Dear AIB members,
The Japan Academy of Multinational Enterprises is pleased to announce that
Volume 5, Issue 2 of Japan MNE Insights (newsletter) is now available
online (http://www.mne-jp.org/english/pdf/NLfinal_vol5No2.pdf) and in PDF
format.
This issue includes two special essays, and we would like to share their
summaries with you..
*D. Eleanor Westney, “CHANGING MNEs”*
Synopsis: In 1972, *The Economist* published a survey on international
business asserting that “a revolution is coming in international business”
(Macrae, 1972: viii) and that the large multinational corporations
dominating the contemporary world of international business were facing a
period of decline. Four and a half decades later, the same magazine has
declared that although huge multinational firms dominated the world’s
business scene well into the twenty-first century, they are now “rickety
and overextended” and that “the global firm is in retreat” (*The
Economist* 2017).
The intervening decades witnessed a succession of similar business press
predictions that giant MNEs were a dying breed, each pronounced as if it
had never been made before. The reasons given for the MNE’s impending doom
are remarkably similar across the decades. In both the 1972 and the 2017
articles, the MNEs’ peril is attributed to three sets of factors: growing
internal complexity of MNEs making them more and more resistant to
effective managerial control; imminent threats to the openness of the
global business environment from national governments; and technological
changes reducing the MNEs’ advantages of scale and geographic dispersion.
Very large MNEs still, however, have continued to dominate international
business and do so to this day.
These recurring predictions of doom can provide entertaining
material for IB classes (and perhaps instill in our students a healthy
skepticism about what they read in the business press). While it may be
easy to ridicule such dire predictions, however, we should note that there
is an underlying reality that goes unrecognized by the journalists and
probably by their readers: the large MNEs as they were organized in 1972,
such as Unilever, IBM, Shell, or General Motors, are indeed no longer with
us, although the companies still are. MNEs have survived and indeed
flourished by changing over time in response to shifting internal and
external challenges. How they organize their activities and distribute them
geographically has been repeatedly transformed over the ensuing decades.
Yet we can question how well the IB field has understood and portrayed
these changes in the very large MNEs, as they moved from the world of 1972
to that of 2017. When I was asked to contribute an essay to this
publication, I could not resist the opportunity to reflect back on what we
have learned and what we have still to learn about the changing form of the
world’s largest multinational enterprises. Perhaps it is simply the
grumpiness of a recently retired academic, but it seems to me that we in
the IB field have not done a good job of grappling with and understanding
the organizational form of the world’s largest MNEs since the turn of the
century.
This essay starts with an overview of past research, and then
looks briefly at more recent changes in large established MNEs and how the
IB field has – or has not – dealt with them. It closes with a short
reflection on the potential of deeper, case study-based research,
particularly on Japanese MNEs.
*Yoshihiro Oishi, “Has Theodore Levitt Returned?”*
Synopsis: Theodore Levitt’s paper, Globalization of Markets, was published
in the *Harvard Business Review* in 1983. The famous paper asserted the
standardization of global marketing. Levitt argued that technological
development in communication, transportation, and travel generated “Global
Customers” who prefer standardized products to localized ones. In his
opinion, every company should adopt standardized marketing for these
homogenous global customers. Standardized global marketing is inevitable
but can also remain selective. For example, Levitt leaned global marketing
strategy toward standardization, whereas Bartels [1968] and Keegan [1969]
retained the balance between standardization and adaptation of global
(international) marketing. In another example, Drucker [1969] presented the
idea of the “global shopping center,” which Levitt seemed to have adopted,
and Ohmae [1990] has called this interlinked world a “borderless word.”
Finally, Hisatomi [1991] demonstrated that when customers across Europe,
the U.S.A., and Japan decide on which passenger car to buy, they consider
the same five of the top six criteria to aid decision making.
As a matter of course, there were many opinions that went against Levitt,
such as Fisher [1984], M & MD [1984], Boddewyn, Soehl and Picard [1986],
Kotler [1986], Wind [1986], and Douglas and Wind [1987]. They pointed out
that climate, culture, political systems, governmental regulation,
competitive situation, consumer behavior, and consumer preference still
varied greatly across different nations. Wind [1986] and Douglas and Wind
[1987] wrote that Levitt’s proposed homogeneous world was “myth,” even
though Levitt explained that the technological development in
communication, transportation, and travel led to a somewhat homogenous
world. These arguments were made in the era when there were no personal
computers (PCs), internet, social networking services (SNS), smartphones,
LCC, electronic money, mobile payment systems, etc. Even if, in
Levitt’ age, the world appeared to be moving toward homogeneity, especially
when compared to the 1960s and the 1970s, it is argued here that this was
not the case. It instead remained in the process of homogenization, that
is, in the process of convergence.
Levitt’s paper was a result of not only technological development but also
popular Japanese products. In the 1960s and the 1970s, Japanese companies
succeeded in mass production and mass sale of quality, inexpensive
products. They sold to the world, in particular to the U.S.A. Many were
products like textiles, apparel, calculators, transistor radios, TVs,
cameras, and automobiles. Levitt perhaps incorrectly believed that because
Japanese products were standardized, their marketing would also be
standardized, and that this was inevitable and marketing would not be
selective in the homogeneous world. Further, he felt that world consumers
were willing to purchase standardized, quality, inexpensive products, in
turn ignoring or deprioritizing their local tastes. In the first place,
since they got homogeneous, they would love to buy similar products.
We hope that you will find the contents interesting and share them with
your colleagues.
With kind regards,
Dr. Tamiko Kasahara
Editorial member of Japan MNE Insights
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Tamiko Kasahara (Ph.D.)
Lecturer in International Business
University of Shizuoka, School of Management and Information
52-1 Yada, Suruga-ku, Shizuoka, 422-8526, Japan
TEL/FAX:+81-54-264-5435 (direct)
E-mail :[log in to unmask]
The Japan Academy of Multinational Enterprises (
http://www.mne-jp.org/english/)
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