Managing Globalization In The Age Of Interdependance

Essay, Research Paper

Notes based on Managing Globalization in the age of Interdependence, published 1995 by Pfeiffer & Company, San Diego, CA.

Introductory Quotation:

“In Managing Globalization in the Age of Interdependence, best-selling author George C. Lodge, Jaime and Josefina Chua Tiampo Professor of Business Administration at the Harvard Business School, tackles an issue of worldwide proportions – the tensions created by globalization, the growing interdependence of the earth’s 5.5 billion people.

Globalization is the process forced by global flows of people, information, trade, and capital. It is accelerated by technology, potentially harmful to the environment – and at the present, driven by only a few hundred multinational corporations. Lodge describes and analyzes the process on a truly global level, looking at the relationships among the world’s economic, technological, political, and cultural aspects to provide more realistic insights than purely management-based books on the subject.

Business in tandem with government must develop safe new institutions to manage global tensions. And communitarianism, or collective leadership among the world’s peoples, he says, is the challenge of globalization.”

Introduction:

“Globalization is a fact and a process. The fact is that the world’s people and nations are more interdependent than ever before and becoming more so. The measures of interdependence are global flows of such things as trade, investment, and capital, and the related degradation of the ecosystem on which all life depends, a degradation that constantly reminds us that we are all passengers on a spaceship, or, more ominously, a lifeboat” (p. XI)

“Globalization is a promise of efficiency in spreading the good things of life to those who lack them. It is also a menace to those who are left behind, excluded from its benefits. It means convergence and integration; it also means conflict and disintegration. It is upsetting old ways, and challenging cultures, religions, and systems of belief.” (p. XI)

“In spite of many variations and differences, an ideological framework can be composed so that globalization may serve the cause of humanity.” (p. XV)

Structure:

The book is written in 5 chapters: The Phenomenon of Globalization, The Collapse of the Old Paradigm, Global Leadership, The Basis for Global Consensus and World Ideology: Variations on a Communitarian Theme.

Chapter 1: The Phenomenon of Globalization

“Globalization is the process whereby the world’s people are becoming increasingly interconnected in all facets of their lives – cultural, economic, political, technological, and environmental.” (p. 1)

“Japan typifies the Asian model in many respects. Its economy is externally focuses; aims at gaining market share in the world economy through exports. Most importantly, it is oriented toward strengthening its producers rather than encouraging consumers.” (p.10)

“Convergence is both forced and facilitated by global information systems, televisions, faxes, fiber optics and the like.” (p. 11)

“Americans have been ideologically averse to government involvement in their lives, especially in the world of commerce, the domain of ‘private enterprise.’ The theory was that firms competed against other firms in open markets ? The Japanese and other cultures have shown that this view of the world was not only unrealistic, but also a handicap. There, consortias of firms cooperating with one another and with the government have emerged to become fierce competitors” (p. 13)

“Globalization has clearly enriched the rich in the industrial worlds of Asia, Europe and North America, but at the same time it has widened the gap between rich and poor both within and among countries.” (p. 23)

Chapter 2: The Collapse of the Old Paradigm

“The management of globalization and its tensions requires a global consensus about purposes and direction.” (p. 31.)

“The United States emerged from World War 2 all powerful and committed to the establishment of a New World order. It took its economic supremacy for granted?”

(p. 38)

“It was not until 1993 – and then only at the urging of the Japanese government – that World Bank economists reluctantly acknowledged that the East Asian countries – Korea, Japan, Taiwan, Malaysia, Thailand and China – were following a development strategy quite different from the one advocated by the bank, one characterized by extensive government intervention?” (p. 44)

“Today the United States lacks an enemy, and there are four instead of two centers of World Power: Japan, China, Europe and the United States. Asian centers are growing fast; western ones are floundering.” (p. 51)

“If the United States is to continue to organize collective leadership, as many seem to want, it must strengthen itself and replace the old Cold War paradigm with a new one.” (p. 51)

Chapter 3: Global Leadership

“In spite of a substantially weaker economy and a more ambiguous moral purpose, if any country is to lead the world into the twenty-first century, it seems that it must be the United States – and that means both its government and its multinational enterprises.” (p. 61)

“A weak America cannot lead: It needs strength to be magnanimous and the confidence to know and secure its vital interests. Only then can it negotiate the instruments of global order with others.” (p. 63)

“The Asian model gives government the important role of targeting for special support those technologies and industries that are crucial to the nation’s future strength. The United States has always supported the industries vital to the countries national security ? but only recently has it conceded that it is proper to support other selected industries for the country’s economic security.” (p. 69)

“The United States must – and has begun to – change its system in order to make more effective use of its resources and to strengthen its economy. This is important not only for Americans’ standard of living, but also as a prerequisite for America’s leadership role in organizing the consensus required to manage the tensions of globalization.”

