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Globalization

Globalization

    • December 2014
    • Article

    Market Competition, Earnings Management, and Persistence in Accounting Profitability Around the World

    By: Paul M. Healy, George Serafeim, Suraj Srinivasan and Gwen Yu

    We examine how cross-country differences in product, capital, and labor market competition, and earnings management affect mean reversion in accounting return on assets. Using a sample of 48,465 unique firms from 49 countries, we find that accounting returns mean revert faster in countries where there is more product and capital market competition, as predicted by economic theory. Country differences in labor market competition and earnings management are also related to mean reversion in accounting returns—but the relation varies with firm performance. Country labor competition increases mean reversion when unexpected returns are positive, but dampens it when unexpected returns are negative. Accounting returns in countries with higher earnings management mean revert more slowly for profitable firms and more rapidly for loss firms. Thus, earnings management incentives to slow or speed up mean reversion in accounting returns are accentuated in countries where there is a high propensity for earnings management. Overall, these findings suggest that country factors explain mean reversion in accounting returns and are therefore relevant for firm valuation.

    • December 2014
    • Article

    Market Competition, Earnings Management, and Persistence in Accounting Profitability Around the World

    By: Paul M. Healy, George Serafeim, Suraj Srinivasan and Gwen Yu

    We examine how cross-country differences in product, capital, and labor market competition, and earnings management affect mean reversion in accounting return on assets. Using a sample of 48,465 unique firms from 49 countries, we find that accounting returns mean revert faster in countries where there is more product and capital market...

    • Article

    Spanning the Institutional Abyss: The Intergovernmental Network and the Governance of Foreign Direct Investment

    By: Juan Alcacer and Paul Ingram

    Global economic transactions such as foreign direct investment must extend over an institutional abyss between the jurisdiction, and therefore protection, of the states involved. Intergovernmental organizations (IGOs), whose members are states, represent an important attempt to span this abyss. IGOs are mandated variously to smooth economic transactions, facilitate global cooperation, and promote cultural contact and awareness. We use a network approach to demonstrate that the connections between two countries through joint-membership in the same IGOs are associated with a large positive influence on the foreign direct investment that flows between them. Moreover, we show that this effect occurs not only in the case of IGOs that focus on economic issues, but also on those with social and cultural mandates. This demonstrates that relational governance is important and feasible in the global context and for the most risky transactions. Finally we examine the interdependence between the IGO network and the domestic institutions of states. The interdependence between these global and domestic institutional forms is complex, with target-country democracy being a substitute for economic IGOs, but a complement for social and cultural IGOs.

    • Article

    Spanning the Institutional Abyss: The Intergovernmental Network and the Governance of Foreign Direct Investment

    By: Juan Alcacer and Paul Ingram

    Global economic transactions such as foreign direct investment must extend over an institutional abyss between the jurisdiction, and therefore protection, of the states involved. Intergovernmental organizations (IGOs), whose members are states, represent an important attempt to span this abyss. IGOs are mandated variously to smooth economic...

    • July 2013
    • Article

    Ethnic Innovation and U.S. Multinational Firm Activity

    By: C. Fritz Foley and William R. Kerr

    This paper studies the impact that immigrant innovators have on the global activities of U.S. firms by analyzing detailed data on patent applications and on the operations of the foreign affiliates of U.S. multinational firms. The results indicate that increases in the share of a firm's innovation performed by inventors of a particular ethnicity are associated with increases in the share of that firm's affiliate activity in their native countries. Ethnic innovators also appear to facilitate the disintegration of innovative activity across borders and to allow U.S. multinationals to form new affiliates abroad without the support of local joint venture partners. Thus, this paper points out that immigration can enhance the competitiveness of multinational firms.

    • July 2013
    • Article

    Ethnic Innovation and U.S. Multinational Firm Activity

    By: C. Fritz Foley and William R. Kerr

    This paper studies the impact that immigrant innovators have on the global activities of U.S. firms by analyzing detailed data on patent applications and on the operations of the foreign affiliates of U.S. multinational firms. The results indicate that increases in the share of a firm's innovation performed by inventors of a particular ethnicity...

