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Globalization

Globalization

    • December 2014
    • Article

    Market Competition, Earnings Management, and Persistence in Accounting Profitability Around the World

    By: Paul M. Healy, George Serafeim, Suraj Srinivasan and Gwen Yu

    We examine how cross-country differences in product, capital, and labor market competition, and earnings management affect mean reversion in accounting return on assets. Using a sample of 48,465 unique firms from 49 countries, we find that accounting returns mean revert faster in countries where there is more product and capital market competition, as predicted by economic theory. Country differences in labor market competition and earnings management are also related to mean reversion in accounting returns—but the relation varies with firm performance. Country labor competition increases mean reversion when unexpected returns are positive, but dampens it when unexpected returns are negative. Accounting returns in countries with higher earnings management mean revert more slowly for profitable firms and more rapidly for loss firms. Thus, earnings management incentives to slow or speed up mean reversion in accounting returns are accentuated in countries where there is a high propensity for earnings management. Overall, these findings suggest that country factors explain mean reversion in accounting returns and are therefore relevant for firm valuation.

    • December 2014
    • Article

    Market Competition, Earnings Management, and Persistence in Accounting Profitability Around the World

    By: Paul M. Healy, George Serafeim, Suraj Srinivasan and Gwen Yu

    We examine how cross-country differences in product, capital, and labor market competition, and earnings management affect mean reversion in accounting return on assets. Using a sample of 48,465 unique firms from 49 countries, we find that accounting returns mean revert faster in countries where there is more product and capital market...

    • Article

    Spanning the Institutional Abyss: The Intergovernmental Network and the Governance of Foreign Direct Investment

    By: Juan Alcacer and Paul Ingram

    Global economic transactions such as foreign direct investment must extend over an institutional abyss between the jurisdiction, and therefore protection, of the states involved. Intergovernmental organizations (IGOs), whose members are states, represent an important attempt to span this abyss. IGOs are mandated variously to smooth economic transactions, facilitate global cooperation, and promote cultural contact and awareness. We use a network approach to demonstrate that the connections between two countries through joint-membership in the same IGOs are associated with a large positive influence on the foreign direct investment that flows between them. Moreover, we show that this effect occurs not only in the case of IGOs that focus on economic issues, but also on those with social and cultural mandates. This demonstrates that relational governance is important and feasible in the global context and for the most risky transactions. Finally we examine the interdependence between the IGO network and the domestic institutions of states. The interdependence between these global and domestic institutional forms is complex, with target-country democracy being a substitute for economic IGOs, but a complement for social and cultural IGOs.

    • Article

    Spanning the Institutional Abyss: The Intergovernmental Network and the Governance of Foreign Direct Investment

    By: Juan Alcacer and Paul Ingram

    Global economic transactions such as foreign direct investment must extend over an institutional abyss between the jurisdiction, and therefore protection, of the states involved. Intergovernmental organizations (IGOs), whose members are states, represent an important attempt to span this abyss. IGOs are mandated variously to smooth economic...

    • July 2013
    • Article

    Ethnic Innovation and U.S. Multinational Firm Activity

    By: C. Fritz Foley and William R. Kerr

    This paper studies the impact that immigrant innovators have on the global activities of U.S. firms by analyzing detailed data on patent applications and on the operations of the foreign affiliates of U.S. multinational firms. The results indicate that increases in the share of a firm's innovation performed by inventors of a particular ethnicity are associated with increases in the share of that firm's affiliate activity in their native countries. Ethnic innovators also appear to facilitate the disintegration of innovative activity across borders and to allow U.S. multinationals to form new affiliates abroad without the support of local joint venture partners. Thus, this paper points out that immigration can enhance the competitiveness of multinational firms.

