Trends and Indications in International Business
Forecasting changes in business environments is critical for appropriate responses by policy makers and corporate decision makers. This article reports on a Delphi study which features three rounds of interchanges between experts on possible changes in the international business environment and practice in the next years.
Results indicate that terrorism and corruption issues have risen in importance while trade negotiations have declined. Corporate strategies are seen to need significant reform to deliver on the promise of globalization. As trends are becoming more multidimensional, regular solicitation of stakeholder perspectives becomes more important.
KeywordsInternational business trends Globalization Delphi method Trade policy International business research Corporate adjustment
Forecasting changes in the international business environment is critical for the policy, corporate, and academic communities. As the importance and impact of international business overall has increased, there is a commensurate need to identify, as early as possible, emerging issues, and assess their potential effect on policy makers, practitioners, and researchers (McKinsey & Co. 2006). While there are many individual broad visions as to the future business environment (Marcovitch 1997), a more specific way to engage in forecasting is to get the business, policy and research communities to interact in the process of outlining possible scenarios and resulting actions. Since no one region or location will be the only origin of change, a diversity of opinion across geographies secures a more balanced portfolio of comments.
The possibility to identify, analyze, and debate changes allows for the timely preparation of strategies in response to them. While some of the issues presented may already be emerging, the ideal results identify early signals of outlying phenomena thereby allowing policy makers and business leaders to execute proactive responses. Similarly, academics can be normative in their research rather than analyzing what may have already occurred (Dunning 2002).
Interestingly, while most agree that international trends are more important than they were only a few years ago, preparation for the changes brought about by these trends is lagging. In their global trends survey of 1,136 executives, McKinsey and Co. (2008) found that while identifying global trends has become increasingly important, few companies are addressing them successfully. In addition, the cross-over of information between the “silos” of disciplines is very limited. For example, top management research publications show an insignificant share of articles focused on the international and policy dimensions. On average only 5 percent of articles present an international focus (Werner/Brouthers 2002). At the same time, only 11 percent of policy articles focus on international issues (Sprott/Miyazaki 2002). A review of the 69 social sciences journals, listed in the Harzing quality list and with a title beginning with ‘International’ (Harzing 2006), revealed that many journals do not publish international research but rather try to indicate through their title that they would like to appeal to, or draw submissions from, an international community.
This study used the Delphi technique, reported to be a “method (which) produces useful results which are accepted and supported by the majority of the expert community” (Fraunhofer Institut 1998). The method integrates the opinions of experts using multiple waves of data collection and interaction between respondents. For 50 years, it has been used by leading corporations and organizations to develop strategic guidelines (Duboff 2007). Results of the technique have been used to guide decisions into investing in new technologies and markets and have brought together the thinking of a variety of different communities.
The overall objective is to achieve consensus among the panelists who represent a diversity of backgrounds and geographies. The selection criteria for panelists included active careers and leadership roles in the international business community, a demonstrated ability to see issues beyond the local and current circumstances, as well as a willingness to engage in intellectual dialogue and debate. A total of 34 experts participated in each of the three phases of the study. There is no agreement on the specific panel size for Delphi studies, but past studies have typically included 10-30 experts (Akins/Tolson/Cole 2005). Users recommend groups of about 30 experts based on the finding that larger groups create few additional ideas and limit the in-depth explorations of the ones generated (Delbecq/Van De Ven/Gustafson 1975).
This report is the latest of five international Delphi studies undertaken by the authors in the past 25 years (Czinkota 1986, Czinkota/Ronkainen 1992, 1997, 2005) in order to identify the key international business dimensions subject to change in the next 10 years. The critical question targets the appropriateness of the Delphi technique to establish expert consensus on very complex issues. Green and Armstrong (2007) suggest that “the Delphi technique could be used to improve the assessment of analogies …, potentially increasing accuracy further at a low cost.” We compared the predictive ability of each of the past studies. Our ‘hit rates’ were in 1986 (82 percent), 1992 (80 percent), 1997 (65 percent), and 2005 (89 percent) providing an average accuracy level of 79 percent. Nevertheless, the changes between Delphi studies have been substantial; for example, from 2005 to 2009, terrorism and corruption issues rose in importance, while trade negotiations declined. Similarly, corporate strategies were much more influenced by the need for reform than was the case only four years earlier.