    • 2013
    • Chapter

    Multinational Enterprises and Incomplete Institutions: The Demandingness of Minimum Moral Standards

    By: Nien-he Hsieh

    Multinational enterprises (MNEs) operate across countries that vary widely in their legal, political, and regulatory institutions. One question that arises is whether there are certain minimum standards that ought to guide managers in their decision making independently of local institutional requirements, especially when institutional arrangements are incomplete. This chapter examines what follows if managers recognize two kinds of duties of forbearance in their decision making that are commonly held to be among the most minimal of moral duties: the duty not to harm and the duty not to violate the liberty of others. The chapter concludes that the standards for MNEs may be more demanding than what the minimalist nature of duties of forbearance initially would suggest.

    • 2013
    • Chapter

    Multinational Enterprises and Incomplete Institutions: The Demandingness of Minimum Moral Standards

    By: Nien-he Hsieh

    Multinational enterprises (MNEs) operate across countries that vary widely in their legal, political, and regulatory institutions. One question that arises is whether there are certain minimum standards that ought to guide managers in their decision making independently of local institutional requirements, especially when institutional...

    • 2014
    • Working Paper

    Finance and Social Responsibility in the Informal Economy: Institutional Voids, Globalization and Microfinance Institutions

    By: Hao Liang, Christopher Marquis and Sunny Li Sun

    We examine the heterogeneous effects of globalization on the interest rate setting by microfinance institutions (MFIs) around the world. We consider MFIs as a mechanism to overcome the institutional void of credit for small entrepreneurs in developing and emerging economies. Using a large global panel of MFIs from 119 countries, we find that social globalization that embraces egalitarian institutions on average reduces MFIs' interest rates. In contrast, economic globalization that embraces neoliberal institutions on average increases MFIs' interest rates. Moreover, the proportions of female borrowers and of poorer borrowers negatively moderate the relationship between social globalization and MFI interest rate, and positively moderate the relationship between economic globalization and MFI interest rate. This paper contributes to understanding how globalization processes can both ameliorate and exacerbate challenges of institutional voids in emerging and developing economies.

    • 2014
    • Working Paper

    Finance and Social Responsibility in the Informal Economy: Institutional Voids, Globalization and Microfinance Institutions

    By: Hao Liang, Christopher Marquis and Sunny Li Sun

    We examine the heterogeneous effects of globalization on the interest rate setting by microfinance institutions (MFIs) around the world. We consider MFIs as a mechanism to overcome the institutional void of credit for small entrepreneurs in developing and emerging economies. Using a large global panel of MFIs from 119 countries, we find that...

Global Initiative

The Global Initiative builds on a legacy of global engagement by supporting faculty, students, and alumni in their work, and encouraging a global outlook in research, study, and practice.
Global
Research Centers

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 eight Global Research Centers that facilitate our contact with global companies and the collection of international data, key investigations concentrate on the effectiveness of management practices in global organizations; cross-cultural learning and adaptation processes; the challenges of taking companies global; emerging-market companies with global potential; and international political economy and its impact on economic development.

Global Initiative

The Global Initiative builds on a legacy of global engagement by supporting faculty, students, and alumni in their work, and encouraging a global outlook in research, study, and practice.

Global
Research Centers

Recent Publications

Detecting Structural Breaks in Inflation Trends: A High-Frequency Approach

By: Alberto Cavallo and Gaston Garcia Zavaleta
  • 2023 |
  • Working Paper |
  • Faculty Research
We combine standard structural-break methods with high-frequency data to identify shifts in inflation trends. We use this approach to study the inflation dynamics of 25 countries from January 2022 to April 2023 and find evidence of a broad-based slowdown in about half of them, including the US. The high-frequency and depth of the data allow us to detect the breaks within a few weeks for a large number of disaggregated sectors, providing an advantage over CPI data for real-time analysis. We apply single and multiple-break strategies; allowing for multiple breaks helps us identify relevant breaks in some sectors but does not significantly change our main results.
Keywords: Inflation and Deflation; Global Range; Economic Slowdown and Stagnation; Analysis; Price
Citation
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Cavallo, Alberto, and Gaston Garcia Zavaleta. "Detecting Structural Breaks in Inflation Trends: A High-Frequency Approach." Working Paper, May 2023. (Preliminary draft.)

