International Business in an Era of Anti-Globalization

Klaus E. Meyer

China Europe International Business School

This version: March 18, 2017

Forthcoming in: Multinational Business Review

Abstract: The apparent onset of an era of anti-globalization provides significant

challenges for international business scholars. In this essay, I identify and analyze two
sets of concerns of the anti-globalization movement: the unequal distribution of the
benefits of globalization and emergent constraints on national sovereignty. On that
basis offer some suggestions how international business scholars may contribute to
addressing these challenges through research, teaching and public engagement.

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 International Business in an Era of Anti-Globalization

“Some aspects of globalization are continuously advancing – notably transport and

communication technology. Other aspects – notably politics – are more like a pendulum
swinging back and forth. Thus, the world economy may best be described as a
combination of continuous technological advance and pendulum swings in government
policies, resulting waves of globalization.” (Peng & Meyer, 2011: 21).1

Globalization has been driving the international business (IB) research agenda for the
past three decades. As a “process leading to greater interdependence and mutual
awareness (reflexivity) among economic, political and social units in the world, and
among actors in general” (Guillén, 2001), it created an unprecedented depth of
interactions across nations and cultures, and opportunities for personal and business
development on the global stage.

However, since the onset of the financial crisis in 2008, a broad movement has
gathered pace aiming to slow or even partially reverse economic globalization. This
“anti-globalization” movement is evident in the gradual increase in protective measures
by national governments (Bremmer, 2014). For example, the share of national
investment policy changes that are primarily of a restrictive nature increased from 2% in
2001 to a peak of 28% during the financial crisis in 2011 before declining again to 14% in
2015 (UNCTAD, 2016). It is also evident in the rise of electoral support for political
parties and candidates with nationalist or protectionist agendas in many countries
around the world. Behind these political changes is a social movement around the world
that brings together people who perceive themselves, subjectively or objectively, as
deprived due to the existing, economic, institutional or political structures associated
with globalization.

Some indicators of global economic integration, such as the share of trade in World
GDP and the volume of international mergers and acquisitions, have dipped during the

1
This quote is identical in the 1st edition (2011: p.21) and the 2nd edition (2016: p.18) of the Peng &
Meyer textbook.

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global financial crisis, or afterwards, though it remains to be seen if these are temporary
set-backs or permanent trend reversals. In this essay, I explore the challenges of the
anti-globalization era for IB scholarship. Specifically, I argue that IB scholars need to
engage in both research and teaching with the economic causes and institutional
arrangements that stir-up the anti-globalization movement. In the spirit of John
Dunning’s (2004) book “Making Globalization Good”, IB scholars ought to help develop
solutions to the negative side effects of globalization to help people around the world to
benefit from globalization. To set the stage, I first put contemporary globalization in a
historical context, and then review some of the economic welfare and national
sovereignty arguments driving the anti-globalization movement. On this basis, I share
my views on the role of IB scholarship in this era.

1. A Historical Perspective

Globalization is like a pendulum. Popular debates and even scholarly debates often
depict globalization as an inevitable trend driven by technological progress.2 Yet, the
history of the past 2000 years has shown the opposite. Globalization comes and goes,
empires rise and fall, and trading relationships flourish and collapse. International trade
and investment prosper when the political conditions are at least moderately stable and
supportive. Yet, human history is full of conflicts that ended making virtually everyone
economically worse off. Technology advances, but international trade and investment
also depend on institutional frameworks, and their evolution has been erratic
throughout history. Thus, Geoff Jones’ (2004) image of ‘waves of globalization’ is a very
astute description of the world economy.

2
Even some IB textbooks represent globalization as unidirectional trend, for instance, Hill (2015, p. 4)
writes: “Over the past three decades a fundamental shift has been occurring in the world economy. We
have been moving away from a world in which national economies were relatively self-contained entities,
isolated from each other by barriers to crossborder trade and investment; by distance, time zones, and
language; and by national differences in government regulation, culture, and business systems. We are
moving toward a world in which barriers to cross-border trade and investment are declining, perceived
distance is shrinking due to advances in transportation and telecommunication technology; material
culture is starting to look similar the world over; and national economies are merging into an
interdependent, integrated global economic system. The process by which this transformation is occurring
is commonly referred to as globalization.”