Over time, the accuracy percentage has increased, possibly as a function of the panels being more global and diversified, though the 2005 result may be overly strong due to the recency of the forecast. In many cases, however, the inaccuracies have been more so on the expected rate and speed of a particular change rather than on missing out on the change itself. There have, however, also been the misses for big events – which were seemingly unpredictable, even by the world’s finest intelligence agencies. Examples are eruptions such as the fall of the Berlin wall, the disappearance of the Soviet Union, or the sudden escalation of the global financial crisis. For those instances we seek recourse to the ‘Black Swan’ phenomenon (Taleb 2007) which postulates that conditions or phenomena which have never been encountered before (such as non-white swans in European descriptions before the discovery of Australia) are particularly hard to incorporate in a forecast.
The quality of participants and their willingness to expend effort on the Delphi work determines the value of the study results. The experts need to understand the issues, have a vision, and represent a substantial variety of viewpoints. The selected participants needed to have more than 20 years of experience in their fields and be very well connected to their global counterparts. In addition, they needed to be active in international business for at least 10 years; have a leadership role within their professional setting; a global vision beyond local and temporary concerns and accessibility and willingness to engage in intellectual dialogue. Most business respondents were either chief executives or executive vice presidents of their organizations, most policy respondents were current or former members of the legislative and executive branches of government. The academic participants were mostly professors specializing in international business. Some individuals had participated in earlier Delphi studies, but most were new respondents. Tab. 1 below indicates the number, location, and profile of the panelists. In order to make use of today’s heightened connectivity and expedite the interactive process, e-mail was used for the data collection. The method was adopted also to secure participant commitment through faster turnaround periods between the waves.
The data collection effort started with an open-ended question. Panelists were asked to “identify international business dimensions subject to change in the next 10 years and highlight the corporate and policy responses to these changes.” Issues and projected responses were to be rated for their impact on a 10-point scale from very low to very high. Responses from the first round were categorized and linked to corporate responses.
In the second round, panelists were presented with the categories and comments and were asked to indicate their level of agreement with the statements made. In addition, they were requested to rate the impact each proposed change would have on corporations and policy makers using a 10-point scale to generate the precision of information needed (Gleason/Devlin/Brown 1994). The overall goal in the first two rounds is to achieve the highest level of consensus possible among the three constituent groups. The third round focused on statements for which there continued to be disagreement between the panelists.
A key element in the data collection is the interaction of the respondents across the corporate, policy, and academic communities as well as across the different geographic locations. The interaction provides broadened perspectives on the importance and impact of the trends. No one community or any geographic location has a monopoly on trends. However, some are more likely to influence or be subject to change than others. We therefore worked on securing input from multiple key groups and locations, but to also ensure that key change regions and fields were represented. This targeted diversity forces respondents to consider realistic and broad aspects within their strategic perspective.
As mentioned previously, panelists in the previous Delphi studies had not identified major outliers of change (such as the collapse of the Soviet Union). Therefore, special provisions were made to re-introduce statements into the debate which were considered unusual or extreme in order to stimulate discussion of even outlandish claims in order to gauge trends beyond the normal realm of expectations (Taleb 2007).
Key Policy Issues
Firms and policy makers have a clear understanding that terrorism is an ongoing phenomenon to be confronted. Combating terrorism was seen as a fact of life and history, resulting in a continuous job for push-back to be conducted multi-laterally and without compromise. Counter-terrorism needs to preclude the failure of the will of the people and governments opposing the terrorists.
