by Abbie Lundberg

A New Role for Global Business

Dec 01, 20003 mins

In the past decade, there’s been a marked shift in attitudes toward capitalism and consumerism around the world. Countries on every continent are moving to a more pro-market/consumer-based philosophy of economic development. As growth slows in the United States, large corporations and startups alike are turning to the developing world for new opportunities and getting a relatively warm reception. And, of course, the Internet is only accelerating global business trends.

While things are moving fast, we’re still in the early days of achieving a truly global economy. According to Jeffrey E. Garten, who is dean and William S. Beinecke professor in the practice of international trade and finance at the Yale School of Management, if things continue on the current track, the percentage of goods flowing through global markets will increase from 20 percent today to 80 percent in five years.

But getting there isn’t going to be easy. Globalism involves not only business and economics, but also politics, culture and many social issues. Barriers to doing business in developing nations aren’t limited to the lack of a sound physical infrastructure, such as modern telecommunications and a consistent power supply. More fundamental support structures must be in place as well: clean water, ample food supplies, adequate education, environmental controls and basic health care. Business leaders can’t assume these challenges will be taken care of by local governments—in too many cases, they simply don’t have the resources.

“The leaders of big global companies grossly underestimate what they’re going to have to do to build infrastructures,” Garten said at the CIO Perspectives conference in Phoenix last October. “The corporate sector has to play a greater role in building the social fabric” of the countries they go into.

Such an approach could help temper the growing backlash against globalism among nationalist groups (witness the protests against the World Trade Organization in Seattle last year). Of course, mishandled, such efforts will undoubtedly be viewed as imperialistic and inappropriate meddling. There’s a real danger in getting too far ahead of what local people are ready for, Garten warns businesses. “If we go too fast, disorientation occurs.”

This summer, CIO senior editors Tom Field and Cheryl Bentsen went to India to explore these and other issues in a country that is emerging as a high-tech mecca and one of the world’s promising—though extremely challenged—new economies. As Tom writes in “India Unbound” (Page 88), “How far and fast can the IT industry grow in a country where the lights and phone lines fail daily? How many knowledge workers can be created from a population with a more than 50 percent illiteracy rate? What social ramifications might there be if India’s new IT wealth proves only to widen the gap between the country’s haves and have-nots? These are among the vexing challenges that come hand in hand with India’s bountiful opportunities.”

In a world driven by global business, business leaders will have to assume a much broader and more diverse role. Is your organization prepared to take on these challenges? I’d love to hear about it.