Saudi Arabia: A Vision in Progress

By: Kristin Fabbe, Adel Hamaizia and Tom Quinn
  • February 2023 |
  • Case |
  • Faculty Research
In 2016, when Saudi Arabian Crown Prince Mohammed bin Salman announced a long-range economic and social transformation plan called Vision 2030, he faced Western skepticism about how the oil-rich and religiously conservative country would accomplish its ambitious goals. In 2022, halfway through the Vision’s timeline, government and private sector leaders needed to take stock. Could they succeed in diversifying the economy away from oil, engineering social change, and elevating Saudi Arabia on the world stage?
Keywords: Economic Growth; Cross-Cultural and Cross-Border Issues; Globalized Economies and Regions; Government Administration; International Relations; Leading Change; Privatization; Religion; Public Opinion; Saudi Arabia
Citation
Educators
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Fabbe, Kristin, Adel Hamaizia, and Tom Quinn. "Saudi Arabia: A Vision in Progress." Harvard Business School Case 723-006, February 2023.

Accelerating the Accelerator: Raja Al Mazrouei at DIFC Fintech Hive

By: Linda A. Hill, Emily Tedards and Lydia Begag
  • February 2023 (Revised May 2023) |
  • Case |
  • Faculty Research
In January 2023, Raja Al Mazrouei became the Managing Director and Acting CEO of Etihad Credit Insurance (ECI) in Dubai, UAE. In her previous role as the Executive Vice President of the DIFC Fintech Hive, she successfully built and led an accelerator program for start-ups in the financial technology (fintech) sector in Dubai. The Fintech Hive has had successful partnerships with established banks like Emirates NBD and accelerated over 200 start-ups in the MENA region. Al Mazrouei and her team embraced recent technologies and evolved their business models to keep up with the global digital space.

With Dubai's ambition to be one of the top ten metaverse economies by 2030, Al Mazrouei’s last mandate as EVP of Fintech Hive was to strategize on how to deepen their partnerships and remain at the forefront of technology. She decided to focus on the metaverse with her long-standing partner, Emirates NBD. Although some questioned whether the metaverse would create value for those in the financial sector, this project kept Fintech Hive and Emirates NBD on the cutting edge. Together, they created a global accelerator program for metaverse start-ups to enhance customer experience, contributing to the country’s agenda. It was clear to Al Mazrouei that building partnerships, like the one established with Emirates NBD, would continue to be critical for success in her new position. She was eager to collaborate with her new team and fulfill the country’s ambitions by building the culture and capabilities required to embrace innovation and digital technology across the Dubai government and economy.
Keywords: Organizational Change and Adaptation; Organizational Culture; Organizational Design; Organizational Structure; Management; Strategy; Technology Adoption; Information Infrastructure; Financial Management; Financial Strategy; Technological Innovation; Digital Marketing; Digital Strategy; Digital Transformation; Global Strategy; Globalized Markets and Industries; Banks and Banking; Corporate Finance; Leadership; Leadership Development; Leadership Style; Financial Services Industry; Technology Industry; Banking Industry; Middle East; Singapore; London; United Arab Emirates; Dubai
Citation
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Hill, Linda A., Emily Tedards, and Lydia Begag. "Accelerating the Accelerator: Raja Al Mazrouei at DIFC Fintech Hive." Harvard Business School Case 423-064, February 2023. (Revised May 2023.)

