The False Dichotomy Between Globalism and Nationalism
June 18, 2020 Harvard Business Review
For years, government officials, business school professors, and executives have espoused the benefits of globalization, supporting their arguments with sound evidence. For example, the United Nations has reported that globalization and economic interdependence among nations helped world GDP to increase from $50 trillion in 2000 to $75 trillion in 2016. Another important metric is rising employment opportunities across borders: in 2017, migrant workers sent an estimated $466 billion to their families in home countries. Synonyms for globalism include development, growth, and maturation, and multinational executives are routinely encouraged to have a global mindset.
In recent years, however, nationalist sentiments seem to be on the rise. During the current pandemic and economic downturn, political leaders might find it more expedient to search for solutions for their own citizenries, instead of combining efforts to find a global one. Before the crisis, protectionist, populist politicians were gaining favor in many parts of the world. And even in the corporate arena, one could see signs of a turn inward, with companies touting the jobs that they are creating at or bringing back home and encouraging consumers to buy domestically produced goods. In the United States, many manufacturers applauded the tariffs that the Trump administration placed on foreign competitors. In Great Britain, voters made their Brexit, and businesses will need to adjust accordingly. And we know Chinese executives at American firms who vocally defend the Communist party. As one told us, “There is nothing wrong with the government of China developing policies to ensure maximum benefit to the country.”
We recognize that nationalism is often linked to negative things like bigotry and xenophobia. But it, too, can carry positive connotations, such as patriotism and good citizenship. Given this, and nationalism’s increasing relevance, we believe that today’s executives can’t choose whether to be globalists or nationalists. Instead, they must figure out how to be both at the same time.
Is this possible? At first glance, it might seem that one has to pick either globalism or nationalism because they appear to be diametrically opposed. We believe that this “either/or” approach leads to highly undesirable outcomes, however. An exclusive focus on globalism could cause an executive to ignore, or even worse, look down upon those who display national pride and allegiance, making it more difficult to see opportunities at home. A strong nationalist focus, on the other hand, narrows one’s perspective in a different way, limiting possibilities abroad. Either bias can reduce effective communication, understanding, and collaboration.
A paradox mindset – one that merges both globalist and nationalist views — is the solution. Let’s take the example of an American executive in charge of R&D in a U.S.-based multinational healthcare company faced with a decision about where a new eye-disease prevention/medicine development project should be launched. The cost is substantially lower in India, and the required talent is ample. But there is pressure to keep the investment and jobs in the United States. The nationalist’s choice is to do just that — take India out of the equation, and make and sell the medicine at home. The globalist approach meanwhile points to India, presuming that benefits still accrue to the United States via taxes and shareholder returns. This is a mild win-win, but in today’s climate, it might not be enough.
Accordingly, a more integrative strategy would be to invest in R&D to invent a low-cost medication in India, where it is produced, marketed, and distributed. The company might also explore the possibility of doing the same in the United States as an affordable alternative for low-income patients, or selling it at a higher cost but offering special discounts to those populations. Such an initiative would help the company’s position in India, while also creating employment and providing a service to Americans. It honors a global ambition, while satisfying nationalistic desires. It generates additional revenues and jobs both in India and in the United States.
The current Covid-19 crisis provides a unique learning opportunity for how to integrate nationalism and globalism. In the United States, efforts to quickly respond to the outbreak were impeded by the scarcity of personal protection equipment (PPE), such as masks, owing to the fact that globally-oriented corporate policies had pushed the manufacturing of such products in faraway markets. (This happened in other countries, too, but the U.S. case was most notable.) In other words, nationalistic concerns were not taken into account. We’ve learned that effective emergency response requires that adequate supplies also be available at home. Going forward, corporations could balance a global and nationalistic stance by either investing in domestic product development and manufacturing in addition to their foreign investments or adding a clause in contracts with foreign suppliers requiring a rapid increase in supply to the home country under certain circumstances (e.g., health crises).
This example of PPE looks back in time. Now let’s look to the future of vaccine development. On April 30, 2020, AstraZeneca, the giant British pharmaceutical company, announced a partnership to manufacture and distribute a Covid-19 vaccine that the University of Oxford is working to develop. We don’t have any insight into how project leaders plan to proceed but we can think hypothetically about how they might. A pure nationalistic approach would be to contain this process within the United Kingdom: the vaccine would be produced to first help the British population, and allow its economy to recover, while allowing for the possibility of exporting it. A globalist approach would call for making the vaccine wherever it is most efficient and cost-effective and then making it widely available, perhaps prioritizing hardest-hit countries first. Or senior executives could take more of an integrative approach. They might replicate the Oxford partnership with a number of centers of medical research excellence, including universities, institutes, or other corporations, around the world.. For manufacturing and distribution, they could either form joint ventures or contract with other companies in other countries. In other words, they could help develop a global ecosystem to satisfy local or national needs as well as those of the international community.
We have been party to hundreds of discussions among executives related to similar decisions. Following conventional wisdom over the past few decades, executives often focus on globally-oriented actions and benefits but almost never take the following integrative steps. First, recognize and explain to your team that it’s not only okay, but actually important, to represent both global and national concerns in decision-making. In fact, we should all endeavor to take both perspectives into account even if we naturally lean toward one side or the other. Second, in making any major business decision that seems to juxtapose a globalist view against a nationalist view, ask three questions: 1) what criteria would a pure nationalist decision-maker who focuses on clear benefits to national stakeholders use?; 2) what criteria would a pure globalist decision-maker who focuses on benefits to the global corporation use?; and 3) how can we integrate at least some of the two sets of criteria in making the final decision? In our experience, addressing such questions goes a long way toward harmonizing both global and national concerns in an executive’s decision-making and actions.
David A. Waldman is a professor of leadership at W. P. Carey School of Business at Arizona State University.
Mansour Javidan is Garvin Distinguished Professor and Director of Najafi Global Mindset Institute at Thunderbird School of Global Management, Arizona State University.