The globalization of business education: through the lens of semiglobalization
The Authors
Pankaj Ghemawat, IESE Business School, Barcelona, Spain and Harvard Business School, Boston, Massachusetts, USA
Acknowledgements
The views expressed in this article are personal and do not reflect the perspectives of any of these institutional affiliations. The article has benefited from comments on an earlier draft prepared for colloquium on the Globalization of Business Education at IESE Business School from October 4-6, 2007.
Abstract
Purpose – This paper aims to provide a personal perspective on the extent to which business schools have globalized what they teach and to make content- and process-related suggestions about how to make further progress.
Design/methodology/approach – The paper provides a mixture of quantitative and qualitative/interpretative analysis.
Findings – The paper finds that rhetoric around the globalization of business education has greatly outrun the reality of curricular change and this problem seems unlikely to be solved until the craving for distinctively global content can be satisfied.
Research limitations/implications – Semiglobalization – the intermediate state of integration in which neither the bridges nor the borders between countries can be ignored – is proposed as a conceptual umbrella for organizing curricular change and in terms, of process, a two-track-approach, combining infusion and insertion, is recommended.
Originality/value – Both the conceptual and procedural recommendations of this paper are novel.
Article Type:
Viewpoint
Keyword(s):
Globalization; Business studies; Education.
Journal:
Journal of Management Development
Volume:
27
Number:
4
Year:
2008
pp:
391-414
Copyright ©
Emerald Group Publishing Limited
ISSN:
0262-1711
Business schools have, in recent years, made significant commitments to globalizing what they teach. There is nonetheless a general sense that rhetoric in this regard has outpaced reality. For instance, of more than 150 deans and directors-general of business schools assembled by the European Foundation for Management Development, less than 5 percent thought that business schools were doing an adequate job in this regard
This essay provides a personal perspective on the problems that business schools have experienced in globalizing what they teach, proposes semiglobalization as a conceptual umbrella for organizing change, and also supplies some procedural guidance. It emphasizes the importance of the craving for global or international content distinct from the single country (often the USA) focused on business education, and suggests that it be satisfied with a focus on the distinctively large differences that arise at national borders. The essay aims to spark further debate by articulating a specific point of view in some detail: it focuses, for the most part, on a modest proposal for restructuring two-year MBA programs (which happens to be the locus of my personal experience and primary interest).
I. Poor globalization performance
What might account for general despondency about what business schools have collectively achieved in globalizing their educational programs? One can, of course, cite instances of regress or, frankly, flim-flam. Thus, sticking to my own field of strategy, I can think of one top 20 school where the first-year core course was recently cleansed of global content—after a multi-year campaign to add it – and another where the strategic management course was recently relaunched as global strategic management without any obvious changes in content.
But even if one discounts exceptions – and there seem to be some good outliers as well as bad ones (see the Appendix) – there are reasons for concern that I will illustrate with the help of two efforts to characterize the cases taught at leading business-schools as well as with briefer discussions of three complementary sets of actions that many business schools have undertaken: conscious efforts to increase the international diversity of their students (and faculty), the offering of international immersion programs, and the formation of international joint ventures. The case discussions, in keeping with the primary thrust of this essay, focus on MBA programs.
A study of core strategy curricula
In the spring and early summer of 2007, Jordan Siegel and I compiled a list of faculty members who taught core strategy courses, with a focus on business schools that had been ranked either in Business Week's 2006 guide to the top 30 global business schools or in the top 50 in the Financial Times' 2006 guide. This represented 56 schools aside from Harvard Business School, with which both of us are affiliated, all of which we contacted. We also contacted another 21 schools that did not make the above list but that contained well recognized business schools which one of us had contacted in 2004 for an earlier data collection effort. Thus, a total of 77 schools were contacted.
These efforts yielded 58 core strategy MBA syllabi from 51 business schools for 2007
Based on our preliminary analysis, 33 percent of the courses did not have a single case set outside of the USA, and for the average course, the non-US percentage was only 34 percent. The most common non-US settings were Europe or Israel, which accounted for 21 percent of the cases. About 7 percent were set in Asia or Australia, and there were very few cases set in Latin America or Africa. Furthermore, few courses seemed to teach global strategy concepts or tools, and when they did, they tended to focus on market entry issues
A study of the core curriculum at one school
Narrowing scope to just one business-school, one can dig a bit deeper into the underlying content problems. An example is provided by another study I conducted, with a research assistant who graduated from one of the top-ranked US business schools in the sample above in 2006, and who had (prior to my employing him) maintained a detailed log of all the cases that he had studied in his first-year in the MBA program, in 2004-2005.