    • July 2013
    • Article

    Ethnic Innovation and U.S. Multinational Firm Activity

    By: C. Fritz Foley and William R. Kerr

    This paper studies the impact that immigrant innovators have on the global activities of U.S. firms by analyzing detailed data on patent applications and on the operations of the foreign affiliates of U.S. multinational firms. The results indicate that increases in the share of a firm's innovation performed by inventors of a particular ethnicity...

    • 2013
    • Chapter

    Multinational Enterprises and Incomplete Institutions: The Demandingness of Minimum Moral Standards

    By: Nien-he Hsieh

    Multinational enterprises (MNEs) operate across countries that vary widely in their legal, political, and regulatory institutions. One question that arises is whether there are certain minimum standards that ought to guide managers in their decision making independently of local institutional requirements, especially when institutional arrangements are incomplete. This chapter examines what follows if managers recognize two kinds of duties of forbearance in their decision making that are commonly held to be among the most minimal of moral duties: the duty not to harm and the duty not to violate the liberty of others. The chapter concludes that the standards for MNEs may be more demanding than what the minimalist nature of duties of forbearance initially would suggest.

    • 2013
    • Chapter

    Multinational Enterprises and Incomplete Institutions: The Demandingness of Minimum Moral Standards

    By: Nien-he Hsieh

    Multinational enterprises (MNEs) operate across countries that vary widely in their legal, political, and regulatory institutions. One question that arises is whether there are certain minimum standards that ought to guide managers in their decision making independently of local institutional requirements, especially when institutional...

    • 2014
    • Working Paper

    Finance and Social Responsibility in the Informal Economy: Institutional Voids, Globalization and Microfinance Institutions

    By: Hao Liang, Christopher Marquis and Sunny Li Sun

    We examine the heterogeneous effects of globalization on the interest rate setting by microfinance institutions (MFIs) around the world. We consider MFIs as a mechanism to overcome the institutional void of credit for small entrepreneurs in developing and emerging economies. Using a large global panel of MFIs from 119 countries, we find that social globalization that embraces egalitarian institutions on average reduces MFIs' interest rates. In contrast, economic globalization that embraces neoliberal institutions on average increases MFIs' interest rates. Moreover, the proportions of female borrowers and of poorer borrowers negatively moderate the relationship between social globalization and MFI interest rate, and positively moderate the relationship between economic globalization and MFI interest rate. This paper contributes to understanding how globalization processes can both ameliorate and exacerbate challenges of institutional voids in emerging and developing economies.

    • 2014
    • Working Paper

    Finance and Social Responsibility in the Informal Economy: Institutional Voids, Globalization and Microfinance Institutions

    By: Hao Liang, Christopher Marquis and Sunny Li Sun

    We examine the heterogeneous effects of globalization on the interest rate setting by microfinance institutions (MFIs) around the world. We consider MFIs as a mechanism to overcome the institutional void of credit for small entrepreneurs in developing and emerging economies. Using a large global panel of MFIs from 119 countries, we find that...

Global Initiative

The Global Initiative builds on a legacy of global engagement by supporting faculty, students, and alumni in their work, and encouraging a global outlook in research, study, and practice.
Global
Research Centers

The globalization of business has long encouraged Harvard Business School (HBS) faculty to research international business practices and the effects of globalization. Seminal contributions - Christopher Bartlett on managing across borders, Michael Porter on competition in global industries, and Louis Wells on foreign investment in emerging markets - helped pave today’s global research path. Supported by eight Global Research Centers that facilitate our contact with global companies and the collection of international data, key investigations concentrate on the effectiveness of management practices in global organizations; cross-cultural learning and adaptation processes; the challenges of taking companies global; emerging-market companies with global potential; and international political economy and its impact on economic development.

Global Initiative

The Global Initiative builds on a legacy of global engagement by supporting faculty, students, and alumni in their work, and encouraging a global outlook in research, study, and practice.

