Business and Management in an Age of Rising Nationalism: Historical Perspectives 

14 04 2017

As I have mentioned in previous blog posts, there are an increasingly number of data points that support the thesis that economic nationalism is on the rise and that political developments may be contributing to the ongoing process of deglobalization. Brexit and the election of Trump are perhaps the most famous of these events.  Public intellectuals and business people are now talking about deglobalization as never before (see here). I’ve also pointed out that academics in business schools have yet to provide managers with concrete and practical advice about how to manage the political risks associated with elevated levels of economic nationalism and protectionist sentiment.  For instance, one of my blog posts critiqued Michael Witt, a political scientist at INSEAD, for failing to give managers advice that was non-obvious and useful. Here’s what I wrote

 

Late last year,  Dr Witt wrote two pieces in which he pondered what deglobalization means for multinational firms. His first piece did an admirable job of summarizing the political science literature on globalization and deglobalization and tells people how two of the three main schools of thought in IR (Realism and Liberalism) view these phenomena. Somewhat curiously, Witt doesn’t say much as about Constructivism, another interpretative tradition in IR, which is unfortunate since constructivism has a great deal  to offer here. Anyway,  his second piece, which was published a week after the first one, sought to offer concrete advice to business executives interested in this topic. Sadly, the main pieces of managerial advice he provided weren’t that useful to managers

I am, therefore, glad that my fellow business historians are now preparing to enter the conversation and to give advice to managers. A special panel on historical perspectives on managerial responses to rising nationalism will be held at this year’s American Academy of Management conference in Atlanta.  Business historians have written extensively about how firms managed previous episodes of deglobalization and my impression is that this panel will draw on this research. In a sense, the panel in Atlanta will complement a recent British Academy of Management event that was held in the city of Coventry. (A few months ago, I blogged about the unfortunate choice of venue for this otherwise excellent event, which included such speakers at  Steven McGuire, University of Sussex, Thomas Lawton, Open University Business School, and Neil Rollings,  University of Glasgow).

My hope is that the events in Coventry and Atlanta will result in publications that give advice to practitioners that goes beyond simply stating the obvious (e.g., “in times of elevated political risk, consider creating an in-house department for engaging in political risk analysis”). Given the calibre of the scholars who attended the two events, I’m very optimistic that high quality manager-relevant research outputs will emerge. It also occurs to me that the volume of the extant business-historical research on managerial responses to rising levels of economic nationalism may now be sufficient to support a meta-analysis paper targetted at a journal such as the International Journal of Management Reviews.

Anyway, here are the details.

Sunday  10.30-12.00pm, Hyatt Regency Atlanta, Spring
Chair: Daniel Wadhwani, U. of the Pacific

Panelist: Matthias Kipping, Schulich School of Bus, York U.

Panelist: Takafumi Kurosawa, Kyoto U.

Panelist: Stephanie Decker, Aston Business School

History can provide management scholars with a unique lens for understanding the current rise of nationalism, and the choices that businesses, managers, and entrepreneurs face in response to those changes. In part, this is because both supporters and critics of the current wave of nationalism point to historical examples and their consequences in justifying their positions. But, even more so, historical waves of globalization and de- globalization allow us a mirror for reflecting on the options and consequences that both policymakers and managers face today. For instance, on the eve of World War I, much of the world economy was economically integrated, with the relatively free mobility of firms, people, and capital across borders. This earlier wave of global integration fell apart with the rise of nationalism and nationalist policies during the interwar period, and a different kind of globally integrated economy had to be rebuilt by policymakers and businesspeople in the post-World War II world. This panel will discuss the lessons of such earlier waves of nationalism and de-globalization for our own time. It draws together four leading business historians, with expertise in four different regions of the world as well as in different aspects of management research. The panel will examine how rising nationalism affected not only the global context in which managers operated, but also consider its implications for business strategy, organizational behavior, social and political legitimacy, labor mobility and entrepreneurship. The goal of the panel will remain focused on the relevance of history for understanding managerial choices and consequences in the face of nationalism in our own time.





Should Scotland Join the Canadian Federation?

