The term globalization is quite new, widely introduced only in the late 1980s/early 1990s, though the Japanese used an equivalent concept in the 1960s. (My computer spellchecker still does not recognize the word, and keeps urging me to remove it - but I'm writing a book about it instead.) The term, and the concept behind it, were not coined by historians, but rather by other social scientists, with economists in the lead. These theorists in turn, implicitly or explicitly, argued that globalization identiï¬ed a phenomenon whose nature and consequences were quite novel, leading to very different inter-regional interactions and human experiences from anything that had occurred before. Most of them also contended that this global innovation was largely a good thing, producing not only a different but also a better world; but it was also possible to make the same claims about novelty but conclude that the results were unfortunate - the world is indeed different and getting worse. Primary attention, in other words, tended to focus on the quality claims associated with globalization, the list of advantages and drawbacks, which is indeed a vital topic. (Guha, Ramachandra.2000)
Emerging patterns of contact, 1200 BCE - 1000 CE
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Several of the early river valley civilizations developed inter-regional trade. Mesopotamia, at the mouths of the Tigris and Euphrates rivers, exchanged with Harappa society in northwestern India (today Pakistan). Not only goods, but artistic symbols were part of this exchange, and there may have been cross-fertilization in religious ideas as well. Egypt began to launch shipping in the Red Sea by 2500 BCE, reaching the Arabian Peninsula (present-day Yemen) and also farther down the Indian Ocean coast of Africa. Egyptians received gold, ivory and slaves from Ethiopia, in exchange for manufactured goods. Trade with the Middle East emphasized spices, some of which had been shipped over from India. Here was an example of somewhat longer-distance trade that did not however involve direct connections; that is, it operated in shorter inter-regional hops rather than direct contact, in this case between Egypt and India. Several centers in the Persian Gulf, notably a center called Dilmun (present-day Bahrain), also served as transmission hubs for goods, such as precious stones produced elsewhere. By the 2nd millennium BCE, a trading ship in the Mediterranean might carry goods from sub-Saharan Africa and northern Europe, as well as the Middle East or India, showing the range of contacts that sustained a lively commerce. (Mazlish, Bruce.2006)
The classical era
The advent of the great classical civilizations, from 1000 BCE or so onward, raises an obvious complication in even a summary analysis of the initial historical backdrops to globalization. The major civilizations now began to stretch over a large territory. In China during the Han dynasty, for example, it took forty days to travel from the capital to the most far off provinces, even on the relatively good roads the state now provided. Not surprisingly, the bulk of the energies of various leaders - not just emperors, but also venturesome merchants and cultural emissaries - went into developing internal networks that would take advantage of this new territory and work to integrate it into a (somewhat) coherent whole. Chinese leaders, for example, worked very hard to link north and south China, building canals to facilitate trade, sending colonists from the north to the south, and promoting use of a single language, Mandarin, at least in the governing class - despite or in fact because of the multiplicity of ethnic groups, languages and cultures of the mixture of peoples that now made up the Chinese empire. All the classical empires fostered cultural systems - like Hinduism and Buddhism in India, and Greek-derived architecture around the Mediterranean - that would provide new links, not necessarily attacking more local systems but seeking to supplement them with more overarching styles and values. Trading activities sought to take advantage of local specializations - like grain growing in North Africa in exchange for wines and olive oil from Italy and Greece - to promote greater efficiency and prosperity (and tax revenues) and in the process create a more coherent overall economy. Common social systems spread out, like patterns of slavery in the Mediterranean or the caste system in India, giving another linking device. Finally, periodically at least, outright empires sought to provide political unity to all or at least major parts of the chief civilization areas.
The limitations of early modern globalization
Always on Time
Marked to Standard
The importance of global developments from 1500 onward, even amid the vitality of older systems in Asia and Africa, must not of course conceal the limitations of the systems involved. Full-fledged globalization moved closer, and there was stimulus for still further change, but this was not a globalized world in our contemporary sense. Two limitations stand out: the relatively modest changes in the technological apparatus, and the striking decline of overt imitation among societies.