Global
Research Centers

Recent Publications

BairesDev: Culture and Growth

By: Raffaella Sadun, Jorge Tamayo and Karina Souza
  • September 2025 |
  • Case |
  • Faculty Research
In February 2025, Nacho de Marco, CEO of BairesDev, the nearshoring tech company founded in Buenos Aires, Argentina, was planning the company’s next growth phase. After ten years of organic expansion, the COVID-19 pandemic had validated BairesDev’s fully remote model and fueled its rapid scale-up, growing from a 500-person team to a talent pool of 4,000 people across 50 countries. By 2025, the company aimed to double its workforce within five years, but this leap would put its culture to the test. While BairesDev remained committed to attracting the “top 1% talent,” employee engagement metrics were steadily declining. Did the company’s purpose-driven culture need to evolve to support further growth? Moreover, would its remote-only model remain sustainable under a shifting business strategy?
Keywords: Business Growth and Maturation; Business Model; Business Organization; Transformation; Communication Strategy; Talent and Talent Management; Cross-Cultural and Cross-Border Issues; Retention; Digital Platforms; Human Capital; Leadership; Growth and Development Strategy; Growth Management; Management Teams; Managerial Roles; Organizational Culture; Performance Productivity; Problems and Challenges; Motivation and Incentives; Business Strategy
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Sadun, Raffaella, Jorge Tamayo, and Karina Souza. "BairesDev: Culture and Growth." Harvard Business School Case 726-382, September 2025.

Samsonite (A): Accounting Baggage?

By: Aiyesha Dey, Jonas Heese and Tom Quinn
  • August 2025 |
  • Case |
  • Faculty Research
In May 2018, Samsonite appeared to be doing well – it was the world’s largest luggage maker, it had just acquired a well-regarded luxury brand, and its stock traded at record highs. However, short seller Blue Orca Capital saw warning signs, including flawed accounting, hidden conflicts, and shaky governance. This case explores Samsonite’s history, business and operations, and accounting policies. The story continues in Samsonite: The Short Seller’s Case (B) (126-006), which explores Blue Orca’s investigation, and Samsonite: The Rebuttal (C) (126-007), which explores Samsonite’s response.
Keywords: Fair Value Accounting; Financial Reporting; Revenue Recognition; Goodwill Accounting; International Accounting; Acquisition; Joint Ventures; Multinational Firms and Management; Corporate Disclosure; Corporate Governance; Governance Controls; Apparel and Accessories Industry; Retail Industry; United States; Hong Kong
Citation
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Dey, Aiyesha, Jonas Heese, and Tom Quinn. "Samsonite (A): Accounting Baggage?" Harvard Business School Case 126-005, August 2025.

The Role of African Fintechs in Facilitating Telemigration

By: Ebehi Iyoha, Omolola Amoussou and Paul Okundaye
  • 2025 |
  • Working Paper |
  • Faculty Research
Africa has experienced substantial growth in digitally delivered services exports driven by telemigration. However, cross-border payment frictions remain a significant barrier to expansion. This study examines how African financial technology entrepreneurs facilitate telemigration by addressing payment frictions, creating economic and social value. We combine case study evidence on a Nigerian fintech startup, a telemigration model incorporating payment costs, and empirical analysis of bilateral trade flows from 2011 to 2023. We find that a 10% increase in transaction costs lowers bilateral service exports by approximately 4.7%. Financial sector innovation moderates these effects, with the most developed fintech markets offsetting nearly all the negative impact of transaction costs. We estimate that a 50 percent reduction in payment frictions alone could generate between 900,000 and 1.1 million telemigrant employment opportunities across Africa. These results suggest that fintech innovation enables African participation in global digital service markets and progress towards Africa’s achievement of the Sustainable Development Goals related to poverty reduction, decent work, and reduced inequalities.
Keywords: Telemigration; African Fintech; Cross-border Payments; Remote Work; Entrepreneurship; Cross-Cultural and Cross-Border Issues; Economic Growth; Developing Countries and Economies; Financial Services Industry; Africa
Citation
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Iyoha, Ebehi, Omolola Amoussou, and Paul Okundaye. "The Role of African Fintechs in Facilitating Telemigration." Harvard Business School Working Paper, No. 26-010, August 2025.