10 04 2017

The author Ken McGoogan has recently proposed that Scotland leave the UK and become part of Canada.  His argument is that Scotland would enjoy considerable autonomy as a Canadian province and tariff-free access to the EU market. His proposal, which has attracted some attention in the press, is reminiscent of the early twentieth century Irish and Scottish nationalists who favoured imperial federation, a constitutional arrangement in which there would be a common parliament for the British Empire along with a federal system in which each country (Scotland, Canada, England, etc) would enjoy internal autonomy– Home Rule All Round.  I would say that there is a zero percent chance of this proposal being implemented  but it is interesting that some people in Scotland are thinking in such terms. The sentimental ties between Scotland and Canada remain strong. Moreover, the social memory of the historic ties between the two countries is being used by a variety of social actors, including Nicola Sturgeon, Scotland’s First Minister, who made an appearance yesterday at the 100th anniversary commemoration of the Battle of Vimy Ridge. (It is not entirely clear what agenda drove Ms. Sturgeon to travel to France for this event, which was also attend by the French president and other EU leaders).  Even though academic military historians tend to scoff at claims that it was important, the Battle of Vimy Ridge now looms large in the Canadian historical consciousness in which the same way that Galliopi is important to present-day Australian. For those who want to learn more about how the memory of Vimy Ridge is used by Canadian social actors, I would recommend this recent piece by the journalist Tony Keene as well as this article by Jean Martin, a historian.

 

Sturgeon at Vimy Ridge

 





Digital Fabrication and the Transformation of Global Production?: Uneven Landscapes of Innovation

7 04 2017

That’s the title of our paper for the Academy of International Business UK&I conference. My co-author Jennifer Johns will be presenting it.

Abstract

This paper examines digital technologies with a focus on a particular type of digital fabrication space, the FabLab. Much existing research on these technologies predicts transformative impacts on international business through the adoption of digital technologies.  We aim to begin filling the gap in empirical examination of this issue, using qualitative interview data collected between 2014 and 2017 in the Manchester, Barcelona and London FabLabs. These sites of adoption of, and innovation in, digital technologies are lenses through which we can observe the interaction of actors in the evolution of digital technology.  We find that a significant challenge for international business is the highly uneven landscape of innovation in digital technologies.  Far from being uniform, development in digital technologies and their impact on international business and production networks are highly geographically specific.

 

Since a major theme of the year’s AIB UK&I conference is deglobalization, I should stress that our paper is agnostic on the question of whether digital fabrication technologies such as 3-D printers will actually contribute to deglobalization  by decentralizing manufacturing back towards the household and community levels  Instead, our paper’s focus is on how European entrepreneurs who work with digital fabrication technologies engage in sensemaking to understand our current era in economic-historical time. I would point out that even if the most radical version of the ‘substitution scenario’ comes to pass and most manufacturing reverts back to the community or household level, it would not mean that globalization itself had been reversed. Such a scenario would instead represent a change in the nature of global production networks from a system in which manufactured goods are moved long distances to one in which the data in the form of the designs for such goods are transmitted long distances and are then applied to raw materials, some of which are sourced locally. Such a scenario would be congruent with a trend that has been underway since approximately 2008: as a recent report by the McKinsey Global Institute observed, globalization in the form of the circulation of physical goods has become proportionally less important, as global merchandize trade as percentage of world economic output has fallen, but the globalization of data flows has become ever more important.

 





Future Role of Business Archives

5 04 2017

ICA-SBA-Stockholm-huvudbild

The annual conference for the International Council on Archives‘ (ICA) Section on Business Archives (SBA) is taking place right now,  5-6 April 2017, in Stockholm. A follow-up conference will be taking place 4–6 December in Mumbai. Both events are about the Future Role of Business Archives and should interest both business historians and uses of the past scholars (I’m both). In the photo below, you can see Kathrine Maher, executive director of the Wikimedia Foundation giving keynote today.  Photo courtesy of Anders Ravn Sørensen

mahler

 

 

 

Although I can’t be at the Stockholm conference, I am hoping to get to the one in Mumbai. The focus of the Stockholm conference in on the importance of using true stories for external brand-building communication. In Mumbai, the focus on the internal effects that historical stories can have on management decisions and organizational culture. Since my current research looks at how history influences managerial cognition and organizational culture, the Mumbai conference is a better fit for my research.