But limitations and positive avoidance were on the whole more important. Europeans, increasingly proud of their technological achievements, often felt they had little to learn in the cultural sphere from any other part of the world. They might be impressed with the wealth of other places and with the power of rulers, but this did not translate into active imitation of cultural values. Indeed, Asian societies, and particularly the Ottoman Empire, came increasingly to be regarded as a bit backward and decadent, though these stereotypes blossomed fully only in the 18th century. Interest in benefiting from Islamic philosophical or scientific achievements declined notably, though some historians have argued that what really changed was European willingness to admit they were still copying, for example in mathematics, rather than a full refusal to learn.
The mid-18th-century option
More important still was the emergence of larger capitalist enterprises the great trading companies but also the workings of the slave plantations in the Caribbean, which increasingly replaced the more personalized, religiously based links that had sustained trans-regional commerce previously. The new operations were more fiercely profit driven than more traditional merchants had been. They increased the size of investments in inter-regional trade and production for this trade, and they were willing to introduce huge changes in labor systems to drive production up; in contrast, while the more traditional merchants had often indirectly encouraged more export activity, they had not directly organized the operations. The new ventures, also provided more impersonal management techniques, capable of operating over large distances without the need for personal connections. All of this meant that most dynamic international companies were ready by the mid-18th century to push global trade to unprecedented levels, with equally unprecedented impacts on local economies and local workers. (Robertson, Roland.1992)
New technologies and systems
Transportation and communication formed the most obvious break between the proto global patterns of the previous period, and the global thrusts by 1850. Capacities for speed and volume in transportation followed from the application of industrialization's steam engine to both land and sea, with trains and steamships respectively. Communication was revolutionized through the telegraph, particularly when undersea cables moved the telegraph from a regional to a global device. The new technologies seemed obviously desirable, of course, because of the levels of global interaction already in effect - it seemed increasingly imperative to accomplish them more quickly. But the changes were so dramatic that they immediately supported a new level of connection, most obviously in trade but also in patterns of immigration, in the dissemination of news and in other areas. (Bentley, Jerry H.1993)
Globalization since the 1940s
The point is obvious, and obviously important: new communication opportunities melted distance and time. People could reach each other, immediately, around the world. This made the experience of travel different from what it had been before - one could go a long distance and retain direct connection with family, friends and work, which meant that travel was less disruptive than ever before. The shrinking of communication gaps, at least technologically, made new types of collaboration possible: scientists for example could work on the same problem, in real time (impeded only by the intractable issue of different time zones), almost as if they were next door to each other. Connections among stock markets tightened as news could be exchanged instantaneously. Even student cheating took on new dimensions: students taking an Advanced Placement test in Egypt could use cell phones or email to tell friends in Los Angeles what was on the exam, hours before they actually had to take it - until the College Board wised up and began preparing different versions of the exam for different international regions.
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Contemporary globalization - or the contemporary phase, depending on how one views historical antecedents - involved two clearly novel elements: the global environmental impact and embryonic global protest - and a massive acceleration and expansion of more established patterns, notably in the areas of technology, language and culture changes in organization and global politics added in, and there were some re-dentitions of earlier staples like migration and disease transmission. Even global food access, though not new, now expanded its impact through the global epidemic of obesity. The overall combination provided powerful arguments for those - whether historians, other social scientists or simply ordinary observers including of course the protesters - who felt that a fundamental transformation was under way that would measurably differentiate the world's present and future from its past. Global innovation could be welcomed by optimists who saw in it a source of greater overall prosperity and of political counterweights to traditional evils like the oppression of women or the denial of basic human rights. It would be bemoaned by those who identiï¬ed both economic and cultural deterioration. The two groups might clash endlessly over their evaluations, but they would ironically agree that something massive was in the works. (Bascu, Juanita-Dawn.2005)
Q no 2
The years 2003-07 represented a golden period of growth and wealth for the world economy, which had not grown so fast since the early 1970s.The World Bank reported that, thanks to the economic boom in China and India, not only the share but also the absolute number of poor in the world diminished (Chen and Ravallion 2007).
