Managing local practices in global contexts
Managing local practices in global contexts

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Managing local practices in global contexts

2 The dimensions of globalisation

2.1 Introduction

Globalisation is used in different contexts to mean quite different things. According to the prestigious Economist magazine's Pocket Strategy: The Essentials of Business Strategy from A to Z, globalisation is: ‘The marketing of uniform products around the globe, based on an idea put forward by Harvard's Theodore Levitt in an article published in the Harvard Business Review in 1983’ (The Economist Books, 1998, p. 88). In his article ‘The globalization of markets’, Levitt (1983) argued that companies must learn to operate as if the world were one large market. For Levitt, the founder of the Ford Motor Company, Henry Ford, had been vindicated in his idea that customers could have any car painted in any colour that they wanted, so long as it was black. Successful companies should not waste time and money trying to meet local tastes, but had to accept the inevitable and opt for standardised products.

In an increasingly interconnected world, globalisation internationalises the interests of powerful corporations – moving capital, technology and management practices across national borders – reshaping the nature and basis of interaction among nation states. However, the legacy of ethnic and religious struggles, colonial conquests and empires, armed conflicts, movements of people and many other historical factors mean that some nations are ‘closer’, in terms of their culture, than others – the impact of globalisation is far from uniform. Moreover, the alignment of cultural factors (such as shared religious beliefs) among people in different nations might link them in ways that overlap, and possibly surpass, different national identities. In terms of managing knowledge, the complexities of interconnectedness have considerable implications for effective transglobal communication and the capacity to achieve a difference – the practice of power – in different local contexts.

At the intergovernmental level, bodies such as the United Nations face new challenges, for example, as the global dimensions of the US ‘war on terror’ transcend established rules of practice. Today, globalisation means worldwide integration in virtually every sphere (Parker, 2003, p. 234). Goran Therborn defines globalisation as 'tendencies to a worldwide reach, impact, or connectedness of social phenomena or to a world-encompassing awareness among social actors’ (Therborn, 2000, p. 154, original emphasis). Similar sentiments are evident in Frank Lechner's definition, cited by George Ritzer, which proposes that globalisation is: ‘the worldwide diffusion of practices, expansion of relations across continents, organization of social life on a global scale, and growth of a shared global consciousness’ (Ritzer, 2004, p. 160).

According to the winner of the 2001 Nobel Prize for Economics, Joseph Stiglitz, who has also been a Senior Vice President of the World Bank and Chairman of President Clinton's Council of Economic Advisers, globalisation is ‘the closer integration of the countries and peoples of the world which has been brought about by the enormous reduction of costs of transportation and communication, and the breaking down of artificial barriers to the flows of goods, services, capital, knowledge, and (to a lesser extent) people across borders’ (Stiglitz, 2002, p. 9). Stiglitz (2002, p. 20) argues that, in itself, globalisation is neither good nor bad – for countries in East Asia, such as Japan, that have embraced globalisation on their own terms and at their own pace, it has brought enormous benefits; for many others, it seems closer to an unmitigated disaster. For example, liberalisation policies, designed to facilitate the free movement of capital, created circumstances in which a speculative attack on the Thai currency (the baht) spread quickly to undermine confidence in all the convertible Southeast Asian currencies (that is, currencies that can be quickly and easily bought and sold using other currencies).

The liberalisation of capital markets makes it possible for international investors to move their money from one country to another with the click of a mouse, but the sudden withdrawal of funds from one country – so-called ‘capital flight’ – can undermine confidence in the local banking system and paralyse economic activity. Mindful of these dangers, the world's two largest developing economies – China and India – have resisted pressures to introduce convertible currencies. For Stiglitz (2002, p. 125), ‘It is no accident that… [w]hile developing world countries with liberalized capital markets actually saw their incomes decline, India grew at a rate in excess of 5 percent and China at close to 8 percent.’ Testimony to the importance of a nation's local knowledge about local practice might be taken from the case of South Korea, which is one of the nations that suffered as a result of the 1997 Southeast Asian currency crisis but ignored ‘universal’ solutions proposed by the International Monetary Fund (opting to recapitalise its largest banks instead of closing them down) – and, according to Stiglitz (2002, p. 17), this is part of the reason why South Korea recovered relatively quickly.


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