Natura: Weathering the Pandemic at Brazil's Cosmetic Giant

By: Brian Trelstad, Pedro Levindo and Carla Larangeira
  • January 2023 |
  • Case |
  • Faculty Research
Brazil's Natura, a multi-brand cosmetics group, has taken several measures to safeguard the livelihoods of its thousands of employees and millions of sales representatives during the COVID-19 health and economic crisis. The company has also made strides in its efforts to increase digital sales. Now the purpose-driven group must decide whether to vocalize its opposition to private companies buying COVID-19 vaccines to inoculate their employees before priority groups in Brazil's public health system.
Keywords: COVID-19 Pandemic; ESG Reporting; Acquisition; Customer Focus and Relationships; Decision Making; Social Entrepreneurship; Environmental Sustainability; Environmental Management; Climate Change; Ethics; Moral Sensibility; Values and Beliefs; Global Strategy; Corporate Governance; Health Pandemics; Human Resources; Human Capital; Crisis Management; Growth and Development Strategy; Marketing; Distribution Channels; Supply Chain; Corporate Social Responsibility and Impact; Mission and Purpose; Organizational Culture; Customer Ownership; Relationships; Business and Community Relations; Business and Stakeholder Relations; Networks; Partners and Partnerships; Science-Based Business; Reputation; Human Needs; Social Issues; Strategy; Equality and Inequality; Beauty and Cosmetics Industry; Brazil; Latin America
Citation
Educators
Related
Trelstad, Brian, Pedro Levindo, and Carla Larangeira. "Natura: Weathering the Pandemic at Brazil's Cosmetic Giant." Harvard Business School Case 323-065, January 2023.

Velong: Rethinking 'Made in China'

By: Krishna G. Palepu, Nancy Hua Dai and Billy Chan
  • January 2023 |
  • Case |
  • Faculty Research
Velong is a supplier of kitchen equipment and backyard grills for major global brands and store brands of large western retailers. In light of the COVID-related disruptions to the global supply chains, and the evolving trade tensions between China and the Western countries, Velong’s global customers were pressuring the company to move 30% of its manufacturing from China to other locations. Velong was considering a number of countries to shift its manufacturing—India, Vietnam, Turkey and Mexico. At present, none of these countries seem to be able to match the cost structure and manufacturing quality that the company is able to achieve in China. Velongs co-founders, Jacob Rothman and Iven Chen, need to decide soon how to formulate a strategy to deal with the challenge.
Keywords: Globalization; Supply Chain Management; Risk Management; Manufacturing Industry; China; India; Mexico; Turkey; Viet Nam
Citation
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Palepu, Krishna G., Nancy Hua Dai, and Billy Chan. "Velong: Rethinking 'Made in China'." Harvard Business School Case 323-064, January 2023.

The END Fund: To Eliminate Neglected Tropical Diseases

By: V. Kasturi Rangan and Courtney Han
  • January 2023 |
  • Case |
  • Faculty Research
Founded in 2012, the END fund focused on eliminating five Neglected Tropical Diseases that accounted for 80% of the tropical diseases affecting nearly 1.5 billion people worldwide. Its roughly $25 million/year annual budget was fully committed when it got news that the British Government would be cutting back its funding for the sector, putting at risk nearly 50,000 people for a tropical disease (visceral leishmaniasis-VL), which the End Fund was currently not addressing. The case question is whether the End Fund should redirect its resources to VL. The case highlights the difficult decisions that nonprofits have to make balancing resource stretch and mission focus.
Keywords: Nonprofit Organizations; Health Disorders; Health Care and Treatment; Resource Allocation; Global Range; Decisions; Investment Funds
Citation
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Rangan, V. Kasturi, and Courtney Han. "The END Fund: To Eliminate Neglected Tropical Diseases." Harvard Business School Case 523-063, January 2023.

