Globalization

Globalization is a featured research topic and an initiative at Harvard Business School.
 
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.

Featured Works

 

  1. Case | HBS Case Collection | September 2019

    Port Competition in the Pearl River Delta

    Willy Shih

    This case examines the competition between ports and port operators in the Pearl River Delta over the last four decades. The cities surrounding the Pearl River estuary are the "workshop of the world," and the development of manufacturing in the region was heavily dependent on efficient container shipping. As China has opened up and drawn more direct trade traffic to Shenzhen and Guangzhou ports, the operators in Hong Kong have had to adapt. More change is afoot, and Hong Kong may have to reinvent itself again.

    Keywords: globalization; trade links; global business; supply chain; Logistics; Globalization; Trade; Logistics; Asia; Hong Kong; China;

    Citation:

    Shih, Willy. "Port Competition in the Pearl River Delta." Harvard Business School Case 620-038, September 2019.  View Details
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  2. Case | HBS Case Collection | August 2019

    Huawei and the U.S.-China Trade War

    E. Ofek and John Masko

    In 2019, Chinese smartphone maker and telecommunications empire Huawei was preparing to launch its new flagship smartphone series, the Mate 30. After years of explosive growth, the previous 18 months had been a challenge for the company. In early 2018, Huawei’s planned smartphone launch in the U.S. had failed due to pressure from regulators who cited concerns about the company facilitating Chinese spying. Over the following months, a trade war between the U.S. and China had broken out, with Huawei at its epicenter. By mid-2019, after months of U.S. pressure and restrictions, Huawei found its supply chain for computer parts and software under siege and several governments around the world threatened to ban its 5G network equipment from their countries. In this unpredictable climate, Huawei founder Ren Zhengfei and his management team had to figure out not only how to successfully launch Mate 30 phones in the upcoming fall, but how to ensure the company’s long term viability.

    Keywords: Trade; Global Strategy; International Relations; National Security; Mobile Technology; Hardware; Volatility; Adaptation; Telecommunications Industry; China; United States; European Union;

    Citation:

    Ofek, E., and John Masko. "Huawei and the U.S.-China Trade War." Harvard Business School Case 520-017, August 2019.  View Details
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  3. Case | HBS Case Collection | August 2019

    Lemonade: Disrupting Insurance with Instant Everything, Killer Prices, and a Big Heart

    Elie Ofek and Danielle Golan

    Launching its first products in the fall of 2016 in New York, insurtech startup Lemonade was on a mission to disrupt the insurance market by using AI and behavioral economics principles. The company offered renters, homeowners and condo insurance and mainly targeted millennial, tech-savvy individuals with relatively few assets— customers who were less attractive to traditional insurers who had costly, labor-intensive, operations. By offering a delightful, bot-driven consumer experience, embracing a model that removed any incentive to deny claims and that let customers pick causes to donate leftover money to, building a loveable brand, and employing creative digital advertising – the company was able to grow at an impressive pace. By the end of 2018, Lemonade was active in 24 U.S. states, had insured 425,000 customers and was expecting sales (gross premiums) of over $57 million.
    In an effort to sustain the spectacular growth momentum, the co-founders sought to pursue ambitious plans in 2019, including the launch of new insurance product lines as well as international expansion. But limited resources and scarce management bandwidth suggested that taking on both moves simultaneously could be highly risky. In deciding which path to take, the leadership team had to consider whether it was more important at this stage to scale globally with the current product lineup or to cover a breadth of insurance categories and stay in the U.S. for now. Assessing the relevance of the business model and the role of AI for each of these moves, understanding the nature of consumers in different markets, and foreseeing competitive pressures from both incumbents and startups were key in making the right call.

    Keywords: Business Startups; Insurance; Technological Innovation; Business Model; Disruption; Brands and Branding; Growth and Development Strategy; Global Strategy; Decision Making; Insurance Industry; Technology Industry;

    Citation:

    Ofek, Elie, and Danielle Golan. "Lemonade: Disrupting Insurance with Instant Everything, Killer Prices, and a Big Heart." Harvard Business School Case 520-020, August 2019.  View Details
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  4. Chapter | The Routledge Companion to the Makers of Global Business | 2019

    Origins and Development of Global Business

    G. Jones

    This chapter explores how business enterprises have been powerful actors in the spread of global capitalism between 1840 and the present day. Emerging out of the industrialized Western economies, global firms created and co-created markets and ecosystems through their ability to transfer a package of financial, organizational, and cultural assets, skills, and ideologies across national borders. They have been major drivers of trade growth, which they often organized within their own boundaries. They have been shapers of, as well as responders to, globalization waves. They were also actors in periodic de-globalization waves, mainly because they functioned as reinforcers of gaps in wealth and income rather than disrupters of them. They were disappointing institutions for knowledge and technology transfer. In recent decades, the domination of global markets by Western and Japanese firms have shifted to a situation in which they competed as equals with firms based in China, India, the Arab Gulf, and elsewhere in the non-Western world. This trend is likely to accelerate as the growing fragility of institutional structures in the United States and the European Union further weakens the competitiveness of firms based in those regions.

