The End of Global Strategy

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European Management Journal Vol. 19, No. 4, pp. 333–343, 2001  2001 Elsevier Science Ltd. All rights reserved Printed in Great Britain S0263-2373(01)00035-4 0263-2373/01 $20.00 + 0.00

The End of Global Strategy
ALAN RUGMAN, Indiana University, and Templeton College, Oxford RICHARD HODGETTS, Florida International University
Recent research suggests that globalization is a myth. Far from taking place in a single global market, most business activity by large firms takes place in regional blocks. There is no uniform spread of American market capitalism nor are global markets becoming homogenized. Government regulations and cultural differences divide the world into the triad blocks of North America, the European
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19, No. 4, pp. 333–343, August 2001


is not so. MNEs are not monolithic; in fact, the largest 500 multinationals are spread across the triad economies of NAFTA, the EU, and Japan/Asia. Recent research shows that of these 500, there are 198 headquartered in NAFTA countries, 156 in the EU, and 125 in Japan/Asia.6 Additionally, these triad-based MNEs compete for global market shares and profits across a wide variety of industrial sectors and trade services. And this process of regional competition erodes the possibility of sustainable long-term profits and the possibility of building strong, sustainable political advantage (Rugman, 1996; Rugman and D’Cruz, 2000). A third misunderstanding about globalization is the belief that MNEs develop homogeneous products for the world market and through their efficient production techniques are able to dominate local markets everywhere. In truth, multinationals have to adapt their products for the local market. For example, there is no worldwide, global car. Rather, there are regionally-based American, European, and Japanese factories that are supported by local regional suppliers who provide steel, plastic, paint, and other necessary inputs for producing autos for that

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