The results of his reconstruction – which excludes country/macroeconomic cases from the international economy course – are summarized in Figure 1. A total of 35 percent of the cases in the first-year of this MBA program – across all functional areas – had significant content related to activities outside the USA, in line with the analysis of core strategy curricula above. But when one focused on cases with cross-border content, i.e. excluded essentially domestic cases set in countries outside of the USA, the percentage fell to 15 percent
Beyond cases
Changing the geographic setting and focus of their cases is of course only one of the levers available, even to case-based business schools, to globalize their MBA and executive education programs. Other, complementary levers that have been stressed towards this end include:
- diversity;
- international immersion programs; and
- international joint ventures.
Thus, a review of the web sites of the Business Week list of the top 30 global business schools indicated that 25 touted the diversity of their students (and, in many cases, their faculty). And some older data – for 2000 – on the incidence of international immersion programs and international joint ventures are provided by Sixth Global Survey of Business School Internationalization of more than 100 schools sponsored by the Academy of International Business (a series that has, alas, since been discontinued). According to Kwok and Arpan's (2002) summary of the results, 53 percent of the respondents were members of a consortium for conduct of international educational activity, 27 percent required study abroad experience for students in some of their degree programs, and 22 percent offered one or more of their degrees in a country other than their home base.
The effectiveness of such activities is hard to judge directly. But based on research about other (admittedly mostly commercial) organizations, the success of globalization efforts largely predicated on such initiatives seems far from assured. Consider them one by one.
Diversity
Williams and O'Reilly (1998, p. 120) summarize their survey of 40 years of research on demography and diversity in organizations as follows:
Consistent with social categorization and similarity/attraction theories, the preponderance of empirical evidence suggests that diversity is most likely to impede group functioning. Unless steps are taken to actively counteract these effects, the evidence suggests that, by itself, diversity is more likely to have negative than positive effects on group performance.
Beyond mixing up study groups, how much attention do business schools and their faculty actually pay to managing as opposed to merely achieving diversity? Without explicit attention of this sort, diversity may end up being simply dysfunctional.
Immersion programs
Despite the rush to develop immersion programs – e.g., since the time of Kwok and Arpan's (2002) survey, more than ten major institutions have launched global executive MBAs – most do not offer participants much of a framework for thinking about the different locations that they are visiting. Instead, they seem to be motivated by the hope that there will be some useful, if hard to (pre)specify benefits from simply being there
Experiential knowledge and academic knowledge are in many ways better seen as intertwined than as in opposition. Experience is interpreted within frames of reference that reflect academic sensibilities, and the research on which academic knowledge is based is deeply affected by the observations and understandings of experience.
What academic frameworks ought to be offered with global immersion programs?
International joint ventures
International joint ventures are often a basis for offering international immersion programs – and suffer from the same kinds of problems. In addition, the rush to form such ventures may be appropriate for many schools at their current level of globalization, but one suspects that they do not represent a long-term panacea given the disagreements, decay rates, and other problems that often bedevil them – and that, in the business world, have contributed to a four-fifths drop-off in the number of new cross-border joint ventures formed between 1995 and 2004
II. Possible explanations
The previous section tried to document some quantitative and qualitative indications of the poor performance of business schools' globalization efforts. If one accepts that diagnosis, the next obvious question concerns the underlying explanations of poor choices and outcomes. There are many possible explanations, which will be grouped in terms of problems atop business schools, among deans and other leaders, problems in the middle, among the faculty, and problems in the underlying knowledge substrate.
Problems at the top
One possible explanation for lack of progress at globalization, highlighted by Porter and McKibbin (1988) in their groundbreaking report, is that there is not much interest in it among business school deans. And a second explanation is that there is interest, but of a misguided sort. In the words of one participant in the GLOBE colloquium that I organized recently, globalization is the last sandbox left for deans outside the increasingly functional straitjacket to which most business schools are subject.
My own experience suggests that the first explanation is much harder to make a case for nearly 20 years after Porter and McKibbin. And both explanations are contradicted by the dissatisfaction expressed by the overwhelming majority of deans with what business schools have achieved in globalizing what they teach (as noted at the beginning of this essay).
Problems in the middle
Motivational problems seem more plausible to me in regard to (some) faculty and the way that they are organized. There are many possible explanations for why globalization has encountered indifference if not outright resistance from faculty in business schools. On the curricular side, one can point to zero-sum competition for class sessions – particularly evident in the first-year core of two-year MBA programs. Research preferences are probably even more important, since faculty tend to prefer to teach what they research – and since research time has be traded-off across cross-border and single-country issues, as discussed in more detail in the next subsection.