The root causes of terrorism were identified as policies towards immigrants and the sometimes dividing roles taken on by advocates of specific religions, cultures, regions, or races. Approaches proposed to address these root causes were education, improved nourishment, and the ability to control one’s own destiny. But there will also be a growing emphasis on national interests accompanied by limited readiness for multilateral solutions. It will be a key task for governments to diffuse such desires rather than coddle to popular demands. Only with the collaboration of all parties concerned can local and regional protectionism and de-globalization be avoided. The greatest imperative will be to develop and maintain the power to execute peace.
Much disagreement rested with the assessment of key approaches to defeat, or at least to manage terrorism. Some panelists felt very strongly that materialism and ‘having something to lose’ are key dimensions to secure for those who perceive themselves excluded from the benefits of globalization. Others suggested a prime role for spirituality, empathy for and understanding of cultural differences. Future success may favor those who have the ability to pair values with valuation.
Consumers appear willing to change their consumption patterns if needed for security considerations. In response to cultural diversity and cross-border cultural conflicts many may give up earlier preferences, giving country-of-origin a new meaning. Corporations are likely to revive ethnocentric and polycentric policies and use export activities, rather than foreign direct investment, as the dominant form of dealing with foreign markets. They will either pull out from countries that lack law and order or service them only at a very high risk premium.
Key gains of globalization are achieved by consumers, intermediaries, and originators, since those participating in the supply chain can move to different locations to benefit for low costs or other advantages. The key issue is mobility. Workers are not necessarily able to take advantage of this since the cost of moving may be quite high due to different environments and cultures.
Education and training are crucial for better and more rewarding tasks for workers. When asked how countries can move up on the globalization chain, our panelists consistently rated education as the most important component, followed by competition and investment. A discussion forum with former Latin American presidents fully supported this perspective (Pino 2007). However, there was a sharp divide between panelists when it came to the content of education. Some stressed the importance of keeping up with learning both quantitative and qualitative knowledge. Others believed that learning of difficult knowledge – say physics, mathematics, chemistry – could be outsourced to those who revel in such materials. Quality education time could then be dedicated to other pursuits, such as music, art, or poetry. Repeatedly, the question arose whether learning was to serve an inner spiritual desire or society and whether, for example, the implantation of a ‘knowledge chip’ would be better or worse than the stepwise acquisition of knowledge under difficult or even unpleasant conditions. A key point was: Are we really all dumbed down since the invention of the calculator?
Workers in low-wage countries are often unable to earn developed-market pay due to barriers imposed by governments. While there is strong evidence that the removal of trade and investment barriers raises living standards across the board, there still will be winners and losers. There is a need for sequencing to minimize disruptions; for example, it may be necessary that a lengthy phase-in time will allow people to adjust to change and help those who are worst hit. Location-specific differences in how quickly globalization’s effects will trickle down jointly with variations in social standards and the existence of a social net greatly affect the change on workers. Currently, brawn and assembly are cheap, while knowledge and creativity are expensive. These dimensions can be cyclical, however. Conditions may change quickly to reward “fighters” more than “thinkers.” Entire clusters of opticians and grinders became obsolete with the advent of electronic manufacture of optical devices.
Those who suffer from globalization will be fierce opponents. No matter if one cogently points out that only a small portion of their troubles emanate from international issues, the mere fact that these issues are implicated will be enough to result in vitriolic campaigns against them. Of crucial importance will be the supportive role played by those who accumulate the gains from international economic activity. However, their preoccupation with managing growth may make their support questionable or limited, letting them recognize their loss only after major actions against the global economy are taken.
Changes in reserves and economic relations, accompanied by an unbundling of financial systems between the U.S. and other nations are also likely to lead to changes in the acceptance of laws and politics. Less deep financial pockets will lead to financing difficulties in markets which have depended on an ample supply of money. The exit of marginal participants and the tightening of existing rules and expenditure habits will be one consequence.
The United States continues to present new and special opportunities to the world. It offers the security and safety that have, sadly, been unattainable for most people on earth. It presents a vision, flexibility, and capability to adjust to new conditions which are the envy around the globe. A long term perspective is needed to appreciate past effects and future prospects. Global investors are not foolish when they show their reluctance to turn away from the dollar. What determines the value of money in the long term is the trust, promise, and the future that a nation offers to those holding its currency. Finding ways of steering these investor expectations enables a country to maintain or systematically alter the value of its currency.
