Evaluating the Impact of Globalization on Global Strategy Debates

This essay provides a comprehensive analysis of four key debates in the field of global strategy, focusing on the impact of globalization on international business and management. It explores the complexities of cultural versus institutional distance, examining how culture underpins global strategy while also considering the influence of formal and informal institutions. The essay also delves into the debate between global and regional geographic diversification, analyzing the political and cultural environments. Furthermore, it investigates the convergence versus divergence in corporate governance, discussing various ruling systems and the influence of Anglo-American practices. Finally, the essay touches upon the debate between domestic and overseas CSR, highlighting how businesses engage in CSR due to increasing pressure from multinational enterprises. The essay uses different author's views and their research to analyze the debates and provide a critical evaluation of the approaches, making it a valuable resource for understanding the intricacies of global strategy.

MANAGEMENT THEORIES AND PHILOSOPHIES
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Table of Contents
Introduction .........................................................................................................................................3
Four main debates in the field of global strategy.................................................................................3
Critically evaluate whether their approach fully captures the complexity of the influence of
globalization on global strategy...........................................................................................................7
References ...........................................................................................................................................9
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INTRODUCTION
The concept of strategic aspects related to globalization has become prominent in the
international business and management from past several years. Global strategy is getting more
attention in the field of disciplines which emphasizes on business related studies; thus it is
considered as an crossroad point ranging between the concept of strategic management and
globalized business (Alvesson and Willmott, 2000). The development of global strategy field has
gone through from relevant progress and also from number of bulge and turns. Firm that conduct
business internationally considers all the formal and informal rules that govern the countries and
that also manages global strategic aspects. There are four major dimensions covered under this
aspect which are discussed in the below mentioned study. The researcher has critically analyzed all
these four approaches to global strategy and along with the same, discussion has also been made
regarding the impact of global strategy on complex business aspects.
The argument lies in the global strategic aspect related to cultural and institutional distance
includes both the formalized and in formalized dimensions of the institutional environment and this
is entirely concerned with the facets of institution based view. Further, the discussion between
global and regional geographic diversification is related to political and cultural environment
related debate (Glickman, Gordon and Ross-Gordon, 2001). Moreover, the debate lies among
convergence and divergence in corporate governance depicts wide range of ruling systems that can
be placed globally. Hence, as a formal process legal legislation needs to be followed so that the
process of globalization can be managed adequately. On the other hand, in order to connect the
debate between domestic and overseas CSR, it can be said that there is an element that assists the
firms to cope with environmental aspects. Business entities have been actively engaging themselves
in CSR aspects due to increasing pressure from policies of multinational enterprises.
FOUR MAIN DEBATES IN THE FIELD OF GLOBAL STRATEGY
Cultural vs institutional distance
Culture is considered as imperative part of international business management and it
underpins the global strategy of any business because culture lies under micro aspects; however
strategy is highly associated with macro forces. A new approach (institutional based view) of
globalization strategy has come to existence has emerged and this argues that global strategy needs
to be properly shaped by the conventional and in formalized institutions (McDermott, 2000). The
dimension of this debate thus emphasizes on role of cultural aspects in an institution based view of
global strategy. The approach of Hofstede can be considered here which is a classification of
national culture and which also specifies the importance of cultural facets in global business
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environment. This also defines culture an aspect which is associated of social beliefs, communal
values. All the transactions concerned with international business aspects includes interaction
among varied societal values; thus this is the reason culture is considered as vital part for every
business transaction (Miller, and Tsang, 2011). In such respect, Wilkinson addresses that both the
cultural aspects prevailing in national and international level are used as dimensions that affect
most of the business practices. This also includes resource concerned artifact, enterprise
management and internationalization processes.
The debate also lay emphasis on culture distance vs institution distance which is another
dimension for better measurement (Norton, 2005). Cultural distance engages the concept of primary
divergence in both regional and international countries where in host and home countries follows
different cultural values. Institution distance embraces social aspects and difference and along with
this it also considers forces like regulatory difference, cognitive identification and normative
pressure. Most of the influence arises from cultural values and this can be categorized on the basis
of sociopolitical market forces. Studies of different authors examines the contribution of cultural
distance which speculate that social values are different in national and international regions even if
multinational enterprise is increasing. This also underlines the ability of multinational enterprises as
how effectively they operate the entity in host market. When culture distance is high, multinational
enterprise faces more difficulties in achieving efficacy in current operations. Therefore, cultural
distance creates huge degree of complexity in work processes and it can also impact the managerial
decision making process (Glickman, Gordon and Ross-Gordon, 2001).