What needs to be added here is that motivational problems at the individual level are further compounded by the way business schools are organized. Thus, according to the survey reported on by Kwok and Arpan (2002, p. 572), only 6 percent of the business schools that responded had international business (IB) departments:
IB specialists were mostly located in functional fields with no international title (54%) and in functional fields with the title of IB specialist (33%).
As John Daniels (in Rugman, 2003) wisely observed:
In retrospect, it seems inevitable that once IB was in a functional department, it would be viewed as a branch or subset of that function rather than as a separate discipline.
Problems with research
Relatively few people within business schools do research on cross-border issues, for a variety of related reasons that include but probably are not confined to the following:
- Lack of data. The last major effort to compile cross-border data of the sort that would facilitate large-sample analysis of hypotheses was Vernon's Multinational Enterprise Project at Harvard Business School (HBS), which concluded 30 years ago.
- Problems of data incommensurability. Even where cross-border data are notionally available, they are subject to especially serious incommensurability/quality problems since most data are still collected at the national level.
- Multifunctional/disciplinary problems. Many globalization-related topics do not fit well with the increasingly functional or disciplinary orientation of business school research.
- Physics-envy. Business school research is also increasingly characterized by a preference for documenting patterns that apply across time and space (combined with misconceptions about the impossibility of cross-border generalizations).
- US-dominated editorial control of the top journals. The gravitation pull of large home markets – documented in research on business enterprises – may apply in this context as well.
Superimposing on these considerations the focus on publication counts used as the key criterion for promotion by a substantial number of the top research schools, one expects supply-side shortfalls by individual faculty intent on maximizing the impact of their work. And this is exactly what seems to be happening. About 5 percent of the articles published in the top 20 management journals between 2002 and 2006 had specifically cross-border content, down from 6 percent over the period between 1996 and 2000 – despite the inclusion of the Journal of International Business Studies in the top 20 in both periods
Problems with educational content
Individual and organizational biases of the sort cited above help account for limited progress at globalizing business education, but probably are not a complete explanation. My diagnosis reflects, in part, the number of B-school professors who do not work on globalization-related issues but emphasize that they would be happy to make more room for them in the curriculum as long as they are convinced of the existence of some distinctive content around globalization-related issues. Because, without such distinctiveness, one would get wasteful duplication of efforts – in research as well as teaching.
In this regard, I think that those who argue that globalization merits additional attention are to be blamed more than the uncongenial environment in which they are embedded. Thus, I was amazed that at the first annual meeting of the Academy of International Business (AIB) that I attended – just five years ago – there was a panel session dedicated to the topic of whether there really is anything distinctive about international business. I had assumed, up to that point, that the organization would have long resolved such fundamental existential issues, at least to its own satisfaction, and moved on.
It seems to me, therefore, that additional specificity about what is truly distinctive about international business is necessary for further progress at globalizing business education. The next section makes a modest proposal in this regard: it suggests that we already know enough from research to specify some distinctive content for business education about globalization.
III. Semiglobalization and the content of business education
My modest proposal is that attention to semiglobalization, i.e. to the distinctively large differences that arise at national borders as well as the bridges across them, is a useful conceptual umbrella for organizing curricular change. This structural diagnosis can be contrasted with the apocalyptic vision of globalization stressed by Thomas Friedman, the journalist and the author of The World Is Flat:
The world got flat … [creating] a global, Web-enabled playing field that allows for multiple forms of collaboration on research and work in real time, without regard to geography, distance or, in the near future, even language (Friedman, 2005).
This characterization sounds “with it” and has won wide support, even among luminaries such as George Soros and Colin Powell. But it certainly is not one with reality. The 80-90 percent level of internationalization that it implies grossly overstates actual levels of internationalization of a broad range of measures, some of which are summarized in the black bars in Figure 2, and which cluster much closer to 10 percent
Some, especially in academia, react to globaloney by cleaving to the opposite extreme and arguing that countries are so different that for practical purposes, they are not very integrated at all. But again, in addition to its empirical deficiencies, this does not seem like a promising point of departure for the globalization of business schools. For one thing, it effectively emphasizes, in the terminology originally introduced by Pike (1954) in linguistics, “emic” knowledge – the deep but narrow single-country perspective of a native participant – to the exclusion of “etic” knowledge: the cross-country perspective of a detached observer
Fortunately for the focus on what is of distinct interest about globalization, the empirical evidence suggests that levels of cross-border integration actually fall somewhere in between the extremes of complete cross-border integration and separation
Beyond local versus global
It is important to begin by emphasizing that the implications of semiglobalization for content cannot be reduced to striking a balance between the extremes of local customization and global standardization – a misconception to which audiences I speak to are often quite prone. As discussed above and summarized in Figure 3, these extremes and the structural assumptions about the level of cross-border integration to which they are optimized do not so much span a continuum as correspond to two singularities in which cross-border complexities can be finessed and simple single-country approaches applied. For this reason, these extremes – and linear combinations of them – are not the best reference points for an approach that seeks to take cross-border complexities seriously.
