John Kay, visiting professor of economics at LBS and head of London Economics, finds evidence in support of his view that corporate thinking and organisation have yet to transcend national boundaries.
World Class: Thriving Locally in the Global Economy
By Rosabeth Moss Kantor
Simon & Schuster; 384pp; £17.99
In the 1980s, American business discovered the rest of the world. The US ran a large trade deficit. The rise in imports cost many American workers their jobs. The deficit was funded by capital inflows which led to direct foreign investment in the US and to the acquisition of many American businesses by foreign companies, particularly those from Britain and Japan.
How American communities are responding to this influx is the subject of Professor Moss Kantor's book. It is based - as with all her previous work - on careful observations of what the changes mean for the individuals concerned.
The book, in short, is much better than the title or the publishers' blurb would suggest. Both imply another hype of the imminent borderless economy in which the 'world class' flit readily from Tokyo to Dayton, Ohio to Lyon. (The title of the book is a word play on the phrase's dual meaning as measure of quality and description of managerial cadre).
Yet the true substance of the book is a sober perspective on how superficial is the impact of internationalisation on American life. For many of Moss Kantor's interviewees, integration into the world economy has not gone much beyond the discovery that foreigners are not an alien species, and sometimes not as far as that: 'We're building a new Kroger's supermarket with Japanese signs, because Honda was coming,' (p187).
We are asked to note the changes in small American communities, 'The internationals bring in other ideas and customers. There's always a German night, or a Greek night - delightful events. People understand that there is life outside of Spartanburg County, South Carolina. Stores stock a greater range of items that they attribute to Europe, such as cheeses and sausages,' (p275).
This pursuit of cosmopolitanism extends to the author herself. Her literary range encompasses the Irish poet William Butler Yeats' assertion that 'the center (sic) cannot hold'. Perhaps it is churlish to point out that the context runs, 'Things fall apart: the centre cannot hold. Mere anarchy is loosed upon the world,' and that in penning these lines it is unlikely that Yeats was, as she suggests, anticipating the decision by Universal Studios to move some of its production facilities from Hollywood to Orlando, Florida (p46).
Almost every page displays this tension between the rhetoric of globalisation and the reality of substantial cultural differences. Take the group of corporations which supposedly dominate the 'global cultural bazaar' for information and entertainment (p72).
There are six companies: Sony, Bertelsmann, Philips, Time-Warner, Matsushita and Disney. It is quite an instructive list.
The first point to note is that no one would have any hesitation in identifying Time-Warner and Disney as US corporations, Sony and Matsushita as Japanese, Philips as Dutch and Bertelsmann as German. Their head offices are in these countries and most of their senior executives have that nationality. Despite predictions for decades that corporate organisation was beginning to transcend national boundaries, it mostly does not. To the two long-standing Anglo-Dutch enterprises of Unilever and Shell one can perhaps add the Swiss-Swedish ABB as a multi-national with dual homes, but even these are country pairings which minimise cultural differences. Perhaps the most truly trans-national corporations are the European operations of some American companies - sufficiently separate to downplay their US ownership, but not attached to any particular alternative European line.
Three of the companies on that list are mainly producers of hardware, three of software. None of the hardware manufacturers (Sony, Philips and Matsushita) are American, two of the three software firms (Disney and Time-Warner) are. The third, Bertelsmann pursues a very different strategy. Pocahontas is the same everywhere, and although Time is not it might as well be. But Bertelsmann is many different local products, and few consumers would recognise the Bertelsmann name. When Sony and Matsushita decided to diversify into software, they did so by buying American businesses.
The products in the 'global cultural bazaar' are either local or American, and what non-American firms do is either provide the local content or build the cash registers. If we mistake American hegemony in mass entertainment or Japanese dominance in consumer electronics for the disappearance of national boundaries in business, we misunderstand the nature of the phenomenon we see.
It is, perhaps, too easy to laugh at the naivete of small town America, or indeed of much American business writing. There is, nevertheless, an important issue. Most Americans still have little knowledge or perception of life elsewhere; my favourite internationalisation anecdote is of a corporation's newly appointed director of global operations who only learnt on the way to the airport that a passport is needed to leave the US. One of Europe's advantages is a more mature understanding of multinationalism; and an appreciation of the complexities of international integration.
The next lines of Yeats' poem are: 'the best are in confusion, while the worst are full of passionate intensity'. Perhaps he was thinking about modern business after all.
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4 Competing for the Future
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