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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

Lisa Su and AMD (A)

By: Joshua D. Margolis, Matthew Preble and Dave Habeeb
  • April 2025 |
  • Case |
  • Faculty Research
This multimedia case study focuses on CEO Lisa Su’s turnaround and subsequent transformation of the technology company Advanced Micro Devices, Inc. (AMD). When Su accepted the top position in 2014, AMD was on the verge of collapse. Su focused the company’s culture, simplified its product roadmap, repaired relationships with key stakeholders, and placed a big bet on innovations in high performance computing and Artificial Intelligence to make AMD a tech powerhouse by late 2023. Lisa Su and AMD (A) and Lisa Su and AMD (B) are not standalone case studies. They are designed to be taught together. Lisa Su and AMD (A) explores AMD’s successes and challenges prior to Lisa Su becoming CEO. Lisa Su and AMD (B) helps students understand the key elements of the transformation, and how Su is positioning the company for the future.
Keywords: Turnaround; Artificial Intelligence; Semiconductors; Change Management; Transformation; Decision Making; Globalized Markets and Industries; Government and Politics; AI and Machine Learning; Innovation and Management; Innovation Strategy; Innovation Leadership; Leadership; Leadership Style; Leading Change; Management; Product Design; Product Development; Organizational Change and Adaptation; Organizational Culture; Organizational Design; Strategic Planning; Business and Shareholder Relations; Business and Stakeholder Relations; Research and Development; Business Strategy; Competitive Strategy; Competitive Advantage; Corporate Strategy; Semiconductor Industry; Computer Industry; United States; California; Texas
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Margolis, Joshua D., Matthew Preble, and Dave Habeeb. "Lisa Su and AMD (A)." Harvard Business School Multimedia/Video Case 425-704, April 2025.

Techint: Strategic Choices for Community Impact

By: Lauren Cohen, Virak Prum, Kenneth Charman, Pedro Levindo and Mariana Cal
  • April 2025 |
  • Case |
  • Faculty Research
In early 2024 Erika Bienek, Chief Community Relations Officer at Techint, had to decide whether to invest in a new company-owned and operated technical school in Veracruz, Mexico, or invest instead in strengthening the city’s public education system. Techint, a global industrial conglomerate with $38.4 billion in annual revenues and 97,000 employees in 2023, had a longstanding commitment to community development through education. Over the past five years, the group invested $204 million in its Community Relations program, focusing on four synergistic education initiatives. The Roberto Rocca Technical School (RRTS)—owned and operated by Techint—offered high-quality technical education to underprivileged students, while other programs strengthened public school infrastructure, provided scholarships, and supported after-school learning. TenarisTamsa, Techint’s subsidiary in Veracruz, had been active in the region for decades, and a new RRTS would expand its footprint. However, some stakeholders argued that broader impact could be achieved by supporting public schools serving over 40,000 students or by launching a community training center to meet urgent workforce development needs in the local energy sector. With Techint’s tradition of deep community engagement and rigorous standards, the question for Bienek and her team was how to allocate the newly earmarked $30 million to generate the greatest long-term impact for Veracruz—through direct, measurable educational transformation, or broader support for the public system.
Keywords: Technical Institutes; Community Relations; Social Impact; Argentina; Mexico; Brazil; Conglomerate; Stakeholder Management; Government And Business; Community Impact; Philanthropy; Business Conglomerates; Business Subsidiaries; Business Headquarters; Family Business; Decision Making; Private Sector; Public Sector; Education; Curriculum and Courses; Middle School Education; Secondary Education; Teaching; Training; Learning; Energy; Engineering; Construction; Values and Beliefs; Geography; Global Range; Local Range; Cross-Cultural and Cross-Border Issues; Globalized Firms and Management; Government Legislation; Recruitment; Innovation and Invention; Disruptive Innovation; Knowledge; Resource Allocation; Industry Clusters; Infrastructure; Family Ownership; Philanthropy and Charitable Giving; Business and Community Relations; Business and Stakeholder Relations; Business and Government Relations; Creativity; Reputation; Social and Collaborative Networks; Civil Society or Community; Social Issues; Poverty; Strategy; Construction Industry; Education Industry; Energy Industry; Industrial Products Industry; Manufacturing Industry; Steel Industry; Europe; Italy; Latin America; North and Central America; Mexico; North America; United States; South America; Argentina; Buenos Aires; Brazil
Citation
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Cohen, Lauren, Virak Prum, Kenneth Charman, Pedro Levindo, and Mariana Cal. "Techint: Strategic Choices for Community Impact." Harvard Business School Case 825-058, April 2025.