It is likely that the role of international organizations will shift. The World Trade Organization is already pressed to take on more responsibilities, some of them reaching well beyond trade. The feeling of many is that, if we are to avoid growing trade conflicts and the exploitation of local rules for the benefit of nefarious individuals and firms, a uniform implementation of key principles will be necessary. Such principles will include child employment, working conditions, and the rule of law in areas such as contract awards. Violators of such rules will eventually find out that the eventual enforcement of consistent regimes around the world, there may be an ability to run, but there is no ability to hide, particularly not from highly motivated consumer activists.
Other international organizations may become much weaker. For example, in an era of individual links with one another for purposes of information, trade, and financial exchange, the developmental role of the World Bank may well diminish. Poor countries may feel that they simply have no stake, no respect, and no benefit from the institution. Similarly, the International Monetary Fund may be far outperformed by local and regional lending arrangements which do not impose requirements for economic adjustment which are harsh and of little relevance to long term performance. The currently overwhelming power of rich countries in the voting system of the fund increasingly lets developing countries feel that they are members of the less than full value.
Corruption is a major detractor from global welfare and local economic development. Its consequences are shoddily built roads, structures that collapse, clinics with equipment purchased at high prices or inappropriate specifications. In all such circumstances vast public expenditures do not achieve the envisioned use and local interest suffer.
Typical side payments are 10-15 percent of all major expenditures, with much higher levels in the developing world. “It is human nature to lubricate relationship with gratuity” was a typical statement, with more diversion attributed to high-context cultures (e.g., Latin America, Latin Europe, and Asia) and less to low-context ones (e.g., United States, Northern and Germanic Europe). Yet, the social acceptance of corruption was seen as a bigger danger because it protects the elite from domestic scrutiny and control. Therefore, the ongoing impact of the U.S. Foreign Corrupt Practices Act and the OECD discussions were seen as instrumental in reducing or at least containing such misappropriations. More multilateral action is seen as necessary to ensure broad, continuous and relentless enforcement of measures against violators. Beneficiaries of ill gotten gains from bribery should eventually be pursued globally to disgorge their ill gotten gains.
There is a strong belief that cultures around the globe will become more similar to each other, particularly in the area of macro issues such as accountability, performance expectations, freedom accorded within society, and product preferences. Such cultural assimilations were also seen to be profoundly influenced by the United States, threatening less-dominant cultures. At the same time, it will be more difficult to export overwhelmingly uniform ways of thinking due to an increase in regional and local sovereignty and calls for cultural protectionism even by multilateral organizations such as UNESCO (Moore 2005).
History indicates that cultures rise and fall over time, with conflict in the process, regardless of information flows, insights, and learning. Otherwise, the world would now be speaking Greek, Latin, or Arabic. Already today, the use of English as a business language can create resentment and hostility. Companies are discovering that language also conveys cultural norms, which, in turn, reduce the creativity and local connections of their employees. It appears to be quite likely that firms will increasingly develop a norm stating ‘we did not hire you for your English’ which will introduce a new multi-polarity to global management.
On the micro level, however, ongoing culture clashes were foreseen to continue, often giving a boost to fundamentalism. In many regions of the world, individuals will, for the first time be truly exposed to new cultural groups. For example, it will be a new experience for many Americans to be exposed to large groups of Latinos, and, perhaps even be confronted with becoming a regional minority. Similarly, ‘Western’ Europeans will become exposed to the influx and major competition from what used to be communist neighbors. Some might find this advent of new neighbors unacceptable.
All these moves will not leave cultures unchanged. Culture is the result of learned behavior and adjustment to new conditions. Opening up to others on a such a gigantic scale as the world has done within a relatively short time, will bring some individual xenophobia, but also the reward of growing flexibility, better understanding and rising tolerance levels. Mobility may well crate a new generation of innovators and risk takers.
