Economists define globalisation as “the increasing trade liberalisation between nations and the rising degree of openness of national economies which have occurred in the last decades” (Bräuninger, M. and Vöpel, H. 2009:185).
Globalisation involves a broadened outlook of the work with “free transfer of capital, goods, and services across national frontiers”. However, it has been argued that it “does not include unhindered movement of labour and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately” (Business Dictionary, Accessed 12/12/11).
We live in a society whereby globalisation has become the norm of world markets and economies; sharing and spreading knowledge and research. However, through competing and supplying on a global scale, businesses can achieve numerous economies of scale. Westland Westland
Due to the increasing competitive pressures facing businesses in the economic climate today, there is an escalating demand to become global. As a result, organisations’ corporate strategies are re-evaluated and changed as well as globalising its research and development function; gaining an insight into international markets. Globalisation has been driven by technology and communication which have, in turn, altered world powers and increased interdependency. Global issues such as climate, food and resources have also influenced the process of globalisation to some extent requiring businesses to export and work co-operatively with other countries. In a survey, executives viewed innovation as the crucial factor to remain competitive in today’s global business environment (The McKinsey Quarterly 2006 cited in Sara, T. and Jackson F.H 2010:1).
According to Sara and Jackson (2010:1), “Companies from developing countries are using innovative ideas and techniques to compete in the global marketplace” whereas “companies from developed countries are expanding their reach of innovations to a broader audience”. Many developing countries have emerged into the global competitive market. For example, China
- Rising spending on research and development: since 1999,
- More patents and scientific output: invention patent applications have increased by 23% annually since 2000.
- More multinational R&D centres: the Chinese government estimates that 750 global companies now have research centers in
- The growing graduate pool:
(Strategic Direction, 2007:32)
As explained by Tidd et al, “global firms now rely hardly at all on their home – or any other one – country for their operations, since they compete and increasingly produce in global markets” (1997:75). However, Porter and Nelson claim that conditions existing in their home countries highly influence their technological strategies because “even global firms draw mainly on mainly one – or perhaps two – countries for their strategic skills and expertise in formulating and executing their innovation strategies” (cited in Tidd et al.1997:75). Statistics have found that “10% of the innovative activities of the world’s largest 500, technologically active firms were located outside their home countries in the 1980s, compared to about 25% of their production and much larger of sales” (cited in Tidd et al.1997:75).
Sara and Jackson (2010:4) express the concern that “In many cases the executives of global companies from the developed countries are so focused on their traditional competitors that they do not recognise the threat developing from rivals coming out of emerging markets”. Ideally, the UK and European Union should take note from these industries to prepare themselves for a world of global innovation networks whereby “ideas and technologies will come from many more places (Strategic Direction, 2007:34). Emphasis has been specifically placed on the need to “invest more in science and innovation, and make international collaboration more central to their way of working” (Strategic Direction, 2007:34).
References
Bräuninger, M. & Vöpel, H. (2009) Globalisation, Trade, and Growth: A Macroeconomic Perspective', Intereconomics, Vol. 44 Iss.3 p185-192, Available from Business Source Complete at: http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=5c01ffb6-ec1b-4484-a915-081c3857830f%40sessionmgr112&vid=7&hid=110, [Accessed 11th December 2011]
Business Dictionary [online], Available from: http://www.businessdictionary.com/definition/globalization.html, (Accessed 12th December 2011)
Sara, T. and Jackson
Strategic Direction (2007) The new world of innovation; Innovation is going global, Strategic Direction, Vol. 23 Iss 9 p32-35, Available from Abi-Inform at: http://proquest.umi.com/pqdweb?index=0&sid=1&srchmode=1&vinst=PROD&fmt=6&startpage=-1&clientid=57096&vname=PQD&RQT=309&did=1360295591&scaling=FULL&ts=1323614138&vtype=PQD&rqt=309&TS=1323614201&clientId=57096, [Accessed 11th December 2011]
Tidd, J., Bessant, J. and Pavitt, K. (1997) Managing Innovation; Integrating Technological, Market and Organizational Change, Chichester : John Wiley & Sons Ltd.
