Globalization

The globalization of business has long encouraged Harvard Business School (HBS) faculty to research international business practices and the effects of globalization. Seminal contributions - Christopher Bartlett on managing across borders, Michael Porter on competition in global industries, and Louis Wells on foreign investment in emerging markets - helped pave today’s global research path. Supported by six Global Research Centers that facilitate our contact with global companies and the collection of international data, HBS faculty today continue to shed light on questions that are critical to our understanding of international business and global markets. Key areas of investigation include:
  • The effectiveness of management practices in global organizations
  • Cross-country and cross-cultural learning and adaptation processes
  • The performance consequences and organizational challenges of taking companies global
  • The creation of emerging-market companies with global potential
  • Questions of international political economy and its impact on economic development
Informed by detailed company case studies and large-sample empirical investigations, HBS global research yields insights that help inform business practice and public policy. As an example, a case study by Michael Tushman of the Organizational Behavior unit investigates a high-tech Taiwanese firm’s cross-cultural transformation as it transitions into a global company. Or take Fritz Foley of the Finance unit and William Kerr of Entrepreneurial Management and their in-depth analysis of U.S. patent filings to understand how immigrant innovators impact the competitiveness of multinationals. These and many other research projects produce insights that can shape how global businesses are managed.
 
  1. Firms and Global Capitalism

    This chapter forms part of the two-volume Cambridge History of Capitalism, a definitive new reference work that traces the history of capitalism from its origins to the present day. The chapter focuses on the role of business enterprises as powerful actors in the spread of global capitalism after 1848 and up the present day. It shows how multinational firms have created and co-created markets and ecosystems through their ability to transfer financial, organizational, and cultural assets, as well as skills and ideologies across borders. The chapter argues that capitalism proved much better than political leaders in building institutions that coordinated activities across borders, but also points to the historical evidence concerning disappointing and sometimes negative outcomes in knowledge and technology transfer. Business enterprises emerge both as important drivers of international economic growth and as significant agents in the divergent patterns of wealth and poverty that have characterized the last two centuries.

    Keywords: political economy; American History; Economic History; business history; labor history; slavery; numeracy and quantification; science and technology studies; History of the Book; globalization; international investment; international business; international marketing; Globalization; History;

    Citation:

    Jones, Geoffrey. "Firms and Global Capitalism." Chap. 6 in The Cambridge History of Capitalism: Volume 2. The Spread of Capitalism: From 1848 to the Present, edited by Larry Neal and Jeffrey G. Williamson, 169–200. New York: Cambridge University Press, 2014.
  2. Jurlique: Globalizing Beauty from Nature and Science

    Considers the marketing and strategic challenges faced by natural beauty brands using the case of Australian-based Jurlique, which was acquired by Pola of Japan in 2011. The case opens two years later in July 2013 when Sam McKay, the chief executive officer, on a visit to Pola's head office in Tokyo, heard news of critical comments about the company and animal testing in a Facebook post from a group in South Australia, where the brand had been founded as a small biodynamic farm in 1985. The discussion of Jurlique's involvement with animal testing was a sensitive issue as it contradicted the brand's strong environmentally-friendly and ethical positioning. The matter had already arisen during the Pola acquisition as Pola, like all Japanese cosmetics companies, traditionally tested products on animals. The animal testing issue is put in context by a discussion of how during Jurlique's growth as a successful premium brand there had been substantial changes in market position, in part associated with shifts of ownership. At times the brand had been focused on core green consumers, but McKay had sought to broaden the consumer base by repositioning it as making "the most effective products as natural as possible." The company lost few existing customers, and found that Jurlique's image was an asset in attracting Chinese consumers who liked the story of the Australian farm which produced most ingredients. However, Chinese regulations refusing to allow the firm's stores to use recycled wood, and mandating of animal testing, were challenging to the brand's global natural brand position. The case can be taught both in marketing classes concerned with green business and in strategy classes exploring the challenges faced by global brands.

    Keywords: Australia; China; environmental strategies; Green Business; marketing; Entrepreneurship; Globalization; Beauty and Cosmetics Industry; China; Australia; United States;

    Citation:

    Jones, Geoffrey, and Andrew Spadafora. "Jurlique: Globalizing Beauty from Nature and Science." Harvard Business School Case 314-087, March 2014.
  3. Vision 2020: Takeda and the Vaccine Industry

    In 2014, Yasuchika Hasegawa was orchestrating the transformation of Takeda from a Japanese pharmaceutical company with a global footprint into a global company with a Japanese heritage. A 33-year veteran of Takeda, Hasegawa-san was appointed president of Takeda in 2003 and chief executive in 2009. By 2013, Takeda was in the midst of implementing its new Vision 2020 plan, a strategic plan for the evolving global corporation, which included developing a global vaccine business.

