seventh paper is a qualitative paper by Smolka and Heugens (2020). With the
lack of a regulatory framework for evaluating new technology-enabled ventures, they
present a process model that reveals how new regulatory structures evolve in the context where high levels of technological and behavioural changes induce systematic uncertainty, and enlarge the interdependence between entrepreneurs and regulators. To
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develop this process model, they have conducted a qualitative processual study of the
emergence of the Dutch remotely piloted aircraft (drone) industry. Rather than portraying entrepreneurs in these enterprises as heroic individuals who act opportunistically to seize opportunities, enterprises are viewed as the co-creators of their institutional
surroundings; regulators develop legal frameworks in consultation with pioneering enterprises, resulting in the novel regulatory institutional structures in the New Normal
business landscape that support a particular technological standard over others (Dunbar
and Ahlstrom, 1995; Jain and Sharma, 2013). Accordingly, enterprises with vested interests have incentives to change the trajectoryies of proto-institutional emergence but not
to abandon them altogether.
The eighth paper, by Zhu, Zhu, and Ding (2020) explored how the different levels of
individualistic cultures in host countries affect the success of cross-border mergers and
acquisitions (CBMAs). Using 404 Chinese firms as the sample, they found a negative
relationship between individualistic cultures (in the host country) and wealth creation
(through Chinese acquirers’ CBMA). Moreover, they have also identified individual-level
variables (i.e., CEO exposure, duality and gender) as moderators that significantly affect
the above relationship in negative and positive ways. The results help advance our understanding of the CBMA value creation from a culture perspective. In particular, they are
implicative to the firms of emerging economies that are competing to survive and grow
in the New Normal as CBMA represents a radical change of Chinese firms’ corporate
strategies in the global markets. The CEOs with exposure to foreign cultures need to
be equipped with the mindsets, knowledge and skills so they can manage their CBMAs
successfully by mitigating the negative effects of individualism cultures on the combined
firm (Hastings, 1999). Moreover, the male CEOs should try to reduce their directive
leadership in their CBMAs where the inputs and cooperation of the acquired firms are
vitally needed for value creation (Miao et al., 2013; Wang et al., 2008). The findings can
be of great relevance particularly to other developing economies that are seeking to learn
from Chinese firms’ experiences in the process of internationalization (Jones, 2012; Zhu
et al., 2020).
The concluding paper in the SI is also a qualitative review paper by Loon, OtayeEbede, and Stewart (2020). They sought to further explore the process of innovation,
but in business models. They particularly explored how the microfoundations of human
resources (HR) enable business model innovation (BMI) to work in the New Normal.
To do so, the authors conducted an integrated systematic literature review of the top
peer-reviewed journal articles that are generally regarded as validated knowledge (Pfeffer
and Sutton, 2006; Podsakoff et al., 2005; Zoogah and Peng, 2019). Loon et al.’s (2020)
study built upon the work of Foss and Saebi (2017) by adopting their recommendation
to explore the antecedents of BMI that can be internal (framed as microfoundations in
this study) and external (e.g., BMI necessitated from the New Normal). The authors argued that HR architecture for BMI in the New Normal requires a unique combination
of HR systems which then enables the development of capabilities for BMI. Meanwhile,
the authors demonstrated the recursive relationship between the New Normal and BMI;
that is, the New Normal has accelerated the use of BMI as a mechanism to counter the
threats that the New Normal yields, and BMI may in turn be amplifying the conditions
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New Normal Business Environment
D. Ahlstrom et al.
of the New Normal. The findings of the study also provide several practical hints for
senior executives in terms of the direction and emphasis of firm HR practices (Huang
et al., 2016). BMI must be on the agenda of senior executives operating in complex
environments reflecting New Normal (Christensen et al., 2016). All senior management
should try to develop an organizational climate and growth mindset that is conducive for
a development-led HR architecture to thrive (Dweck, 2007; McCall, 1998).
