Bricks and Mortar in a Borderless World: Globalization, the Backlash, and the Multinational Enterprise

Abstract

Research summary

Globalization, increased interconnectedness, and deep integration resulted in significant increases in trade and FDI from 1989 through 2008. The recession marked the end of that trend and the rise of a broad-based opposition that has economic, social, and political components. This article explores the backlash, arguing that is driven by sociotropic perceptions. While globalization can be explained as a cyclical or structural phenomenon, I argue that technological change results in a networked global economy, the transition from a space of places to a space of flows, and increases the potential cost of devolution to the point where economic independence is no longer feasible. Nonetheless, I conclude that MNCs face a period of prolonged uncertainty and develop implications for firm strategy.

Managerial summary

Globalization entailed explosive growth in trade and FDI from 1989 through 2008. The decline in both since the recession and the strident backlash may indicate the end of this wave. The economic, political, and social components of the backlash are explored, and I argue that while the economic and political factors that gave rise to globalization longer exist, structural factors—networked MNCs, dispersion of technology, and complex global supply chains—increase the cost of devolution to the point where a return to independent national markets is not feasible. We are likely to be stuck with an international economy from which we can neither withdraw nor manage effectively, a prolonged period of angst and uncertainty. I conclude with scenarios and implications for multinational firms. Copyright © 2017 Strategic Management Society