Essay: Globalization and Leadership

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Globalization and Leadership

The Phenomenon of Globalization

Globalization can be defined as the unfolding resolution of the contradiction between ever expanding capital and its national political and social formations. Up to the 1970s, the expansion of capital was always as national capital, capital with particular territorial and historical roots and character. Afterwards, capital began to expand more than ever as simply the corporation; ownership began to correspond less and less with national geographies. Just as capital once had to create a national state and a defined territory, in the form of the transnational corporation (TNC) it has had to remove or transform this 'shell' to create institutions to ensure and facilitate accumulation at the global level (House, et al., 2004-page 18). Globalization is the close of the national history of capital and the beginning of the history of the expansion of capital sans nationality.

Globalization can also be grasped as the 'triumph of capitalism', that is, as the ascendancy of economics over politics, of corporate demands over public policy, of the private over the public interest, of the TNC over the national state. It is the last stage in the capitalization of the world. This 'triumph' is embodied in global agencies whose function is to facilitate global conditions for capital accumulation. These agencies have global powers, structured in the interests of corporate private property, but are neither democratic nor representative of other interests (Ashkanasy et al., 2004-page 11). 'National' and 'general' interests become subordinated to those of the corporation.

Globalization can further be defined as the arrival of 'self-generating capital' at the global level: that is, capital as capital, capital in the form of the TNC, free of national loyalties, controls, and interests. This is different from the mere internationalization of capital, which assumes a world of national capitals and nation states; it is the supersession by capital of the nation state. All the circuits of capital become global in nature and so begin to render the national economy; and its associated borders, policies and programmes, more or less meaningless, while at the same time giving coherency to a global system as such (Stone, 2006). These definitions emphasize different aspects of the same phenomenon, one that is proceeding but not yet complete. The present era is a transitional one in which the world of nation states and national markets is being transformed into a single world market with sizeable and growing percentages of all economic activity accounted for by a few hundred corporations, and world trade increasingly is intra-corporate rather than international.

The Changing Globalization Paradigm

Those that praise the emergence of the globalization paradigm point to the quicker growth of international trade, as compared to world output, and to the improved flows of both portfolio and foreign direct investment. Consumers now choose from a greater variety of foreign as well as domestic goods, and individual savers now habitually invest in diversified portfolios of foreign equities and securities. Much as technology has benefited the emergence of the globalization paradigm, it has also substantially benefited from the very paradigm it helped create. Accelerated technological change has dramatically shortened product life cycles. The high cost of research and development coupled to these shortened product life cycles has mandated access to more and larger global markets in order to efficiently amortize the high cost of innovation. Quite frequently, the amortization of these costs represents a larger portion of total product and/or service cost than does the unit production cost (Levitt, 1983-page 14). Selling more units during a product's active life is the obvious best solution, and accessing more and larger international markets is an effective methodology to increase such unit sales.

Some firms had taken steps to reinforce their competitive position in terms of general international trade and not specifically in response to FTA. Thus their focus was to adapt to world competition by designing strategies to develop a specific market. A plot of the "exposure factor" versus the "dynamism" of the responding firms generates a mapping that leads to groupings of the firms as follows: 94 firms that are dynamic but not threatened and 38 firms operating in closed markets, giving a total of 132 firms not vulnerable to the agreement. The central part of the graph includes 57 firms that can be classified as vulnerable. They are either highly dynamic and highly affected or moderately dynamic and moderately aware. The third group contains 53 very vulnerable firms that are highly affected and yet very passive. The clothing sector is found to be the most vulnerable but having taken few or no steps to improve their competitiveness. On the other hand, machinery, commercial printing, and wood sectors reacted well to the market opening. The smallest firms (1 -- 10 employees) operated in niche markets with specialized products and were found not vulnerable. The medium-sized firms (50 -- 250 employees) were found to be vulnerable or highly vulnerable. Exporting firms were only moderately vulnerable. An interesting finding of the study is that when the capacity of SMEs to react to removal of international barriers consisting of trade between two countries is considered, the measure is found to be insufficient compared to a measure that widens the notion of competitiveness in terms of national and international markets. This is reflected in the number of firms reacting to opening of markets, 28.9% of the firms in the former case (trade between two countries) versus 78.1% in the latter case (international markets). The findings confirm that increasing numbers of SMEs realize the new challenges created by market globalization. The FTA with the United States becomes just one element in the new international structure that includes Common Market countries, Japan, and the newly industrialized countries as well. SMEs develop different ways to face the challenge of market globalization (Ashkanasy et al., 2004-page 20):

1. Use of new production technologies (computerization, CAD system, etc.)

2. Creating differentiation through innovation at the national and international market levels.

Research tends to show that international competitiveness depends as much on product differentiation as on the use of new production technologies. SMEs refusing to adapt to new international environment while operating in open markets will find it hard to survive. Knowledge and some basic understanding of external environment in the context of the national as well as global developments and changes, together with an evaluation of the firm's resources, are necessary for the small firm's survival. Small businesses lack the resources to acquire such information and to conduct an analysis of its implication, to develop appropriate policies, and to undertake innovative programs to address this shortcoming.

Powerful Forces Driving Economic and Social Change: Leadership Mind-Set

Hofstede (1991) discusses his four inventive dimensions of culture: Power Distance; Uncertainty Avoidance; Individualism & Collectivism; and finally Masculinity & Femininity. The fifth dimension which was afterwards added based on results from the Far East and Asia - Long- versus Short-Term Orientation. In spite of that, it remains a very important and highly readable introduction to the theme from. Hofstede (1991) uses these dimensions of culture to 'classify' organizations to diverse types according to where they are placed on the Power Distance vs. Uncertainty Avoidance grid. The debate is highly informative and touches on Mintzberg's theories additionally typical models of organization in diverse cultures. He discusses how intercultural encounters are related to these dimensions and how consciousness and acceptance of these differences can give way to more effective results. "In the region of organizations and management, theories, models and techniques developed in a given country -- usually in the United States -- are not valid and ready to be applied, without further considerations, in countries with very different cultures" (pg. 21).

Competencies That Are Most Important For Global Leaders

The GLOBE researchers deliberated leadership worldwide; they define leadership as: "...the ability of an individual to influence, motivate, and enable others to contribute toward the effectiveness and success of the organizations of which they are members" (House, et al., 2004-page 15). A major outcome of this enormous research effort was the growth of six generally shared notions of leadership, known most frequently as "culturally endorsed leadership theory dimensions," also known as "global leadership dimensions" and by quite a few other names (Stone, 2006). It is of significant weight to keep in mind that these six are magnitudes, or continua, and per se are not statements of what is exceptional leadership. To a certain extent, they are about the ways in which people worldwide differentiate between leaders who are effectual and ineffective.

These six ethnically certified leadership theory dimensions are direct results of the research inside all 62 societal cultures. The six are explained using the 21 "primary leadership dimensions" or "first order factors." The Six Global Leadership Dimensions-

** means "reverse scored" Charismatic/Value-Based

* Charismatic/Visionary

* Charismatic/Inspirational

* Charismatic/Self-sacrificing

* Integrity

* Decisive

* Performance oriented

Team Oriented

* Team collaborative

* Team integrative

* Diplomatic

* Malevolent **

* Admin. competent

Self-Protective

* Self-centered

* Status conscious

* Conflict inducer

* Face saver

* Procedural

Participative

*… [END OF PREVIEW]

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