A wider-aperture lens for global strategic management: The multinational enterprise in a bifurcated global economy

Abstract

Research Summary

The growth of China and President Xi's policies have transformed the global economy in ways that global strategy and international business (IB) scholars have yet to reflect fully in their research. The global economy is increasingly bifurcated between a China-centered authoritarian system and a market-oriented democratic system, generating complications and perils largely unknown since the end of the Cold War. The global business environment now bears faint resemblance to existing models in IB. To properly analyze the new reality, global strategy and IB scholars need to adopt a wider-aperture, systems-theoretic view that will require the cross-fertilization of ideas and collaboration with other disciplines such as international political economy. This engagement will allow the development of more broadly based frameworks, theories, and models that can assist decision makers in the private and public sectors.

Managerial Summary

Strategic rivalry between China and the West requires managers to face a new reckoning. China remains the world's factory, but it has a tenuous relationship to even-handed rules of law, both domestically and internationally. China leverages access to its market and has aligned with other autocratic countries to reshape the world order. Many firms have straddled the divide and tried to play by two sets of rules. This is not viable longer term. The strategic decisions of Western firms, particularly those involved with advanced and, especially, dual-use technologies, are consequential to the future of democracy. A systemic view of the long-term health of the enterprise may reveal the need to choose. Choosing democracy means, at minimum, guarding intellectual property, enhancing organizational capabilities, coordinating with peers, and protecting national security.