    Keywords: global business; multinational; Globalization; Business History; Strategy; Africa; Asia; Europe; Latin America; Middle East; North and Central America; Oceania;

    Citation:

    Jones, G. "Origins and Development of Global Business." Chap. 2 in The Routledge Companion to the Makers of Global Business, edited by Teresa da Silva Lopes, Christina Lubinski, and Heidi J.S. Tworek, 17–34. New York: Routledge, 2019.  View Details
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  5. Chapter | The Routledge Companion to the Makers of Global Business | 2019

    The Great Divergence and the Great Convergence

    G. Jones

    This chapter provides a new lens to the extensive debate among economists and economic historians concerning why the West grew rich and the rest of the world lagged behind as modern industrialization took hold in the 19th century. The literature has focused heavily on quantitative research on comparative income levels, especially GDP per capita and real wage levels as well as on broad brush explanations related to institutions, culture, and human capital development. This chapter argues that there needs to be closer engagement with the processes of how such factors translated into generating productive entrepreneurs and business enterprises. It explores in particular why the development of modern business enterprises in Africa, Asia, and Latin America lagged; how they started to emerge more successfully in the interwar years only to be set back by failed government policies after World War II; and how the second global economy from the 1980s provided many more opportunities for firms outside the West to catch-up with innovation and competitiveness.

    Keywords: Globalization; Growth and Development; History; Africa; Asia; Europe; Latin America; Middle East; North and Central America; Oceania;

    Citation:

    Jones, G. "The Great Divergence and the Great Convergence." Chap. 37 in The Routledge Companion to the Makers of Global Business, edited by Teresa da Silva Lopes, Christina Lubinski, and Heidi J.S. Tworek, 578–592. New York: Routledge, 2019.  View Details
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  6. Case | HBS Case Collection | July 2019

    Acelerex

    John R. Wells and Benjamin Weinstock

    In early 2019, Randell Johnson, Founder and Chief Executive of Acelerex, was reflecting on the company’s first year of rapid growth and the challenges of scaling the business that lay ahead. Acelerex was riding the waves of change taking place in electrical power grids as battery storage was introduced and more renewable energy was integrated into the systems. These changes opened up opportunities for a whole range of software and support services. Headquartered in Boston, Massachusetts, at the Cambridge Innovation Center (CIC), Acelerex was leveraging technologies, such as big data and grid analytics, Artificial Intelligence (AI) forecasting tools, cloud computing, real time control systems, energy storage testing software, monitoring, and blockchain smart contracts, to provide consulting expertise and software-as-a-service (SaaS) products to a diverse group of stakeholders, including state and municipal policymakers, regulators, grid developers, utilities, and investors. Demand for Acelerex’s services had outstripped supply, and, within a year, the company had grown to 14 professionals, with advanced degrees in multiple technical domains. Moreover, the company had made a profit in its first year, had achieved proof of concept and minimum viable products for all of its targeted services, and made sales along all business lines. But, cash flow had been a constant challenge because of slow-paying clients and rising fixed costs, while talent development had proved a “headache.”
    Acelerex was Johnson’s first start-up after 25 years of experience working with major firms and research institutions across all segments of the power sector, including generation, transmission, distribution, consumption, and storage. Having doubled in size for four quarters, he had set himself the challenge of doubling in size again, but he was going to take a year to do it. He was confident there was enough business in the USA to support this rate of expansion and that he could hire the team to deliver it, but was uncertain whether he should raise funds to resolve the cash flow pressure. He was also being asked to do more and more work in China, India, and Africa; did this make sense? And to add to his list of opportunities, he had been asked to provide similar services to transport, natural gas, and water networks. As the company’s website claimed, it was “an era of many options” for Acelerex. After a year of 7-day weeks and 150 nights away from home, Johnson considered his next steps.

    Keywords: Energy; Energy Sources; Growth Management; Expansion; Global Strategy; Cash Flow; Energy Industry; Web Services Industry; Consulting Industry;

    Citation:

    Wells, John R., and Benjamin Weinstock. "Acelerex." Harvard Business School Case 720-360, July 2019.  View Details
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  7. Working Paper | HBS Working Paper Series | 2019

    Varieties of Outward Chinese Capital: Domestic Politics Status and Globalization of Chinese Firms

    Meg Rithmire

    Recent focus on China’s surging outward investment has overlooked a puzzling fact about China’s policy regime governing outward investment: rather than increasing liberalization and enhancing domestic “push” factors, China’s policy toward outward investment has been ambivalent and vacillating, pushing large-scale internationalization while also embracing strict capital controls. This paper accounts for China’s ambivalent policy moves by focusing on the domestic coalitions that sustain capital openness. I show how three types of domestic Chinese capital—state capital (SOEs), private capital (SMEs and large competitive firms), and crony capital (firms who enjoy access to profits based non-market rather than market advantages)—differ in political vulnerability and therefore pursue globalization in different ways. While all prefer capital openness, they do so for different reasons: state capital uses preferential access to domestic credit to expand internationally for political power and prestige in addition to profits; private capital, in keeping with the theoretical expectations of the international business literature, seeks markets and/or efficiency; and crony capital seeks to transform domestic access into international safety as quickly as possible. China’s policy ambivalence can largely be explained as the party-state’s attempts to discipline or empower these groups.

