Deglobalization: What Business Historians Can Teach Managers

26 03 2017


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.






Workshop: Energy governance and sectoral trajectories: France and Japan in evolutionary perspective

1 06 2016



AS: Anyone who will be in Paris on 6 June and who is interested in attending this workshop should contact the organisers on to reserve a place. There is no fee.
Energy governance and sectoral trajectories: France and Japan in evolutionary perspective
6 June 2016, 9.30-18.00, 190 Avenue de France, 638 (6th floor)

9.30-9.45 Introduction and welcome, Sebastien Lechevalier (EHESS) and Patrick Fridenson (EHESS)

9.50-10.30 Alexandre Rojey (Fondation Tuck)
The energy transition in France and in the world – Objectives and obstacles

10.35-11.15 Yukiko Fukasaku (Independent scholar)
The energy transition in Japan – Challenges and opportunities in comparative context

11.20-12.00 Miyuki Tsuchiya (Université Paris II / Cersa)
Governing energy: the ambiguous link between policy and politic after 3/11. A comparison between France and Japan

Lunch 12.00-13.00

13.00-13.40 Takeo Kikkawa (Tokyo University of Science)
The evolution of Japan’s electricity industry since the 20th century

13.45-14.25 Alain Beltran (CNRS / Université Panthéon-Sorbonne, Paris I)
The history of French electricity since the 20th century
14.30-15.10 Chenxiao Xia (Kyoto University)
Japanese electrification as contrast with the West

Tea break

15.35-16.15 Aleksandra Kobiljski (CNRS / Institut d’Asie Orientale)
Energy workaround: Upgrading coal in Japan’s steel industry

16.20-17.00 Maki Umemura (Cardiff University / FFJ)
Innovation, governance and uncertain shifts in Japan’s photovoltaics industry

17.05-17.45 Christophe Bouneau (Université Bordeaux III Michel de Montaigne)
Governance strategies and innovation dynamics in the French energy sector since the

Interwar period

17.50-18.00 Concluding remarks
Please email to register attendance.

Historical Research and the Panama Papers

8 04 2016


The Panama Papers are front-page news around the world and nowhere more so than in the UK, where the tax arrangement’s of David Cameron’s family are facing intense public scrutiny (see here, here, and here).  The international furore over the Panama Papers revelations follows many months of debates about international taxation, particularly the taxation of multinational firms such as Google.

At such a time, it is helpful to put contemporary debates about tax havens and cross-border tax strategies into a business-historical perspective. Luckily, a recent paper by Simon Mollan and Kevin Tennent allows us to do that. I’m sharing the details of their paper here in the hopes that it gets the attention from the media and policymakers that it deserves.

International Taxation and Corporate Strategy: Evidence from British Overseas Business, circa 1900-1965


In this article we establish the impact and importance of international taxation on British overseas business circa 1900 to 1965. As the levels of national taxation rose across the twentieth century, different states began to compete for taxable income. This created international double taxation whereby taxation was due twice on the same income or profit. We examine the difficulties that this caused and the responses of firms to this challenge, through the adoption of tax-minimisation strategies, alterations to corporate structure, and the relocation of corporate domicile. We discuss how international taxation was one of the secular changes in the international business environment that contributed to the rise of large-scale multinational enterprises. We conclude by making a call for greater consideration of international taxation in international business history.


Historical Parallels with Current Debates about the Ideology of Silicon Valley

29 02 2016

Henry Ford, 1919


What are the political values of  Silicon Valley’s leaders? How do the values prevailing in Silicon Valley influence the ways in which tech companies are run and the interactions between tech workers and the rest of the population? These questions have recently been debated extensively in the media. Interest in this topic has been increased by stories about conflict between “tech bros” and the homeless in San Francisco (see here),  Y Combinator’s apparent interest in the idea of a minimum income for all citizens (see here), the ongoing fight between Apple and the FBI (see here), controversies about gender (see here) and race in tech companies (see here), and the astonishing data showing that Bernie Sanders has been out-fundraising Hillary Clinton in Silicon Valley (see here).

