Skepticism toward globalization, technological knowledge flows, and the emergence of a new global system

Abstract

Research Summary 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. Managerial Summary Anti‐globalization policies threaten a key feature of multinational enterprises (MNEs)—the ability to transfer efficiently complex technological knowledge across political borders. They do so through limitations on the international transfer of intellectual property, restrictions on the free movement of scientists and engineers as well as through dis‐harmonization of regulations across nations. We present a model that shows that such limitations are likely to change the global system making it much more similar to the one that existed pre‐WW1 and WW2. The emerging global system is predicted to include a large proportion of domestic firms engaging in international trade and MNEs that locate only a small number of value chain activities abroad.

Varieties of populism

“…For example, the rise of populist political parties is requiring firms to rebalance the benefits of global integration versus the benefits of local responsiveness as the political pressures have made globalization gains more costly (Devinney, Midgley, & Venaik, 2000). However, unlike Buckley and Hashai (2020), we do not believe this is heralding a new global system. Similarly, the value of corporate political action does not disappear because the nature of political and country risks and the holders of power change and the power of the state increases relative to that of the multinational.…”

“…Ultimately, it is unclear the extent to which such changes will affect "embedded" subsidiaries and the trade-off between outsourced activities and the internalization of more of the global value chain in proximate locations. However, as Buckley and Hashai (2020) show, as the cost of operating the components of a global value chain change, this alters the local and control structures of the MNE's network.…”

The local co-evolution of firms and governments in the Information Age

“…Essentially, each country tries to ensure that it occupies the upward parts of the ‘smile curve’ involving R&D, design and marketing, where value capture is the highest (Mudambi, 2008 ). There is thus an inherent contradiction between the techno-nationalist paradigm and the reality of knowledge creation within multinational firms, that is increasingly dependent on access to localized knowledge sources abroad (Buckley & Hashai, 2020 ).…”

Transnationalization of multinational corporations: Peculiarities and trends

“…Важнейшими мотивами для транснационализации деятельности становятся ПИИ, ориентированные на знания и компетенции [Кондратьев, 2018]. Способность цифровых МНК работать на зарубежных рынках при небольших инвестициях и антиглобалистские настроения приводят к концентрации их в нескольких крупных развитых странах [Buckley, Hashai, 2020]. Следствием этого может стать сокращение числа создаваемых рабочих мест в развивающихся странах.…”