It is the task of governments to prevent cultural conflicts from becoming irreconcilable and to find ways to keep society cohesive, linked, and ready for collaboration. Governments must recognize the investment models driving the behavior of firms. They evaluate locations and opportunities in terms of risk and return within a particular time frame. Higher risk or shorter investment periods require higher returns. Expedited returns lead to higher prices, lower investments, and less investment stability. It is important that governments provide a lower risk platform and communicate about their planning and results, so that investors can recognize and reward a less risky environment. In addition, the impact of consumer activists on corporate actions needs to be recognized. Rapid and transparent information flows result in greater insights and more challenges on part of consumers. They are willing and able to express their views, consolidate their emotions into commercial action and use their networks to enhance their reach. In consequence, governments need to develop and adhere to standards of behavior which comply with global expectations for human dignity.
The corporate challenge is to reap the economic advantages of globalization while preserving local cultural values. Corporate business practices are likely to become more global due to the growing participation by Asian firms, brands, and managers in world markets. Therefore, a better understanding of networks and networking across cultures becomes more crucial. For example, Chinese, Indians, and Russians have different approaches to network building than Westerners. Increased participation by international players will affect market opportunities for American products and force firms to globalize their strategies. Similarly, corporations will opt for more use of soft power (e.g., corporate philanthropy) rather than hard power of penalties to achieve gains in the global market place (Tse/Cainey/Haddock 2007).
They may also have to find ways to adjust to different subcultures around the globe which are already entrenched and growing. The Archbishop of Canterbury stirred up much public sentiment when he called for a re-examination of the role of Sharia in British life in 2008. Sharia is the body of Islamic religious law which is based on the Koran, the words and actions of the Prophet Mohammad, and the rulings of Islamic scholars. It typically finds it application mainly in Muslim countries.
The Archbishop suggested that, with a population of more than 2 million Muslims in Great Britain, Sharia already figures prominently in the lives of many. Informal neighborhood councils provide rulings on family issues such as divorce; banks, such as HSBC already market mortgages which comply with Sharia rules of lending (Adam 2008). Perhaps Muslims in Britain would be more comfortable and willing to build a more constructive relationship within British society if they could choose Sharia law for the settling of civil disputes.
Even though a greater diversification of information sources may typically provide for better knowledge evolution, there is an expectation of fewer data sources offering increasingly larger quantities of data due to mergers and acquisitions, cost cutting, or limited user willingness to pay. Such developments are likely to affect accuracy and reliability making data use heavily trust-dependent. To a growing degree, data users may demand more insights into the origin of information in order to gauge its validity. Just like butchers are expected to label the meat they sell with precise origins, information providers need to offer data locale and source of origin. Under such conditions, the locality of data can be systematically used to enhance credibility (e.g., through increased use of local debt-rating agencies).
Due to more transparent sourcing, there will be a decrease in the willingness of firms and people to offer information. Nebulous laws and restrictions may be increasing the threat of law suits. Also, the gains from free information that have greatly helped businesses and individuals in the past 10 years are likely to shrink.
There may be a tendency towards “organic” data unaltered by manipulation or interpretation. Another alternative may be “comparative” data which, on an onion basis, provide multi-source perspectives. In addition, quantitative data are likely to be combined with qualitative information, resulting in a diagnostic perspective. Once data pass the trust threshold, they can then be used in a much more aggressive and insightful way, going far beyond the traditional and retrospective use of statistics.
Advancements of information technology and convergence of new technologies will allow any new equipment to be more sophisticated and to perform more functions at lower cost. Even though companies will be willing to adopt these new technologies faster than ever before, doing so will only provide a competitive edge if it is not done at the expense of ease to user and customer friendliness. While youth markets will be quick to use new capabilities, more mature buyers will be reluctant to invest in products which require a high degree of additional learning. Excelling in technology alone has no intrinsic value. It is the application of technology to satisfy human needs and values, at a profit that will matter for business success.