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 Two thousand years ago, the Roman Empire established a legal structure and a
common currency and built roads and ports that created a foundation for flourishing
international trade across the Mediterranean region, and beyond. When the Roman
Empire collapsed due to internal political divisions, the infrastructure broke down and
with it the trade relationships. In the European Middle Ages, the Hanseatic League, an
association of free cities, created a trading network around the Baltic Sea with outpost
as far as Novgorod in modern day Russia to London in England. The Hanseatic League
established common rules for merchants in all member cities, and thus overcame the
fragmented political landscape of the time. After three centuries of prosperity, it
eventually declined due to internal disputes and external threats with the rise of
territorial states in Sweden and Russia.

In the 14th century, Chinese merchants were trading across the Southern Seas
and Admiral Zheng He established trade contacts as far as East Africa (Lavathes, 1994).
Yet, this period of globalization in East Asia came to an end when a new emperor rose to
power and the anti-globalization lobby at court gained the upper hand, radically
outlawing international travel and trade. In fact, they destroyed most historical evidence
such as maps of Chinese merchants’ shipping and trading routes (Brook, 2013). Later,
Dutch and Portuguese traders build their networks in Asia, followed in the 17th century
by the British East Indian Company, arguably the first global multinational enterprise,
which laid the foundation for the British colonial empire.

Innovations in communication and transportation technology were key enablers

in each of these waves of globalization, but at least as important were changes in the
legal framework (Jones, 2005; Kenwood & Longhead, 1999). Note that China, despite
being having developed more advanced technology than Europe in the 17th century
failed to industrialize or sustain an international trade network (Needham, 1969),
presumably because the political and social structure of Chinese society did not support
the development of the merchant class. European nations developed formal and
informal institutions that provided a foundation for new forms of organization and

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contracting, and thereby enabled international trade and investment. For example, the
limited liability company enabled pooling of capital in larger companies, and patent
protection encouraged entrepreneurs to innovate. Moreover, the gold standard
adopted by many countries provided stable exchange rates that facilitated transactions
across countries.

At the onset of the 20th century, the world economy was highly integrated globally.
Capital and goods moved quite freely around the world, with geographic distance being
the main obstacle to close coordination. Multinational enterprises played a major role
connecting Europe with its colonies and other trading partners. For example, global FDI-
stock as a ratio of global GDP reached 9% in 1913, a level only achieved again in 1990
(Baldwin & Martin, 1999; Jones, 2005). However, the benefits of globalization were
distributed unequally, creating wealth primarily in Europe and North America.

The 19th century wave of globalization came to an end with World War I, and with
extensive protectionism in the 1920s. Many countries raised tariffs to record levels, and
created quotas and other trade barriers to protect their domestic industries.
Restrictions on foreign ownership and exchange controls inhibited foreign direct
investment. Restrictions on travel such as visa and work permit requirements reduced
the mobility of people. For example, US annual immigration fell from 1.16% of the
population in 1913 to 0.04% after the war. The stable exchange rate system broke down
when Britain abandoned the gold standard in 1931, starting a period of competitive
devaluations, commonly known as ‘beggar thy neighbour’ policies. In consequence,
international trade declined during World War I, recovered moderately in the early
1920s, and collapsed again by the end of the decade, accelerating the economic
downward spiral triggered by the financial crisis of 1928.
The economic crisis caused widespread economic hardship and unemployment
across the industrialized world, which led to widespread opposition to the existing
economic and political order. People expressed their frustration by voting for
protectionist and nationalist parties, most consequentially in Germany. Nationalist
governments could generate a temporary debt-financed recovery that created

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employment, but destroyed the institutional foundations for international trade, and
eventually for world peace.
2. Economics of Contemporary Anti-Globalization

At the outset of the 21st century, globalization had achieved higher degrees of
integration than ever before in human history due to both technological innovations
and collaborative efforts between nation states – often led by political leaders
determined not to repeat the experience of the 1930s. For example, the worldwide
FDI/GDP ratio increased from 9.6% in 1990 to 30.9% in 2007, and, after a temporary
setback during the global financial crisis, to 33.6% in 2015 (UNTAD 2016, Annex Table 7).