The Routledge Handbook of Infrastructure Finance

By: Joshua Yindenaba Abor, John Macomber, Thankom Arun and Victor Murinde
  • 2025 |
  • Book |
  • Faculty Research
This handbook provides a comprehensive overview of infrastructure financing from a global perspective. It offers an extensive examination of infrastructure financing worldwide. It encompasses a wide range of subjects concerning infrastructure finance, including different project types, financing options, and the functions performed by public and private sector entities in financing and overseeing infrastructure initiatives. Given that infrastructure investment is crucial to socio-economic growth and development, it has become a critical policy priority for governments, investors, and other stakeholders around the world. It is intended for a wide range of readers interested in infrastructure finance, including academics, researchers, students, policymakers, and practitioners.
Keywords: Infrastructure Finance; Economic Development; Infrastructure; Finance; Project Finance; Economic Growth; Global Range
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Abor, Joshua Yindenaba, John Macomber, Thankom Arun, and Victor Murinde, eds. The Routledge Handbook of Infrastructure Finance. Routledge, 2025.

Turning Points in Inflation: A Structural Breaks Approach with Micro Data

By: Alberto Cavallo and Gastón García Zavaleta
  • 2025 |
  • Working Paper |
  • Faculty Research
We introduce a novel methodology for detecting inflation turning points that combines high-frequency, disaggregated price data with standard structural break techniques to provide policymakers with more precise and timely signals of inflation dynamics. The methodology consists of three key components: measuring inflation as the slope of the log price index rather than using conventional inflation rates, employing structural break techniques to detect shifts in this slope, and leveraging highly disaggregated price indexes to identify trend breaks at a granular level. We apply this approach to study two critical recent episodes: Argentina’s 2024–2025 disinflation and the inflationary impact of U.S. tariff adjustments in 2025. For Argentina, we detect a broad-based disinflationary turning point in mid-2024. For the U.S., we find significant sectoral inflation accelerations in early 2025, notably in food and furnishings, despite stable aggregate inflation measures. These applications demonstrate the utility of our approach for enhancing real-time inflation monitoring and policy decision-making.
Keywords: Inflation and Deflation; Global Range; Economic Slowdown and Stagnation; Analysis; Price
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Cavallo, Alberto, and Gastón García Zavaleta. "Turning Points in Inflation: A Structural Breaks Approach with Micro Data." NBER Working Paper Series, No. 34102, August 2025.

ICARE: Frontline Leadership at Michelin

By: Hubert Joly and Emilie Billaud
  • July 2025 |
  • Case |
  • Faculty Research
In 2025, Michelin CEO Florent Menegaux reflected on the company’s transformation since taking the helm in 2019. Amid a volatile global landscape marked by inflation, rising competition, and geopolitical and sustainability pressures, Michelin had achieved strong financial and operational results. Revenues climbed from €24.1 billion in 2019 to €27.2 billion in 2024, and its share price increased by over 60%.

Under Menegaux’s leadership, Michelin had adopted a new purpose, defined an ambitious strategy, and implemented an innovative leadership approach—ICARE—which focused on genuinely investing in and empowering its frontline employees, especially in its 83 tire production plants around the world. Menegaux believed that the implementation of the ICARE leadership philosophy had been a key driver of the company’s strong performance during this period. He believed that an engaged and empowered workforce was essential to achieving excellence and sustaining continuous improvement. The approach required significant investments and remained a major undertaking still in progress.

The case profiles operators, business unit leaders, and executives to explore how the ICARE philosophy shaped factory culture, engagement and performance—and what challenges remained.

