Corporate strategy
Module 9 – globalization and the firm
Readings session 9
1 – Globalization, transnational corporations and the future of global governance
The once clear distinction between public and private spheres, between politics, law
and regulation on the one hand and the market and economic activities on the other
has broken down.
Double movement governing the dynamics of a market society = the continuous
expansion of the self-regulating market was met forcibly by a countermovement
seeking to re-embed the market in the fabric of society.
International society = when a group of states, conscious of certain common interests
and values, form a society in the sense that they conceive of themselves to be bound
by a common set of rules in their relations with one another, and share in the working
of common institutions.
Private authority = an organization not associated with government institutions
exerting decision making power which is regarded as legitimate in a particular issue
area. Private institutions can become authoritative, and thus perceived as legitimate,
because of perceived expertise, historical practice or an explicit or implicit grant of
power by states.
The fragmentation of political authority and the rise of significant non-state actors
complicate the problem of economic governance in a transnational world order in a
number of ways:
1. Governance is no longer synonymous with government, either in terms of
individual governments or relations among them in the inter-state system.
Multiple actors provide public goods and exert significant, legitimate authority in
international politics. Any system of governance must reflect this fragmentation
of authority: it must involve multiple actors in rule making and rule enforcing.
2. We are in the midst of a transition to a transnational world system and the
political order or society in which the market is to be embedded is far from clear.
Extraterritoriality = attempts to exercise authority over non-nationals abroad.
There are four aspects, all a function of the digital revolution, to the post-modern
transition:
1. The viability of discrete borders.
2. The increasing indeterminacy of location.
3. The increasing irrelevance of geographic proximity.
4. The reorganization of international production as a result of the disaggregation
of production.
The systemic changes taking place in the international political-economic order can be
reconceptualized in terms of two underlying dimensions:
64
, Corporate strategy
1. The fragmentation of authority as multiple actors emerge from a state-centric
system where states were the only legitimate sources of authority and the only
subjects of public international law.
2. Changes in the nature of space as borders become more permeable, location
less determinate, proximity less important and the root principle of mutually
exclusive territoriality increasingly compromised.
Possible political-economic systems:
1. Traditional, international states system. A state-centric world order based
upon mutually exclusive territoriality.
2. Trans-governmental relations. States remain as the only actors in the system,
but territoriality is compromised.
3. Transnational transformation. Both state-centric political authority and
territorial sovereignty are compromised. All three of Bull’s attributes of the
international states system are in flux:
a. Territorial sovereignty.
b. Modes of international interaction.
c. The nature of an international society.
4. Parallel universes.
65
, Corporate strategy
Any effective post-Westphalian system of economic governance will have to be
consistent with the parameters of the evolving transnational order including the
fragmentation of authority, the rise of multiple actors in international politics and the
decreased viability of territoriality.
An effective system of governance of global markets must transcend both mutually
exclusive territoriality and sovereign authority. It must exert non-territorial control and
involve multiple actors to reflect the fragmentation of political authority. What appears
to be evolving is some combination of inclusive and authoritative international
organizations and private, soft law based, governance regimes.
In a transnational system, multinational firms are both governed and governor, both
objects and subjects of international politics.
Notes session 9
The strategic journey:
1. competitive analysis - how to compete?
2. digital competitive strategy - how to respond to digitalization and AI?
3. corporate development - where to compete?
4. corporate portfolio strategy - how to respond to hrand challenges and shifting
global politics?
globalization and strategic shift:
1. Globalization - starting point.
a. Unclear boundaries
b. political localization
c. firm / government influence
2. Internationalization - strategy implementation.
a. models / adaptation / implementation.
3. Non-market stakeholders - strategic adjustment.
a. politics of change or permeance
4. Networks and influence - strategy shift.
a. pushback and setting an agenda.
global vs local vs glocal
1. From an international to a transnational economic system.
a. driven by regional economic growth
b. emergence of regional powers: China, Brazil, Saudi Arabia, India, Mexico
2. How to manage this change.
a. dealing with economic governance based on regional agreements.
3. Fractional political authority
a. changing political winds
4. Emergence of non-developed economy multinationals.
5. Shifting consumer and societal priorities.
a. sustainability
b. conservation and protection.
A new world order:
66
, Corporate strategy
• the firm as an agent of global power
• the multinational as its own NGO
• the multinational as an agent of the state
digitalization, networks and the new order:
• creation, transfer, control, use of information
• world with no borders
• networks are supranational
o supply chains
o finance
o labor
o brands
o innovation
globalization model for the firm:
Institutional issues
Enterprise activity:
• In India, it costs more and takes longer to start a business, enforce a contract,
and close a business than other BRIC countries.
o However, India does not rank much better when it comes to protecting
the rights of investors.
• In Russia, it is easier to set up a new business, register property and enforce
contracts than other BRIC countries.
• However, in China it is easier to run a business and engage into international
business but recently it has suffered from increased government interference.