    Keywords: health care; global; NGO; public health; pharmaceutical industry; Japan; GSK; "vaccine,"; supply chain; Market entry; Health; Health Care and Treatment; Trade; Market Entry and Exit; Global Strategy; Health Industry; Pharmaceutical Industry;

    Citation:

    Quelch, John A., and Margaret L. Rodriguez. "Vision 2020: Takeda and the Vaccine Industry." Harvard Business School Case 514-084, March 2014.
  4. Novartis' Sandoz: Between Generics and Pharma

    Sandoz, which made a significant investment in bio-similars as a way to differentiate itself from its generic drug industry peers, has to negotiate with its parent company and the innovative pharma division on how best to commercialize its bio-similar portfolio. What is the best way to balance the parenting advantage of Novartis with the unique demands of the generic drug industry?

    Keywords: Global Strategy and Leadership; Managing Within a Multi-Business Organization; Generic Pharmaceuticals; Global Strategy;

    Citation:

    Palepu, Krishna, and Carin-Isabel Knoop. "Novartis' Sandoz: Between Generics and Pharma." Harvard Business School Case 114-033, March 2014.
  5. Babcock International Plc

    In 2013, Babcock International Plc (Babcock) was the largest engineering services provider in the UK with sales of over £3 billion. Under the leadership of CEO Peter Rogers, Babcock had grown revenues and profits nearly tenfold over the previous decade as it benefited from increased public sector outsourcing. In 2012, for the UK's Ministry of Defense (MOD), Babcock trained over 50,000 troops, maintained the nuclear submarine fleet, provided engineering support for military vehicles, and managed numerous facilities at military bases. On the civil side, the company decommissioned aging nuclear plants, maintained the Metropolitan Police auto fleet and other emergency services fleets, and was the UK's leading trainer of engineering apprentices.
    Babcock's leadership team believed that continued pressure on public spending would provide opportunities for double digit growth in the UK for at least five years. However, this might not come from Babcock's primary customer, the Ministry of Defense. What other national and local government agencies might the firm target? On the civil side, the resurgence of the salience of nuclear power generation in the mid 2000s had appeared to be good news for Babcock with its long-standing nuclear expertise, but the April 2011 Fukushima nuclear leak in Japan had shed doubt on future construction, while the fracking of shale deposits to extract natural gas promised a much lower cost supply of abundant energy. Nevertheless, decommissioning nuclear power stations promised steady and growing work. What other opportunities might Babcock pursue in the UK? Meanwhile, analysts were pushing for more international expansion but efforts at building business in South Africa, Canada, and Australia had been slow, with only 16% of revenues coming from outside the UK in 2013, a figure little changed since 2005. What would drive Babcock's long term future growth?
    Growth itself also posed challenges. Babcock relied heavily on informal processes to extract synergies across its portfolio. Would this continue to be effective as the scope of operations continued to expand? Meanwhile, analysts were concerned about succession. Rogers and many of the leadership team were approaching retirement. Where would the next generation of Babcock leaders come from?

    Keywords: strategic change; strategy and leadership; diversification; United Kingdom; military; nuclear power; nuclear; Engineering and construction; conglomerates; Strategic Planning; Competitive Strategy; Global Strategy; Corporate Strategy; Construction Industry; Energy Industry; United Kingdom;

    Citation:

    Wells, John R., and Galen Danskin. "Babcock International Plc." Harvard Business School Case 714-496, March 2014.
  6. Opting Out of Good Governance

    Cross-listing on a U.S. exchange does not bond foreign firms to follow the corporate governance rules of that exchange. Hand-collected data show that 80% of cross-listed firms opt out of at least one exchange governance rule, instead committing to observe the rules of their home country. Relative to firms that comply, firms that opt out have weaker governance practices in that they have a smaller share of independent directors. The decision to opt out reflects the relative costs and benefits of doing so. Cross-listed firms opt out more when coming from countries with weak corporate governance rules, but if firms based in such countries are growing and have a need for external finance, they are more likely to comply. Finally, opting out affects the value of cash holdings. For cross-listed firms based in countries with weak governance rules, a dollar of cash held inside the firm is worth $1.52 if the firm fully complies with U.S. exchange rules but just $0.32 if it is non-compliant.

