debates in the field of global strategy (Essay Sample)

DEBATES IN THE FIELD OF GLOBAL STRATEGYNameInstitutionDate Introduction International business and strategic management are merged by a global strategy which is an important discipline in many business schools. Despite global strategy discipline being faced with multiple challenges, significant strides have been made. Research and practical application debates have significantly contributed to moving the field forward. This paper will offer a critical review of current global debates strategies: cultural distance versus institutional distance debate; regional versus global geographic diversification debate; divergent in corporate ruling versus convergence in corporate decision and international versus domestic in corporate social responsibility. Reasons as to why we put the focus on the four debates strategies include: to obtain a difference on global strategy research, to be able to select debates that differ in characteristics. The four debates were chosen since each of them has a way to which they address the issue of global strategy audience, each has a targeted research group that it addresses (Peng, 2007). Due to the incorporation of these debates, it is easy to have an encompassing difference to conduct research on as well as obtain the significant issues in the field of global strategy research. In literature, some debates have existed such as the firm performance and the internationalization. In this paper, we have identified only the discussions with the difference in time such as institutional versus cultural distance debate that has been described by Kogut and Sighn (2008) as the oldest debates. However, due to the recent line of activities within the field of global strategy, these debates have been identified as the world leading debates as they may have contributed to the increased application of institutionally based techniques in comprehensive policy research. In addition, all other debates have their history as well with the most disclosures being in the recent past. As a result, the scenario has made us identify disputes with systematic reviews. Definition of global strategy There exists a different view that tries to define the meaning of world strategy. One view holds that it is a particular form of multinational enterprise technique that offers all world countries equal treatment at the global market. This is regarded as a multinational company well known across international, transnational and multi-domestic landscapes. In real world applications, this strategy appears to exist hardly in many MNEs and the few that implement it end up in significant problems. On the other hand, another view holds that it defines a strategy of organizational structure in the world and is seen as the first theory of successful competition. This second definition of global strategy will be widely explored abd critiqued in this paper given that these two debates included in the paper entirely focus on international aspects. Corporate social responsibility (CSR) and corporate governance feature major domestic requirements (Peng and Lee, 2008). Institutional based-overview For a long period, international business researchers have invested on the issues that are related to environment such as culture, political challenges as well as context. For the purpose of consolidating this literature, it is important to research further on all the existing works that have close relations with the external environment on a perspective known as institutional based (Hofstede et al, 2002). In broader terms, institutions can be defined as rules that govern the process. Global firms should have a good understanding of both formal and informal regulations that governs vested countries. The institutionally based view suggests that different rules around the world governs the game of global strategies. All the four debates whose discussions are included in this paper contain interesting components that connect them with the institutional view. Both formal and informal environmental elements are actively engaged in the debate between institutional versus cultural distance thus giving them to connect directly to the institutional view roots. In addition, cultural distance is based on informal aspects in institutional –view while institutional distance has both formal and informal components of institutional-view based. The debate between regional geographic versus global diversification is described as cultural and political environmental debate. In addition, the divergence and convergence debate in corporate ruling describes the governing systems in a global position. Two competitive proportions are suggested by an institutional-based view i.e. converging of the formal institution and lack of proper implementation of the convergence mechanisms by the informal institutions. Finally, firms have to deal with all elements in the global institutional environment for the purpose of connecting domestic versus international CSR debate (Rugman and Verbeke 2004). At times firms functions in extreme environments under different governance at a global institutional environment. Each of these four debates is discussed in depth. Divergence versus Convergence in Corporate Governance Debate Since the release of Industrialism, researchers have diversified to cultural based beliefs, attitudes, and consumption patterns. The main issue is whether cultural values are derived from national cultures and participation of ideology. Divergence perspective is followed by those who support national cultures while those who pursue convergence perspective believe in economic ideology. Following this debate there are no clear answers and the debate keeps on widening up in the two schools of thought. According to corporate governance research, questions arise on whether corporate governance is diverging or converging on a global scope. Convergence experts argue that globalization will be beyond process whereby firms will have to adapt to best practices globally (Singh, 2007). The Anglo-American-style of governance procedures reflect that companies following their style pay high premiums. This is due to the convergence of international rule of conduct. Prior to this, diverse set of pressures leads to firms voluntarily adapting to international rules. Furthermore, critics have indicated that governance activities will continue to expand globally. The structure of responsibilities and rights is within the individuals with a stake in the firm. To deal with major conflict, the United States, and the United Kingdom promote principal-agent conflicts. In the Asia, Europe and Latin might be competitive during production since the major challenge facing them is how to control shareholders. The solution lies on how to reduce the monitoring and ownership. Findings show that owners are allowed more ownership and authority than other in other countries. Two points are made concerning the case of cross-listed firms. One is that as compared to the firms in the United Kingdom and the United States, these companies have a concentration of ownership, low institutional ownership, more inside directors and a larger board of trustees (Tihanyi, 2005). In a nutshell, it shows that cross-listed foreign companies or firms do not adopt the United States and the United Kingdom governance practices. Secondly, in practice laws applied by the listed companies in the United States are not actually implemented. Divergence advocates for the possibility of export regulations from the United States and the United Kingdom while convergence experts express the implication of same governance regulation being used globally. Institutional versus cultural distance debate For a long time culture has been regarded as a section of international business research and this has made not to be part of significant research describing the global strategy and in this case, policy is viewed as macro while culture is viewed as micro. Over the last decade, there has been an emergence of the institutional view of global strategy. At this point, comprehensive strategy is viewed as fundamentally influenced by both informal and formal institutions which are also known as the game rules. An engaging debate on the role of culture in an institutional view of global strategy and identify institution and culture as the most expensive to develop and determine the differences between tradition and culture (Jiang, 2008). Great Hofstadter’s law of cultural classification debates the function of culture in the global surrounding. Under the law, culture is defined as cumulative of beliefs, social values, patterns of behaviours and norms. Since global businesses transactions interact with different societal values, culture is therefore identified as part of all business transactions. The question of whether institutional or cultural distance is a better measurement tool is the current debate of institution versus culture. The study of national cultural differences between home country of multinational enterprise and other operating countries hosted are all included in the cultural distance while on the other hand, institutional distance involves a combination of cultural differences and other inclusive factors such as cognitive identification, normative pressure, and regulatory differences. Institutional development, marker elements, and socio-political stages can be used to explain cultural attributes. According to the studies by Peng (2007) that examine cultural distance, role indicates that differences in culture of both the host and home market increase while the multinational capacity to operate in a host market reduces. This describes why it is hard to achieve excellent efficiency on current operations when the cultural distance is significant. As a result, high complexity levels, as well as uncertainties in managerial decision making, might occur as a result of hig...