It is also worth pointing out similar problems with the widely used and abused slogan, “Think global, act local”. There is some common sense at its core, concerning the need to balance the conflicting pulls of global integration and local responsiveness. But while this slogan is meant to steer companies towards a sensible middle ground, the flavor is, once again, of striking a balance between two unappealing extremes rather than really thinking more broadly about the possibilities unlocked by semiglobalization
Location-specificity versus nonspecificity
Location-specificity versus nonspecificity offers a more promising basis than the flat world for developing distinctively international/global content. I find the reasons easiest to specify in the context of the strategy field, although analogous arguments can be developed for (other) functional areas.
It is useful to begin by parsing the strategy field into the domains depicted in Table I. Note the somewhat paradoxical character of domain A, “mainstream” (i.e. single-country) business strategy: by assuming total specificity (or, less frequently, total fungibility), it allots the least attention to actually coming to grips with either business/usage-specificity or location-specificity. As a result, we have to look to domain B, that of mainstream corporate strategy, for interesting analyses of variations in the extent to which key firm activities, resources or knowledge are business-specific as opposed to generic in the sense of being fungible across businesses. And we must look to domain C, that of international business strategy, for analyses of variations in the extent to which activities, resources, knowledge etc. are location-specific as opposed to generic in the sense of being fungible across locations. Domain D, featuring international corporate strategy, combines considerations of business/usage specificity and location-specificity. The point of Table I, however, is not to celebrate the grand unified theories in domain D but, instead, to make the fundamental point that some degree of location-specificity is essential to the possibility of international strategy having distinctive content.
To be more precise, location-specificity is generally considered the attribute of an asset or resource (see Williamson, 1985, p. 89) and refers to the extent to which the redeployment of an asset (or the output that it provides) to other locations impairs productive (supply-side) value. Location-specificity, thus defined, is clearly a matter of degree. In addition, the Heckscher-Ohlin-Samuelson factor price equalization theorem reminds us that at least under the benchmark assumption of price taking behavior, frictions in the trade of output of products or services from the asset as well as frictions in asset-mobility itself are both necessary for there to be any room for location-specificity. In the absence of either kind of friction, asset prices around the world would equalize, as would the profitability of serving one location as opposed to another with a particular asset.
The possible frictions in trade in the products or services provided by an asset include:
- transportation costs/hazards/time requirements;
- additional (generally positive) costs of transacting at a greater distance, including language and other cultural differences;
- preferences for proximity/home bias; and
- legal/administrative/contractual restrictions on transacting at a distance.
Most of these barriers to mobility, but particularly the last one, can apply to the underlying assets as well as to the output they provide. In addition, on the supply side, one can also cite frictions associated with:
- physical asset/input immobility;
- complementarities with other immobile assets;
- specific knowledge in the Hayekian sense of knowledge that is costly to move around (in some sense a subcase of the previous point); and
- specialization to local conditions, with adaptation to new ones compromised by adaptation costs and/or complexity.
Of course, the price-taking assumption may not fit. Think of a global oligopolist who has lock on an intangible asset that exhibits increasing returns to scale in the sense that its deployment in one location does not affect the quantity available to be deployed elsewhere or the terms of such other deployments – e.g., a brand name without cross-border reputational externalities. In such situations, redeployability across locations is moot: it is firm-specificity rather than location-specificity that is the key driver of behavior, although differences across locations still tend to matter (e.g., ubiquity is rarely the optimal strategic target), as discussed in the next subsection.
The other point worth adding is that location-specificity can be studied at several different scales, ranging from the local – e.g., the local clusters that have been stressed in the literature on strategy and competitiveness – through to the global or international, as in the discontinuities created by national borders. The international scale is not only the one of direct interest in the context of globalization; it also has the broader attraction of, in many situations, maximizing locational variation along various dimensions – cultural/social, administrative, geographic and economic – in a way that casts location-specificity into particularly sharp relief
From differences across locations to distance: the CAGE framework
The discussion in the previous subsection of dimensions of variation should have suggested that there is a broad array of differences across countries. Efforts to analyze known dimensions of difference and to add new ones occupy a good chunk of the current IB research agenda, which makes some sense. But some attention must be allotted – in teaching and in research – to the issue of how to move beyond essentially piecemeal consideration of a large number of individual dimensions of difference, i.e. beyond models of low-dimensionality towards integrative frameworks.
