Originally published in Stanford Business magazine in May 2004.
The school’s new Center for Global Business and the Economy aims to foster research, teaching, and community engagement on worldwide growth and multinational business management.
Answered prayers, perhaps? The walls of tariffs are falling. Communism has collapsed, and capitalism is flourishing. Technology and transportation are shrinking the world faster than ever. The result? It’s as if a million new vectors have tumbled into the hopper of business and economic decisions.
Globalization and its intricacies are challenging more aspects of commerce than ever before. Trade is growing by leaps and bounds. Goods and services bought and sold between countries today account for almost a quarter of their combined gross domestic product, double the proportion just 30 years ago in the developed world. Yet this global efflorescence also has brought waves of unemployment in certain industries. Cultures are clashing as a new worldwide work force emerges. Systems of international capital struggle to support wider flows. And quandaries persist with the failure of many nations to develop economically.
Like the weather, globalization is everywhere. Yet understanding its forces, predicting its sometimes-damaging storms, and seizing its enormous energies in many cases is beyond our current capacities.
Business education and research are changing too. “That’s where management is going — you’ve got to have a global mindset,” notes Robert Joss, dean of the Graduate School of Business. Modern business education and research have added greatly to rigorous application of domestic disciplines from accounting to tax strategies. Stanford, like other business schools, has greatly internationalized its approach to the classic disciplines. But now “we’re driving out into a much larger arena,” the dean says. “We’re in territory we’re not nearly as skilled at: Geography. Demography. Anthropology. Culture. [We are seeing] whole different economic systems that are not very efficient. Issues of legality. Issues of corruption and of the rule of law over multilateral institutions.”
A new Center for Global Business and the Economy — called the Global Center, for short — will open at Stanford to work on these issues. Its role will be to foster research, teaching, and community outreach related to worldwide growth and the management of multinational business. The center will focus the business school’s research efforts and augment its Global Management Program, with its rapidly widening selection of course offerings. It will also connect the school’s joint programs with other Stanford schools and institutes. It will stitch corporate experience with lessons from developing nations to add depth to research and teaching. And the new center brings a fourth leg to the business school’s platform of focused interests, complementing the existing Center for Entrepreneurial Studies, the Center for Leadership Development and Research, and the Center for Social Innovation. The Global Center, like the other centers, is an organizational entity, not a physical building.
Nearly $7 million has been raised. The founding support came from John Gunn, MBA ‘72, and his wife, Cynthia, and corporate donors BP and Cemex SA. Other, sizable contributions are expected. Center codirectors, faculty members John Roberts and John McMillan, plan initially to use about $3 million a year of support for enhanced course offerings, research, and communication on global subjects. Roberts, who is the John H. Scully Professor of Economics, Strategic Management, and International Business, and McMillan, the Jonathan B. Lovelace Professor of Economics, bring different interests and expertise to the center. Roberts researches international business and the economics of corporate strategy and organization. He is the author of The Modern Firm, which considers the management of organizations in the context of globalization. McMillan works on development economics and international business. He is the author of Reinventing the Bazaar, a study of market mechanisms around the world.
The center’s operations already are under way. Globalization will be the subject of an inaugural conference this month (May 19) that will bring internationalist luminaries to Stanford including John Browne, Sloan ‘81, chief executive officer of BP; Roger Deromedi, MBA ‘77, chief executive officer of Kraft Foods, and Trevor Manuel, South Africa’s minister of finance.
New business cases are being written that examine nuances of international trade and investment, issues of developing economies, and management structure across cultural boundaries, among other topics. These will be prime teaching tools for internationally oriented courses and in many instances will infuse other subjects with an international perspective. In many instances they will allow globalization angles to be considered in some courses that don’t now offer international aspects.
