Creative Class

The Judgment Call section of today’s Financial Times asks:

Last week, Volkswagen chairman Ferdinand Piëch announced the company was interested in buying Alfa Romeo, the Italian brand. While at Fiat, chief executive Sergio Marchionne says the company is “Italian based but not an Italian company.” In the era of global business, does a company’s national identity matter?

Here’s my answer:

It depends who you are talking about.

For companies, nationality is becoming less important. Their products have to be in the major markets, no matter where they are. You need to source stuff where the capabilities and the prices are right. One thing I learned way back in the 1980s and 1990s, when I was studying the globalisation of auto manufacturing, is that it’s often harder to upgrade and transform existing plants at home than it is to set up not just new factories but whole new work systems in new places. For unions, nationality matters because factory jobs are tied to locations: it’s not as though existing workers can be transported abroad. Workers can benefit when foreign companies invest in new countries and generate new jobs overseas but often those companies prefer to operate without unions. Countries, meanwhile, worry that globalisation will hollow out their economies.

Domestic companies, politicians believe, are more inclined not just to create jobs but to invest in national projects. Maybe so, but foreign companies have considerable interest in making their offshore locations more productive and engaging local employees and communities more effectively. Corporate nationality is losing ground to globalisation. Those that try to prop it up only stand in the way of their own progress.

The rest is here.

This entry was posted on Wednesday, October 6th, 2010 at 2:48 pm and is filed under Globalization. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.