Broadening the Debate:The Pros and Cons of Globalization

Joyce Osland

Journal of Management Inquiry

Introduction to Globalization

• 15th century– New trade routes

• WWII– International Monetary Fund

• World Trade Organization– Reduce trade barriers– Stimulate Globalization

Recent Trends

• Technological growth

• Recent protests

Opposing Views

• Proponents– Opportunity for economic growth and

prosperity

• Opponents– Threat to prosperity, political sovereignty,

cultural integrity, and the environment

Definition of Globalization

• Disagreement over definition– Can be framed in a variety of ways

• Definition for this purpose– “A process leading to greater economic

interdependence and networks and the economic, political, social, cultural, and environmental results of that process.”

Purpose of the Article

• Impact of globalization on other areas in the broader system…a systems view

• Objective analysis of benefits and liabilities

• Common stakeholder perspectives

• Impact of globalization on:– Equality, labor conditions, governments,

culture and community, and the environment

Positive Effect of Globalization on Equality

•Income increased globally•Increased wages for well educated•Increased wages for technologically skilled•Improved economic conditions for those who compete successfully in the global economy•Increased access to more goods•Reduced prices duet to competition

Negative Effect of Globalization on Equality

• Greater gap between the haves and the have-nots

• Some downward pressure on wages for the poorly educated and technologically unskilled

• Worsened economic conditions in countries marginalized from the global economy.

Positive Effect of Globalization on Labor Conditions

• Increased job opportunities• Upgraded education system and more training• Increased labor standards• Increased labor productivity• CNN effect pressures firms to correct labor

abuses

Negative Effect of Globalization on Labor Conditions

• Certain industries were forced out of business• Decreased labor conditions, forced over time,

etc• Decreased power of unions, benefits, and

pensions

Globalization and Culture

• Greater cross-cultured understanding

• Double edged sword

• Monoculture

• Other views of decentralization– Regional centers

• Ethical identity

Environmental Sustainability

• Meeting needs without compromising the ability of future generations

• Positive side

• Negative side

Globalization and Governments

• Historically, governments played a major role in the promotion of economic development

• Currently, governments have less to do with the economic development within their borders

Technology, Governments, and Globalization

• Technology has allowed businesses to move and change so fast that governments can’t keep up

• Technology has also helped break down the market boundaries, making it a losing battle for governments to try to control them

Positive and Negative Impacts on Governments because of Globalization

Positives• Infrastructure• Jobs• Economic

Development• Improved

management techniques

• Less wars?

Negatives• Lower labor

standards• Private vs. public

goods• Less government

programs• Smaller tax base

Lessons Learned

• Expanded boundaries shows good and bad

• Impact is “mixed”– Must consider tradeoffs

• Understand different assumptions for more objective discussions

• Take a systems approach

• The need to “tame” globalization

United Nations’ Global Compact

• Response to globalization

• Aims to “create a more stable, equitable, and inclusive global market by making its nine principles an integral part of business activities everywhere.”

• Nine points– Human rights, labor standards, and

environmental practices

Global Compact Now

• 3,200 business participants in 94 countries

• Added a tenth point on anti-corruption

• Participation and implementation lag is some markets including the U.S.

• New challenges:– Motivate companies– Deepen engagement by companies– Increased penetration in emerging economies