This article was published in Management Today on Wednesday, 28 August 2024.
Multinationals that came to maturity in the nineties and early noughties in the globalisation era adopted a one-size-fits-all model for their worldwide activities, but many have been slow, or indeed struggled, to adapt to deglobalisation.
Worryingly for boards, the costs and strains of stuttering adjustment to the new economic landscape are beginning to increase, raising questions about the sustainability of centralised corporate decision-making. Given the emergence of a more fragmented world, would multinationals be better placed to deal with the consequent challenges by granting their regional operations more autonomy? The question requires serious consideration, as the one-size-fits-all approach is starting to show unmistakable signs of strain.
Resurgent great power rivalry, growing multipolarity, competition over resources and protectionism have over recent years been reversing globalisation, hugely complicating the international business landscape. This has led to multiple concerns for global companies, from the unreliability of supply chains, the toughening of local content rules, expanding primary and secondary sanctions to restrictions on the use of certain types of software and diverging data regulation.
International businesses are starting to be impacted by deglobalisation at every level, even down to nomenclature issues, as firms operating in East Asia will have doubtlessly experienced. Marketing collateral featuring maps and services that suggest Taiwan is part of China will not help you win business in the Taiwanese market. Similarly, if your business uses Taiwanese enquiry numbers, you will likely upset Chinese customers. Elsewhere, Israeli services and software are effectively barred from parts of the Middle East and beyond. And in Asia, Europe and North America, data regulations are beginning to diverge – so much so, that there is no guarantee that following the highest standard will keep your firm compliant across all jurisdictions.
Authored by:
Dr Nicholas Redman
Editor-in-Chief and Director of Analysis
Dr Sarah Fowler
Senior Analyst, International Economy