Economic data and analysis show that globalization has been a major source of
economic growth and prosperity (e.g. Bhagwati, 2004; Melitz & Trefler, 2012; Rajan &
Zingales, 2003; Wolf 2004). In particular, international trade allows greater
specialization of national economies and pooling resources across nations, which
increases productivity and economic growth. Thereby international trade can make
people around the world are better off on average. But that average hides the unequal
nature of the gains from globalization. The common person (i.e. most people outside of
university economics departments) doesn’t care whether the GDP is up or down, but
care about how much money they take home, how their local community is faring, and
whether their children have a prospect of a better future.

Economic models of international trade demonstrate the gains for all participating
nations based on the notion of comparative advantage. However, already in the 1940s,
Wolfgang Stolper and Paul Samuelson (1941) had shown that under realistic
assumptions, international trade will make some people worse off, even in the longer
run. The economic argument for free trade thus rests on the assumption that
compensation is paid from the winners to the (relative) losers.

In advanced economies, the relative losers likely fall in two categories. First, many
people develop specialized skills that are not transferable across sectors of industry.
When entire industries or professions decline because changing comparative
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advantages and/or trade barriers make them uncompetitive, then some of these people
may not be able to acquire new skills that enable them to earn similar incomes as
before (a special concern for older workers). Second, low skilled workers in advanced
economies appear to lose out. The income of the highest skilled and geographically
mobile people has been rising relative to the low skilled – in part because of
technological change, and in part because of global trade. For example, Timmer and
coauthors (2014) analyze the value chain of cars ‘made in Germany’, and find that from
1995 to 2008 the value added created in Germany declined, especially the contribution
by low skilled workers (from 7% to 4%) and medium skilled workers (34% to 25%). The
winners on the other hand were in emerging economies, specifically the owners of
capital (8% to 15%) and high skilled workers (3% to 6%).

The rise of income from capital relative to income from labour compounds concerns
about rising inequality within countries. Thomas Piketty (2014) famously argued that
these trends can be predicted to continue in the long run, and he received support from
prominent economists such as Robert Solow (2014).3 Both forms of inequality –
between wage earners of different skill levels and between labor and capital – appear to
have substantially increased in many countries since the onset of the global financial
crisis, according to latest data from the ILO (2016). In fact, in the US and UK in particular,
the mean income has been rising continuously faster than the median income for three
decades, indicating increasing inequality (Blanchard & Willman, 2017).

In theory, those who gain from trade liberalization (e.g. buyers of cheap imported
textiles) would pay a small compensation to those employed in the sector losing
comparative advantage (e.g. displaced textile workers). Hence, theoretically, fine-tuning
national regulations should ensure that everyone can benefit from globalization (see,
e.g. Bhagwati, 2004; Rajan & Zingales, 2003).

3 See also the debate on Piketty’s book in the Journal of Economic Literature between Acemoglu & Robinson (2015),

Jones (2015) and Piketty (2015).

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 Yet, in practice it is difficult to design policies that remedy the negative side effect of
free trade on people with industry-specific qualifications or with low skills. Thus,
economists like Joseph Stiglitz (2002; 2013), John Dunning (2004), Paul Krugman (2008)
or Dani Rodrik (2011) have been arguing for more than a decade that much more needs
to be done to address the distribution effects of free trade before advocating ‘free trade
for all’. Countries pursuing a free market driven ideology such as the USA and the UK
often did little to help these particular groups of people. Other countries, notably in
Europe, have built extensive social welfare systems, and/or training schemes for
manually skilled workers to address the issue. However, the welfare state itself can
create rigidities and inhibit entrepreneurship while high labor costs associated with an
extensive welfare state makes industries more vulnerable to international competition
(Snower, Brown & Merkl, 2009).

For many years, the side effects identified by Stolper and Samuelson (1941) were
believed to affect only a small minority of workers, who would eventually benefit
indirectly through accelerated economic growth (a free marketers’ view) or through
social welfare or retraining (a social democratic view). For example, Bhagwati,
Panagariya, and Srinivasan (2004) argue that the threat posed by Indian competition to
the US economy is small because relative to the entire US economy offshoring is too
small to matter much. Moreover, without low skill jobs, many people will invest in skills
and thus enhance their earnings potential. However, mounting evidence suggests that
patterns of trade have evolved, especially due to more fine-grained geographic
disaggregation of supply chains (Baldwin 2006; Krugman, 2008, Timmer et al. 2014). In
consequence, quite substantive groups of people may be net losers from free trade, and
they tend to be regionally concentrated. Even Paul Samuelson (2014) expressed
concerns that a loss of comparative advantage of some groups may make the US
economy worse off because those losing their job could not be adequately
compensated.

