Globalisation – And its Impact on Organisational Change(Lecture 2, Module 1)

James HuntTrimester 3 2012

GSBS6120: Managing Organisational Change

Preliminary Notes – Aspects of Change

• The increasing intensity of competition on a global scale; the Japanese ascendancy in the 1980s, the technology revolution of the 1990s.

• New forms of employment, and changes in organisation: Shamrock Organisations

• Organisational Development

• Resistance to change

• Approaches to change: structural, job-design, personnel, cultural change

• Restructuring and change: two time horizons – short term, long term

• Transition stages in the organisational change process: denial, resistance, exploration, commitment.

Lecture Outline

Module 1: Background – Globalisation and its Impact on Organisational Change

Module 2: Forces for Change - Hyper-competitiveness and Organisational Change

Module 3: Four Frames for Understanding Change in Organisations

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Globalisation – What Does It Mean ?

Most definitions centre upon economic aspects of globalisation.

But globalisation has many dimensions worth considering, because all of them influence and shape our organisations:

– Socio-cultural dimensions: language, culture, value systems

– Political dimensions: rules of national and international governance

– Legal dimensions: international commercial law, patents, intellectual property recognition.

– Financial dimensions: currency controls, financial regulations, capital flows.

Globalisation – What Does It Mean ?

Some aspects of globalisation are relatively benign and free from controversy:

– The global postal system

– The global airline system

Other aspects of globalisation are increasingly being disputed in terms of whether the benefits derived outweigh the costs incurred.

Globalisation – A Brief History

The beginnings of globalisation are very much a matter of debate and conjecture, depending upon one’s preferred time-horizon.

Were the first real steps towards globalisation taken by imperial Rome? At the height of its power, Rome’s influence in culture and commerce permeated much of the known world.

Did globalisation begin in the 16th century with the first great expansion of European capitalism, following the circumnavigation of the world?

Some economic historians point to the sizeable expansion in world trade and investment in the late nineteenth century, before WWI and the Great Depression intervened.

Others have argued that globalisation really began in earnest between 1875 and 1925 with the time zoning of the world and the establishment of the international dateline (and the near universal adoption of the Gregorian Calendar).

Globalisation – When did it Begin?

Some analysts view globalisation as a process beginning at the end of WWII. This period saw a significant expansion in the flow of investment capital, and the emergence of multinational corporations – looking to produce and sell in domestic markets in many countries around the world.

Those with a more immediate time horizon, see globalisation’s direct origins gaining momentum at one of the following points:

– 1980: Japan begins its ascendancy as host nation to a number of significant multinational corporations.

– 1989: The fall of the Berlin Wall & the collapse of Communism: The apparent triumph of Western capitalism, entrepreneurship, and the concept of creative destruction.

– The 1990s: The dawning of the information age: personal computers, widespread digitisation of information, the rise of Microsoft and the ubiquity of its products.

Globalisation – Advantages & Challenges

Proponents of the globalisation of world trade argue that intellectual, cultural and economic progress is dependent upon the relatively free flow of commercial activity.

They argue that globalised trade and investment has the potential to raise the standards of living of all those involved in the process; providing poorer countries with access to superior infrastructure and living standards; cleaner water, better education, improved literacy levels, and better medical care.

Proponents of globalisation also argue that globalisation as a process is misunderstood by those who oppose it, often dismissing the protesters as a loose coalition of misguided loony left radicals .

Many proponents further argue that globalisation is here to stay, and that those protesting against it are simply wasting their time and disrupting sensible debate with their civil disobedience.

Globalisation – Protest Groups & their Agendas

Opponents of globalisation have become more prominent and vocal, as well as more persistent – particularly between 1999-2003, as globalisation itself became more real, more pervasive and more recognisable.

In particular, the privatisation of government-owned entities (banks, airlines, rail systems, telecommunications companies, electricity suppliers) in many countries around the world, has produced visible shifts in pricing patterns of these services, angering large numbers of consumers.

Industrial activity on the world stage has provided graphic examples of pristine ecosystem despoilation, adding fuel to the cause of groups such as Greenpeace, and Friends of the Earth.

Others have expressed concern over apparent exploitative labour practices in third world countries, choosing to rally against globalisation as the driver of corporate mercenary behaviour.

Globalisation – Who are the Protesters?

ANTI TRADE ACTIVISTS:

Predominantly concerned with the socio-economic dimensions of globalisation: They object to what they see as the exploitation of workers in poorer, less developed countries.

The International Forum on Globalisation is one such body which bears the hallmarks of an anti-trade activist group.

These groups argue that developing countries are trapped in a ‘race to the bottom’, locked into abusive labour practices, poor environmental quality and poverty-cycle wages.

They argue that sweatshops do not represent a genuine economic opportunity for labourers.

From a social justice perspective, these arguments are deontologically valid – but can be refuted along the lines of relying excessively on an “advanced nations” perspective of labour conditions, and for their reliance on emotive, altruistic persuasive devices.