Location and Source of Growth
Key Industries Affected
Coordination of Services/Demographics
In terms of geography, emerging market economies will continue to increase their impact on the global economy. The treat of polarization and an increase in regional and the local trade and finance relations will encourage an eventual completion of the Doha Round of trade negotiations. Countries will focus on those issues which are most relevant for their economies, thus leading to a differentiation of players which grow, make, create, or coordinate.
Significant new market opportunities will develop within emerging economies. At the same time, growing capabilities will let these countries compete directly with more self-developed products and services in the developed world. There will be more cooperation between emerging regions, resulting in more integration among them, and perhaps more protectionism outside of their sphere. Developing nations will welcome more diversity of partners and will welcome increased competition among larger players. For some countries, this collaboration is also likely to introduce new global moral positions, raising the relative precedence of business, politics, human dignity and freedom. While efficiency will gain in importance, there will also be more incorporation of Eastern business practices into overall methods. Overall, economic power is likely to shift globally to Asia, both in terms of investment and output.
China will be the player to watch. For firm’s who are planning to enter the global market, succeeding in China will be a crucial indicator of competitiveness, since “if you can make it there, you can make it anywhere.” Due to domestic pressures fueled by weaknesses in the banking system, urban/rural imbalances, and regional political dissonance, top Chinese corporations are likely to expand significantly overseas. Multinational firms from third world countries will expand in general, and the Fortune 1,000 will soon include a significant number of China-headquartered companies. There will also be a significant increase in mergers and acquisitions led by Chinese firms.
Another important participant will be India. That country’s opening will rival the growth of China, due to its wide-spread facility with the English language, its close alignment with the rule of law, a well developed commercial infrastructure, and a democratic government. Companies are likely to see India as both a primary place for outsourcing and as an important market for their goods. In particular, Indian linkages in the communications and information sectors are likely to soar.
Environment, Conservation and Sustainability
China will demonstrate only limited concern towards the environment, even though environmental problems will have a major effect on its ability to compete as a global manufacturing center. Medical, environmental and other social costs will dramatically reduce the advantages of firms to manufacture in China – therefore leading to a move of FDI to other locations, including the U.S. and Europe.
One consequence of China’s and India’s rapid growth will be an ongoing depletion of natural resources. Aspirations for economic progress and better lifestyles will cause shortages in the natural resources. In consequence, the sourcing and controlling of important raw materials will be a key strategic issue, often leading to preferential bilateral agreements perhaps even in contradiction to multilateral arrangements. Governments will attempt to put more land into grain production and also use tools such as subsides and price controls. Scarcity will also drive up the price of consumer alcohol. Protection of materials within society from theft will become a key issue (e.g., cutting electrical wires to steal copper). Recycling and recovery will grow as vital business opportunities. Farming will become highly attractive and profitable again as fuel production from food accelerates. The global shortage of potable water will be re-discovered as a key issue and a key constraint on global advancement and wellbeing. There will be much higher government investments in desalination and reverse osmosis technologies and more emphasis on water conservation.
In light of public concern about climate change, there will be growing preference for energy saving technologies and a reduction and limit to energy use. A stream of scientific and non-scientific proof will be offered for global warming, with any unusual natural phenomenon being blames for global warming. Public impressions and perceptions will lead to changes in living patterns – for example the population of dry arid and hot climate areas may well shift due to water shortages and, say, limits to the use of air conditioning technology. Such effects will occur even if it becomes generally accepted that global warming is only slightly dependent on human activities – given the overriding argument of: What can it hurt?