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 For example, a very comprehensive study by Autor, Dorn and Hanson (2013) in
the American Economic Review shows that import competition accounts significantly
contributed to the drop of manufacturing employment in the US (though technological
change also is important). More concerning, people losing their job do not move on to
other jobs, but local areas that traditionally specialized in industries where the USA lost
competitive advantage experienced larger drops in key indicators, including 4.5% larger
drop in the number of manufacturing employees, 0.8% larger drop in the employment
rate, 0.8% larger decline in weekly earnings, and 2-3% larger increases in unemployment
and other social indicators. While the USA has traditionally prided itself of its social
mobility, these workers appear to be not mobile in terms of skill profile or geography.
The consequence is regionally concentrated economic decline resulting in regional areas
of social instability and political disaffection (Autor, Dorn and Hanson, 2016, 2017a).

Overall, my reading of contemporary economic debates suggests that free

international trade retains its potential to do good for participating societies; yet there
are well founded concerns regarding the unequal benefits of international trade, and
the substantive adjustment costs for individual people, especially those with specific
and/or low skills. These concerns are not new but have been articulated by leading
economists, such as the Nobel Prize winners cited above (Paul Krugman, Jo Stiglitz, Paul
Samuelson, and Robert Solow). The challenge thus is for business leaders, policy makers
and scholars alike to develop solutions to better share the benefits of global trade.

3. National Sovereignty and Anti-Globalization

Beyond the economic effects of the benefits of free trade, the anti-globalization
movement has been fuelled by opposition to specific regulations that have been
introduced as part of multilateral or bilateral agreements aiming to promote free trade
and investment. A common theme is national sovereignty; do commitments in
international trade and investment agreements impose constraints on national policy
makers to regulate their country according to the preferences of their citizens, i.e. their
voters (Meyer & Rottig, 2016; Sauvant & Sachs, 2009; Rodrik, 2011)? At least four areas

9
of conflict have emerged between national and supra-national institutions: (1)
consumer protection, (2) environmental and social responsibility, (3) the shifting
bargaining power between MNEs and host governments, and (4) national security.

First, consumer protection especially in terms of health and safety is a common

motivation for trade barriers. For example, breeding practices for cattle, genetic
modification of foods, labelling requirements for food ingredients and chemical
treatment of meats are issues where views on what is ethical and what is safe differ
across societies, leading to different preferences for regulation, which in turn are
viewed as trade barriers by others. Multilateral agreements like the WTO or free trade
areas create rules or conflict resolution mechanisms on such issues. Yet, their rulings
may not be acceptable to consumers or other interests, creating potentially a sense of
lost national sovereignty with respect to issues that affect people very personally, i.e.
their health and safety. A particular concern in this context is that commitments in
international investment agreements (IIAs) may reduce the scope for new regulation in
response to evolving standards of ethics and scientific evidence because prohibitively
high compensation would have to be paid to businesses already engaged in activities no
longer considered legitimate (Coté, 2016; Satyanand, 2016).

Second, similar to health and safety, environmental and social responsibility standards
often conflict with the ideal of free trade. Developed countries tend to have
sophisticated standards regarding for example employment hours and environmental
emissions. The question then becomes, what standards should apply to the production
processes of imported goods? Relying solely on producing countries’ regulations (and
their potentially weak enforcement) undermines the competitiveness of industries of
countries aiming for higher standards. Imposing importing countries standards overseas
creates high barriers for producers not only due to direct cost but also due to complex
monitoring and documentation requirements. Exporting nations are bound to challenge
the legitimacy of rules designed abroad. Free trade agreements need to regulate such

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conflicting interests, but whichever rules is adopted, some will see it as an infringement
of their economic rights, or of their ability to secure social and environmental standards.