The performance of multinationals links to three dimensions of market orientation:
• customers
• competitors
• interfunctional coordination
Countries push to globalize their local firms:
• China - silk road
• India - made in India
67
Module 9 – globalization and the firm
Readings session 9
1 – Globalization, transnational corporations and the future of global governance
The once clear distinction between public and private spheres, between politics, law
and regulation on the one hand and the market and economic activities on the other
has broken down.
Double movement governing the dynamics of a market society = the continuous
expansion of the self-regulating market was met forcibly by a countermovement
seeking to re-embed the market in the fabric of society.
International society = when a group of states, conscious of certain common interests
and values, form a society in the sense that they conceive of themselves to be bound
by a common set of rules in their relations with one another, and share in the working
of common institutions.
Private authority = an organization not associated with government institutions
exerting decision making power which is regarded as legitimate in a particular issue
area. Private institutions can become authoritative, and thus perceived as legitimate,
because of perceived expertise, historical practice or an explicit or implicit grant of
power by states.
The fragmentation of political authority and the rise of significant non-state actors
complicate the problem of economic governance in a transnational world order in a
number of ways:
1. Governance is no longer synonymous with government, either in terms of
individual governments or relations among them in the inter-state system.
Multiple actors provide public goods and exert significant, legitimate authority in
international politics. Any system of governance must reflect this fragmentation
of authority: it must involve multiple actors in rule making and rule enforcing.
2. We are in the midst of a transition to a transnational world system and the
political order or society in which the market is to be embedded is far from clear.
Extraterritoriality = attempts to exercise authority over non-nationals abroad.
There are four aspects, all a function of the digital revolution, to the post-modern
transition:
1. The viability of discrete borders.
2. The increasing indeterminacy of location.
3. The increasing irrelevance of geographic proximity.
4. The reorganization of international production as a result of the disaggregation
of production.
The systemic changes taking place in the international political-economic order can be
reconceptualized in terms of two underlying dimensions:
64
, Corporate strategy
1. The fragmentation of authority as multiple actors emerge from a state-centric
system where states were the only legitimate sources of authority and the only
subjects of public international law.
2. Changes in the nature of space as borders become more permeable, location
less determinate, proximity less important and the root principle of mutually
exclusive territoriality increasingly compromised.
Possible political-economic systems:
1. Traditional, international states system. A state-centric world order based
upon mutually exclusive territoriality.
2. Trans-governmental relations. States remain as the only actors in the system,
but territoriality is compromised.
3. Transnational transformation. Both state-centric political authority and
territorial sovereignty are compromised. All three of Bull’s attributes of the
international states system are in flux:
a. Territorial sovereignty.
b. Modes of international interaction.
c. The nature of an international society.
4. Parallel universes.
65
, Corporate strategy
Any effective post-Westphalian system of economic governance will have to be
consistent with the parameters of the evolving transnational order including the
fragmentation of authority, the rise of multiple actors in international politics and the
decreased viability of territoriality.
An effective system of governance of global markets must transcend both mutually
exclusive territoriality and sovereign authority. It must exert non-territorial control and
involve multiple actors to reflect the fragmentation of political authority. What appears
to be evolving is some combination of inclusive and authoritative international
organizations and private, soft law based, governance regimes.
In a transnational system, multinational firms are both governed and governor, both
objects and subjects of international politics.
Notes session 9
The strategic journey:
1. competitive analysis - how to compete?
2. digital competitive strategy - how to respond to digitalization and AI?
3. corporate development - where to compete?
4. corporate portfolio strategy - how to respond to hrand challenges and shifting
global politics?
globalization and strategic shift:
1. Globalization - starting point.
a. Unclear boundaries
b. political localization
c. firm / government influence
2. Internationalization - strategy implementation.
a. models / adaptation / implementation.
3. Non-market stakeholders - strategic adjustment.
a. politics of change or permeance
4. Networks and influence - strategy shift.
a. pushback and setting an agenda.
global vs local vs glocal
1. From an international to a transnational economic system.
a. driven by regional economic growth
b. emergence of regional powers: China, Brazil, Saudi Arabia, India, Mexico
2. How to manage this change.
a. dealing with economic governance based on regional agreements.
3. Fractional political authority
a. changing political winds
4. Emergence of non-developed economy multinationals.
5. Shifting consumer and societal priorities.
a. sustainability
b. conservation and protection.
A new world order:
66
, Corporate strategy
• the firm as an agent of global power
• the multinational as its own NGO
• the multinational as an agent of the state
digitalization, networks and the new order:
• creation, transfer, control, use of information
• world with no borders
• networks are supranational
o supply chains
o finance
o labor
o brands
o innovation
globalization model for the firm:
Institutional issues
Enterprise activity:
• In India, it costs more and takes longer to start a business, enforce a contract,
and close a business than other BRIC countries.
o However, India does not rank much better when it comes to protecting
the rights of investors.
• In Russia, it is easier to set up a new business, register property and enforce
contracts than other BRIC countries.
• However, in China it is easier to run a business and engage into international
business but recently it has suffered from increased government interference.
The performance of multinationals links to three dimensions of market orientation:
• customers
• competitors
• interfunctional coordination
Countries push to globalize their local firms:
• China - silk road
• India - made in India
67