These two conferences will help us to answer the following questions: why do corporate archives exist?  How does the use of history give firms a competitive advantage?  How do corporate archives help firms to use history more effectively?   Why on earth would a for-profit company fund the creation of a corporate archive? Why are firms in some industries more likely to spend money on elaborate archives than firms in other industries?  Scholars  various disciplines have come up with competing explanations for why corporate archives exist.  There is a consensus that corporate archives exist because they help firms to achieve their objectives. However, there is disagreement about precisely how archives give firms a competitive advantage.

According to National Strategy for Business Archives of England and Wales (2009), which was written by people trained in the academic discipline of archive science, company archives exist to support “new product innovation, corporate culture and brand identity management information and evidence to protect against litigation, trademark infringement, or assault on reputation”. This description of the function of corporate archives hints at the fact that corporate archives can serve very different purposes.  According to Castellani and Rossato (2014), two Italian communications studies professors,  corporate archives “act as an innovative communication tool” that create opportunities “for dialogue between the company and its community”. This interpretation, likely reflects the Italian context of the authors and is difficult to reconcile with the examples of corporations that fund excellent, well-organized archives that are closed to all external users (Alcan’s archive in Montreal is a famous case in point).

My point is that right now the social-scientific literature doesn’t give us a clear generalisable answer about what exactly corporate archives are for and how they contribute to the competitive advantage of companies. Our paper seeks to answer these questions.  Our argument is that possessing an archive gives a firm a competitive advantage because it makes the historical narratives produced by the firm seem more authentic in the eyes of stakeholders. Most firms invest at least a few resources in the production of historical narratives. The advantage one gets by spending money on a proper archive is that people in post-Enlightenment cultures are much more likely to believe a firm’s historical narrative if it is based on archival documents. It is no coincidence that the world’s first corporate archive was developed by the East India Company in the wake of the Enlightenment, which had convinced educated British people that for a historical narrative to be true, it had to be based on primary sources. Needless to say, many companies have since emulated the EIC’s archive-based rhetorical history strategy!

 

 

 

Castellani, P., & Rossato, C. (2014). On the communication value of the company museum and archives. Journal of Communication Management18(3), 240-253.

 

 

 





Reflections on BHC 2017

2 04 2017

The Business History Conference is my favourite conference of the year. I always come away from this conference feeling energized and inspired. One of the great strengths of the BHC is its interdisciplinarity: economists, historians, management academics, and many other contribute to making the conference very rich. Many of the people who work in management schools who attend BHC will tell you that the research presented here is of greater relevance than the papers that are presented at many management conferences.  The conversations one has at BHC are fascinating: where else can you speak to range of people that include NASA employees, practicing corporate lawyers, and the odd Hollywood actor.

This year’s conference was, in many ways, a typical BHC conference. However, it was exceptional in the sense that there were frequent references to the life and work of the late Chris Kobrak. At last year’s BHC, Chris Kobrak held a reception to announce the launch of the Canadian Business History Association. This year, there was a reception to honour the memory of Professor Kobrak.

 

 

 

 





Connecting the Histories of International Business and “Otherization”: What Business History Can Offer International Business Scholars Who Want to Become Relevant Again

30 03 2017

Andrew Smith: This is the abstract of the paper I will be presenting today at a pre-conference workshop here at the Business History Conference. 

Judging by the content of the leading journals in their field, International Business (IB) scholars have paid little attention to how the imagined communities of race, faith, and ethnicity influence the strategies of multinational firms. In recent years, the terms “othering” and “otherization,” which were previously used postcolonialist academics, have become part of the lexicon of political commentators on both sides of the Atlantic. The Oxford English Dictionary identified “otherize”.  Otherization is the process by which a racial, religious, or ethnic group is deemed to be exotic, alien, and interior to the observer. In March 2016, National Public Radio in the United States noted that this word was being by analysts to describe a particular presidential campaign’s methods of representing those who are perceived to be outside the national community.  These development have profound implications f or multinational firms, particularly those with multicultural global workforces.  Indeed, the managers of the world’s leading corporations appear to be increasingly worried about the rise of populism and xenophobia. Multicultural global capitalism appears to be under attack. Otherization and xenophobia, terms whose use was once confined to left-wing academics and activists, is now being used in debates about the future of global capitalism.  Business people are aware that there has been a change in the mind-set of many voters, consumers, and policymakers.