To Feed the Planet: Juan Luciano at ADM

By: Joshua D. Margolis, David E. Bell, Damien McLoughlin, Stacy Straaberg and James Weber
  • December 2022 |
  • Case |
  • Faculty Research
In December 2022, Juan Luciano, Chairman and CEO of agribusiness and nutrition giant ADM, considered the next phase of the historic company’s future. Beginning in 2011 when he joined as COO and moving into his tenure as CEO in 2015, Luciano led a transformation of ADM from a commodities-focused trading company to a customer-centric solutions firm. Upon coming aboard at ADM, Luciano saw changes in the agribusiness industry that warranted pivots in ADM’s business strategy to ensure long-term success. To shepherd the company through a changing industry, Luciano conceptualized three “strategic horizons”—general timeframes to pursue specific goals. The first horizon was aimed at getting ADM financially fit including raising ROIC above WACC and reducing CapEx. The second horizon was characterized by moving closer to customers through identifying global macro-trends and offering corresponding products and services to generate better margins. As part of the second horizon, ADM acquired flavor company and food and beverage solutions provider WILD Flavors which resulted in Luciano creating a Nutrition division that used rapid design-for-market capabilities to create complete product solutions for customers. As a leader, Luciano exhibited the traits of both a learner (e.g., seeking out a variety of perspectives before ultimately making key decisions himself) and a teacher (e.g., utilizing drawings, vivid analogies, and hands-on demonstrations). Luciano needed to define the company’s next horizon. He knew his general goal was sustainable growth, but balancing profitability with innovation and pace of change with durability of change could prove challenging in the years to come.
Keywords: Agriculture; Leadership; Agribusiness; Acquisition; Business Units; Customer Focus and Relationships; Customer Value and Value Chain; Forecasting and Prediction; Capital; Cash; Cost of Capital; Cost Management; Profit; Food; Global Range; Innovation Strategy; Leadership Development; Leadership Style; Leading Change; Growth and Development Strategy; Risk Management; Organizational Culture; Organizational Structure; Strategic Planning; Risk and Uncertainty; Adaptation; Business Strategy; Corporate Strategy; Vertical Integration; Value Creation; Transformation; Agriculture and Agribusiness Industry; Energy Industry; United States; Chicago
Citation
Educators
Related
Margolis, Joshua D., David E. Bell, Damien McLoughlin, Stacy Straaberg, and James Weber. "To Feed the Planet: Juan Luciano at ADM." Harvard Business School Case 423-060, December 2022.

Marfrig's Quest for Sustainable Beef

By: Jose B. Alvarez, Pedro Levindo and Ruth Costas
  • December 2022 (Revised February 2023) |
  • Case |
  • Faculty Research
Marfrig, one of the world’s leading meatpackers, strived to comply with its commitment to have a deforestation-free value chain in Brazil by 2030. The company also pledged to reduce its emissions of greenhouse gases in accordance with the guidelines set by the Science-Based Targets Initiative (SBTi). Controlling shareholder and chairman Marcos Molina, and Director of Sustainability and Communications for South America Paulo Painez, must figure how to achieve these goals while dealing with increased pressures from NGOs, customers, and foreign governments. The pair believed that a solution to the company’s—and the sector’s—challenges would only be achieved by working together with other stakeholders of the Brazilian beef industry: cattle ranchers, NGOs, the government, and civil society at large. Aligning the interests of the different players, while keeping Brazil’s lead as the world’s top beef exporter, was especially challenging given the country’s fraught political environment and its tarnished image abroad.
Keywords: Agribusiness; Animal-Based Agribusiness; Plant-Based Agribusiness; Acquisition; Family Business; Communication Strategy; Environmental Management; Climate Change; Environmental Regulation; Environmental Sustainability; Bonds; Food; Global Strategy; Goods and Commodities; Government and Politics; Political Elections; Leading Change; Marketing; Product Marketing; Product Positioning; Supply Chain; Supply Chain Management; Corporate Social Responsibility and Impact; Business and Government Relations; Business and Stakeholder Relations; Partners and Partnerships; Strategy; Adaptation; Business Strategy; Commercialization; Competitive Strategy; Corporate Strategy; Diversification; Expansion; Agriculture and Agribusiness Industry; Food and Beverage Industry; Brazil; Latin America; Argentina; Uruguay; North America; United States; Europe; Asia; China
Citation
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Alvarez, Jose B., Pedro Levindo, and Ruth Costas. "Marfrig's Quest for Sustainable Beef." Harvard Business School Case 523-073, December 2022. (Revised February 2023.)