Third, globalization is associated with the rising power of MNEs relative to national
governments and other stakeholders (Giddens, 1999; Rodrik 2011). Two trends in
particular strengthen MNEs have increased their bargaining power. The first trend is
increased market concentration due to not only extensive mergers and acquisition, but
also the critical role of corporate controlled technology platforms for some industries.
The emergent oligopolistic market structures not only reduce choices for consumers,
but weaken the position of laborers vis-à-vis firms and thus accelerate inequality
concerns (Autor, Dorn, Katz, Patterson & van Reenen, 2017b). The second trend is the
widespread adopted of international investment agreements (IIAs), often within free
trade pacts, that enable MNEs to sue nation states in international courts of arbitrage if
they are disadvantages by legal changes (Johnson and Sachs 2016; Satyanand, 2016).
This power of the MNE vis-à-vis elected government is not necessarily due to
globalization as oligopolistic market structures (and hence dependence on a few large
businesses) are more likely in protected markets without important competition.
Whatever the cause, many consumers, workers and voters feel powerless and elected
politicians appear to have lost some of their power to shape the rules in their own
country (Vernon, 1971; Kobrin, 2001).

Fourth, free trade and investment in some sectors conflicts with national security
concerns. Traditionally, this relates to defense-related industries, where many countries
tightly restrict both exports and imports as well inward and outward FDI. However, in
recent years, the scope of what constitutes national security has been broadened in
many countries, not only in terms of technologies and industries but also in terms of the
range of perceived threats. For example, the Committee on Foreign Investment in the
United States (CFIUS) assesses inward investment projects with respect to three
potential threats: the possible leakage of technology in ways that may harm US national
interests, the ability of a foreign investor to delay, deny, or place conditions upon
provision of critical output from newly acquired facilities, and the possibility that foreign

11
investor might monitor, conduct surveillance, or place destructive malware within
systems or infrastructure critical to US economy or military (Moran, 2009). Thus, for
example, investment in infrastructure such as port and infrastructure or real estate near
military basis may trigger national security motivated intervention.

Confusingly for investors, the scope and content of national security related concerns
is defined differently in every country. According to an assessment of UNCTAD,
“significantly different entry conditions in different countries in respect of similar or
even the same economic activities ... while sector-specific foreign investment
restrictions are usually clearly defined and transparent, limitations based on national
security are often less predictable and may leave room for instances of investment
protectionism. ... No country that was surveyed had an exhaustive and clear-cut
definition of “national security” in the context of foreign investment” (UNCTAD, 2016:
page 94).

Overall, international trade and investment agreements force participating nations to

share some aspects of their regulatory regime, and hence of their national sovereignty.
Although the specific concerns usually affect only specific sectors, the complexity and
perceived lack of transparency generate substantive popular opposition to such
agreements.

4. The Political Power of the Anti-Globalisation Movement

The analysis suggests that globalization has some negative side effects on some
economic groups and on some aspects of national sovereignty. These concerns,
however, do not outweigh the potential benefits of globalization for societies at large.
They call for targeted intervention and modification of some of the rules of the global
economy, such as international investment agreements (IIAs). Yet, in recent years, we
have seen such a surge in support for protectionist and nationalist political parties and
leaders, such as Putin (Russia), Orbán (Hungary), Erdoğan (Turkey), Duterte (Philippines)
and Trump (USA), even when they (threaten to) dismantle democratic institutions such
as independent media and courts.
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 An analysis of the politics of nationalism is beyond the scope of this paper; political
scientists ought to study this at a deeper level. In my view, the rejection of the
established political order in several countries arises not from the previously discussed
economic-welfare and national-sovereignty concerns of globalization per se, but from
the fusion of these issues with other political issues that are primarily domestic in
nature. For example, grassroot organizations attack global institutions for benefitting
solely the elites, while (political) elites use global institutions as scapegoats for the
failings of their domestic policies.

For the purposes of this essay, it suffices to acknowledge that there is link between
the concerns about the impact of globalization, and political action around the world.
From this follows that the themes of the anti-globalization movement merit careful and
rigorous analysis.