Many of the integrative frameworks that have been proposed, often for teaching purposes, for thinking about the differences across countries (or locations) presume that countries can be assessed one-by-one or unilaterally against a common yardstick – possibly calibrated on the basis of the actual population distribution – to yield meaningful rankings or contrasts. Note that indexicality in this sense encompasses not only cardinal indexes such as the World Economic Forum's Global Competitiveness Indexes (formerly one, now two) or Transparency International's Corruption Perceptions Index, but also ordinal ranking schemes such as Porter's “diamond” framework for diagnosing the (relative) international competitiveness of different countries as home bases in specific industries. But indexicality is fundamentally limiting since it is incapable of capturing bilateral differences of the sort necessary to envision countries as existing in (and even occupying) space in relation to each other, i.e. as nodes in a network rather than as a heap of structurally equivalent objects, instead of as an array along a common yardstick. In other words, countries should be represented as nodes in a network rather than as a heap of structurally equivalent objects
The tendency to neglect this point about bilateral (or more broadly, relational) measures of difference is particularly unfortunate because such measures often turn out, at least in gravity models of international trade, to exert effects that are as large as if not much larger than those of unilateral measures: see Figure 4, which summarizes some of the results of statistical analysis that Rajiv Mallick and I undertook (Ghemawat and Mallick, 2003). Of course, having drawn that distinction, it is useful to add that unilateral influences – i.e. influences specific to individual countries rather than to country-pairs – are by no means incompatible with careful consideration of the bilateral influences to which gravity models, almost by definition, draw our attention. A formal link is supplied by a unilateral measure of isolation (or integration), which captures unilateral country-specific attributes that generally decrease (or increase) a country's involvement in cross-border economic activities and which can be treated as a common component of that country's distances along various dimensions from other countries. For example, really isolated countries (characterized by unique, ingrown cultures, closed administrative policies, physical remoteness, etc.) can be thought of as being relatively distant from everywhere else.
This broad way of looking at things has some strong implications for the study of location-specificity. First, a simple focus on spatial differentiation, i.e. differences across locations, will not suffice: attention must also be paid, in an integrated way, to spatial interactions. Second, for purposes of studying spatial interactions, it is useful to think of countries as being embedded in multidimensional space, i.e. varying in their distances from each other, instead of simply lumping them into home versus an (undifferentiated) abroad. Third, and relatedly, work that focuses on interactions at very short distances, i.e. interactions at what is effectively a common location (e.g., the rapidly growing literature on agglomeration economies), is certainly of interest, but it is hard to know what to make of it without also having some insight into interactions across longer distances. Put differently, to focus the study of spatial interactions at the local level would, in the present context, be akin to setting off to study networks but never getting past the individual nodes within them.
In addition, we also need general frameworks for thinking about why countries differ in ways relevant to cross-border economic interactions as a supplement to specialized models of individual dimensions of difference among countries. Table II presents my proposal in this regard: the CAGE framework, with the acronym meant to evoke the cultural, administrative/political/institutional, geographic and economic dimensions of differences across countries. Others might further unbundle some of the CAGE categories or modify or even recast them. But it is not necessary to agree on the best possible framework for thinking about this issue to accept the utility of some such framework(s) for organizing thinking. Note, in particular, that it is much broader than many of the dimensions of difference for which special attention has been suggested, e.g. institutional differences (which generally seem classifiable under the “A” or “C” dimensions of the CAGE framework).
The final point to be made about this way of thinking about difference is that the differences that matter the most are going to vary from industry to industry. It is therefore useful to establish which difference or differences it is key to address in a particular situation before actually deciding what to do. The cement industry is heavily constrained by geographic distance whereas in satellite television, the constraints associated with geographic distance have been greatly relaxed, but cultural distance (e.g., different languages) and administrative distance (governmental regulation of a politically-sensitive sector, including restrictions on foreign-owned competitors) continue to matter a great deal. In addition, structure can vary enormously at the industry level and so I sometimes talk about the “CAGES” framework, with the S standing for structural differences to supplement the other kinds already mentioned.
