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.