Between 1986 and 2005, Indian growth put to rest the concern that there was something about the "nature of India" that made rapid growth difficult. Following broad-ranging reforms in the mid-1980s and early 1990s, the state deregulated entry, both domestic and foreign, in many industries, and also hugely reduced barriers to trade. Laura Alfaro of Harvard Business School and Anusha Chari of the University of North Carolina at Chapel Hill analyze the evolution of India's industrial structure at the firm level following the reforms. Despite the substantial increase in the number of private and foreign firms, the overall pattern that emerges is one of continued incumbent dominance in terms of assets, sales, and profits in both state-owned and traditional private firms.
In this breakout session, panelists shared insights, informed by history, of the convergence that globalization promotes.
The economic crisis should not have been unexpected, says professor Niall Ferguson. Business leaders should consider history when developing their strategies, plans, and models, and should keep in mind that outlier events occur.
Published in 2008
While both China and Vietnam have experienced rapid annual growth over the past two decades, income inequality has risen more rapidly in China than in Vietnam during the same period. Structural and socio-cultural determinants fail to account for these divergent paths, as nearly every variable predicts higher inequality in Vietnam. This paper by Regina Abrami and colleagues focuses on differences in political institutions to explain these divergent paths. In so doing, it contributes to a growing body of literature describing variation in authoritarian regimes, but focuses on variation within one authoritarian regime type.
How is the impact of historical institutions felt today? This comparative analysis by Banerjee and Iyer highlights the impact of a specific historical institution on long-term development, specifically the land tenure systems instituted during British colonial rule. The paper compares the long-term development outcomes between areas where controls rights in land were historically given to a few landlords and areas where such rights were more broadly distributed. The paper also documents the impact of these differing historical institutions on political participation and electoral competition in the post-colonial period.
A significant number of recent papers find legal origins to be strongly correlated with current indices of rule of law, financial development, the regulation of entry and labor, and the concentration of ownership, among other things. Few studies, however, have explored whether correlations between institutions and economic and financial outcomes hold in the past. For this reason, we cannot be certain that the alleged persistence of the effects of these institutions passes the scrutiny of history. This paper examines specifically the relationship between legal origins and financial development by analyzing countries' legal traditions and the extent of investor protections and financial development over time.
Published in 2007
With the start of the new decade, most global financial powers are rethinking a previously powerful trend toward liberalizing global finance. In his new book Capital Rules, Professor Rawi Abdelal charts the intellectual, legal, and political history of financial globalization, and the tensions facing today's world economy. Read an excerpt.
Published in 2006
Before 1945, many thinkers believed cartels brought widespread benefits. But following the spread of antitrust ideas after 1945, Adam Smith's verdict on cartels as "conspiracies against the public" prevailed. The cartel question highlights important issues about the benefits and risks of competition. This working paper maintains that, for better or worse, cartels have shaped economic and business history since the late nineteenth century. Big business must recognize how, up until the 1980s, the activities and influence of cartels affected technological development, corporate strategy, and organizational change.
Following decades of liberalization, controls on cross-border capital movements are again being discussed by financial institutions, governments, and policymakers around the globe. Professor Rawi Abdelal discusses implications and the historical roles of Europe and the United States in promoting the flow of capital across national borders.
During the postwar decades, consumer-products giant Unilever survived and even thrived in developing countries such as India and Turkey even as business conditions discouraged or drove away peer companies. Why? At least five factors explain Unilever's ability and willingness to persist in such developing countries. These factors may also explain why foreign direct investment shrank to low levels in these countries, and has remained low.
Even six-month-old infants may understand what makes faces "attractive," regardless of ethnicity, but adults vary considerably in how they present themselves through clothes, hairstyles, and physical appearance. Studying the period from 1945 to 1980, this paper examines the drivers of the globalization of beauty; the strategies that firms employed to overcome challenges to globalization; and the outcomes, including the level to which globalization has brought about a homogenization of beauty ideals and practices.
Many people believe that globalization has caused companies to lose their national identity. This study traces the history of corporations and nationality and finds that multinational companies have always had ambiguities, particularly before World War I. National subsidiaries became stronger in the twentieth century, and companies like Ford, for example, would feel very American in the United States, but have a more local identity in another part of the world. In the twenty-first century, globalization has caused a reemergence of issues concerning corporate nationality. However, this research shows that in many ways corporate affiliation with a country may matter more than ever.
The Panama Canal was expected to bring great economic benefits to the people of Panama. Instead, the United States received most of the benefits. This was a deliberate act on the part of the U.S. The U.S. didn't allow Panamanian businesses to sell goods or services in the Canal Zone, it avoided the employment of Panamanian workers, and it used its military leverage to force Panama into accepting a low payment for the Canal territory.
Published in 2005
In his recent book Multinationals and Global Capitalism, professor Geoffrey Jones dissects the influence of multinationals on the world economy. This excerpt recalls the rebuilding of the global economy following World War II.
Published in 2004
International Business scholars often talk about history, but rarely take it seriously. The first generation of International Business scholars placed a high priority on evolutionary and historical perspectives and methodology, but little work these days grapples with the history of International Business or uses historical data to explore an issue. Jones and Khanna discuss new avenues for researching business groups in history and in contemporary emerging markets, resource-based and path-dependent theories of the firm, and foreign direct investment and development over time.
One way to understand management trends and ideas today is to look at yesterday. HBS entrepreneurship professor Geoffrey G. Jones and co-editor Franco Amatori have done just that with their new book, Business History around the World.
Published in 2002
Theories of competition and strategic planning are essential ingredients in running a global business. In this excerpt from Business History Review, HBS professor Pankaj Ghemawat outlines their development.
Published in 2001
Whether the subject is Third-World development or national competitiveness, George Lodge, Jaime and Josefina Chua Tiampo Professor of Business Administration, Emeritus, has exercised his talent for seeing the big picture in a prolific outpouring of books, cases, and articles.
It was a business world defined by globalization and growing interdependency. But it's not international trade circa 2000. As HBS professor Geoffrey Jones points out, the "global economy" first emerged in the 1870s.