Wide range of criticism and inconsistent findings related to cultural distance have been
explored and MNE performance; however most of the studies showcases a negative relationship
among both the facets. Cultural distance is significant initially; however its importance comes to
decreasing stage when it is reviewed on the basis of institutional view approach (Donaldson and
Dunfee, 1994). The critics on this approach includes dimensions towards an institutional construct
that can be construction on the basis of institutional distance. It entirely embraces cultural
differences through incorporating all the legal regulations and prescriptive aspects of institutional
situations. In order to ascertain the association of culture and institutions, it can be said that the are
the crystallization and concerned with social norms which further also changes the ways of
institutional approaches for cultural divergence. Hence, the authors also claims that causality is
linked to institutions and cultures is useless until it is properly managed in the business entities. The
real issue is that every aspect related to subsequent divergence is specific because it includes
institutional and cultural explanation that also provides comprehensive aspects about firm's
performance (Davis, Schoorman and Donaldson, 1997).
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Global vs regional geographic diversification
Firm that operates the business beyond the scope needs to develop globalized strategy
because it determines all the global aspects of a firm which is yet difficult to ascertain. Thus,
Perlmutter has confronted that being multinational can be seen as a prestigious aspect that enhances
global power of the business (Ferraro, Pfeffer and Sutton, 2005). The author lay emphasis on three
major aspects such as partisanship, polycentric and geocentric. It includes all the chief aspects of a
firm which critically contributes to diversification of multinational dimensions in business
operations. Having established regional multinational enterprise, it is required to have global
experiments based on regionalization and that offers two chief facets. Initial one is about practices
held on international level which ought to be operated at intra- regional level rather than inter-
regional level (Goulding, 2002). Secondly, various multinational enterprise activities needs to be
organized on regional level rather focusing on global level. The reason of observing more activities
at inter regional and national level is due to inadequate concern towards foreign aspects in a
specific region. Moreover, reason behind conducting the business on international level is that it
develops difficulty in business practices and helps in developing more networks with different
multinational organizations (Locke, 2001). In order to support this fact, several studies have been
reviewed on regional divergence and firm's performance and this suggests that multinational
enterprise needs to be regionally focused so that their performance level can be increased.
However, despite of these findings, some authors have argued that attention towards
regional multinational enterprise activity is getting highly contemplative for nation's income and
trade aspects. Hence, the main criticism can be seen towards measuring varied hierarchy aspects.
Most of the multinational enterprises should be more correctly labeled as regional so that the value
of relative measure can be found out. Most of alternatives can be adopted to specify region norms
and several authors have defined cultural and institutional similarities (Partington, 2000). In order
to discuss the globalized economic aspects, several current researches suggests a trend towards
different categories of interregionalism. The authors have also undertaken the approach towards
bilateralism which can take place beyond the global boundaries. Focusing on the political aspects
prevailing in the country, it is believable that multinational enterprises have to compete with
different multiple regional entities where in most of them are not associated to each other. Another
conflict is prevailing in the area of regional definition since that includes economical aspects. In
such case, it can be articulated that multinational enterprise can acquire benefits from global
political advantage that arises among home and host country (Williams, 2008). Instead of having
large cultural and institutional distance, political resources can be utilized for these facets.
Therefore, the regional divergence needs to specify political aspects and should also discuss its
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norms so as to comprehend the geographical patterns of variegation of multinational enterprise.
Convergence vs. divergence in corporate governance
Third Debate which discussed about corporate governance need to focus on the viewpoints
of Mike W. Peng1 and Erin G. Pleggenkuhle-Miles, there are several people who have faith in
economic philosophy generally encourages values and consider the concepts of convergence
perspective. While on the other hand, there are various individuals in the society who are in the
favour of the fact that culture of a nation initiates values are followers of divergence perspective
(Willmott, 1992). However, this debate has been around for long time but still researchers and
authors are unable to identify any answer. However, it always seems to be an increasing gap
between thoughts and philosophies of two different schools.