FUTURE RESEARCH
A key factor that has emerged from the New Normal environment of the past decade
or so is that context matters greatly in the management and success of businesses and
other organizations, and seemingly small events can exert their influence on firms over
great distances. The world of radical and difficult-to-predict political movements and
change such as the Arab Spring, Brexit, recent protest movements, and the new nationalist tendencies and their direct and indirect impacts on organizations as we have discussed highlight one leg of this New Normal environment. The second leg involves new
computer and communications technologies which enable worldwide competitors and
disruptive innovations, which are developed and introduced rapidly, often to undermarkets that can adopt the simpler technologies quickly (Ahlstrom, 2010; Christensen et al.,
2018). This has further led to substantial advancements in digitization and availability
of substantial amounts of information (‘cybernation’) as these disruptive innovations in
computer, communications, and production take hold (Cukier, 2019; Etzioni, 2015). We
not only need more research on the characteristics and meaning of this New Normal environment, we also need a better understanding of how firms can respond to this highly
complex, dynamic and uncertain environment, particularly in emerging economies (Jain
and Koch, 2020). Firms may need to develop organizational hybridity, organizational
agility and managerial dynamic capabilities to respond to the New Normal environment
in which they now exist. Yet, we know little about how firms build these attributes and
capabilities and can respond to sudden events emerging from far off locations which can
threaten firm operations. In this section, we introduce a set of research questions that
need to be addressed to build our knowledge about organizations and specific understanding of managerial practices in the new normal.
A hybrid organization is one that integrates different strategies, logics, structural forms,
and other key elements. Smith and Besharov (2019) suggest that effectively maintaining
hybridity often requires structural flexibility. National institutions often have strong influences on industry environments within a country (Hitt et al., 2020). As a result, industry
characteristics can vary across countries because of institutional differences thereby requiring large multinational firms to maintain strategic flexibility to respond effectively in
the different markets (Jain and Sharma, 2013). Thus, hybridity can be helpful in managing complex organizations that operate in multiple international markets. Based on this
information, following are potential questions for future research:
RQ 1: What are the characteristics of a hybrid multinational organization that operates in multiple markets
each in countries with unique institutional environments?
RQ 2: How do large complex organizations operating in multiple markets achieve structural flexibility?
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Firms must not only be able to deal with multiple and perhaps conflicting logics, which
may require several different types of structure and foci, they must also be able to make
changes in strategy and structure and sometimes do so quickly. Thus, they need to develop and maintain organization agility which is the ability to design and implement
changes effectively. To this end, firms may need to develop fluidity and rapidity (action
quickness) (Doz and Kosonen, 2007). This information suggests a potential question for
future research:
RQ 3: How do firms truly build a fluid organization that can change quickly?
We know that, to make changes, firms often have to overcome resistance to change.
However, to make the change quickly while also well-accepted, they must ensure that
a growth mindset is present in the organization to encourage innovative thinking, resilience, and learning from mistakes (Dweck and Yeager, 2019). In particular, a growth
mindset needs to be prominent in the organization’s leadership, which allows for more
trial and error learning, and reduces resistance to experimentation and change (Dweck,
2007, 2014). Therefore:
RQ 4: How do large complex organizations achieve continuously low resistance to change across the whole
organization (in all operations often in multiple markets)?
Certainly, it is important for firms to be flexible, able to take quick actions and operate
with different and conflicting logics (Tilleman et al., 2020), Yet, more is required as they
must be able to diagnose situations and determine when they need to make changes,
design those changes and then implement them effectively. To do so, requires that they
have dynamic managerial capabilities to create, extend, and modify the firm’s operations to earn valued returns (Helfat and Martin, 2015). Doing so requires that managers
effectively orchestrate their resources which includes investment in resources (acquiring
and developing), divesting less valuable ones, integrating them (bundling) to create firm
capabilities and then deploying the capabilities through actions taken (Sirmon and Hitt,
2009). Kor and Mesko (2013) suggest that dynamic managerial capabilities are attributes
not of individuals but rather of managerial teams. Although it has been common for top
management teams to be dominated by a powerful CEO, dynamic capabilities in order
to be agile requires the integration of all team members’ talents whereby they cross fertilize each other to make better decisions and share the tasks required in the implementation of changes thereby supporting their individual and group efforts (Xing et al., 2020).
These ideas suggest the following research question:
RQ 5: How do large complex organizations with many managers and many managerial teams at multiple
levels develop dynamic managerial capabilities throughout the firm?
In the new normal environment with high uncertainty, firms not only must change
but must do so quickly in order to adapt to the unique environment (e.g., new competitors with disruptive innovations, major institutional changes with new requirements
for adaptation) to avoid suffering negative consequences. Yet, while research has found
that groups frequently make higher quality decisions (than do individuals), they often
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New Normal Business Environment
D. Ahlstrom et al.
are slower to achieve a decision. And, in some cases, groups can suffer from groupthink
which devalues and discourages the potential synergy from integrating their complementary capabilities and can create group polarization or rushed decisions (Baron, 2005).