Implications for strategy: the AAA Triangle, etc
The CAGE framework itself is relatively general and therefore seems broadly applicable across a range of functional areas, but it is time to drill down a level and consider specific functions, starting with strategy. Strategic discussions essentially started with Fayerweather's (1969) identification of the tension between pressures for unification within companies and for fragmentation that differences in national environments can create: Prahalad and Doz (1987) elaborated this tension into the widely cited trade-off between global integration and national responsiveness – what I refer to as aggregation (to overcome cross-country differences, e.g. through regionalization) versus adaptation (to adjust to cross-country differences, e.g. through variation or more effective ways of creating variety).
A useful direction in which to expand this basic global strategy set is suggested, quite literally, by the economic theory of the multinational enterprise, which distinguishes between horizontal multinationals (e.g., Coca-Cola, which sets up more or less complete business systems in the countries in which it competes) that seek to exploit the similarities across countries, albeit subject to cross-country differences, and vertical multinationals (e.g., the oil companies) that seek to exploit differences along some selected dimensions (in this case, primarily in the availability and cost of oil and, to a lesser extent, in terms of willingness-to-pay for end-products)
This way of looking at things does more than simply expand the range of possibilities by including a third pure strategy. As the literature in economics on the multinational enterprise (MNE) also reminds us, vertical MNEs that exploit the differences across countries have very different operating and organizational characteristics from horizontal MNCs that perform (some of) the same activities in different countries (and that mush together the categories of adaptation and aggregation). Table III highlights the strategic differences across the three As.
Most fundamentally, the three As involve the pursuit of different sources of advantage from operating across borders and, relatedly, are associated with different organizational types. If a company is emphasizing adaptation, a country-centered organization is often indicated. If aggregation is the primary objective, cross-border groupings of various sorts – global business units or product divisions, regional structures, global accounts, and so on – make sense. And an emphasis on arbitrage is often best pursued by a vertical, or functional, organization that tracks the flow of products or work orders through the organization. Clearly, not all three modes of organizing can take precedence in one organization at the same time. And although some approaches to corporate organization (such as the matrix) can combine elements of more than one pure mode, they carry costs in terms of managerial complexity
In practice, this conception of strategy as involving fundamental choices collides with the aspirations of energetic managers to do everything well. To reconcile this tension, I typically make three points in discussions with practitioners. First, especially given the headroom that most companies seem to have in making progress along all of the triple A dimensions, it is useful to set up and use a globalization scorecard – a checklist, if you will – that covers all three dimensions, rather than relying, as often seems to be the case, on just some crude measure of the internationalization of revenues to track progress. Second, the possibility and in fact necessity of progress along all three dimensions does not, because of competitive and organizational constraints, imply attaching equal priority to all three As. Companies that are sensible about their intended positioning either figure out which of the three As will be their principal source of competitive advantage or, if they have the appetite for the additional complexity, which of the three AA tensions (with earlier discussions largely representable in terms of adaptation versus aggregation) they will try to manage particularly well. And third, it is usually a bad idea to try to beat all comers on all three As.
In addition to the triple A triangle and associated imperatives and guidelines for choice, taking differences seriously – and thinking about them broadly – yields some other strategic insights. For example, the CAGE framework discussed in the previous subsection has a number of direct strategic applications: making differences visible, understanding the liability of foreignness (as well as the advantages of MNEs relative to local competitors), assessing positions relative to foreign competitors from other countries in particular markets, and comparing markets on a basis that captures more than just their sizes – as well as, of course, helping inform strategy selection. Other applications derive from the consideration of a comprehensive template for valuing cross-border moves, and superimposing dynamics on it
Implications for other functions
The preceding perspectives on semiglobalization and strategy, however idiosyncratic, were at least based on more than 20 years experience of the strategy field. To stick my neck out, it seems – from an outsider's perspective – that similar points apply to other functional areas in business. This inference is based not on any inside perspectives but on the basis of reading the news as well as the literature, reviewing extant curricula and textbooks (with the help of my research associate, Steven Altman), asking academics from other functions about what points they would teach if they had a limited number of sessions to deal with globalization-related issues (with the help of my IESE colleagues, Africa Ariño and Joan Enric Ricart), and pursuing lists of key topics with distinguished practitioners as well.
My sense from this exercise is that semiglobalization serves as a useful frame for assembling at least some of the obvious globalization-related topics in a range of functional areas. Consider the two functional areas flagged as key in terms of incidence and importance in surveys such as Beamish and Calof (1989) and Kwok and Arpan (2002), finance and marketing, and the other two areas they also tend to register, organization and human resources and technology and operations management. (This list deliberately excludes topics in international business policy/strategy and international economics as well as language and legal courses whose content is often nonbusiness.)