5. Challenges for IB Scholars

Many IB scholars along with economists and mainstream management scholars have for
decades been highlighting the benefits of globalization, and hence made important
contributions to public debates. However, undifferentiated advocacy of globalization
and highlighting its benefits is not good enough. Many of us may have focused on
average benefits, and not paid sufficient attention to the relative losers, who (arguably)
are a minority but not a powerless minority. What is needed is a more differentiated
analysis of both benefits and costs to societies, and the development of both business
practices and government policies that generate benefits for all social groups. Ultimately,
IB scholars are well positioned to develop and promote what Dunning (2004) called
responsible global capitalism.

a. IB scholars as researchers
Many aspects of business and society in this era of anti-globalization ought to attract
research interest from IB scholars. First, the concept of anti-globalization ought to be
conceptually developed, both as a political phenomenon (i.e. describing a political
movement) and as an economic phenomenon (i.e. declining rates of international trade
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and investment). Presumably, the former drives the latter, though that is not entirely
clear as the global financial crisis in 2008 triggered a decline of some indicators of
economic integration ahead of a political backslash. More importantly, IB scholars ought
to engage with the antecedents and consequence of both aspects of anti-globalization.
Second, it remains important to further clarify the winners and losers of trade
and investment liberalization. A widely talked about series of studies by Autor, Dorn and
Hansen (2013, 2016, 2017a) shows empirical linkages between import competition from
China and the decline of regions in the US that used to be strong in the particular
industries. However, traditional manufacturing centers are also under pressure from
industry concentration and hence consolidation of production sites, and from
technological change including not only the rise of robot-based assembly but the digital
economy integrating and optimizing processes within and across plants (Industrie 4.0
Working Group, 2013). A sober assessment of the impact globalization ought to
separate these influences devise targeted policy responses.
Third, turning to firm-level perspectives, businesses face the question how their
strategies, such as offshoring, contribute to the positive and negative effects of
globalization on societies? Specifically, how can businesses manage such processes
while minimizing negative impact on relevant stakeholders such as workers with low or
industry-specific skills? In other words, how can workers who either lost their job or are
working in less value adding (and hence lower salary earning) jobs than before be
helped to benefit from globalization? Averages and total numbers do not help much in
identifying small but potentially influential groups that need to be brought on board to
make free trade socially supported. This research agenda ought to build on ongoing
work on responsible leadership, business ethics, and business and society.

Fourth, management research is predominantly taking top management

perspectives, for instance, analyzing how best to manage people, or analyzing the
careers of globally mobile human capital and of those who make it to top management.
We need more focus on explaining business phenomena from the perspective of people
with lower skill or ambition levels that will never make it top management. How do

14
business practices enhance not only their contribution to their employer, but their self-
esteem as a citizen? How do business practices impact on socially disadvantaged people,
say those unable to afford expensive education or skill upgrading?

Fifth, the debates over ‘varieties of capitalism’ or ‘business systems’ (Hall &
Soskice 2001; Redding, 2005; Judge, Fainshmidt, & Brown, 2014) need to continue.
There are many forms of capitalism that all have their merits, and that evolve gradually
without necessarily converging. Pertinent questions would be why some societies
benefit more from globalization than others, and why the anti-globalization movement
gathers more pace in some societies than in others.

Sixth, business researchers should help designing policy instruments that help
the disenfranchised to participate in the benefits of globalization both economically and
psychologically. Policy relevant work is often led by economists, which, while insightful,
can be reductionist in their understanding of human nature; business scholars with their
broader understanding of both businesses and of the people working in businesses have
complementary insights to offer. For example, I personally believe that the traditional
continental European apprenticeship system offers opportunities because it not only
generates a workforce that is the backbone of productivity in Germany, Switzerland and
neighboring countries, but it provides career perspectives for those who do not find the
intellectual pursuits of a university degree appealing. Initiatives in countries ranging
from China to the UK to adapt aspects of this system are encouraging.

b. IB scholars as educators
Many IB scholars are teaching MBA or EMBA students, and thus engaging with young
people who belong to, or aspire to, what I like to call the “global jet set”. Our students
likely are among the beneficiaries of globalization, if only because without globalization
they would not be able to pursue a degree abroad. Therefore, I believe that instilling in
future business leaders a sense of responsibility for the social impact of their business is
essential. Moreover, the global jetset needs to be aware that most people do not have

15
the same opportunities, and are not able to interact as smoothly with people from other
cultures as the typical MBA graduate. In other words, when we talk to the young elite,
they may not appreciate that cultural and other differences across countries are a big
issue for many people.