As Menegaux reflected on this transformation, a question remained: How could Michelin rigorously evaluate the return on its people investments and determine whether its leadership model was truly making a difference?
Keywords: Human Capital; Transformation; Management Practices and Processes; Managerial Roles; Organizational Culture; Leadership; Competency and Skills; Global Strategy; Multinational Firms and Management; Compensation and Benefits; Recruitment; Retention; Employee Relationship Management; Working Conditions; Leading Change; Growth and Development Strategy; Groups and Teams; Motivation and Incentives; Well-being; Auto Industry; Manufacturing Industry; Europe; China; United States; France
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Joly, Hubert, and Emilie Billaud. "ICARE: Frontline Leadership at Michelin." Harvard Business School Case 326-024, July 2025.

Mitsui & Co., Ltd.

By: Ramon Casadesus-Masanell and Akiko Saito
  • July 2025 |
  • Case |
  • Faculty Research
In 2025, Kenichi Hori, President and CEO of Mitsui & Co., Ltd.—one of Japan’s most prominent Sogo Shosha (investment and trading companies with sprawling global footprints)—reflected on the company’s record-breaking profits. Its operations spanned multiple industries—including energy, chemicals, healthcare, and infrastructure—and more than 80% of its profits were generated overseas. The company had evolved from a prewar industrial giant into a globally integrated investment and trading firm. Originally focused on commodity trading, Mitsui gradually shifted toward strategic investments across industries, owning or co-managing businesses across the value chain—from upstream production to downstream distribution. To support this transformation, it restructured its organization, encouraged cross-unit collaboration, and invested heavily in talent development. Since becoming CEO in 2021, Hori had overseen strong financial results and reaffirmed Mitsui’s standing as a global powerhouse. Yet he remained restless. Confronted with a sprawling and increasingly complex portfolio, he saw an urgent need to sharpen the firm’s strategic focus, deepen its presence in key markets, and position it for long-term growth. “Are we making the right choices to build the Mitsui of tomorrow,” Hori asked, “and what exactly should that Mitsui look like?”
Keywords: Corporate Strategy; Growth and Development Strategy; Operations; Organizational Change and Adaptation; Business Conglomerates; Business Model; Restructuring; Transformation; Talent and Talent Management; Global Strategy; Multinational Firms and Management; Vertical Integration; Energy Industry; Chemical Industry; Health Industry; Japan
Citation
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Casadesus-Masanell, Ramon, and Akiko Saito. "Mitsui & Co., Ltd." Harvard Business School Case 726-362, July 2025.

Economic Integration and the Transmission of Democracy

By: Marco Tabellini and Giacomo Magistretti
  • July 2025 |
  • Article |
  • Review of Economic Studies
In this paper, we study the effects of economic integration with democratic partners on democracy. We assemble a large country-level panel dataset from 1960 to 2015, and exploit improvements in air, relative to sea, transportation to derive a time-varying instrument for economic integration. We find that economic integration with democracies increases countries’ democracy scores, whereas the impact of economic integration with non-democracies is muted. Results are stronger when democratic partners have a longer history of democracy, grow faster, spend more on public goods, are culturally closer, and export higher quality goods. The effects we document are driven by imports, rather than exports, and by integration with democratic partners that account for a larger share of a country’s trade in institutionally intensive, cultural, and consumer goods, as well as in goods that involve more face-to-face interactions and entail higher levels of bilateral trust. These patterns are consistent with economic integration favoring the transmission of democracy by signaling the (actual or perceived) desirability of democratic institutions. Alternative mechanisms—including human capital accumulation and economic growth—cannot, alone, explain our findings.
Keywords: Democratization; Institutional Development; Economic Integration; International Trade; Democracy; Political Preferences; Institutions; Trade; Global Range; Economics; Government and Politics
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Tabellini, Marco, and Giacomo Magistretti. "Economic Integration and the Transmission of Democracy." Review of Economic Studies 92, no. 4 (July 2025): 2765–2792. (Available also from VOX, VOXEU, Atlantico, The Economist, Domani, and Ideas for India. Longer NBER working paper version available here.)