In finance, the strategic notion that intermediate levels of integration of markets for real assets and their output are essential for anything really interesting to happen has its obvious counterpart in the idea of intermediate levels of integration of markets for financial assets. And indeed, such financial semiglobalization seems responsible for many of the complications on which international finance focuses. For instance, if financial markets were completely separate, a firm making capital budgeting decisions could use the single-country capital asset pricing model country by country, and if they were completely integrated, it could use the same model at the level of one world: it is only in between that complexities arise. Ditto the extensive attention allotted to international tax management, other financial arbitrage opportunities (e.g., where to raise capital), etc.
In marketing, some of the existing strands of teaching and research on areas such as preference heterogeneity (particularly work on cross-country segmentation) and country-of-origin effects fit well with the ideas described above around semiglobalization. But other strands raise questions, such as the extensive literature on whether global branding will let global competitors trounce local ones. The 1980s saw a surge of work on this issue, much of which asserted an affirmative answer to this question, and while there has been some drop-off in activity since then, the question has always struck me as not very well-posed because my understanding is that cross-border consolidation has been attempted in many fast-moving consumer goods (a marketing-driven sector) usually to achieve savings in procurement, manufacturing and R&D (which presumably fall outside the frame of marketing) rather than in marketing expenditures. It would seem, at least to an outsider, that it might be better to divert some resources from this topic to some of the other topics listed in the marketing row of Table IV.
Technology and operations management, defined broadly to include information technology, has historically been less of a focus of globalization efforts than finance or marketing but is clearly an area of greatly enhanced interest given the trend towards supply-side globalization discussed above and the observation that governance frameworks have generally lagged behind. The management of international supply chains stands out as a particularly key topic since they confront dozens of challenges that loom larger in a cross-country context than a within-country one, including border delays, difficulties in dealing with local customs officials, exchange rate fluctuations, export license requirements, protectionism, time zone differences, etc.
Finally, in the broad area of organizations and human resources, while some of the organizational challenges have already been discussed in the context of making use of the Triple A strategy framework, one can imagine much more attention being paid to vertical coordination mechanisms and their integration with horizontal coordination mechanisms, and to building organizations more capable of moving things – people, ideas, products – across borders – all of which are underpinned by cross-country differences.
These and other topical foci for attempts to globalize the four functions discussed in this subsection are summarized Table IV. The list is obviously motley, but less so, in my view, than at least some other attempts to put together lists of this sort (e.g., Contractor, 1997).
IV. Changing curricular content
A final broad attraction of semiglobalization is related, in my view, to the knotty problems around the process of changing business school curricula. Most attempts have employed one of two in some sense opposed approaches: insertion of a standalone international course that could be a general/survey international business course, a specialized functional international course or a internationally-oriented nonbusiness course such as world geography, world politics or comparative economic systems, etc., and infusion of international competencies into functional courses or other existing business courses.
Ray Vernon (1994), the prime mover behind a very early and influential experiment at the HBS, has summarized the lessons from attempting, at different times, both insertion and infusion:
When the School decided in the early 1960s to adopt a formal structure based on functional areas, international business was designated one such area. I could teach what I liked; but at the same time I could exert little or no influence over the content of other courses at the School … When in the late 1960s, the Dean of the Business School proposed to me the abolition of the international business area, it seemed to me a reasonable and logical step. Thenceforth, according to the proposed plan, the various functional areas would internationalize their respective curricula. And to ensure that the shift occurred, the handful of faculty members associated with the international business area would be distributed strategically among the various functional areas. With hindsight, it seems evident to me that the shift came too early.
Based on such lessons, the model that I would advocate – focused on the MBA curriculum – involves treating insertion and infusion as complements by:
- Inserting a front-end focused on semiglobalization – or some other world-structural/historical view – to cure students of globaloney (to which they are otherwise as subject as the managers whose responses are summarized in Figure 2) and give them some foundations for thinking about globalization. Such a front end might also discuss institutional variation since students should, as a boundary condition on what they learn elsewhere, understand that the free-standing corporate model that occupies center-stage at most business schools is actually largely confined to the USA. Of course, other cross-functional themes might also be housed in such a front-end.
- Infusing globalization-related content into the functional courses, probably by insisting that 10-20 percent of each should have a clear cross-border component that covers at least some of the topics listed in Table IV – a change that recognizes the functional organization of most business schools (Kwok and Arpan, 2002) and taps into it, going beyond IB people. It may also entail discrete globalization-related modules within courses: while such modules often occur late in courses and are sometimes dropped as instructors fall behind, they ease monitoring and help avert “infusion” that culminates in identifiably international content disappearing from the curriculum.
