When Romeo Turcan and I started exploring the concept(s) of “late globalization”, it became clear to us that the qualifier “late” can have many variations, depending on what aspect/entity is late, and what the ‘lateness’ is in relation to (and equally, what is ‘early’ and early in relation to what?).
One very macro and historically elongated sense of “late” was discussed in my TBRP Perspectives post titled “Late Globalization Flavors and Stripes: Culture Theory Aspects”. In that posting the perspective discussed was of globalization as a long process that has been happening for over two millennia. We are well past the early, growth, and mature phases of globalization – and now have entered the “late” phase of globalization. This long historical view has its value in terms of providing stage-setting overall context; but its usefulness is limited when – in the contemporary world – nations, sectors, industries, companies, specific individual or institutional actors are grappling with practical aspects of late globalization affecting their situations, fortunes, and prospects.
So, in this posting, I want to turn to some of the possible ways in which the notions of late globalization play out in the contemporary, current-history sense.
First, a few words on the distinction between globalization and internationalization that Romeo Turcan has proposed in some of his writings. Globalization is often an outside-in process: strong external forces (generally a giant global corporation) motivate a supplier firm to go international, to support the global giant’s operations and strategic goals. Internationalization, by contrast, is inside-out: forces inside the nation motivate (sometimes compel) a firm to go to foreign markets.
For this note, let us focus on globalization in time frames that can be considered “recent” by historical standards – the past couple of centuries. In terms of late globalization, in such time frames, at the most macro level, the entity of interest is the nation. Some nations – UK, France, USA, Japan – globalized early (although in case of Japan, after Meiji Restoration, the internal compulsions to internationalize were extremely strong – so internationalization occurred in first few decades and then globalization processes took hold). If we look at the post-World War II period, most of the so-called developing and emerging nations were late globalizers. Import-substituting industrialization was a key goal of developing nations, and of the nations in the Soviet bloc. Internationalization of firms from such nations was slow, and globalization practically non-existent for many decades. Then, going with the ‘outside-in’ idea of globalization, some na tions enacted policies to ease and accelerate the globalization of their firms. Comparing China and India, for instance, China started these processes in 1971 and was an ‘early globalizer’ compared to India, a ‘late globalizer’ that opened the doors to outside-in forces and processes only in 1991.
At a somewhat less macro level of analysis, we can look at industries. Some industries – many consumer goods, computers – are early globalizers. The footprint of major companies in these industries becomes global relatively early in the life of such industries. Other industries – cars or even more so, steel – are late globalizers.
Next, we can turn to companies within an industry. In soft drinks, Coca-Cola was an early globalizer on its own and, during the Second World War, the decision to “follow the troops wherever they are” (a decision encouraged by the U.S. government and military), made the bottling and distribution of Coca-Cola extremely global. By contrast, PepsiCo was – in relative terms – a late globalizer.
The qualifiers early-late can also be applied to the functions or aspects of the business of a company. A company can be early or late in terms of globalizing its market-seeking, manufacturing, distribution channel development, supply chain development, talent recruiting and management composition, etc.
The act of being late in whatever aspect of globalization – whether it is deliberate, serendipitous, or for other reasons – often means many opportunities were grabbed by the early globalizers and are thus scarce or closed for the late globalizer. There may be benefits to lateness also – the timing of a late globalizer may correspond so well with some external events that the late globalizer can grab a very large share of opportunities. For example, the massive needs to reprogram computers for “Y2K” century-end date change arose precisely when India’s software industry was beginning to globalize; allowing India to develop a very large and world-class software service sector in a relatively short time. Other similar possibilities could arise: U.S. policy changes are creating outside-in pressures for Cuba (the nation, some of its industries, its companies and individuals) to globalize, and there are prospects for Cuba to avoid some of the mistakes of ea rly globalizing Caribbean nations.
At this blog site and in our work at TBRP, we will continue to explore the various aspects of ‘late’ in late globalization; and will keep the readers informed as we discover new aspects, ideas, and connections.
Nikhilesh Dholakia
Rhode Island, USA
July 20, 2015
Shedding further light on late globalization: In his opening essay on ‘What and/or Who is Late’, Nikhilesh Dholakia delineated inter alia “stage-setting contexts” or levels of analysis which could shed light on the phenomenon of late globalization, including its causes and effects. Indeed, these, especially the effects in contemporary context, are less understood and researched. To stimulate research on late globalization, Nikhilesh essay is a rich source for conceiving research questions. Herein I will try to do that.
At meta-theoretical level, it is useful to understand the relationship between globalization and internationalization, or between outside-in and inside-out phenomena. Are they distinct, separate phenomena or two sides of the same coin (capitalism)? As Anthony Giddens in his book ‘Runaway World: How Globalization is reshaping our lives’ maintains, globalization is “‘what is out there’, remote and far away”, but at the same time “‘in here’ phenomenon”, influencing all aspects of our lives. Giddens suggests that globalization ‘pushes downwards’, creating new pressures for local autonomy; ‘pulls away’ power or influence from local communities and nations into the global arena, and ‘squeezes sideways’, creating new economic and cultural zones within and across nations. In this, Giddens refers to Daniel Bell who says that “the nation becomes not only too small to solve the big problems, but also too large to solve the small ones”.
