Part 1 – The international dimension and the organization

Synthesis
The two chapters in this part have highlighted internal aspects of the business organization in the context of interactions with the international business environment. A theme is that businesses interact with numerous players, including other businesses, governments and groups in the societies where they operate. We might suppose that when they become more active in cross-border activities, businesses become more focused on international than national factors, but these chapters have shown that national factors continue to shape the international firm, and, indeed, success internationally depends in large part on the skills and knowledge of managers in interactions at national level.

Businesses everywhere are drawn to the corporate form of organization, forming companies which go on to create subsidiaries and acquire other companies. The structures and roles within the company are therefore at the heart of the business. As Chapter 1 emphasizes, however, these organizational legalities take place within national legal and cultural frameworks: when the company expands internationally, it moves into further national frameworks. Although we speak of ‘born-global’ companies, this relates to the entrepreneur’s vision; legally, it is a misnomer – all companies must start from national legal and regulatory frameworks and acquire further national involvement as they expand. Ownership and corporate governance differ from country to country, and the role of owners – be they ordinary shareholders, founder families or the state – shapes the culture and strategy of the firm. We have seen in this part that there is now unprecedented variety in the types of organization active on the international stage. Moreover, they are springing from a widening range of countries. The expansion of companies from emerging economies adds to the diversity of international organizations, creating challenges both for the newcomers and the established MNEs, which are finding dramatic changes in the competitive landscape globally.

The rise of new players and new locations is indicative of globalization. Through FDI and outsourcing, MNEs have been the drivers, and have reaped handsome rewards for their owners. Host countries have seen benefits in terms of capital investment and jobs. In some, domestic companies are now becoming more confident as international players. However, globalization has a negative side, evidenced by the ravages of rapid industrialization and urbanization, with little heed of environmental and social impacts. Businesspeople once asserted that theirs was a mission solely focused on economic goals, but we now appreciate that business activities in communities have other dimensions, including social, ethical and political. Companies are increasingly drawn into interactions with stakeholders, including governments, NGOs and community groups. Managing these interactions has, perhaps paradoxically, become important in achieving success in the firm’s economic goals.

Reflection and discussion

1. Which company examples in the two chapters illustrate links between corporate ownership structures (including governance) and corporate strategy?


2. Cite some MNEs from emerging economies mentioned in these chapters. In what ways are they challenging established MNEs?


3. Which companies mentioned in these chapters have focused on stakeholder, ethical and/or environmental considerations in their international strategies?

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