In addition to this broad consideration of possible curricular models, there seem to be several other requirements for curricular change and renewal that I think of as the six Rs:
- Restrict the scope of the effort instead of looking for solutions that involve changing everything: the functional structure of business schools and the research they do, their incentive systems, other aspects of the curriculum (e.g., leadership-related topics), etc. Careful consideration of what the institution will not do in the pursuit of globalization is typically also required. Note that the emphasis should fall on exploiting some of the substantial headroom left by current practice rather than on finding perfect solutions.
- Recognize the importance of contingency – and strategic variation. The variation of key cross-country differences across industries and by functions has already been mentioned. A school's location and other attributes are also likely to affect how it should select and implement a globalization model. Thus, European business schools face different challenges and opportunities than their US counterparts
[20] , and Asian business schools even more so[21] . And of course, the resources and rankings of schools also matter for what they ought to do (e.g., in terms of joint ventures). - Rebalance research – semiglobalization offers a vast research agenda that is only partly captured by the multifunctional characterization in Table IV and in the prior discussion of strategy, and which is further enriched by locational and other contingencies. In addition, there is still a need for research on the stylized facts of globalization and more generally, for more problem-driven research
[22] . Journal editors must buy in, of course, for these and other gaps to be addressable. - Reach beyond faculty focused on international business (IB). This seems essential, at least outside IB, for further progress at teaching globalization as well as at research. Focusing on the infusion-plus-insertion model advocated above, the infusion component seems the ideal locus for attempting to hook up more tightly with and harness the energies of different functional areas, and the insertion component for integrative cross-functional perspectives.
- Reach out to companies to validate the results of globalization efforts, which is still uncommon. Companies can also usefully be involved in the formulation of globalization efforts (see the recent UK survey which found that foreign language competence was the only skill out of 19 that employers deemed unimportant
[23] ). But it does seem important to note that the role of companies in formulating the agenda is naturally limited by academic ambitions to help define the agenda – which is still an outstanding issue – and not just diffuse what the best companies already know. - Reinforce these efforts with other complementary mechanisms. To cite just a few examples, there are opportunities to use technology to diffuse proven content more quickly (maximum adoption still tends to take well over five years), to treat executive education programs with their greater “flexibility” as the place to pioneer certain types of pedagogical innovations, and to invest more in conferences and other initiatives focused on curricular content and teaching (e.g., the GLOBE colloquium for which this paper was originally prepared, at IESE on October 4-6, 2007).
V. Conclusions
The first two parts of this article argued that there is a problem with the globalization of business education and that distinctively global content is part of the solution. The third and fourth parts made the modest proposal that semiglobalization be used as an umbrella concept in unifying such discussions of curricular change. Whether one agrees with that proposal or not, it seems clear that attention to the distinctive or distinctively large effects that arise at national borders – with a broad perspective on differences such as the one adopted in the CAGE/CAGES framework – is the promising place to look to satisfy the craving for distinctively global/international teaching content.
Figure 1First-year MBA program of a US business school
Figure 2Globaloney
Figure 3The scope for distinctively global content
Figure 4Influences on bilateral trade
Figure 5The horizontal dimension: adaptation versus aggregation
Figure 6The vertical and horizontal adaptation versus aggregation dimensions: the AAA Triangle
Table IStrategy domains
Table IIThe CAGE framework for country-level analysis
Table IIIDifferences across the three As
Table IVSemiglobalization-related topics for functional areas other than straegy
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Appendix. Some institutional exceptions to the rule of nonglobalization
The general rule that business schools have made limited progress at globalizing their educational programs does admit of some exceptions:
- INSEAD operates campuses in France and Singapore, although a project to start up a campus in the USA as well foundered.
- IESE, in addition to offering programs at four non-Spanish locations as well as its two Spanish campuses, is connected through religious and other ties to more than a dozen other schools in a network that spans all five major continents.
- Duke, through Duke Corporate Education, has developed an electronic platform for a Global Executive MBA that it has licensed to numerous other schools, “private labels” executive programs for institutions such as the London School of Economics and reportedly considered buying out the Australian Graduate School of Management.
- Thunderbird, founded as a graduate school of international management 50 years ago, has been joined in recent years by other schools focused on the topic, such as the University of South Carolina.
About the author
Pankaj Ghemawat is the Anselmo Rubiralta Professor of Global Strategy at IESE Business School, Barcelona, the Jaime and Josefina Chua Tiampo Professor of Business Administration (on leave) at the Harvard Business School and the departmental editor for Business Strategy for Management Science. His new book, Redefining Global Strategy, was published by Harvard Business School Press in September 2007. Pankaj Ghemawat can be contacted at: pghemawat@iese.edu