(p. 73)

“The United States looks like a less-developed country, importing high-value, high-tech products and exporting raw-materials and minerals.” (p. 72)

“Japan’s corporations have built national loyalty into their purposes; other nations, including America, often do not. This difference has political, social, and economic effects. A nationalistic corporation helps its nation, perhaps at the expense of other nations. It designs its global operations to maximize the benefits at home, such as high-paying jobs, skill development, and future technological gains. By contrast, a non-nationalistic corporation designs its operations strictly for the benefit of the corporation, unmindful of the effects on the home country. It being unclear which procedure is more competitive, both approaches will continue to flourish with important effects on different communities.” (p. 75)

“Theoretically, management’s purpose in the United States is to satisfy shareholders, but increasingly that purpose in unachievable unless at least equal weight is given to the long-run interests of the managed and the community.” (p. 78)

The Basis for Global Consensus:

“Socialism and communism are dead. Capitalism reigns supreme. Such conventional thinking is dangerously misleading. In fact, all three isms are meaningless, replaced by mixtures of the three that differ radically among national and regional communities. The mixtures have one thing in common: They share a communitarianism, as opposed to an individualistic, ideology, even though particular nations’ versions of communitarianism differ widely.” (p. 89)

“By the late Twentieth Century they (Capitalism and Socialism) dissolved themselves by intermingling. Capitalist systems had adopted most of the aims of Socialism – if not the means – and “socialist” systems realized that to reach their lofty goals required many “capitalist” tools” (p. 98)

“We have already seen the United States, which is perhaps as ideologically distant from Japan as any nation can be, changing its ways in a Japanese-like direction in order to become more competitive. And the pressures for ecological integrity are causing all nations to bow to certain global constraints affecting property rights, the uses of property, the role of government, and, most importantly, our perception of reality” (p. 108)

“National systems – economic, social and political – are being forced to converge by two global forces: intensifying competition among the different systems and pressures to preserve ecological integrity” (p. 109)

Chapter 5: World Ideology, Variations on a Communitarian Theme

“There will, of course, never be a single world ideology. There will be as many ideologies as there are communities, but a variety of pressures are pushing the nations of the world toward ideological homogeneity” (p. 111)

“The needs of the community (focusing on a national one, for example) for clean air, and water, safety, energy, jobs, competitive exports, and so forth are becoming increasingly distinct from, and more important than, what individual consumers may desire.” (p. 118)

“The role of the state in a communitarian society is to define community needs and to insure that they are implemented. Inevitably, the state takes on important tasks of coordination, priority setting, and planning. It needs to be efficient and authoritative, capable of making the difficult and subtle trade-offs among, for example, environmental purity, energy supply, economic stability and growth, rights of membership, and global competition” (p. 120)

“The shape which communitarianism takes in different communities will be formed by crisis. The task of leadership is to prevent crisis from becoming catastrophe – to make maximum use of minimum crisis for maximum change. This requires early perception and definition of community needs, and the artful design of institutions and incentives to insure that they are met. It is also the task of leadership to make the best of communitarianism.” (p. 123)

Summary: From the Back of the Book

“Globalization is so mysterious,” says Harvard Business School Professor George Lodge, “that most examiners tend to approach it in pieces, using economics, political science, or sociology to approach the subjects it covers. There is no expert in globalization, nor will there ever be – unless he or she is a special emissary from the divine”

Lodge’s latest work, Managing Globalization in the Age of Interdependence, is a compact, complete study. It recognizes the interconnectedness of culture and communication, supply and demand, and the environment and technology. It also examines the replacement of old, pre-Cold War connections with new connections developed especially for the 21st Century.

Because of the increasing power of multinational companies and the key role of business in managing globalization, Managing Globalization in the Age of Interdependence should be required reading among corporate executives and managers in every nation.”

Call Number: 658.049 Lod