Because of high growth in many less developed countries, the world is seeing a stark economic convergence, which has become a dominant theme in the global economy. The focus is now on the largest emerging economies of Brazil, Russia, India, and China-the so-called BRICs. Goldman Sachs forecasts that by 2039 the BRIC economies will together be larger than the G-6 economies. (Balcerowicz and Fischer 2006, Gaidar 2005)
Economic growth does not come alone. It raises society as a whole, accompanied by extraordinary social achievements. Poverty has fallen sharply, not only in the share of the world population that is poor but also in absolute terms, even if the World Bank still estimates that about one billion people live in absolute poverty (Chen and Ravallion 2007).
The major indicators of global health are improving, and impressively so. The average life expectancy in the world increased from 63 in 1980 to 68 in 2005.In the same period, global infant mortality declined from 79 per 1,000 live deaths to 52. The world's healthier and wealthier people have invested in their human capital, so that global literacy has risen from 76 percent in 1990 to 82 percent in 2005 (World Bank 2007).
Trade, terrorism, clash of cultures, migration, off-shoring banking, international portfolio and foreign direct investment, multinational corporations, outsourcing, Avian flu and SARS. global warming, the importation of foreign invasive species that gain ecological advantages over native species, ordering Vietnamese or Ethiopian food in rural America restaurants, choosing between a Big Mac or KFC in Beijing, and study abroad are just the tip of an iceberg labeled globalization. Globalization consists of multiple processes by which people in one society become culturally, economically, politically, socially, informationally, strategically, epidemiologically, and ecologically closer to peoples in geographically distant societies. These processes include the expansion of cross-border trade, production of goods and services via the multinational corporation, outsourcing of work across borders, movement of peoples, exchange of ideas and popular culture, flow of environmental effects and disease from one state to another, and routine transfer of billions of dollars across borders in an nanosecond. They connect communities, cultures, national markets for goods and services, and national markets for labor and capital. The food we consume, clothes we wear, jobs we perform, air we breathe, water we drink, cars we drive, transport that delivers our goods, information we access, capital that powers our economies, services we use, computers we use, places we travel, education we seek, diseases we contract, drugs and therapies we employ to combat illness, and just about every aspect of day-to-day life have some global component. The world is figuratively shrinking as activities in one nation increasingly spill over to influence activities in other nations.
The extent of global influences on our lives, and our interpretation of globalization, varies depending upon where we live, our nationality, our income, our professions, the openness and strength of our national political economies, and how the processes of globalization affect us at any specific time. Creating connections across national boundaries can bring good and bad consequences. Some of the consequences of globalization improve the human condition, enhance social welfare, create wealth, and enrich our lives.
The very extent of economic globalization and the cross-border cooperation necessary to fuel that globalization should give some hope to those despairing of the global arena as full of inevitable violence and conflict. Yet, other aspects of globalization produce dislocations that can damage individuals, families and communities, spread illness, contribute to violent conduct, poison our environment and even threaten our existence. Globalization is neither all good, as many proponents of globalization argue, nor all bad, as many opponents assert. Concurrently, the processes of globalization can improve the well-being of many, but also create new risks and problems for societies.
This contributes to schizophrenias in societies. Some praise globalization, others rail against it, and yet others see both good and bad consequences of globalization and argue for managing the negatives and promoting the positives. Globalization evokes visceral public arguments, passions and fears
Demonstrators regularly protest globalization and the transformations of global capitalism at the World Trade Organization, World Bank and IMF (International Monetary Fund) meetings.
Broadly speaking the integration of global capital markets has some distinctive advantages, at the global level it allows world saving to look for their most productive uses regardless of their location. Furthermore, integrated markets create possibilities for an international pooling of risks and diversification of investment. By buying foreign securities, investors can diversify away some of the systematic risk connected with their home market and achieve increased risk-adjusted returns. Countries in a temporary recession or with little capital can borrow abroad to finance investment for promoting economic growth from the issues perspective, offering securities globally provides them with a range of benefits not to be obtained in their home markets, such ad additional capital, increase in share value, additional liquidity, increased publicity, and others. Ventures capital missing at the domestic level may be found in foreign markets. In short, the welfare gains of free capital flows are by most measures significant.
