Anselmo Rubiralta Center for Globalization and Strategy International Workshop

Creating Value through Global Strategy

Refocusing academic attention on the creation of value through global strategies was one of the main themes of this 1st International Workshop, held on June 15, 16 and 17 at IESE’s Barcelona campus. It was organized by Anselmo Rubiralta Center for Globalization and Strategy, and was attended by 40 academics from 11 countries

For more than a decade, research in the globalization field has tended to focus more on the organizational rather than the strategic challenges involved in this revolutionary phenomenon. In an international environment in which many companies express their dissatisfaction with the value created by their past global strategies, it would seem to be the right moment to return to strategic questions about value creation. This was the main aim of the conference, organized by Professors Joan E. Ricart (IESE), África Ariño (IESE) and Pankaj Ghemawat (Harvard Business School).

The first session was opened by Professor Pedro Videla, who set out the international background, explaining the trends and imbalances of the current economy. The presentations given in six sessions over two days were introduced by Pankaj Ghemawat and Arie Lewin, of Harvard Business School and Duke University respectively.

From “globeuphoria” to “globaphobia”

Professor Ghemawat presented a paper in which he reflected on how the most recent “global shocks” – 9/11, the Iraq conflict, SARS – had acted as a brake on the moves towards liberalization that had begun in many countries during the 80s and 90s, and how there had been a significant fall in the profitability of international operations as compared with domestic business.

Many large companies, including such icons of globalization as Coca-Cola and McDonald’s, have put their global initiatives on hold, and have even in some cases begun a process of deglobalization. Professor Ghemawat concluded by saying that in recent years there had been a switch from “globeuphoria” to “globaphobia.”

Seeking a competitive advantage

The first session, “Creating Value through International Expansion,” included presentations by Professor Walter Kuemmerle (HBS), Professor Xavier Martin (Stern School of Economics) and Professor Jon Martinez (ESE). Walter Kuemmerle presented research which compared the process of international expansion at large, already established companies with “start-ups” in knowledge-intensive industries such as electronics and pharmaceuticals.

Professor Kuemmerle pointed out that the characteristics of the expansion process were determined both by an organization’s own internal situation and by the reasons leading the company to expand internationall. He explained that an inadequate internal situation at an already established company could place it at a considerable disadvantage alongside a “start-up.”

Identifying local advantages

Professor Cuervo-Cazurra (Carlson School of Management), Professor Patricio del Sol (Universidad Católica de Chile) and Professor Subramanian Rangan (INSEAD) contributed to the session entitled, “Exploiting Local Advantages.”

Professor Cuervo-Cazurra analyzed sources of competitive advantage in an international context, and stated that companies can benefit not only from their own specific advantages but also from other, less specific ones, such as a new location. In Professor Cuervo’s opinion, the creation of international competitive advantage also depends on the ability to transfer one’s resources and on whether these resources are actually valued in the countries into which one is expanding.

The third session, “Governing Companies in Different Institutional Environments” saw contributions from Professors David Collis (HBS), Jordan Siegel (MIT), George Yip (LBS) and Bernard Yeung (Stern School of Management).

George Yip explained that companies from various countries in Europe differed both in their systems of corporate governance and in the scope of their global strategies. In his presentation, he offered a theoretical model that showed how the differences between systems of corporate governance in the various European countries were significantly illustrative of the different models of globalization being pursued by multinational companies.

Professors Tim Devinney (Australian Graduate School of Management), Reinhilde Veugelers (Leuven) and Jeffrey Reuer (Ohio State University) contributed to the session entitled “The Multinational Company and Organization.”

Independence: synonymous with good results in subsidiary companies

Tim Devinney set out the results of his research, which was centered on ascertaining which marketing factors were necessary both inside and outside an organization in order to achieve a desirable level of organizational learning and innovation at its subsidiary companies, thus affecting the company’s general profitability. Professor Devinney emphasized that both innovation and good profitability were shown by subsidiary companies that had achieved a high level of independence in their decision-making, learning and networking with other subsidiaries.

The role of alliances in processes of internationalization

Professors Harry Barkema (Tilburg University), Paul Olk (Daniels College of Business) and Peter S. Ring (Loyola Marymount University) led the fifth session, entitled “Global Alliances and Networks.” Professor Barkema explained how multinationals identify and select the opportunities that arise during a process of international expansion. More specifically, he outlined a theory of how companies in a process of internationalization pursue organizational improvements by identifying, evaluating and selecting international joint ventures.

The last session was led by Silviya Svejenova (Cranfield School of Management) and IESE doctoral students Adrián Caldart and Luis Vives, who spoke about “Internationalization in Corporate Strategy.”

The conference was brought to a close by Professors África Ariño, Pankaj Ghemawat and Joan Enric Ricart, who thanked everyone for their attendance and praised the quality of the presentations made.