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Globalization and International Business asInterdependent
Phenomena
Michael ChibbaInternational Center for Development Effectiveness
and Poverty Reduction, Canada
Whether it is the relocation of a local plant to another
country by a multinational corporation (MNC), the avail-
ability of a vast array of fruits and vegetables at the
local
supermarket throughout the year, or the internationaliza-
tion of professional sports where the national hero in a
certain sport may play professionally for a foreign team,
globalization and international business (IB) evoke inter-
est and often passion in each of us. Are these phe-
nomena interdependent? In this commentary, I will
address this question by rst briey outlining the early
period of globalization and IB. I then highlight the deni-
tions and related contemporary issues, including the
question of semi-globalization. Lastly, the linkage
between globalization and IB is discussed further and I
close with a prognosis.
The birth of globalization and IB
Globalization and IB have old roots. Yet a common aw
in research and analysis on the subject is that the histori-
cal context is usually overlooked. In focusing completelyon the
contemporary (or post-Second World War) period,
important questions on the nature, scope, sustainability
and future of globalization and IB are misread; a awed
analysis and prognosis is usually the result.
The early history of globalization and IB covers the
long period from the 15th to the 19th centuries. During
that period, seismic changes and events that represent
the veritable dawn of globalization and IB occurred
around the globe. Game-changing milestones were
passed. First, the discovery of the New World between
1492 and 1519 by various western explorers including
Christopher Columbus, John Cabot, Juan Ponce de Leon,Hernando
Cortez and Ferdinand Magellan, among others
was a turning point in history that heralded the start
of globalization, and soon thereafter the gradual rise of
IB through the application of the earliest IB models. Sec-
ond, global shipping expanded multifold, beginning with
the opening up and expansion of trading routes between
Europe and Asia, especially in the 16th and 17th centu-
ries. Also, certain cities in Europe (such as Antwerp in the
early 16th century and London in the 17th century)
developed a global character by virtue of being major
trade hubs, especially with Asia (in spices and textiles,
for
instance), and exploitation in Latin America (e.g. of silver
and gold shipped back to Europe). Third, the rst joint-
stock company was established in the mid 1500s in Eng-
land and arguably the rst state-backed IB (and a rather
political and military entity, at that), the East India Com-
pany, operated from 1600 to 1874.
The profound implications of this early history are far-
reaching and evident to this day. Importantly, the legacy
of these early IB models and the close interdependency
between globalization and IB survives in many respects
to this day international joint-stock companies and glo-
bal public enterprises bear witness to this.
Definitions and fast forward
In the contemporary context globalization and IB are
popular terms, whether as concepts or in practice. These
terms are often employed in the formulation and pursuit
of goals (and related policies and strategies) in various
forms of engagement
especially in business but also ineconomics, politics and
culture, for instance.
But what exactly does IB (or global business) mean? As
a practitioner with over three decades of international
experience I dene IB as any business with a signicant
international dimension that views the world as its busi-
ness territory. International small and medium enterprises
(SMEs), MNCs and global public enterprises are examples
of IBs. Academic denitions, meanwhile, highlight the
central role of commercial transactions (sales, transporta-
tion, nancing, technology transfer, investments, etc), the
raison detre of business (especially prot), and the inter-
play between business, economics, politics and gover-nance
issues in all matters of IB.
In comparison, the denition of globalization is
innately a contentious subject and therefore is worthy of
clarication. Globalization is a multifaceted and multidisci-
plinary concept in terms of meaning, scope and usage.
Moreover, the denition and usage of the term varies
according to the viewpoint being espoused (economic,
political, technological or cultural, for instance). But
above
all, globalization is synonymous with the interdependence
of nations and economies, the interconnectivity of peoples
GlobalPolicy(2014) 5:4 doi: 10.1111/1758-5899.12141 2014
University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 5 . Issue 4 . November 20144
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and cultures, global governance, global communications,
the global marketplace and related phenomena (such as
international migration). Taken together, these manifesta-
tions embody a sort of grand notion of globalization.
The imprint of globalization especially through glo-
bal trade, the role of multinationals, travel,
transportation
networks and the hand of modern technology and com-
munications (computers, smartphones and the Internetin
particular) is ubiquitous in all regions and countries
today, even in the remotest areas. Despite this, however,
the local culture (language, preferences and values) plays
a dominant role in matters of business, economics, poli-
tics and lifestyle in many countries. This being the case,
can we say that we live in an era of semi-globalization?