 

Historians will note that the process of otherization is nothing new and the level of ‘otherization’ in the world is not a fixed constant but a variable that changes over time. To become relevant again, IB scholars should become more historical. By becoming more historical, I mean that IB scholars should both take advantage of historical empirical data for theory testing and development and should engage with such issues as otherization, two themes that are very important to scholars in history departments.  In my  paper, I call on historians of international business to do for the Otherization of racial, ethnic, and religious groups  what international business historians are starting to do for warfare: to combine serious archival research and IB theory so as to produce scholarly works that can inform managerial concerns in the present. My paper will sketch several  ways in which historians of international business can develop our understanding how the shifts in mindsets associated with Otherization have influenced how commercial activity across the imagined borders of races and civilizations have been conducted. It is my contention that by exploring how such “large-group” identities influenced the operation of international business in the past, we can help IB scholars to think about the impact of Otherization in the present, and possible future.





Deglobalization: What Business Historians Can Teach Managers

26 03 2017

17397546-abstract-word-cloud-for-deglobalization-with-related-tags-and-terms-stock-photo

Deglobalization is the current buzzword, as I pointed out in a  blog post I published soon after the WEF meeting in Davos.  Actually economists have been talking talking about deglobalization for a number of years, ever since international trade as a share of world economic output began to decline. Now, however, CEOs and other top executives are really worried about how to respond to the rising levels of protectionist sentiment and the apparent trend in actual government policies towards protectionism.

Stephen D. King, the chief economist of HSBC, discusses deglobalization in a new book on the future of the global economy. King notes that we are in a very different historical epoch than the sunlit uplands of the 1990s, when globalization appeared unstoppable and public intellectuals announced the end of history and great power conflict. King sees a pattern that others have observed, namely that we are going back to an era of protectionism, nationalism, and  ethno-religious tensions similar to that of the interwar period of the 1920s and 1930s.  As a senior executive at a corporation that embodies the multicultural, multiracial global financial capitalism that emerged at the end of the twentieth century, King has very good reasons to be worried about deglobalization.  A similar historical analogy was used by Ruchir Sharma, Morgan Stanley’s chief global strategist in December 2016, although Sharma observed that today’s deglobalization  is somewhat different from the deglobalization of the interwar period .

 

It seems to me that mainstream strategy literature doesn’t appear to offer much guidance to managers seeking to formulate strategies to cope with the new phenomenon. Perhaps that’s because strategy professors haven’t yet had a chance to think about managerial responses to the newly discovered phenomenon.  Similarly, political science doesn’t  seem to offer a lot of practical advice to decision-makers in the private sector.  Michael Witt is a first-class political science/IR professor who teaches at INSEAD business school. If any political scientist could help executives to deal with deglobalization, it would be him.

Late last year,  Dr Witt wrote two pieces in which he pondered what deglobalization means for multinational firms. His first piece did an admirable job of summarizing the political science literature on globalization and deglobalization and tells people how two of the three main schools of thought in IR (Realism and Liberalism) view these phenomena. Somewhat curiously, Witt doesn’t say much as about Constructivism, another interpretative tradition in IR, which is unfortunate since constructivism has a great deal  to offer here. Anyway,  his second piece, which was published a week after the first one, sought to offer concrete advice to business executives interested in this topic. Sadly, the main pieces of managerial advice he provided weren’t that useful to managers.

Let me justify that assessment. Witt says that Liberal IR theory argues that  deglobalization is driven by rising inequality, which caused an upsurge of populist, anti-globalization sentiment from the parts of the electorate that have suffered from globalization.  Witt says that if firms wanted to continue doing business across borders, they need to shore up the political foundations of globalization by accepting a more progressive form of taxation. (Similar sentiments were heard from CEOs the January 2017 gathering in Davos).  Witt also argues recommends that  “longer-term investment plans should probably involve scenario planning”  that takes the re-imposition of tariffs into account.

