Prof. Pankaj Ghemawat, the Global Professor of Management and Strategy and Director of the Center for the Globalization of Education and Management at the New York University’s Stern School of Business and a speaker of the IEDC Presidents' Forum in the past, in his recent HBR article, was talking about the trajectory of globalization. While the financial crisis shed some doubts on the future of globalized world, and recent political events from Trump election to Brexit and indepence referendum in Spain show signs of the world would rather go »local«, the figures of merchandise trade and foreign direct investment say the reverse. In fact, they support the opposite, that the globalization is increasing. The perseption of people, however, tend to either overestimate or underestimate the depth and the breadth of globalization. Prof.Ghemawat goes on suggesting two laws that govern both aspects of globalization: the law of semi-globalization and the law of distance. What we are in fact experiencing now is just a slow-down of globalization, which is bound to bounce back eventually, as history suggests.
What we are also observing is that while in the past only multinationals could play on a global market, nowadays, digitalization of processes and communications in particular contributed to the fact that small local businesses thanks to e-commerce can compete on a global market on par with big giants. While there is no one recipe for multinationals on what would be the best strategy in such conditions, Prof. Ghemawat suggests leveraging the mix of three that he described in his book Redifining Global Strategy: aggregation, adaptation and arbitrage.
Another thinker and specialist of multinationals, Prof. Joe Santos of INSEAD, for instance, claims that globalization is dead in its old understanding, and says that »It is now about management, and not about business. It is about being together in one world«. He also states that internationalization today is not following the same model as some years ago. Prof. Santos observed local and regional companies that successfully compete with global companies by using the »home team« advantages and lists five strategies that help build these advantages:
- engaging deeply with consumers and end users
- partnering with local suppliers
- fostering development of the local talent pool
- shaping the regulatory and institutional environment
- participating in the broader development of social value
Complexity and uncertainty are two more ingredients that help grasp the picture to certain extent of what is going on in the world. However, one more ingredient that most probably will impact the new wave of development of globalization and can simply change everything we know and do, is the ever growing digitalization and the raise of Artificial Intelligence. Time will tell.