In this regard, there is always a lively debate in corporate governance whether it is covering
or diverging globally (Alvesson, and Willmott, 2000). However, in this context, people who follow
convergence argue that globalisation is the process that unleashes the survival of fittest and finest
corporate players. Constantly, companies are being forced to follow the practices which are suitable
and reliable to sustain globally i.e. Anglo-American practices. There are mammoth governance
codes that are enacted around the globe through the concept of Anglo-American practices.
Furthermore, global investors these days are interested in paying premium to those companies only
which are following the base of Anglo-American style of governance procedures (Davis,
Schoorman and Donaldson, 1997). This trend is increasing rapidly which indeed affecting the
course of companies who are not abiding with these concepts and due to which needs and wants of
shareholders remain unheard in most of the part of corporate world which is constantly becoming
more visible.
Apart from all, the biggest quarrel lashing in this aspect of the discussion consist of market
forces which are enhancing their operations with cross national convergence to get established on
the international standards (Donaldson and Dunfee, 1994). However, portrayal of varied set of
compressions which consist of market, nation-state and foreign state has commanded the firms to
increasingly adopt the international standards so as to enhance their business functioning and to
sustain in the international market for a long period. But later, it was identified that, these set of
pressures were not the major drivers but the risk of overseas marketplace termination to non-
compliant multinationals was the major driver that was identified by the nation-state regularity
authorities. Thus, it was identified that intended implementation of major global ethics were arrived
from the characteristic menace of market agreement compressions.
Looking at the present condition in UK and US, companies operating in it are highly
promoting the rigorous ownership and regulator which is often considered as the major solution to
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the conflicts of combat principle agent. In this regard, divergence followers determine the two
major points of concern in case of cross listed firm i.e. as compared to companies of US;
multinational firms have larger boards, integral directors and focuses on more concentrated
ownership style (Easterby-Smith, Thorpe and Jackson, 2012). Thus, it is not necessary that cross
listed firms operating in US abide by its governance before or after listing. Along with this, despite
of several rules and regulations related to cross listed foreign firms in UK and US, these laws rarely
affect the course of functioning of cross listed foreign firm.
While on the other hand, convergence followers determine that corporate governance rules
and regulations are being applied around the globe (Erin. And et.al, 2009). But contradicting to this,
divergence clearly defines that it is feasible to export the formal US and UK style regulations
around the globe but it is difficult to implant foreign rules and regulations within these countries
because companies operating in it have larger boards, integral directors and focuses on more
concentrated ownership style. Therefore, it can be said that considering the global economic
perspective, following comprehensive divergence is perhaps the impractical approach. In particular,
firms that operate at a large level and are always in quest of raising investment from international
investors cannot undertake the concepts and standards of divergence in corporate governance
(Ferraro, Pfeffer and Sutton, 2005).
Domestic vs. Overseas Corporate Social Responsibility
In general terms, corporate social responsibility is one of the major aspects of a business
enterprise irrespective of operating in domestic or overseas marketplace (Glickman, Gordon and
Ross-Gordon, 2001). However, it has been one of the biggest and continuous sources of debate
among different scholars and policy makers. Considering from the global perspective, it is
important for the organizations to uphold equilibrium among domestic and overseas CSR activities.
Herein, practitioners always focus on the fact that in case if there are limited corporate resources
than companies have to define their priorities either domestic market or international market. Along
with this, according to the top level management of a firm whose interests are more important in
terms of future sustainability, it is difficult to emphasis on local stakeholders as compared to the
overseas workforces and communities. However, there are several authors who simply illustrate
that for a multinational company, it is important to be socially responsible for all communities
where it operates (Goulding, 2002).
According to the viewpoints of Mike W. Peng1 and Erin G. Pleggenkuhle-Miles, two
primary stakeholders of a firm are employees and communities. In order to expand overseas to
emerging economies, companies tend to avoid the domestic employees and communities. In the
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regard, growing to the international grounds not only assist in enhancing the profitability and return
of the stakeholders but also leads to generate employment opportunities to the host countries
(Grant, Shani and Krishnan, 1994). But this can be achieved at the expense of domestic
stakeholders for the future expansion and growth.