At macro, nation-state level, the role of timing (being early or late) in terms of globalizing is an interesting area of inquiry. What are the benefits or downsides of late (early) globalizing? It could be further argued that it might not be so much about timing as about whether to globalize or not in the first place? Should nations oppose globalizing and opt for protectionism, or open up, embrace globalization and integrate fully into global economy? Partly, the answers to these questions would depend on whether globalization is or is perceived to be a negative or positive phenomenon. Or as Anthony Giddens warns that globalization “…is by no means wholly benign in its consequences”.
The above presupposes some sort of conscious (policy) decision about globalizing or not globalizing. What about being inadvertently or unintentionally late globalizer or not globalized at all (despite a policy discourse that states the opposite). It was interesting to observe the latter in late 2008, beginning of 2009, as financial crisis was unfolding. For example, the Republic of Moldova, which at the time of crisis was considered one of the poorest countries in the European Union, was ranked in early 2009 as the fifth most stable economy in the world, hence not affected (comparing to other nations) by global economic and financial crisis. Invulnerability to the global economic and financial crisis came from its non-globalized economy. Moldova’s primitive financial system, low level of credit issuing, agricultural rather real based economy made Moldova less susceptible to the global financial and economic crisis.
At meso level, the impact of late globalization on industries and sectors is yet to be well understood. As an outside-in phenomenon, how has late globalization driven and still drives the fragmentation of value chains within national borders? What are the effects of globalization on organizations and industries value chains? This level also offers an opportunity to explore the interplay between globalization and internationalization. For example, local SMEs become captive to multinational enterprises and eventually follow these MNEs abroad, abandoning the national markets completely. Being constantly driven by economy of scale and scope, these MNEs reconfigure their own value chains, especially in times of crises. Some of the first victims of such reconfigurations are SMEs that de-internationalize as a result, going back home. Will their sectors be there and if yes, will there be room for them? Not only SMEs become victims of globalization, de-internationalization or withdrawal fr om international markets. In recent years, MNEs have been involved in back-shoring – reversing previous off-shoring by bringing manufacturing back home. Practitioners and policy makers acknowledge the relevance of back-shoring for MNEs and international trade policies as UNCTAD (2013) report on ‘Global Value Chains: Investment and Trade for Development’ states. Growing empirical data adds to the relevance of this phenomenon. For example, in Germany alone approximately 400 to 700 per year perform back-shoring activities. Despite compelling empirical evidence of de-internationalization, including back-shoring, academic research lags behind. At TBRP, one of our theory building research programme focuses on this, largely unexplored de-internationalization phenomenon.
Furthermore, at meso level – context indeed matters and here might be nothing new. Nonetheless, we maintain that the role of context and institutions in globalization era needs more research by altering levels and units of analysis. For example, we argue that focusing solely on how MNEs adapt to or are affected by international or target country contexts limits our contemporary understanding of globalization and internationalization and their effects. Investigating different forms of organizing or different organizations may generate interesting, sometime contradictory findings. For example, being late globalizers compared to MNEs, increasing number of internationally renowned universities has recently started to withdraw from emerging or developing international countries, the primary reason being the incompatibility between university autonomy and the context in the target, emerging country. Unwillingness to compromise on university freedom and autonomy, as Turcan and Gulieva (2016) argue, makes advanced – campus building, off-shoring – internationalization of universities to emerging or developing countries not only impossible, but also unethical. Such contradictory findings have an impact not only on internationalization and globalization policies and practices, but also question the explanatory power of extant foreign direct investment theories and models.
At micro level, the enduring question yet remains: how does late globalization affect massively complex human and organizational behavior?
Romeo V. Turcan
Aalborg University
January, 2016
Recent casualties of late globalization: In this essay I will expand my thoughts on universities as ‘late globalizers’ and the impact ‘being late’ has on university internationalization or globalization activities.
In my earlier essay (above) I viewed universities as ‘late globalizers’ and briefly introduced the impact of being ‘late’, e.g., withdrawal or de-internationalization of universities due to incompatibility between university autonomy and the context in the target country or universities unwillingness to compromise on their freedom and autonomy.
De-internationalization or withdrawal of universities from international markets is a fairly recent, but largely unexplored phenomenon. And the empirical focus has been steadily shifting from anecdotal evidence towards a systematic, scholarly enquiry of the phenomenon. That contexts matter is not something new in international business or international management. Yet, before we dive into the discussion, it is important to define context. For the purpose of this essay I employ Gary Johns’ definition of context as “…situational opportunities and constraints that affect the occurrence and meaning of organizational behavior as well as functional relationships between variables”.