    Keywords: outward investment; capital controls; Investment; Global Range; Capital; Globalization; Policy; Government and Politics; China;

    Citation:

    Rithmire, Meg. "Varieties of Outward Chinese Capital: Domestic Politics Status and Globalization of Chinese Firms." Harvard Business School Working Paper, No. 20-009, June 2019.  View Details
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  8. Case | HBS Case Collection | April 2019

    Coup or Crime? The Case of Carlos Ghosn

    Aiyesha Dey, Jonas Heese and Puneet Brar

    This case explores the interplay of global corporations, management styles, and local traditions through the high profile arrest of auto industry icon, Carlos Ghosn, in November 2018. The case allows students to debate opposing theories that led to the arrest and examines several key themes, such as leadership challenges in an increasingly global market, role of culture, and the design and role of incentive and governance mechanisms. The case also allows for discussions on personal accountability in light of misbehavior.

    Keywords: Management Style; Globalized Markets and Industries; Problems and Challenges; Ethics; Governance Controls;

    Citation:

    Dey, Aiyesha, Jonas Heese, and Puneet Brar. "Coup or Crime? The Case of Carlos Ghosn." Harvard Business School Case 119-096, April 2019.  View Details
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  9. Chapter | The Oxford Handbook of Structural Transformation | 2019

    Location Fundamentals, Agglomeration Economies, and the Geography of Multinational Firms

    Laura Alfaro and Maggie Xiaoyang Chen

    Multinationals exhibit distinct agglomeration patterns, which have transformed the global landscape of industrial production (Alfaro and Chen, 2014). Using a unique worldwide plant-level dataset that reports detailed location, ownership, and operation information for plants in over 100 countries, we construct a spatially continuous index of pairwise-industry agglomeration and investigate the patterns and determinants underlying the global economic geography of multinational firms. In particular, we run a horserace between two distinct economic forces: location fundamentals and agglomeration economies. We find that location fundamentals, including market access and comparative advantage, and agglomeration economies, including capital-good market externality and technology diffusion, play a particularly important role in multinationals' economic geography. These findings remain robust when we use alternative measures of trade costs, address potential reverse causality, and explore regional patterns.

    Keywords: multinational firm; economic geography; agglomeration; location fundamentals; agglomeration economies; Multinational Firms and Management; Geographic Location; Industry Clusters; Economics;

    Citation:

    Alfaro, Laura, and Maggie Xiaoyang Chen. "Location Fundamentals, Agglomeration Economies, and the Geography of Multinational Firms." Chap. 10 in The Oxford Handbook of Structural Transformation, edited by Célestin Monga and Justin Yifu Lin. Oxford University Press, 2019.  View Details
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  10. Article | Journal of Political Economy | April 2019

    Internalizing Global Value Chains: A Firm-Level Analysis

    Laura Alfaro, Pol Antràs, Davin Chor and Paola Conconi

    In recent decades, advances in information and communication technology and falling trade barriers have led firms to retain within their boundaries and in their domestic economies only a subset of their production stages. A key decision facing firms worldwide is the extent of control to exert over the different segments of their production processes. We describe a property-rights model of firm boundary choices along the value chain that generalizes Antràs and Chor (2013). To assess the evidence, we construct firm-level measures of the upstreamness of integrated and non-integrated inputs by combining information on the production activities of firms operating in more than 100 countries with input-output tables. In line with the model's predictions, we find that whether a firm integrates upstream or downstream suppliers depends crucially on the elasticity of demand for its final product. Moreover, a firm's propensity to integrate a given stage of the value chain is shaped by the relative contractibility of the stages located upstream versus downstream from that stage, as well as by the firm's productivity. Our results suggest that contractual frictions play an important role in shaping the integration choices of firms around the world.

    Keywords: Global value chains; Sequential production; Incomplete Contracts; Demand and Consumers; Customer Value and Value Chain; Globalization;

    Citation:

    Alfaro, Laura, Pol Antràs, Davin Chor, and Paola Conconi. "Internalizing Global Value Chains: A Firm-Level Analysis." Journal of Political Economy 127, no. 2 (April 2019): 508–559. (See Online Appendix. Replications files available here. Also NBER Working Paper 21582.)  View Details
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Initiatives & Projects

  • Global

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

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HBS Working Knowledge

Pic
re Geoffrey G. Jones
Geoffrey Jones discusses the overthrow of President Jacobo Arbenz of Guatemala in 1954 in a US-backed coup supporting United Fruit Company and a key landmark in the history of globalization.
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re William R. Kerr
High-skilled workers in today’s knowledge-based economy are arguably the most important resource to the success of businesses, regions, and industries. This chapter pulls from Kerr’s book The Gift of
PicPic
re Geoffrey G. Jones and Tarun Khanna
Geoffrey G. Jones reports on a business history conference studying the many shades of capitalism around the world and through time.

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Harvard Business Publishing

Article
by Paul M. Healy and Karthik Ramanna
Case
by Elie Ofek and Danielle Golan

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