2 management - School of International Business and ...

Günter S. Heiduk
SUMMARY
This chapter aims to shed light on the ongoing globalization of the world economy which even
to senior international managers presents itself as an everlasting puzzle. MNCs/TNCs in many
industries are exposed to an accelerating vicious circle of cost pressure, sales pressure, R&D
pressure and price pressure which result in the slowdown of advancing productivity. International
managers are challenged by the complexity of the experienced globalization on the one side and
the simplicity of the theoretical tool box on the other side. Therefore, the economic analysis of
the empirical nature of globalization is based on a multi-level framework which allows carving
out, isolating and vertically integrating the main features of globalization. Natural resources and
resulting trade, culture and cross-border communication, technology and clustering, nation states
and their behavior toward globalization, MNCs/TNCs as main actors are especially shaping the
globalization path. Visualizing this path using indicators such as trade, FDI, cross-border M&A,
key facts of MNCs/TNCs is not enough to unravel the puzzle of globalization. But, in-depth quan-
titative analysis is an important pre-requisite to test theories which are aiming to explain why, to
what extent and with what results cross-border activities occur. The focus of the theoretical part of
this chapter lies firstly on explaining different types of international trade and its regulation by non-
market actors, secondly on highlighting the effects of cross-border activities as well as other rele-
vant events on the formation of exchange rates and the equilibrium of the balance of payments.
Managers in MNCs/TNCs either pro-actively influence the globalization path or passively adapt
to the evolution of the globalization. Both cases are connected with organizational changes of
the company. Managing globalization offers a bundle of more or less risky organizational op-
portunities. The willingness to invest in organizational learning determines to a high degree the
absorptive capacity to internalize external knowledge, skills and competences. One of the most
challenging tasks seems to be the integration of an organizational culture into the concept of
international management and its harmonization with the path of globalization.
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