All of this is timely, says founding donor Gunn, who will address the inaugural conference. He anticipates world business trends soaring to a new, higher plane of activity. “We’re going through an enormous transition — something without historical precedent,” the president and chief investment officer at Dodge & Cox mused in a lengthy interview with Stanford Business. Flows of trade and investment capital have reached a tipping point, triggering vigorous growth in parts of the developing world. “My guess is that 2003 will be proved a watershed year,” Gunn says. The promise of the 1990s in the realignment of Eastern Europe in fact has come to pass later than expected, but with great effect, he says, adding that open markets are the driving force behind these changes. In a sense, “all of this will occur without us, since the blueprints for building the free market economy are well known.” But, he added, the fruits of advancing globalization can be improved by a better understanding of the principles at work.
Yet, the emergence of open markets is complicated by one’s perspective, Browne added in a separate interview. The BP chief executive, more formally The Lord Browne of Madingley, says these benefits “clearly are evident to a few countries — the U.S., the U.K., maybe a few others. In certain sectors they are of interest to other governments — such as India in certain [information technology] areas such as outsourcing. But to a large number of people there are questions of what benefits globalization brings.” Indeed, Browne adds, these benefits “are not clear, not clear indeed.”
“Corruption, maladministration, and governance” are problems, Browne says. Foreign investors and developing nations themselves must work more effectively to assure that “money that is generated — very often from foreign direct investment but also from foreign trade — better circulates in the economy to the benefit of the economy as a whole — not actually to a small subset of people.” Intellectual development is a deep concern of Browne’s. Properly trained and with education widely available, people of many developed nations should in the long run choose to govern themselves and conduct business in a noncorrupt way, he says.
Knowledge — and skills — transfer between the developed and the developing nations will be an important research interest at the center. “A major focus is going to be on ties between business and economic development,” says codirector Roberts. “We are particularly interested in economic development and the role that business plays — in a lot of different ways: I mean not just contributing to the gross domestic product but to social development and to the economic development through the spread of management technology.” This and other research interests will place the center squarely on new ground, where classic business interests in management and investment will give a different optic to development economics and political science.
Codirector McMillan notes that firms such as BP are showing increasing concern for the countries where they operate. They build schools and hospitals, for instance, and sometimes help build improved governance, he says. “Thinking about the ways in which firms can have a beneficial impact will be one of the center’s roles.”
The first glimmers of the center emerged at a small dinner at the Stanford Park Hotel in spring 2002 to consider international issues and the School. Among those who could attend were Gunn; investor Robert Bass, MBA ‘74; John Scully, MBA ‘68; Dean Joss, MBA/PhD ‘67,and Professor McMillan. It was very different from most Stanford GSB planning sessions. “We were at the point of trying to get ideas flowing in the School, and we wanted some very thoughtful people to know that we were pushing this direction,” says David Kennedy, associate dean for development, who helped put the dinner group together. Conversation was lively around the table, with faculty describing their current international research projects and alumni chiming in. It was soon apparent, says Kennedy, that there was a strong core of interest. The global center soon emerged as a way of focusing international interests that are already a strong part of the School’s culture. Today, roughly 30 percent of the student body comes from outside the United States, as does a similar proportion of alumni, and the nationalities and research interests of the faculty are indeed global. “We couldn’t create a center unless there was already enough momentum,” says Kennedy.
There was a time when international interests were much more subdued at the School. “When I came here in 1980, there were just five courses listed as having an international focus,” recalls Roberts. This year (2003-04), the MBA Program not only requires study of global strategy and economics but offers 28 “global elective” courses. As a student, Leo Linbeck III, MBA ‘94, recalls pushing for creation of the Global Management Program, which today offers students international speakers, career resources, internships, and support for study trips that expose students to business environments around the world, as well as the opportunity to earn a certificate in global management. Now, Linbeck welcomes the School adding an overarching Center for Global Business and the Economy not only as a powerful tool for teaching and research but as “very good marketing that clearly communicates the reality of the product.”
Joss, who as dean has overseen the latest advances, remembers how different things were when he was a student in the 1960s. “I didn’t even get my passport until I was in the middle of the MBA Program here and had a chance to go to Europe,” he recalls. These days, “we could probably count on the fingers of one hand the number of incoming students who would be in that category.”
by Frederick Rose, who is a Palo Alto-based business writer.