It has long been clear that few people in Silicon Valley could be placed on a traditional US political spectrum (i.e., one that extends from Bible-thumping patriots on the right to ultra-left social workers on the left). There is certainly a libertarian segment within the Valley, but the reality is even more complex than that.   In my view, perhaps the best journalistic piece about Silicon Valley’s ideology was Timothy B. Lee’s article in Vox earlier this month.  Lee’s paper digests the research on the political views of of Silicon Valley’s elite that has been done by Greg Ferenstein, formerly of the  popular Silicon Valley blog TechCrunch (see here and here).

Lee writes that:

If you’re used to thinking about politics along conventional left-right lines, the Silicon Valley ideology Ferenstein sketches might initially seem like a mass of contradictions — it’s simultaneously anti-regulation and pro-government, libertarian and pro-Obamacare. But Ferenstein argues that these views start to seem more coherent once you understand the unique perspective of technology elites.

In an interview with Lee, Ferenstein claimed that Teddy Roosevelt’s ideas correspond with those of Silicon Valley today. “Theodore Roosevelt. Progressivism — meaning modernism — jumped from the Democrats to the Republicans in the early 20th century. The idea of government efficiency became very popular in Roosevelt’s short-lived Bull Moose Party. Around this time, scientists and engineers started to develop the modern technocratic state.

The word progressive then got co-opted by the labor movement and populist movements a few decades later. But Teddy Roosevelt’s progressivism has been in the American timeline for a while. I think it’s becoming powerful now thanks to the rise of the tech industry.”

I can kinda see why Ferenstein gravitated towards this historical example in the course of trying to make sense of Silicon Valley’s politics. Teddy Roosevelt, the iconoclastic Republican who eventually broke with the GOP in the 1912 presidential election, is an early example of an individual whose views are hard to label. However, I don’t think that Teddy Roosevelt’s militarist, nationalist, and hyper-macho ideology has much in common with the pro-feminist, pro-globalization, and proudly multicultural Silicon Valley of Mark Zuckerberg and Cheryl Sandberg.

As a business historian, what is interesting to me are the parallels between the ongoing fascination with the ideology of Silicon Valley and the amount of ink that was spilled a century ago by people who tried to understand the ideology of Henry Ford, a hard-to-categorize entrepreneur whose innovations disrupted American life. Ford was a vegetarian, a pacifistic, an anti-Semite, and a hater of trade unions and thus combined a variety of left-wing and right-wing positions. His political and managerial ideas fascinated contemporaries, which is why he became a cult figure (think Steve Jobs) who was admired by leaders around the world, including several totalitarian rulers.  I detect a pattern here: whenever a disruptive new industry comes along and changes everyday life, people devote lots of time to trying to determine whether the key entrepreneur or entrepreneurs have a coherent political worldview. (Such efforts may be a foolish intellectual project– I would defy anyone to find coherence in the inconsistent ramblings of Donald Trump).

As a management academic who is interested in entrepreneurial cognition, I’m very interested in another pattern that is revealed here: the people who create new industries tend to be unconventional thinkers whose political views are hard to categorize.



Relevance and Academic Rigour: Why Business Historians Ought to Read Dan Drezner’s Recent WaPo Piece

3 09 2015

Dan Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University. His scholarly works will be familiar to those of us who research international political economy or international business history.  Non-academics will know of Drezner through his Washington Post punditry: Drezner has a knack for presenting academic research in an accessible fashion that allows the average reader of a quality newspaper to make sense of the world. Yesterday, he published a great piece on how political scientists can be academically rigorous and policy-relevant at the same time.

Addressing his remarks at younger political scientists considering their career strategies, he writes:

My own piece of advice on this question is simple.  The best way for academics to maximize their rigor and their relevance is to focus on those areas where the Beltway consensus is at variance with the academic consensus… If there is a gap, that’s fantastic for political scientists. Because that creates a pretty easy-to-write paper that demonstrates the policy consensus, then discusses the academic consensus, and ideally provides data to explain why the gap persists. Often it’s because the policymakers retain untested assumptions, like China’s holdings of U.S. debt giving China foreign policy leverage. But sometimes it might be because policymakers think about the question differently, which in turn can provoke academic reconsideration of the question.  Take, for example, the ongoing debate about the role of reputation in international crises.  The overwhelming consensus in international relations theory used to be that it didn’t matter much at all. Now, there’s a reevaluation going on.