Africa may well emerge in the offering the most opportunities for green investments and the accumulation of carbon credits. However, is the transfer of resources resulting from carbon trading grows; such trading will become, in the eyes of governments, non-sustainable and therefore prohibitive. There is more likely to be an increase in international agreements (both multilateral and bilateral) which set a framework for corporations, promotion and subsidies for technologies and products which protect the environment. Rich countries will give more importance to this concern, and most internationally operating companies will take this concern seriously. Key sectors for industry creation and expansion will focus on the protection of public health; the need for sustainability; the saving of energy, water and natural resources; the growth of bio-technology, genomics and nano-technology; the creation and promotion of eco products, services and processes. For example, sustainable water recycling technologies will spawn new industries. Governments will, at the same time, adopt and encourage more advanced pollution control policies, particularly for heavy metals and engineered (non-naturally occurring) substances.
The aging of populations of North America and Europe will be joined by those of Asia and Latin America. These older populations will become a growing customer segment for the financial-services sector as well as to providers of health care and appropriate household products. In particular, the lack of public support for the disabled and needy – often the result of cultural traditions – will create problems for generations caught in transition. At the same time, there will be major opportunities as older generations will expect more education, entertainment and involvement to enjoy their increased leisure time.
As baby-boomer societies experience waves of retirement, companies will shift to increase employee longevity and loyalty. New and substantial incentives will be designed to maintain expertise within and to reduce the need to find specialists outside the firm.
In a world of permeable borders, there will be more of an opportunity to pick up and move. The ability to prove and improve oneself as well as to access new resources is a powerful motivator for migration. The young and the not-so-well off are primary groups to be involved. The moves and behavior of the young will become an informational signal for others. A tremendous opportunity exists for regions to enrich their quality of life, through the acquisition of young, upwardly mobile immigrants.
Reforming the Global Corporation
Corporations are likely to face increasing pressures from a wide variety of stakeholders, governments, unions, media, and the public at large. These grow even more intense in light of a corporate migration from a Western-centric organization to multi-polar structures, accompanied by a shift from a West-North to and East-South orientation. Accountability and transparency will be the basis for key developments.
Accounting systems will recognize and develop procedures for calculating the value and the change of intangible corporate assets, so that they can increasingly be used to drive corporate capitalization and performance. Such assets will increasingly become the prime measure of corporations and will have the key influence on predicted future cash flows and stock prices. Value investors will recognize that the building of intangible assets is a multiyear, multi-faceted endeavor. Consequently, buy-and-hold strategies will become more dominant and quarter-to-quarter performances will become less important in the investing decision.
Corporate responsibility will be interpreted to include broad-based activity and profit sharing. Low capital manufacturing facilities will be expected around the world. Stakeholders will demand greater involvement, and, for better or for worse, will play a major role in the image building of the corporation. Since lapses in ethics or social responsibility will have a major negative impact on brand equity, strong corporations will increasingly be indicated with strong corporate social responsibility (CSR) programs and strong corporate ethical conduct.
There will be a backlash against excessive executive remuneration – not only from regulators but also from shareholders, inside managers, and employees. Executive compensation will again be seen in comparison to average pay levels – which may well lead to pay raises for those at lover levels. At the same time, the higher education of future business leaders will increase new dimensions of morality, ascetics and long term orientation in their mission. Perhaps a new class of trained and dedicated managers will emerge who will become the transforming new ‘Jesuits’ of business management, working with precision, force and success to ensure both improved performance and increased social wellbeing.
Back-office and support functions are increasingly likely to be outsourced, allowing global firms to eliminate internal functions like treasury and tax. Global banks will expand into outsourcing by providing high value added services, such as the oversight of corporate treasuries.
Emerging markets will increasingly account for larger portions of corporate profits and sales, particularly in light of their representation of more than two-thirds of the total consumer base. Corporations will be expected to provide improved product access and help overcome difficulties in logistics and infrastructures. For many products, the development strategies will need to shift from “the latest” to increased affordability.
Critical Business Functions for Global Success
Smaller firms can benefit from the globalization of markets by focusing on niche markets, especially those abandoned by the large players. What may be uneconomical to produce for a multinational conglomerate may well be a key viable segment for much smaller firms. Of course, just because they are small players does not mean that they do not face large problems. For example, it may be a small village where nuclear waste is deposited, but the problems to be solved are of a world class nature. Strategic alliances and other joint efforts will often be the key answer based on which smaller players can compete for global market share. These firms will also be heavily dependent and therefore heavily concerned about open markets and global standards. Consequently, uniform local codes and enforcement supported by the rule of one country, one vote will be crucial for the success of smaller players.