Globalisation – Protest Activity

Globalisation – Who are the Protesters?

ENVIRONMENTAL GROUPS:

Are extremely active in the campaign against the unrestrained advance of globalisation.

Their central claims are that globalisation has a short but irrefutable history of harming the environment.

These groups generally lay the blame on global corporations for global warming, the depletion of natural resources, large-scale industrial accidents; Bhopal, Exxon-Valdez and the Gulf of Mexico oil disasters, the manufacturing of harmful chemicals, and the degradation of organic agriculture.

They view the damage that is done to the environment by large MNEs as the effect of externalised cost. Businesses do not currently bear the full cost of production in their commercial activities – a portion of the cost is borne by a third party. Eg: Air pollution from factories, forest depletion by logging companies.

These interest groups have had some success in changing corporate behaviour;

DuPont (responsible for the production of 25% of the world’s CFCs).

Motorola (recycles its rinse water used to clean pc boards).

Globalisation – Protest Activity

Globalisation – Who are the Protesters?

LEFT ORGANISATIONS:

Are highly suspicious of the unrestrained advance of capitalist models of business – largely because of the narrow perspective these models adopt.

They argue that free enterprise needs regulating by an independent body, otherwise the pursuit of profit will override other more important societal concerns.

These groups (along with non-leftist economists) challenge the actions of national and world governing bodies, including the WTO, the IMF, and the World Bank, along economic policy lines.

Globalisation – Who are the Protesters?

LEFT ORGANISATIONS:

Their predominant concerns seem to centre on the growing acceptance of higher levels of unemployment in the advanced nations.

They argue that high unemployment is an unacceptable waste of per capita productivity, and that sound economic management would contain unemployment at much lower levels than are currently acceptable.

In the 1980s and early 1990s, these kinds of views were dismissed by many as irrelevant. More recently, however, these perspectives are being taken more seriously by moderate, non-leftist economists and business analysts.

In 2001, Joseph Stiglitz, former World Bank Chief Economist, vehemently criticised the imprudent role played by the IMF in the 1997 Asian Economic Crisis, for example.

Globalisation – Protest Activity

Globalisation – Heightened Protest Activity: 1999-2003

Protests against globalisation escalated significantly between 1999 and 2003:

Seattle, December 1999: 40,000 protesters took to the streets rallying against the World Trade Organisation. Skirmishes with police eventuated.

Davos, February 2000: At the World Economic Forum a McDonalds store is violently trashed.

Washington, April 2000: A massive blockade by protesters threatens to disrupt talks at the World Bank and the IMF meeting, eventually causing lengthy delays as delegates are initially advised of the danger of the hostile crowds.

Prague, September 2000: A clash eventuates between 12,000 protesters and authorities, again threatening to disrupt the World Bank-IMF annual meeting.

Melbourne, September 2000: Activists barricaded delegates to a World Economic Forum conference, again disrupting parts of the meeting.

Nice, December 2000: Disruption of a European Union summit.

Globalisation – Protest Activity

Davos-Zurich, January 2001: The World Economic Forum Meeting has to be locked down: Zurich gets trashed in the ensuing rampage.

Naples, Italy, March, 2001: Thousands of anti-globalisation protesters clash with riot police. More than 100 people are injured in the violence.

Quebec City, April, 2001: At the Summit of the Americas, tear gas and water cannons are used to control protesters.

Barcelona, June 2001: World Bank cancels conference as activists stage massive protests.

Gothenburg, June 2001: Although 40,000 held a peaceful march, a core of masked anarchists wielding cobblestones created bloody mayhem at the European Union summit in the Swedish port city.

Genoa, Italy, July 2001: More than 500 people are left injured and one dead after two days of intense clashes between riot police and anti-globalisation demonstrators.

Washington DC, September 27, 2002: IMF and World Bank summit marred by anti-globalisation protests.

Cancun, Mexico, September 14, 2003: Fifth Ministerial Meeting of the WTO collapses.

Globalisation – Questions for the Future

Is globalisation, as some have argued, neither inherently bad, nor inherently good, but merely an emerging system requiring the management of a diverse set of interest groups and national agendas?

Is globalisation being driven predominantly by multinational corporate interests, or rather, is it driving organisations to change and respond to new patterns of commercial and social activity?

Can international economists effectively manage the process of globalisation, or is it really beyond the control of anyone, including the so-called global titans? This argument is advanced by Thomas Friedman in The Lexus & the Olive Tree. A counter argument is provided by John Pilger in The New Rulers of the World.

Some Further Reading:

• Hunt, J. (2003) Chapter 1: The Anatomy of Organisational Change in the Twenty-first Century. In Wiesner, R. & Millett, B. (Eds.), Human Resource Management: Challenges and Future Directions, John Wiley, Queensland.

• Semler, R. (1989) ‘Managing Without Managers’, Harvard Business Review, Vol. 67, Iss. 5 (September-October): 76-84.

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