The directors and senior managers of companies are required to work within corporate structures which at the highest level will define the aims and objectives of the organization. It is now necessary to move outside the private corporate realm and consider the role of the corporate body in the wider societal and global context. It is also necessary to study the relationship between the corporate body and the various stakeholders who have an interest in the company's performance economically, ethically and philanthropically. If the balance among these various interests can be maintained in equilibrium than the company will have developed an additional and effective strategy to prevent corporate accidents. The company will have ceased to be driven solely by the profit motive with the ever-present danger of cost externalization
Corporate Ethical Responsibility
The corporate ethical policy (sometimes called a code of ethics) essentially expressed the purpose of a company (if any) apart from the main declared purpose of most companies: to make a profit, pay out a dividend and increase the value of the stock for the owners. As described below, the purpose needs to be translated into action via structures which support the purpose. If the expressed purpose and the action correspond then the company can be said to be acting with integrity. A very simple definition of ethical policy is:
The company's reasons for existence (purpose) beyond just making money and being compliant with the law.
This is not to be confused with specific corporate goals or business strategies which are simply the means to implement the many policies including ethical policy. Ethics includes but goes beyond compliance with the various laws that govern corporate behaviour. Corporate body, although it can be defined legally as an artificial person, is unable to do anything of its own volition, let alone comprehend the finer points of ethics and morality. It can only operate through the intention and will of the human corporate actors which animate it. Corporate ethical policy is not therefore something the company does; rather it is aimed at the standards of conduct of the directors and managers who determine the behaviour of the organization. When society sees a company behaving badly, perhaps in failing to take account of the interests of stakeholders, or perhaps more seriously following a corporate accident, it sees the
Ethical policy is often put into practice in the organization by mean of a code of ethics for the company and for its employees who advises on the ethical response to various circumstances when they arise (see below). A company cannot act responsibly in its duties to its stakeholders and to society generally unless it has an ethical basis for action as set down in an ethical policy. However, every company is unique and each must develop an ethical policy that is based on its own core values. Core values have been defined as the 'central and enduring tenets of the organization, they remain fixed while business strategies and practices endlessly adapt to a changing world'.
Whilst core values will depend to some extent upon the kind of business in which a company is engaged, a study of core values across a spread of companies reveals a basic set of values common to most companies. Core values can be divided into two main types, moral and social values and organizational values. Moral and social values are those values which are brought to the company by individuals and which are underwritten by the company. Organizational values are those values which are brought by the company for individuals to subscribe to.
Typical values are shown for each category in Table below
Moral and social values
Respect for others
Honesty and integrity
Caring for fellow employees
Tolerance of diversity
Being community minded
Cooperation with peers
Pursuit of excellence and quality
Responsiveness to customers
Innovation and creativity
The main problem with core values arises when the espoused values do not correspond with the reality of everyday life in the company. The company may lay claim to a core value and the staff may espouse the value without having the least idea of how to apply it in a given situation, especially where the situation is novel or causes a conflict with normal job parameters. To ensure this correspondence, it is necessary for the ethical policy to be developed in the form of a code of ethics which is much more specific and becomes part of the method of working.
Code of ethics
The code of ethics may be the same as the ethical policy, or it may flesh out a brief statement of ethical policy in more detail across the main areas of a company's operations. It provides ethical standards to which the company and its stakeholders can be held accountable. It can also be used as a standard for the company to assess whether its employees have engaged in unethical practice. Guidance is widely available from many sources on constructing a code of ethics and the following represents an overview of the typical aspects of business activity which need to be considered. As might be expected, the key areas to be included in the code of ethics are really centered on the main stakeholders. There is a strong element of reciprocity between the obligations of stakeholders and the corporate body.
The purpose of the business
The purpose of the business is described, typically as found in a business plan. It describes the services or products which are being provided, with the focus upon the needs of the customers and the role of the business in society from the point of view of the company.