The New China Shock: How Beijing’s Party-State Capitalism Is Changing the Global Economy

By: Margaret M. Pearson, Meg Rithmire and Kellee S. Tsai
  • December 8, 2022 |
  • Article |
  • ForeignAffairs.com
In the wake of the global financial crisis of 2008, China began to move away from the market-based approach that had shaped its economic policies for three decades, and toward something that might be termed “party-state capitalism,” which involves a high degree of Chinese Communist Part (CCP) control over strategic sectors of the economy. This has led to significant changes in the U.S.-Chinese economic relationship, as both sides have made efforts to secure supply chains, screen inward and outward capital flows, diminish the power of global firms, and reorganize alliances to protect against economic coercion. The effects of this dynamic go well beyond the U.S.-Chinese relationship: the economic arms race between Washington and Beijing has changed the shape of global capitalism.
Keywords: International Relations; Globalized Economies and Regions; Economic Systems; Trade; China
Citation
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Pearson, Margaret M., Meg Rithmire, and Kellee S. Tsai. "The New China Shock: How Beijing’s Party-State Capitalism Is Changing the Global Economy." ForeignAffairs.com (December 8, 2022).

Freelancer, Ltd.

By: Christopher Stanton, Karim R. Lakhani, Jin Hyun Paik and Nina Cohodes
  • December 2022 |
  • Case |
  • Faculty Research
Over the course of the 2010s, the rapid advancement of mobile technologies and the rise of online freelancing platforms seemed to portend a radical transformation of labor markets into on-demand, flexible talent pools. Even though several Fortune 500 companies-including Microsoft, Samsung, and General Electric-embraced digital labor solutions, enterprise adoption lagged far behind smaller businesses and startups. Despite the promising potential benefits, concerns persisted about navigating labor regulations, ensuring appropriate vetting, and guaranteeing the quality of work. Sarah Tang, the newly appointed Vice President of Enterprise at Freelancer, Ltd., took on the challenge of crafting the growth strategy, operations, and sales of Freelancer's services to Fortune 500 companies. What it would take to convince more enterprises of the potential of on-demand freelance labor that could help them hire skilled freelancers in volume or in multiple countries simultaneously? What did the future hold for open work practices between enterprises and digital labor markets?
Keywords: Freelancers; Labor Markets; Internet and the Web; Digital Platforms; Corporate Entrepreneurship; Human Capital; Change Management; Globalized Firms and Management; Employment; Global Range; Employment Industry
Citation
Educators
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Stanton, Christopher, Karim R. Lakhani, Jin Hyun Paik, and Nina Cohodes. "Freelancer, Ltd." Harvard Business School Multimedia/Video Case 823-706, December 2022.
More Publications

Faculty

Geoffrey G. Jones
Christopher A. Bartlett
Tarun Khanna
John A. Quelch
Lynn S. Paine
Ray A. Goldberg
Louis T. Wells
Rosabeth M. Kanter
Michael Y. Yoshino
Michael E. Porter
Laura Alfaro
Rawi E. Abdelal
→See All

HBS Working Knowlege

    • 17 Aug 2020

    Of Learning and Forgetting: Centrism, Populism, and the Legitimacy Crisis of Globalization

    Re: Rawi E. Abdelal
    • 23 Jun 2020

    Dignity, Inequality, and the Populist Backlash: Lessons from America and Europe for a Sustainable Globalization

    Re: Rawi E. Abdelal
    • 16 Apr 2020

    Has COVID-19 Broken the Global Value Chain?

    Re: Laura Alfaro
→More Articles

Harvard Business Publishing

    • August 29, 2017
    • Article

    How to Successfully Work Across Countries, Languages, and Cultures

    By: Tsedal Neeley
    • February 2023 (Revised May 2023)
    • Case

    Accelerating the Accelerator: Raja Al Mazrouei at DIFC Fintech Hive

    By: Linda A. Hill, Emily Tedards and Lydia Begag
→More Harvard Business Publishing
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