Value in a World of Differences
CHAPTER 1 SUMMARIZES evidence that the current state of the world is one of semiglobalization: levels of cross-border integration are generally increasing and, in many instances, setting new records, but fall far short of complete integration and will continue to do so for decades. The chapter goes on to explain why semiglobalization is essential for cross-border strategies to have distinctive content—as well as why failing to keep it in view can be a recipe for poor performance.
Chapter 2 collects the reasons that borders still matter and classifies them in terms of the cultural, administrative, geographic, and economic (CAGE) distances between countries. This framework is usually best applied at the industry level because different types of distance vary greatly in importance from industry to industry. But in most industries, countries of origin do have important implications for destinations—a point that mostly eludes more established frameworks for country analysis.
Chapter 3 discusses why—if at all—firms should globalize in a world in which distance still matters. It presents a scorecard for tracking value creation that includes but goes beyond the familiar components of size and economies of size. It also supplies a set of analytical guidelines and a list of specific questions to ask—and answer. The aim is to foster more realism about how cross-border strategies will add value in the face of large cross-border differences. Such strategies themselves are the topic of part 2 of this book.