Skepticism of globalization and global strategy: Increasing regulations and countervailing strategies

Abstract

Academic abstract 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. Managerial abstract We study how the increases in negative attitudes toward globalization, which we call skepticism of globalization, influence the global strategy of firms. We explain that inequality, identity, and influence drive this skepticism and propose that the increases in rhetoric and government regulations do not seem to have resulted in significant reductions in cross‐border economic flows because companies have redesigned strategies to counter the effect of rising skepticism of globalization. Specifically, we explain how the regulations of cross border trade, investment, finance, labor, and knowledge flows that accompany increases in skepticism of globalization are countered by multinationals' strategic changes in the flexibility in global value chains, localization of global operations, lobbying in global financing, nativization of global workforce, and protection of global innovations.

A socio-technical transitions perspective for assessing future sustainability following the COVID-19 pandemic

“…In the second outcome, a weak civil society coupled with frail business and economic systems brings the prospect of "chaotic transition" wherein there will be a rapid but unorganized system rebalancing around much lower levels of wealth creation and material consumption. This theoretical position is compatible with a "doomsday" or "catastrophe" perspective, for example, seen in fears of a nuclear winter in the event of an all-out nuclear war (Baum et al 2015;Coupe et al 2019) If civil society is stronger in the post-COVID-19 period, there will be enhanced legitimacy to pursue civil and social agendas. The primacy afforded to business and the economy is eroded.…”

“…Indicators of this looming failure include a slow-down in global growth in gross domestic product (GDP) and ballooning levels of personal, corporate, and government debt. Strong nationalist, protectionist sentiments had emerged in the United States, the European Union and elsewhere, creating a tension or underlying conflict between globalization and nationalism and causing some to question the corporate logic of global strategy (Anwar 2020;Cuervo-Cazurra, Doz, and Gaur 2020;Witt 2019). Thus, COVID-19 may have acted to accelerate and focus some of these emergent strains.…”

The liability of disruption

“…The skepticism of globalization embodied in the liability of disruption points to the important role that both market and nonmarket actors play in the success of firms’ internationalization efforts, and the negative consequences on firms when that institutional support is contested or rescinded. Airbnb and Uber have indeed faced “a questioning of the activities … in the countries in which they operate, and a need to justify the benefits that their companies bring to each country” that is consistent with socio‐political uncertainty surrounding globalization in the wake of the 2008 Great Recession (Cuervo‐Cazurra et al, ; see also Kobrin, ). At the same time, some of the markets that have reacted strongly to Airbnb and Uber have been more open to similar local disruptors—fear of global forces rolling over local institutions seems to have been used as a competitive posture by these equally disruptive emergent local firms.…”

“…The tension between the “current skepticism of globalization” (Cuervo‐Cazurra, Doz, & Gaur, ) and the “extraordinary opportunities” created by the evolving digital environment (Palmisano, ) is well captured by the international expansion of the leading “sharing economy” firms Airbnb and Uber (MacMillan & Karmin, ). Born near the start of the 2008 Global Recession, Airbnb and Uber have experienced rapid global growth opportunities typical of new multinational digital platforms (Ghemawat, ) and highly skeptical responses from local institutions—legal, competitive, and cultural—in many of the foreign countries and localities that they have entered (Pascal, ).…”

Automobilities after SARS-CoV-2: A Socio-Technical Perspective

“…At the highest level, the institutions of globalisation and political-economic integration had been under pressure for some time, by those proposing a return to more nationalist orientations. Before the pandemic emerged, there was already a strand of discussion that was arguing that globalisation was failing to resolve social, environmental, and economic dysfunctionality [44,45] and resulted in flawed corporate strategy [46]. Manifestations of these trends include the decision to leave the EU by the UK, the attacks by US President Trump on the IPCC, World Trade Organisation, North America Free Trade Area, World Health Organisation, and North Atlantic Treaty Organisation, and the growing popularity of nationalist/separatist political parties in Europe.…”