    Keywords: Financial Markets; Globalization; Corporate Governance;

    Citation:

    Foley, C. Fritz, Paul Goldsmith-Pinkham, Jonathan Greenstein, and Eric Zwick. "Opting Out of Good Governance." NBER Working Paper Series, No. 19953, March 2014.
  7. Bio-Piracy or Prospering Together? Fuzzy Set and Qualitative Analysis of Herbal Patenting by Firms

    Since the 1990s, several Western firms have filed patents based on medicinal herbs from emerging markets, evoking protests from local stakeholders against 'bio-piracy'. We explore conditions under which firms and local stakeholders share rents from such patents. Our theoretical model builds on two distinct strategy literatures: firms appropriating rents from new technologies and firms managing stakeholders. We predict that a win-win outcome emerges when the patent strength is moderate and when local stakeholders form a coalition with larger national stakeholders to initiate litigation against the focal firm. We test our predictions using a two-pronged empirical strategy. Our empirical context relates to herbal patents from emerging markets and given that we have a small sample (N=17), we employ a fuzzy set QCA methodology. In addition, we develop four in-depth qualitative case studies to support our predictions.

    Keywords: Rents from New Technology; Local Stakeholders; Herbal Patents; QCA; Fuzzy Set Analysis; Qualitative Case Studies; Plant-Based Agribusiness; Patents; Emerging Markets; Health Care and Treatment; Business and Stakeholder Relations; Cross-Cultural and Cross-Border Issues; Agriculture and Agribusiness Industry; Pharmaceutical Industry;

    Citation:

    Choudhury, Prithwiraj, and Tarun Khanna. "Bio-Piracy or Prospering Together? Fuzzy Set and Qualitative Analysis of Herbal Patenting by Firms." Harvard Business School Working Paper, No. 14-081, February 2014.
  8. Return Migration and Geography of Innovation in MNEs: A Natural Experiment of On-the-Job Learning of Knowledge Production by Local Workers Reporting to Return Migrants

    I study whether return migrants and their direct reports facilitate knowledge production and transfer across borders for multinationals. Using unique personnel and patenting data for 1315 inventors at an emerging market R&D center for a Fortune 50 technology firm, I exploit a natural experiment where the assignment of managers for newly hired college graduates is mandated by rigid HR rules and is uncorrelated to observable characteristics of the graduates. Given this assignment protocol, I find that local employees who report to return migrants file disproportionately more U.S. patents. I also find evidence that return migration facilitates knowledge transfer across borders.

    Keywords: Return migration; knowledge production; multinational enterprise; internal labor markets; Demographics; Multinational Firms and Management; Cross-Cultural and Cross-Border Issues; Innovation and Invention; Knowledge;

  9. Emirates Airline: Connecting the Unconnected

    Narrates the story of Emirates, an airline founded in 1985 in Dubai that by 2013 was among the three largest commercial airlines in the world. The case emphasizes how Emirates capitalized on its location—a small city–state strategically located to reach ¾ of the world population in a flight of less than eight hours—to build a fast-growing and profitable hub-based business model. The case details how Emirates' chooses new routes, technology, and equipment and manages its human resources, marketing and branding, and government relationships—together forming an internally consistent strategy that capitalizes on opportunities across geographic markets. Importantly, students are asked to evaluate if the airlines' strategy will be sustainable as Emirates faces technical and political challenges to expand and must compete with numerous new players from the Middle East.

    Keywords: competitive advantage; sustainable competitive advantage; Business Strategy; airlines; multinational; Location strategies; Geographic Location; Multinational Firms and Management; Air Transportation; Competitive Advantage; Business Strategy; Air Transportation Industry; Middle East; Dubai;

    Citation:

    Alcacer, Juan, and John Clayton. "Emirates Airline: Connecting the Unconnected." Harvard Business School Case 714-432, January 2014.
  10. The Kursk Submarine Rescue Mission

    The Kursk, a Russian nuclear-powered submarine sank in the relatively shallow waters of the Barents Sea in August 2000, during a naval exercise. Numerous survivors were reported to be awaiting rescue, and within a week, an international rescue party gathered at the scene, which had possessed between them all that was needed for a successful rescue. Yet they failed to save anybody. Based on the recollections and daily situational reports of Commodore David Russell, who headed the Royal Navy's rescue mission, the case explores how and why this failure—a classic coordination failure—occurred. The Kursk rescue mission also illustrates the challenges of pluralistic risk and disaster management, and asks students to consider how to bring about solutions in the face of pluralistic risk issues, such as the depletion of natural resources and many other disasters, when multiple parties with competing and often conflicting values and expertise have to learn to coordinate and establish a virtual, well-aligned organization.

    Keywords: Risk Management; Moral Sensibility; Leadership; Organizational Structure; Crisis Management; Failure; Cooperation; Cross-Cultural and Cross-Border Issues; Norway; United Kingdom; Russia;

    Citation:

    Mikes, Anette. "The Kursk Submarine Rescue Mission." Harvard Business School Case 114-046, January 2014.
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