Commentary on 'Tracing the Early History of IB Teaching at Harvard Business School' by Teresa da Silva Lopes

By: Louis T. Wells
  • 2025 |
  • Chapter |
  • Faculty Research
The Comments follow the evolution of International Business (IB) at Harvard Business School (HBS) after the IB Area was disbanded in 1973. Several IB faculty were relocated to a course on the economic and political environment of business. HBS dropped its doctoral program in IB and it did not seek holders of such doctorates from elsewhere. Deans championed internationalization of the School, encouraging faculty to spend time abroad, providing funds for overseas research, and establishing “centers” abroad. Many new faculty were foreign-born and foreign educated. Internationalization at HBS shifted from a focus on specifically IB content to a broader concept of "globalization."
Keywords: Business Education; Globalization
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Wells, Louis T. "Commentary on 'Tracing the Early History of IB Teaching at Harvard Business School' by Teresa da Silva Lopes." Chap. 11 in The Historical Evolution of International Business: Growth Trajectory of an Academic Field of Study, edited by L. Nachum and A. Yaprak, 233–241. Palgrave Macmillan, 2025.

Trade Within Multinational Boundaries

By: Laura Alfaro, Paola Conconi, Fariha Kamal and Zachary Kroff
  • 2025 |
  • Working Paper |
  • Faculty Research
We leverage newly linked data from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis to study transactions within U.S. multinational enterprises (MNEs). We show that using administrative data on intrafirm trade allows us to correct for measurement error in survey data and to identify the positive relationship between input-output (IO) linkages and the probability of trade between U.S. parents and their foreign affiliates. We also document the prevalence of intrafirm trade: more than half (three-quarters) of affiliates worldwide (in North America) export to or import from their U.S. parent. Our findings provide strong empirical support for traditional theories of firm boundaries that predict trade between vertically linked units of the same firm, and underscore the importance of accounting for the trade frictions that shape MNEs’ regional supply chains.
Keywords: Multinational Enterprise; Input-output Linkages; Multinational Firms and Management; Trade; Supply Chain
Citation
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Alfaro, Laura, Paola Conconi, Fariha Kamal, and Zachary Kroff. "Trade Within Multinational Boundaries." Harvard Business School Working Paper, No. 25-058, May 2025.
More Publications

Faculty

Geoffrey G. Jones
Christopher A. Bartlett
Tarun Khanna
John A. Quelch
Lynn S. Paine
Louis T. Wells
Ray A. Goldberg
Rosabeth M. Kanter
Laura Alfaro
Michael Y. Yoshino
Michael E. Porter
Rawi E. Abdelal
→See All

Seminars & Conferences

Oct 01
  • 01 Oct 2025
HBS Finance Unit/Harvard Economics Department Seminars
Valentin Haddad, UCLA Anderson
Oct 15
  • 15 Oct 2025
HBS Finance Unit/Harvard Economics Department Seminars
Arvind Krishnamurthy, Stanford GSB
→Seminars & Conferences

HBS Working Knowlege

    • 23 Jul 2024

    The New Rules of Trade with China: Navigating Tariffs, Turmoil, and Opportunities

    by Rachel Layne
    • 21 May 2024

    What the Rise of Far-Right Politics Says About the Economy in an Election Year

    Re: Paula C. Rettl
    • 12 Dec 2023

    COVID Tested Global Supply Chains. Here’s How They’ve Adapted

    Re: Laura Alfaro
→More Articles

Harvard Business Publishing

    • February 13, 2025
    • Article

    Research: The Costs of Circumventing Tariffs

    By: Jaya Y. Wen, Ebehi Iyoha, Edmund Malesky and Sung-Ju Wu
    • July 2025
    • Case

    ICARE: Frontline Leadership at Michelin

    By: Hubert Joly and Emilie Billaud
→More Harvard Business Publishing
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