According to Mark Casson, de-internationalization could be viewed as correcting an error previously made. For example, a university may be too quick to internationalize, may entry to too many markets, or engage in advanced internationalization when it sets up branch campuses or other greenfield investments as independent institutions in a foreign country. From this perspective, one may ask whether engaging in advanced internationalization or correcting such errors a university is any different from an MNE or even whether international business theories could explain or inform such advanced internationalization processes of universities.
For example, a top, internationally recognized and reputable university that wants to take advantage of market opportunities in a developing economy and that believes that the quality and reputation could be delivered and safeguarded only within the university would decide to open or build a campus in that country. Furthermore, following conventional wisdom of international business, a university, as any MNE, should adapt its strategy, resources, structures and organization to that international environment.
On the other hand, if we bring to the fore the context that defines a university to explain or to inform the decision to internationalize or globalize, then the output would not only be different, but to a degree inconvenient to decision and policy makers. The context that defines a university – institutional university autonomy – rests on 4 pillars of autonomy: organization autonomy, financial autonomy, human resource autonomy and academic autonomy, and 5 five interfaces that characterize external and internal points of interaction between modern universities and their key stakeholders: government-university; university management-university staff; academic staff-students; university-business; and university-internationalization (Reilly, Turcan and Bugaian, 2015).
Organizational autonomy pertains to university freedom to set own structures and statutes, making contracts, electing decision-making bodies and persons; financial autonomy is about university freedom to acquire and allocate funding, decide on tuition fees, and accumulate surplus; staffing autonomy is relates to university freedom to recruit, set up salaries and promotion policies; and academic autonomy is about university freedom to decide on degree supply, curriculum and methods of teaching, as well as decide on areas, scope, aims and methods of research (Estermann and Nokkala, 2009).
Government–university interface explores inter alia state policies towards higher-education, and role of central and regional governments in issuing regulations for the structure of university governance; university management–university staff interface explores inter alia governance and management models of a modern university, power sharing in strategic and operational decision making, and implications of top-down, bottom-up or flat organization; university staff–students interface explores inter alia students’ role in university governance and management, as well as in learning and teaching with the new learner-centered paradigm and research processes, staff as teachers vs. staff as facilitators, and changing the mind-set about relations with students; university–businesses interface explores inter alia businesses’ role in university governance and management, as well as in teaching and research processes, models of knowledge transfer and knowledge sharing; university–internationalization interface explores inter alia university internationalization policies, university strategies for internationalization, staff and student mobility, in-ward and out-ward internationalization modes and models, partnership models and their implication for accreditation related to the process of internationalization (Reilly, Turcan and Bugaian, 2015).
Recent review by Turcan and Gulieva (2015) of university advanced internationalization through the lenses of institutional university autonomy illustrated that none of the reviewed papers on university internationalization explored the effect of local context (institutional university autonomy) in host countries on university internationalization. Moreover, none of the reviewed papers investigated the degree and the effect of incompatibilities between institutional university autonomy in the host and home countries. In the context of internationalizing university, Turcan and Gulieva (2015) refer to such incompatibility as ethical dilemma. That is, should internationalizing universities develop a different set of ethical standards for the target country, should they insist on deploying their own ethical standards in that country, or should they adapt to ethical standards of the host country? It was surprising to observe that some researchers would suggest that one way to deal with differences and incompatibilities between institutional university autonomy in the host and home countries is for an internationalizing university to “hold two sets of ethical standards—one for its domestic stakeholders and the other for the rest” (Sidhu, 2009, p. 137).
Intersecting international business and institutional university autonomy theories could be viewed as a paradox, generating a set of interesting research questions for future research and theory development. Given the incompatibility between institutional university autonomy in the host and home countries, should a university even consider advanced internationalization? For example, despite of the generous offer and incentives from the Singaporean Government to establish a branch campus in Singapore as well as positive financial forecast of the project, Warwick University declined the offer raising concerns over the state of human rights and academic freedom. Or, if universities do decide to internationalize despite the incompatibility between institutional university autonomy in the host and home countries, should they compromise their autonomy in favor of advanced international entry? Or, to what degree these internationalizing universities, in embracing new, dissimilar, and sometimes conflicting dimensions of institutional university autonomy in the host country, are compromising key aspects of their own autonomy and core mission? The incongruity in institutional university autonomy settings at home and in the host countries may lead to the de-internationalization of universities. Or, universities would correct the error of advanced internationalization through de-internationalization?
Recent failures and de-internationalization of universities from international markets – or shall we say recent casualties of late globalization – highlight numerous problems and challenges universities face, and at the same time generate interesting and surprising findings that challenge not only international business theories, but also practice and public policy. New contexts: sector (e.g., higher education) and organization (e.g., university) as well as unexplored areas of international business such as de-internationalization not only challenge the explanatory power of existing organization and international business and management theories, but also advance new concepts and theories, contributing to our better understanding of late globalization reality and stimulating future research.
Romeo V. Turcan
Aalborg University
February, 2016