Typically, the requirements of the code for employees are divided into two parts:
• Obligations of employees to the company:
- Positive ('shall do') injunctions include acting with high standards of honesty, integrity, fairness and equity in all aspects of their employment as well as actively promoting compliance in letter and spirit with laws, rules and regulations which govern the operation of the business. Exercising due care and diligence in the performance of their duties and responsibilities, attending to detail in all aspects of work, being mindful of the sensitivities of others, protecting confidentiality and being courteous, open and honest.
- Negative ('shan't do') injunctions include avoiding participation in any illegal or unethical activity such as entering into any arrangement that would conflict with the interests of the company, the community or prejudice the performance of professional duties; not using the company's assets for personal benefit.
• Obligations of the company to employees. This would state that the business values its employees and would refer to the company's policies on working conditions, recruitment, development and training, rewards, health, safety and security, equal opportunities, retirement, redundancy, discrimination and harassment, diversity awareness, mentor programmes and work-life balance.
The requirements for directors include maintaining a high standard of integrity in the conduct of their personal, business and professional affairs; not accepting any payment, gratuity or other asset, for assisting in obtaining business or securing special concessions from the corporation; not profiting from the acquisition or disposition of corporate property; and not making improper use of corporate assets for personal benefit. Their personal interest and their duty to the company should not be put into conflict; therefore directors will promptly report all actual, potential or perceived conflicts of interest to the company secretary. Directors will comply with all laws affecting directors.
Typical ethical standards relating to customers will ensure that products and services provided by the company will be of high quality and delivered in a timely and equitable manner while protecting customers' health and safety. When quality of products and services provided by the company is not satisfactory to its customers, prompt remedial action needs to be taken. Customer satisfaction and good faith in all agreements, quality, fair pricing and after-sales service is given the highest priority. Information supplied to customers should not distort or deliberately misrepresent the facts.
Usually the board of directors is responsible for drawing up the code of ethics for the company and the general stockholders' meeting for approving the code. The stockholders as owners of the company assets should therefore exert their responsibility by having ethical oversight and become guarantors of compliance in respect of ethical obligations of directors and managers. At the same time directors and managers must protect the investment of the owners and ensure a proper return on the capital.
Ethical obligations of the company require fair and honest dealings with suppliers, maintaining objectivity based on price, quality, service and reputation, among other factors. Employees dealing with suppliers should not accept or solicit any personal benefit from a supplier or potential supplier that might compromise their objectivity.
Their obligations may also include prompt settlement of accounts, cooperation to achieve quality and efficiency. Care must be taken in the area of gifts given or received, to avoid any suggestion of bribery or excessive hospitality. Promoting the use of minority and women suppliers is encouraged.
The areas of concern described above, which may be covered by an ethical policy and/or code of ethics, are not meant to be all inclusive, rather indicative of what many ethical companies may include in such a policy. Particular business situations may dictate other concerns that need to be addressed. Professional ethics provide guidance to employees who are members of professional bodies in the areas of competency as well as working in the public interest.
In Germany, Denmark, the Netherlands, Switzerland and the UK, consumers began to boycott Shell products when the protests were at their height. There were violent demonstrations in Frankfurt and Hamburg, and Shell employees were threatened. It has been estimated that the sales of Shell products fell by 15-20 per cent as a result of the negative publicity. The consumer boycott of Shell products by the public clearly shook the company, and it is estimated that the costs to Shell in terms of lost revenue were of the order of £100 million. Arguments continue about the relative health, safety and environmental benefits and detriments of the different forms of disposal of redundant oil facilities. Clearly, there were mistakes and misunderstandings on all sides of the argument both during and after the incident, by the company, the protestors and the UK Government. The main point to be made in this case study is the powerful influence of media, public and consumer concern on the ethical behaviour of large companies when their behaviour is even perceived to be unethical.
From this point on, the facts of the situation become less important than the perception of the harm being created. Companies therefore need to take account not only of the facts of a controversial situation, but also of the public perception of the consequences of their behaviour if they wish to maintain their reputation and competitive position. Lessons were learned by many big companies following the Brent Spar incident in 1995, which became a watershed in terms of the way public relations were conducted and had a major influence on corporate social responsibility.
(McIntosh, M., Leipziger, D., Jones, K. and Coleman, G. 1998)