With the possible exception of economics, every social-scientific discipline has its own debates about whether there are trade-offs between academic rigour and accessibility. Accessibility in this context means ensuring that academics are being heard by the group of real-world practitioners served by each discipline. The ultimate consumers of academic knowledge vary, but generally speaking they are policy-makers in the case of political science, working lawyers in the case of legal academics, and businesspeople in the case of management academics.  (Cass Sunstein, the great US law school professor, recently published a paper on this issue as it pertains to legal journals).

Business historians are currently engaged in a debate about the future research trajectory of our scholarly community (see here and here).  Since most business historians work in management schools, we need to give some thought as to the relevance of our research to the ultimate consumers of our academic knowledge. It seems to me that Drezner’s advice about identify gaps between the scholarly consensus and the prevailing ideas among practitioners could be adapted to the needs of the business history community.

I’m currently working with some colleagues on an book about the impact of the First World War on international business. Although the book is aimed primarily at academics, we are striving to ensuring that the manuscript we produce will be readable by and relevant to interested non-academics. I’m working on that book project today and Dan’s piece in the WaPo has intensified my belief that it is really important that we business historians reach out to businesspeople and others who live outside of our ivory towers.

Business History Journals in the Journal Quality Guide of the Association of Business Schools

26 02 2015

Journal Quality Guide of the Association of Business Schools  is used to rank journal articles and is important in the lives of many management academics in the UK and Scandinavia. The new version of the guide was released at 12:01am yesterday. I know of at least one colleague who stayed up past midnight so that they could download the guide immediately after its publication.

ABS Journal Quality Guide

There have been some significant changes in the relative positions of business history journals on page 17 of the ABS guide.

For one thing, some economic-historical journals have appeared on the list of approved historical journals. We can expect more submissions by management scholars to such journals.

Business History a UK based journal, has now been overtaken by the Business History Review from the US. The precise reasons for this change continue to be debated. Business History now ranks as a 3, a rank it shares with Enterprise and Society. The Business History Review has climbed to 4.  The system of rankings has five grades: 4*, 4, 3, 2, and 1.

One other important development in this ranking system is that Management and Organization History has attained a ranking of just 2, whereas prior to yesterday’s release of the new rankings, it had been widely expected to climb to 3.

The guide can’t be downloaded as document that I can forward to you, so I have inserted a screen shot.

The Buzz About Citizen Coke

4 02 2015

I’m going to be co-editing a special issue of the journal Business History with my frequent research collaborator Kirsten Greer. The theme of the special issue is the intersection of business and environmental history: all of the papers in the SI will look at the historical relationship between business and the natural environment.

Because of my work on the special issue, I’ve been encouraged by the fact that Bartow Elmore’s new environmental history of the Coca-Cola company has generated extensive media attention. The degree of attention that has been paid to Citizen Coke is unusual for an academic book, especially one that is the author’s first major publication.

Here is the book’s blurb:

How did Coca-Cola build a global empire by selling a low-price concoction of mostly sugar, water, and caffeine? The easy answer is advertising, but the real formula to Coke’s success was its strategy, from the start, to offload costs and risks onto suppliers, franchisees, and the government. For most of its history the company owned no bottling plants, water sources, cane- or cornfields. A lean operation, it benefited from public goods like cheap municipal water and curbside recycling programs. Its huge appetite for ingredients gave it outsized influence on suppliers and congressional committees. This was Coca-Cola capitalism.


Positive reviews of the book have appeared in the Wall Street Journal, the New York Times, and the Business Standard. [The Business Standard review faults the book on stylistic rather than for content]. A more critical but nevertheless thoughtful review appeared in  Columbia Daily Tribune. The review published in the WSJ is favourable, which is impressive given that Elmore’s book is hardly compatible with the ideological agenda of that newspaper.  The book has also been described in media sources ranging from the Daily Mail, a middlebrow UK newspaper to the Huffington Post to Bloomberg Radio. The book has also been cited in the debates about whether to levy special taxes on sugary foods.

You can listen to Elmore talk about his research here. You can watch him here.

Anyway, the interest that Elmore’s book has generated has convinced us that our Special Issue on Business/Environmental History will be of use to a wide variety of academics.