Therefore, this question can be asked:
RQ 6: How can managerial teams in the New Normal environment make not only high-quality changes but
do so in a time-efficient manner?
Successful firms have been known to suffer from a ‘winner’s curse’ (Thaler, 1991).
Popular notions of a ‘winner’s curse’ suggests that a person may be overly optimistic such
that s/he overestimates the value of an asset and thus pays too much for it or overestimates its potential benefits and, then, does not gain the expected value from it after it is
acquired. Our focus is on the firms that have been highly successful and thereby become
market leaders. Research has shown that these firms often try to protect their current
position and avoid taking risks and making changes (Shimizu, 2007). So, they are focused
on avoiding losses instead of seeking new opportunities and gains. Therefore:
RQ 7: How can highly successful firms overcome the type of ‘winner’s curse’ noted above and make changes
in the products and strategies that helped them achieve past successes in order to adapt to the realities of
the New Normal environment?
Managing large complex organizations such as MNEs can be challenging, at times
burdensome and stressful. And, in the dynamic New Normal environment in which there
is significant uncertainty and pressure to make changes quickly, perhaps even to survive,
these challenges are even greater. Research has shown that leaders who make major
changes can produce major benefits for the organization, but they also experience much
stress and emotional exhaustion (Lin et al., 2019). These notions suggest the following
research questions:
RQ 8: Do managers in the New Normal environment experience burnout faster than in previous times?
RQ 9: Are certain types of major changes more stressful than others (e.g., disengagement with existing markets; coping with technological disruptions)?
RQ 10: Does developing managerial teams with dynamic capabilities reduce managerial stress and burnout
(e.g., because the group shares responsibility and the stress and have a group coping mechanism)?
Large MNEs operating in multiple international markets across the globe and with
multiple networks of suppliers and other stakeholders may find the New Normal environment to be especially challenging, even though they are accustomed to dealing with
substantial complexity. There are many research questions relating to the MNEs in this
environment, such as the differing institutional environments of emerging economies,
complex supply chains and security issues (Otuoze et al., 2018; Young et al., 2014). In
addition, deglobalization has been a concern in the New Normal as trade levels off, FDI
falls, and countries seek new, regional trade deals (Rodrik, 2019; Witt, 2019). Yet as papers in our special issue demonstrate, developing economies are seeking to enter the globalization game through cross border merger and acquisitions; China, for example, has
increasingly seen its firms participate in cross border acquisitions (Zhu et al., 2020). The
© 2020 Society for the Advancement of Management Studies and John Wiley & Sons, Ltd.
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431
current environment is characterized by an iterative cycle, shifting from globalization to
deglobalization. In a way, the New Normal is actually characterized by the co-existence
of globalization and deglobalization. Following is a sampling of such questions:
RQ 11: How can large MNEs best deal with their international supplier networks in an environment of
deglobalization?
RQ 12: How can large MNEs effectively deal with the growing lack of MNEs’ legitimacy existing in some
countries?
RQ 13: How and with whom do MNEs build political ties across countries varying in levels of nationalistic
policies, some of which frown on relations with governments of other nations?
RQ 14: How can MNEs deal with cybernation, and its corresponding strategic challenges and opportunities?
CONCLUSION
Firms are experiencing a New Normal environment of slowing globalization, increased
competition (and cooperation) enabled by new computer and communications technologies, and an institutional landscape whereby governments, NGOs and even individuals can substantially influence firm operations, sometimes from the other side of the
globe (Etzioni, 2015; Yan et al., 2019). Sociopolitical movements can likewise create
major challenges for firms as they struggle to conduct operations amidst upheavals, flu
outbreaks, and major institutional change in their regions or those of their customers. If
this article and special issue could have one primary message, it would be that top management can no longer confine itself to decisions about product markets, competition,
and operations. De-globalization, institutional change, government participation in,
and interference with business, sociopolitical movements, rapid communications, digital
crime, and disruptive innovations all constitute the New Normal and require watchful
preparation. And it is thus important for managers to remember that the world is not flat
but rather is round, and events on one side of the globe, even those in a Parisian neighbourhood or a seafood market in central China, can have significant implications for
firms anywhere. Top managers have a major role in responding to this challenging new
environment, where competition as well as crises can emerge suddenly, but significant
opportunities also abound in this New Normal.
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