The End of the Multinational Business Model?

IBM's Sam Palmisano has announced the end of the multinational. That, at least, is ComputerWeekly.com's take on the usually taciturn IBM chief executive's recent call for corporations to become globally integrated enterprises rather than simply offloading activities to low-wage countries. Palmisano wrote in the Financial Times that a more integrated way of organizing business activities is inherently more profitable and benefits developing countries.

Palmisano's declaration may appear self-serving -- it was coupled with news of a $6 billion IBM investment program in India -- but it will resonate among his peers. Like the "End of History" heralded by Francis Fukuyama at the conclusion of the cold war, the hyperbole contains a valid insight: greater integration between foreign investment projects and the local economy is a win-win proposition.

On the other hand, integrating the projects of foreign investors into a local economy can be surprisingly hard to do. Project managers want to buy locally, for example, but they need assurances of quality and consistency of supply. Local suppliers often need technical support and financing to become credible suppliers. Last, but not least, the local business environment may need improving. IFC has long worked with clients on projects in emerging markets. Click here for more details.

The end of the multinational is not near, but the end of the "enclave" project is. The shift to a new model of integration with the local economy is a win-win for foreign investor and host country -- and it is taking place before our eyes.

Comments

[Per Kurowski]

Friends, in relation to Palmisano’s article you might find of some interest the following comment I made on a Financial Times note in my http://teawithft.blogspot.com/.

The global work-force needs some global representation too

Sir, The head of IBM, Sam Palmisano in his (local) Multinationals have been superseded (June 12) makes a passionate defense of the “globally integrated enterprise” in order to diminish the dangers of that neo-protectionism that is dangerously lurking around and that could create havoc for the world economy. But his arguments also remind us that currently, absent of any true independent representation of Mother Earth’s long term interests the World Bank seems more a “Pieces of the World Bank, and the International Monetary Fund an association of very local central bankers. In this respect, in the frequent discussions about the need for updating the different voting rights and the Executive Boards of these institutions to current economic realities, what could be most beneficial is to find ways giving representation and voice to the real new kids in town, meaning all those workers, skilled or unskilled, legal or illegal, who nowadays represent jointly one of the largest and most vibrant economies of the world.