However, when companies have adequate amount of resources, they tend to carry out their
corporate social responsibilities for both domestic and overseas communities. But with the
increasing competition, pressure of cutting the costs and reformation of managers have to prioritize
their focus which at times lead to disturbing results for domestic stakeholders. Unexpectedly, due to
rise in CSR because of globalization, migration of jobs from developed economies is increasing at a
rapid pace (Hofstede, 1993). Contradicting to this, CSR is important aspect of the business
enterprise irrespective to its level of operations because it helps in benefiting company itself while
benefiting the society it operates in. However, it is one of the major footholds for the companies to
expand their business operations to the international boundaries and attain desired growth and
sustainability. In the public affairs forum in Atlanta 2006, argument on emerging tension as a
flawless blizzard, a major risk of globalization to the American employees which mainly focuses on
the responsibilities of multinational enterprises towards its inland forces and societies. However,
with lack of positive outcomes, this constitutionally short-tempered debate will be heating up in
years to come. However, there multinational organizations that are involving themselves to
overseas CSR but not interested in reformulating tactics to work with NGOs in their base of
pyramid (Locke, 2001).
CRITICALLY EVALUATE WHETHER THEIR APPROACH FULLY CAPTURES THE
COMPLEXITY OF THE INFLUENCE OF GLOBALIZATION ON GLOBAL STRATEGY
Considering the present environment in global market, above defined four debates came into
existence. However, all these aspects have revived the argument on globalization along with the
perception it includes in comprehensive aspects. Hence, it generates scope to other debates which
are related to convergence and divergence in corporate governance. The large corporations have
provided very different strategic responses to multiple changes in their external environment
(McDermott, 2000). As the need for global efficiency has become strong in every business, many
corporations have started to treat the world market as an integrated whole. The major perspectives
of all these debates consist of timeliness and unsolved nature that clearly defines that there is lot to
research in future regarding these avenues. Hence, articulating the first debate, it can be said that
cultural distance is likely to be the most difficult aspect to be changed swiftly especially in formal
part. Looking at different emerging financial prudence which continue to grow just because of the
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reason that they adopts prescribed western style of protocols that govern multinational enterprise
and their corporate governance aspects. Hence, both the informal organizations personified with
cultural values and standards showcases correlation at one point and it also includes regulatory
change factor. In terms of second debate, it can be said that it addresses regional and international
modification problems which are increasing at a rapid pace. Further, it highlights different stages
and prospects of provincial policies (Miller and Tsang, 2011). While a dynamic approach may also
be considered as significant aspect for increasing the level of rationality.
Considering the concepts of geographical divergence strategy it is already a complex
procedure to undertake and most of the multinational enterprise which concentrate on bringing the
combination of different elements of both product and terrestrial divergence while entering into
international market place (Norton, 2005). Overall discussion has been made so as to review the
field of strategy which is dependent on international strategic management. From the discussion
dependent on corporate social responsibility, it is considered as one of the most debated aspect
because all the scholars have different point of view regarding cultural and institutional aspects.
However, it has been analyzed that when corporations consist of adequate amount of resources they
are able to carry out operations in effective manner because management is able to manage the both
international and local stakeholders in suitable and reliable manner. Despite of adequate resources,
managerial level of such organizations has to overcome immense pressure regarding minimizing
the costs and rearranging the managers at both international and local level. In this situation, it is
the duty of managers to prioritize the things which leads to generate desired results and outcomes
for the company. In the age of globalization, CSR activities have been increasing and people are
migrating from one place to developed economies (Partington, 2000). This ratio has been
accelerating as when people and countries at BOP manage such migration, domestic employees and
communities’ faces more political dimensions. There are several MNC’s which are avoiding the
CSR practices at international market; however to manage the business internationally, companies
have been reformulating their strategic aspects and they are working with NGOs.
Furthermore, looking at the present scenario it can be said that, established marketplaces are
equally saturated; thus in that case nonprofit organization may lead to create the path for growth
and sustainability regarding both emerging and developed market (Williams, 2008). Additionally,
the timeliness and unsolved nature of four debates suggest a number of avenues that can be
considered for future research as well. Change in the informal institutions are well associated with
cultural aspects; however in order to connect this with corporate governance, finance convergence
needs to be managed properly as per the cultural values. In context to dynamics approach it has
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been evaluated that, it properly addresses the last debate of domestic vs. overseas CSR. However,
debate constantly concentrates on the informal legal practices, values and responsibility regarding
the society (Willmott, 1992).
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