Conclusions and Discussion
Three dimensions were seen as objectives for the future of globalization: First, the reduction of global inequality; second, new and widely enforced global rules which would provide stability and consistency of basic rights and obligations across borders; and third, the support for individual freedom. There was an expectation that over time, nations, institutions, and individuals around the world will increasingly accept these dimensions as the foundation of the good life. In reciprocal causality, freedom is seen to cause and facilitate international business, while international business is a key pillar in support of the cause of freedom.
There may well be a reconsideration of the economic growth construct, particularly regarding growth expectations. Many believe that we have come to the point where mere stability and constancy is seen as wrong and as indicative of “falling behind.” There is nothing necessarily negative about rearranging resources and the acceptance of everything not being linear. It may well emerge that growth, particularly on a global level, is increasingly seen in the context of the angles on a protractor: Growth does not always have to take place at all degrees, on all levels, and simultaneously, because there are many different areas to grow. Therefore, the current ‘go-go-grow’ economic mentality may be reduced in its future importance.
Concurrently, the importance attributed to the embeddedness of industries will become more relevant. Countries, regions and cities will further specialize in the development of industry clusters. Firms increasingly will open subsidiaries and representative offices in such locations in order to take advantage of the proximity to competitors, suppliers, and customers. New corporate hubs will emerge beyond the traditional ones to exploit future opportunities. Public policy makers will encourage these developments and place greater emphasis on the special educational needs of the workforce in those industrial clusters.
A new world-wide division of labor and specialization will change growth patterns by causing a new competitive setting which includes the disappearance of the old borderlines between West-East and North-South and resulting in new East-South configurations. Rather than being a function of location, the new borders are defined by research intensity and high standards of education and training of the human work force. Firms will have to focus on highly specialized research- and service intensive niche products. In order to stay ahead, they need to set the technological standard and, aim for narrow, monopoly positions. Politics will play less of a role, since liberal social market economies are not automatically more competitive and efficient than different political and economic systems which may develop in other areas.
Most experts agree that (business) trends are more important to business strategy than they were only a few years ago. The critical question targets the appropriateness of the Delphi technique to establish expert consensus on very complex issues. Many of the issues raised by the panelists can be described as “wicked,” i.e., they have many causes, they change their appearances constantly, and for which no correct answers seem to exist (Camillus 2008). However, one of the most effective ways proposed to tackle them is to solicit stakeholder perspectives on these issues, involve them in developing possible scenarios, as well as communicate the findings to foster commitment to their subsequent implementation. The Delphi method is ideal as a data collection method for “wicked” problems.
The choice of e-mail as a data collection tool was intended to allow the participants convenience and the possibility of responding quickly to the presented materials. Participant commitment may easily falter if the process is too long or the materials presented are too cumbersome. Additionally, the use of e-mail cuts down on the costs of the data collection effort. Even though there is much optimism in the literature for electronic delphi work (Nielsen/Thangadurai 2007), we found the process of data collection for each of the three waves to be long (in this case, 6 months). Even with advance alerts and reminders, any one particular e-mail can be buried in the respondent’s mailbox or stopped by gatekeepers. Due to the vast amounts of data, especially in the second round, respondents may feel overwhelmed. This may be exacerbated when the respondent is working on screen with the data presented. Researchers using the delphi technique should try strenuously to present the data in the most concise form possible.
There are a number of ways to improve on the existing process. Although not necessarily practical and certainly cost prohibitive, it would be ideal to bring the panelists together at the latter stages to discuss the findings or to maintain the panel over a number of number of years to gauge the effectiveness of the actions or moves that may have been taken to correct for a problem. To increase validity, the use of multiple panels could be possible. The challenges of recruiting and retaining the experts needed may challenge this, however.
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