The second piece of advice is sound and common-sensical, but the suggestion that senior executives do more to combat inequality  isn’t really practical, since a single CEO would be unable to combat rising inequality in their home country, unless that country happened to be very small and their firm was a major employer. There is a sort of free rider problem—if a CEO increases the wages his firm pays and no other firm follows suit, the CEO will have added to his costs without having done much to change the overall level of inequality in the country. A CEO operating in a corporate system dominated by Shareholder Value Ideology has very limited freedom to act.  That’s the problem with the argument that the left-wing venture capital Nick Hanauer made, when he said that CEOs who are worried about Trump’s protectionism should simply have paid their workers more.

It seems to me that Constructivist IR and, especially, my own home discipline of Business History could offer more useful advice to the makers of MNE strategy at this junction. (Business History informed by Constructivist IR could be a very powerful tool indeed).

The Constructivist approach to IR and International Political Economy (IPE) stresses that nations make policy in a cultural context that shapes how contemporaries view their self-interest. In other words, cultural differences such as gender ideologies, racial, religious, and ethno-national identities need to be taken into account. Deglobalization, both historically and in the present, appears to be associated with the rise in ethno-nationalist sentiment and growing hostility to the perceived other. While no single firm can reverse a pronounced trend in the culture towards  greater intolerance towards the Other, a group of firms, working together, can help to limit the spread of ethno-nationalist ideologies. For instance, they could do so by agreeing not to advertise on websites that promote the alt-right mentality that is congruent with tariff protectionism (see here).

Business history provides even more concrete advice. As business and economic historians know, deglobalization has happened before, most famously with the outbreak of the First World War. We can look to see how firms at the time handled deglobalization. Business historians have shown that a classic response to the imposition of tariff barriers is for firms to create local manufacturing subsidiaries within foreign nations.

There are other lessons about how to deal with deglobalization that managers can take from the historical record.    In a paper I published in an international-business journal, I discussed how the Hongkong and Shanghai Banking Corporation dealt with the First World War, a crisis that had the potential to destroy the corporation. HSBC, which was founded in 1865 and which had a multinational shareholder base and board of directors on the eve of the First World War, embodied that the open and cosmopolitan capitalism of the late nineteenth century, an era that was marked by falling trade barriers and increasing interconnectedness. HSBC was able to survive the First World War by paying close attention to the state of public opinion in Britain, which became increasingly xenophobic, and by severing ties to its German shareholders, directors and customers and by purging its executive workforce of a prominent individual of German-Jewish ancestry. HSBC was a much less profitable firm at the end of the conflict, but unlike many of the international banks in existence in August 1914, it survived the war. My paper aimed to use the historical experience of HSBC in war to identify lessons for the managers of present-day firms confronted with war and other drivers of deglobalization. One of these  lessons for present day managers is that conserving political capital in periods of heightened tensions between nations or other imagined communities may require the ruthless termination of relationships with people who are associated with the Other, at least insofar as the law of the land permits. (Note that I’m not saying that such a strategy would be morally right, just that it has worked in the past for firms). Another lesson that wartime managers could take from my paper on HSBC in WWI is that preserving legitimacy in the home country requires the head office to exert more control over overseas managers, less they embarrass the MNE in the home country, than would be the case in a time of generally good international relations.

There are important lessons for managers in the edited collection on the impact of the First World War on firm strategy was released by Routledge.  This book brought together the research of a business historians who use corporate archives. It is a common place among economic historians and historians of globalization to say that First World War end a long period of globalization and initiated a long period of deglobalization that that continued until after 1945. The edited collection was intended to help explore how firms confronted with a radical change in their operating environment responded. The papers in the collected documented a range of creative managerial responses to the First World War and its aftermath that included the creation of trans-national interfirm research alliances (see the paper by McGlade),  the adoption of new legal forms for companies (see the paper by Hannah), and the adoption of new management techniques in France and the UK (the chapter by Boyns). Studying how firms responded to sudden and dramatic change in the geopolitical environment in 1914 has the potential to offer lessons to the managers of today’s multinational firms.