Dear friends and colleagues,
The first issue of Global Strategy Journal for 2020 is out! It is a special issue on the Skepticism of Globalization. We hope that you find the articles insightful.
Best wishes,
Gabriel Benito, Alvaro Cuervo-Cazurra, and Ram Mudambi, co-editors
Skepticism of globalization and global strategy: Increasing regulations and countervailing strategies
Alvaro Cuervo‐Cazurra, Yves Doz, Ajai Gaur
We analyze how skepticism of globalization, the socially constructed vulnerability that emanates from global interdependencies, affects global strategy. We argue that inequality, identity, and influence drive this skepticism and propose that the increase in rhetoric against globalization and for new regulations do not seem to result in significant reductions in cross‐border economic flows. We explain this discrepancy by proposing that multinationals' strategies counteract the impact of politicians' regulatory reactions to the skepticism of globalization. Specifically, we propose that firms increase flexibility in global value chains in response to skepticism of cross‐border trade, rework the localization of global operations to deal with skepticism of cross‐border investment, use lobbying in global finance to address skepticism of cross‐border finance, nativize the global workforce in reaction to skepticisms of cross‐border labor, and protect global knowledge to solve the skepticisms of cross‐border knowledge flows.
Varieties of populism
Timothy M. Devinney, Christopher A. Hartwell
The recent electoral popularity of populism suggests our understanding of global and domestic institutions and their impact and relevance to international business may require adjustment. In particular, the literature may be omitting key variables as to what the political environment entails. We propose a framework for understanding the differing varieties of populism. We examine what channels populist thought operates through and how various strains of populism concentrate on different facets of society. We articulate an operational definition for international strategy based upon prior research in economics, political science, and history. This framework is incorporated into current research on institutional theory as applied in international business, with the goal of proposing a more nuanced and foundational view of institutional environments and how they impact global strategy.
Manufacturing discontent: National institutions, multinational firm strategies, and anti‐globalization backlash in advanced economies
Olivier Butzbach, Douglas B. Fuller, Gerhard Schnyder
There is mounting evidence of a widespread popular backlash against globalization in advanced economies, which can hurt multinational companies' (MNCs) interests. In this article, we argue that MNCs are both "culprits" and "victims" of backlash against globalization. Building on the comparative capitalism literature, we argue that national institutions influence the likelihood of a backlash by either encouraging MNCs to embrace a "labor arbitrage" strategy consisting in tapping into cheap labor markets overseas or preventing them from doing so. Where institutional constraints lead firms to adopt an "upgrading" route of using domestic workers, popular backlash is less likely. Such institutional factors help to explain variation in the likelihood of backlash across countries. We also discuss the strategic options available to firms facing backlash.
Skepticism toward globalization, technological knowledge flows, and the emergence of a new global system
Peter J. Buckley, Niron Hashai
This article examines the potential effect of anti‐globalization on a key attribute of multinational enterprises (MNEs)-the ability to transfer efficiently complex firm‐specific technological knowledge internationally. Anti‐globalization policies can suppress the transfer of complex technological knowledge by limiting the international transfer of intellectual property, restricting the free movement of scientists and engineers or by disharmonizing regulations across nations. Such suppression is shown to significantly change the global system in terms of the location of value‐adding activities, their organizational firm boundaries and the origin of MNEs. The model predicts that after a "shock" of anti‐globalization policies, which significantly increases international technological knowledge flow costs, a smaller number of firm and MNE location and control configurations emerges, and domestic firms become more dominant.
Counteracting globalization's skeptics: How diasporas influence the internationalization preferences of minority entrepreneurs' firms: Entrepreneurs' firms
Todd M. Inouye, Amol M. Joshi, Iman Hemmatian, Jeffrey A. Robinson
We argue that the anti‐immigrant backlash sparked by globalization's skeptics isolates U.S. minority entrepreneurs as outsiders, which constrains their domestic business opportunities. In response, these entrepreneurs leverage their shared ethnic identities as insiders within diaspora networks to pursue international expansion opportunities focused on their countries or regions of origin. We hypothesize that diasporas imprint minority entrepreneurs with risk preferences that reduce their skepticism about globalization, while increasing their caution about overcommitting resources. Analyzing over 20,000 U.S. small businesses, we find evidence that minority entrepreneurs' firms prefer to leapfrog into markets, mitigate risks via contractual and bounded commitments, and target countries that are more ethnically and linguistically fractionalized. We extend internationalization process research with theory and evidence about how diasporas influence firm‐level strategic risk management decisions.
The liability of disruption
Valentina Marano, Stephen Tallman, Hildy J. Teegen
We study the internationalization‐related legitimacy challenges of firms with disruptive business models by using a case comparison of leading sharing economy companies Airbnb and Uber. We show that they are insulated from many traditional legitimacy challenges to multinationals entering host markets, but exposed to others that have not been noted previously. Specifically, we identify a novel market‐entry legitimacy challenge, "liability of disruption," which manifests as regulatory, incumbent business, and societal pushback against firms with disruptive business models. After presenting our cross‐case analysis, we theorize about the nature and impacts of these three distinct but interconnected forms of host country institutional pushback on firms' ability to achieve and maintain legitimacy, and how they are driven by national governance characteristics.
How does de‐globalization affect location decisions? A study of managerial perceptions of risk and return
Tina C. Ambos, Beate Cesinger, Felix Eggers, Sascha Kraus
Our understanding of how managers take international location decisions is still scarce. Building on the microfoundations view, we explore managers' perceptions of risk and return in a discrete choice experiment with 2,618 decisions in 2013 (a globalizing world) and 2017 (a de‐globalizing world). While managerial perceptions vary over time due to economic and political changes, such as the current de‐globalization trend, decision heuristics remain remarkably stable: locations perceived as least risky offer the highest expected returns. We also find that distance is a good proxy for managerial perceptions. Investigating the microfoundations of decision‐making we show that international experience, risk‐taking propensity, and shareholder status affect heuristics. In sum, our study provides novel insights into the microfoundations of location decisions and extends the behavioral perspective on internationalization.
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Alvaro CUERVO-CAZURRA
Professor, International Business and Strategy, Northeastern University
Co-editor, Global Strategy Journal
a.cuervocazurra@neu.edu. +1-617-373-6568.
www.cuervo-cazurra.com.------------------------------