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The influence of globalization on information technology


The world is indeed a very small place


Pablo Molina, Assoc VP of IT & Campus CIO, Georgetown University

Highlights

  • Transnational corporations are main agents in the global dissemination of technology.
  • In general, it is advantageous for a country to host as many transnational corporation activities as possible.
  • To succeed in the current economy, one must be global.

Reading The World is Flat by Thomas Friedman, one gets the impression that the world is indeed a very small place. The establishment of shift work centers in Ireland, India and other countries by multinational corporations is evidence that information and communication technologies, by virtually reducing time gaps and space distances, contribute to globalization. When payment problems arose at the time of purchasing my plane ticket from the United States to China, I called the airline’s suggested phone number and received assistance from call center operators in India.

The influence of globalization on technology is felt in the need to ensure that technology can be localized easily to serve constituents in different cultures and languages. In the case of the software industry, for example, startups often find themselves struggling to go from an English-speaking market to a worldwide market. Their initial product and service offerings often are not flexible enough for ready localization. As corporations grow larger, they begin to understand the need to design their products with added flexibility for new markets. In The Sources of Economic Growth, Richard R. Nelson makes a compelling point about the impact of globalization in technology: “We believe that the internationalization of trade, business, and technology is here to stay. This means that national borders mean much less than they used to regarding the flow of technology.”

The most pervasive way to disseminate technologies is by trade. By purchasing and selling products and services, individuals and corporations disperse their underlying technologies all over the world. This is true of consumer goods and services, such as high-definition television sets or mobile phone services, and of capital goods and components, such as industrial car-wash machines or enterprise resource planning systems.

Foreign direct investment is another way to disseminate technology. Investments sometimes take the form of capital equipment and related services by which a multinational corporation decides to invest in production facilities elsewhere. Technology also travels in the relationships between buyers and suppliers. Contributing or feeder technologies become part of the supply-chain of other products and services. For example, microprocessors, hard disks or video cards are necessary parts of assembled laptop computers. In some cases both of these exchanges take the form of technology licensing or assistance agreements by which a party, a multinational corporation or technology vendor, lets others use its technology know-how, processes and components in exchange for compensation.

Legally or not, those who are eager to innovate pay close attention to those who have innovated first. By closely examining the business models, products and services of the pioneers, others may be able to replicate them and even improve them. As the saying goes, “copying is the greatest form of flattery.” Often, simple copying is not possible due to technical complexity and trade secrets. This is when scientists may resort to reverse engineering to decompose a product or service with the idea of learning how to build a similar or better one.

Education and training are great ways to disseminate technologies. When scientists, engineers and technicians learn about processes and products from the innovators, they are then able to produce them and even improve on them. This education takes place in the form of corporate training, academic education, joint research projects and mentoring relationships. Often times, these training activities take place around trade shows, conferences, professional meetings and even distance learning over the Internet. Technical knowledge also circulates in the form of books, research and white papers, both in print and on-line, as well as directly over the Internet. Every time a person downloads open source or freeware programming code, that person gains access to a potential contributing technology.

Transnational corporations are main agents in the global dissemination of technology. In Global Shift: Reshaping the Economic Map in the 21st Century, Peter Dickens defines transnational corporations, TNCs, as “networks of internationalized relationships.” The geographical spread of their activities brings opportunities and challenges to the corporations, their home countries and those countries hosting some of their operations. Transnational or multinational companies may choose to place their central, regional and local headquarters, or their research and development centers, in a variety of locations. By the same token, they may choose to set up their production, assembly and service operations in different places. Sometimes corporations choose to produce near their markets. Sometimes it makes more sense to establish operations closer to the raw materials, energy and supply chain contributors.  Yet, it is often the case that tax incentives, labor conditions, environmental regulations and other economic incentives suggest the ideal location. In the case of headquarters or research centers, corporations also pay close attention to the quality of life in the chosen area, ensuring that executives, researchers, support personnel and their families judge the location attractive.

In general, it is advantageous for a country to host as many transnational corporation activities as possible. This is why governments often engage in cut throat competition to entice large corporations to open and maintain their factories and other centers in their territories. Tax breaks, land deals, infrastructure commitments and employment incentives are some of the tools at the disposal of governments to achieve their goals. Sometimes countries rely on market protection regulation, incentives and disincentives to ensure that corporations carry out some of their activities, for example, assembly plants, near their target markets.

To succeed in the current economy, one must be global. Read the news from every corner in the world and understand what is happening. Cultivate friendships with people of different ages, and people of diverse ethnic backgrounds and nationalities. Travel to other countries regularly. Absorb and enjoy other cultures. Expose yourself to new ideas by watching foreign movies, by reading foreign books and newspapers, by visiting international web sites and by listening to music from other countries. Make a life time commitment today. Visit at least one new country every year but preferably two or more. The United Nations recognizes 192 countries as of today, so it will take many years to visit most of them. Travel to every continent, from the Americas to Australia, from Asia to Africa, and every region to understand the world better. This is how you will truly understand globalization. 



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