In terms of specific, first, I believe we need to integrate more business history in

our teaching. Textbooks tend to focus on economic models that are powerful analytical
tools for small changes in relatively stable systems. Alas, the real world is at times not
very stable. In the 1975 introduction to the third edition of his 1955 study 'The Great
Crash', John Galbraith wrote "As a protection against insanity, memory is far better than
law. When the memory of the 1929 disaster failed, law and regulation no longer sufficed.
For protecting people from cupidity of others and their own, history is highly utilitarian.
It sustains memory and memory serves the same purpose as the S.E.C. [securities
exchange commission] and, on the record, is far more effective". As emphasized by
Khanna and Jones (2007), historical experience contains rich insights relevant to
contemporary policy and scholarly debates. In this spirit, I would like to call on business
school worldwide to integrate ‘Business History' in their curricula!

Second, we need to analyze institutional frameworks in depth, not reducing it to

the simplifying abstract concepts popular in contemporary scholarly research. The
institution-based view has become a powerful theoretical perspective in international
business (Meyer & Peng, 2016). However, at high levels of abstraction, it easy to
overlook the unwelcome side-effects of proposed institutional change. To generate
insights useful for practice, we need to address specific institutions such as free trade
zones, international investors agreements (Sauvant & Sachs, 2009; Meyer & Rottig,
2016), or corporate tax regimes (Nebus 2016; Contractor 2016). An IB course thus
should do a deep dive into selected regulatory and policy debates.
Third, as noted in my historical introduction, one of the drivers of economic
integration is technology. Technological revolutions thus also impact on the mechanisms
of coordination across nations. We are likely experiencing a fourth industrial revolution,

16
which is widely predicted to bring about new forms of digital economy, data
management, and coordination of economic activity across firms and across national
boundaries (Industrie 4.0 Working Group 2013). For example, additive manufacturing
technologies (also known as 3D printing) create opportunities for reducing physical
flows of goods by printing close to customers (Laplume, Petersen & Pearce 2016). A
forward looking discussion of IB thus needs to incorporate technology trends in both
new and old economy businesses.
Finally, our students tend to be full of enthusiasm when it comes to bringing
together social concerns and business opportunities. We should help them to develop
solutions to the side effects of global business on disadvantaged groups in the societies
in which they operate, including for example former employees and their families. Many
young people are inspired to make the world a better place, and to make business more
socially responsible. Beyond employee welfare and environmental liabilities, they should
consider communities with historical ties to their industry.
c. IB scholars as publicly engaged citizens
We as IB scholars have more expertise than most commentators of global business
affairs – even if we probably are also more aware of the limitations to our
understanding. In the spirit of ‘Making Globalization Good’ (Dunning, 2004), I would like
to call on my colleagues to do a bit more. Everyone needs to find their own best channel,
be it active engagement in public debates through blogs, newspaper columns, TV
appearances, or behind the scenes involvement as policy advisor.
A key challenge is to balance clear messages and analytical rigor, and to reach
relevant audiences beyond our own classrooms. Based on the analysis above, I believe
that interventions preaching the benefits from globalization would not be helpful
because they are unlikely to reach critical audiences. Rather, some of the concerns
about globalization are legitimate, and merit careful consideration and incorporation in
both business practices and in regulatory frameworks.

6. A Personal Conclusion

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When I was a teenager, my generation of young Germans challenged our grandparents’
generation: how could you vote for, or at least tolerate, the NSDAP in 1933? How could
you not recognize the dangers from what they had written before, or in fact from their
swift actions in early months in power, January to April 1933? These debates left a
strong mark on my generation and many of those holding political power in Germany in
recent years.

History never repeats itself exactly, but there are similarities in the social and
economic conditions that urge us to be vigilant. One of the lessons from the 1930s is
that once in power, authoritarian leaders tend to subtly cement their power by
undermining institutions that secure the balance of power. The overriding concern is
that the anti-globalization movement may gain further momentum at the level of
national governments, who then drive each other into an economic downward spiral.

In this context, IB scholars are well positioned to raise the level of the debate,
and to help societies make informed decisions on how they want to achieve future
prosperity.

18
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