There are several experts who would agree with this
proposition (although they are part of a distinct minor-
ity). For instance, Pankaj Ghemawat of the IESE Business
School discounts the extent and scope of globalization
and posits that we live in an era of semi-globalization.
He argues that whether one looks at indicators of global
integration, free-owing capital, the ow of information,
the direction and extent of globalization, the myth that
the world is dominated by a handful of companies or
the notion that global means homogeneity, virtually all
such perspectives suggest an era of partial globalization.
The important point, however, is that globalization is a
long-term process and it took over 500 years to reach
the contemporary stage. While globalization might be
partial in some respects, it is close to being complete in
others: for instance in communications technology, sup-
ply chains, economic interdependency, product availabil-
ity and modes of travel, to name but a few of the
myriad of globalized goods, services and systems. Thereare also
a few experts who suggest that globalization is
reversible, as was the case during and after the 200809
dual nancial and economic crisis (or crash). This argu-
ment, however, is specious: temporary setbacks are part
of the natural cycle that IB and globalization always
experience. In this regard, it is noteworthy that John Ral-
ston Saul, a respected novelist and essayist, declared in
2005 that globalism is dead. Three years after that pro-
nouncement, the 200809 crash was a stark reminder to
us all that we live in a globalized world.
Globalization and IB today and in the future
Over its long history and to this day, globalization has
been an important driver of IB. And the opposite is also
true: IB can and does shape globalization; the two phe-
nomena feed on each other. As in the early period, glob-
alization facilitates and promotes IB; meanwhile IB
reinforces, enhances (or sometimes temporarily stymies)
the process of globalization. An additional example can
be found in the case of Coca Cola, an MNC. Based in part
on its mission, policies and strategies (and other core
strengths see my subsequent description of corner-
stones), Coca Cola has excellent marketing strategies,
production facilities, delivery networks and name recogni-
tion worldwide. I have found Coca Colas products being
sold in the remotest parts of Asia, Africa and the Ameri-
cas. Local populations everywhere like its products and
identify with them as status symbols (even in conservative
or traditional societies). The same argument applies
toelectricity, television, laptops and mobile phones. These
products and services are truly global and exemplary of
the reality that IB and globalization are intertwined.
Other key drivers of globalization and IB include: eco-
nomics, trade and nance, politics (global, regional,
national and local), governance structure, ideology, val-
ues (e.g. status symbols and prot seeking), technology,
migration and access to scarce resources (including
human capital).
A directly related point is that these two phenomena
have resulted in consumers enjoying more variety, better
quality or lower prices for goods and services, while pro-
ducers have greater opportunities through, inter alia,
wider markets, improved communications and extensive
transportation networks.
Over the past quarter century, both capitalism (as
found in the US, India and Brazil, for example) and
authoritarianism (especially Chinas model) have contrib-
uted to the rise of IB and globalization. The ancien status
quo namely an overwhelming dominance of IB by
rms from rich countries (or developed economies)
has undergone a major adjustment since the 1980s.
Globalization has deepened, with emerging MNCs play-
ing a more active role. Today, many of the worlds top
MNCs are based in emerging markets.In addition, as with the
drivers of globalization and IB,
linkages between these two phenomena are manifest in
various ways, from economic, operational and gover-
nance-based factors to politics and culture. Economically,
the linkage is evident in the interconnectedness and
integration of economies the 200809 crash bears testi-
mony to this fact. Operationally, there are six corner-
stones that impact IB in the global marketplace, at the
rm level and in terms of governments providing an
enabling environment. The six cornerstones of IB are: (1)
mission, policy and strategy; (2) culture; (3) leadership;
(4)
technology, innovation and creativity; (5) human capital;and (6)
the business environment. Each of these corner-
stones is also exemplary of the close relationship
between IB and globalization.
Furthermore, the type of governance structure is
important as the cases of the US and the BRICS econo-
mies (Brazil, Russia, India, China and South Africa) sug-
gest. The role of global governance, meanwhile, is
evident through the institutions founded at Bretton
Woods and other multilateral institutions that have been
established since the 1950s. Politics and culture are
2014 University of Durham and John Wiley & Sons, Ltd.
GlobalPolicy(2014) 5:4
Michael Chibba478
