Beyond Seattle: globalization, the nonmarket environment and corporate strategy

Abstract

Globalization is changing MNEs' nonmarket environments in four ways. First, instead of a 'retreat' of the state across sectors, it is leading to deregulation as well as reregulation. Because cross-border mergers and acquisitions are creating global oligopolies, there is increased antitrust scrutiny, thereby creating opportunities for governments to employ competition policy as a non-tariff barrier. Second, since MNEs retain national identities and 'first-movers' appropriate significant profits, governments have incentives to influence nonmarket environments in favour of their home-based MNEs. Third, many citizen groups that oppose MNEs have acquired a broad array of cross-border competencies (not merely country-specific). Their collective opposition is significantly aided by the Internet and by their abilities to manage the media. Fourth, since media is now significantly globalized, local nonmarket issues quickly acquire supranational dimensions. Thus, to respond to these changes, MNEs can be expected to simultaneously develop multi-domestic and supranational (regional and global) nonmarket strategies.