The Political Economy of Firm Networks: CEO Ideology and Global Trade

By: Elisabeth Kempf, Mancy Luo and Margarita Tsoutsoura
  • 2025 |
  • Working Paper |
  • Faculty Research
We examine how the political ideology of corporate leaders shapes cross-border firm networks. Exploiting changes in ideological alignment between U.S. firm CEOs and foreign governments around close foreign elections, we show that U.S. firms are more likely to terminate trade relationships with countries led by governments whose ideology becomes more distant from that of their CEOs. The impact is concentrated among CEOs holding strong political views, and is particularly pronounced for shorter trade relationships, suggesting ideological alignment is more relevant in more flexible and substitutable connections. Our findings highlight the role of ideology in shaping the formation and persistence of international firm networks.
Keywords: Global Trade; Firm Networks; Political Ideology; Elections; Political Economy; Political Elections; Cross-Cultural and Cross-Border Issues; Trade
Citation
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Kempf, Elisabeth, Mancy Luo, and Margarita Tsoutsoura. "The Political Economy of Firm Networks: CEO Ideology and Global Trade." Harvard Business School Working Paper, No. 25-050, April 2025.

High Stakes: A Framework for Geopolitical Risk Management

By: Meg Rithmire and David Fagan
  • 2025 |
  • Report |
  • Faculty Research
This report provides a data-based assessment of how U.S. companies perceive geopolitical risk and articulates a recommended decision-making process and framework to manage such risk. The research reflected in the report indicates that various concerns related to China are most prominent in reshaping the global business landscape and the presentation of risk for U.S. companies. The primary source of risk for businesses is the transformation of China’s political economy under the People’s Republic of China (PRC) to focus on security, to which the U.S. has responded with enhanced laws and regulations, as well as rhetorical instruments (such as Congressional statements) that can heighten reputational risk for businesses. Our recommendations are that companies exposed to China and US-China competition adopt a governance framework that is well-informed, holistic, enduring, authoritative, and tailored to review strategic and national security risks in a structured way.
Keywords: Globalization; International Relations; Business or Company Management; Risk Management
Citation
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Rithmire, Meg, and David Fagan. "High Stakes: A Framework for Geopolitical Risk Management." Report, U.S. Chamber of Commerce Foundation, Washington, DC, USA, 2025.

Velong: Rethinking “Made in China” (B)

By: Krishna G. Palepu, Billy Chan and Nancy Dai
  • April 2025 |
  • Case |
  • Faculty Research
After much deliberation, the founders of Velong formed a joint venture with two local partners in India as they calculated that India could remain intact amidst the rising tensions over trade between the U.S. and China. By choosing India to diversify away from China, the founders now had to tackle the challenges that they once experienced in their Chinese factory more than two decades ago when China had not yet become a manufacturing superpower. Could their operation thrive in India?
Keywords: Business and Government Relations; Globalization; Operations; Supply Chain Management; Risk Management; Strategy; Manufacturing Industry; China; India
Citation
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Palepu, Krishna G., Billy Chan, and Nancy Dai. "Velong: Rethinking “Made in China” (B)." Harvard Business School Case 325-111, April 2025.

Navigating Choppy Waters: How U.S. Trade Policy Uncertainty Affects Small Businesses

By: David Atkin, Zoë Cullen and Ebehi Iyoha
  • 2025 |
  • Working Paper |
  • Faculty Research
This paper explores the impact of recent changes in the US trade policy environment on small businesses. Drawing on a survey of more than 4,000 small businesses conducted between March 22 and 31, 2025, we examine firms’ knowledge, expectations, and decisions during a period of substantial trade policy uncertainty. Our findings reveal widespread knowledge gaps about current tariffs, even among internationally exposed firms. Most businesses expect continued policy uncertainty throughout 2025, anticipate reduced sales and increased costs, face limited options for mitigating tariff-induced cost increases, and do not expect government assistance in facilitating adaptation. These results highlight the vulnerability of small businesses, which represent a significant share of US economic activity, to rapid trade policy changes and suggest the need for clear policy communication and targeted support mechanisms.
Keywords: Trade; Risk and Uncertainty; Government Legislation; Globalization; International Relations; Small Business
Citation
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Atkin, David, Zoë Cullen, and Ebehi Iyoha. "Navigating Choppy Waters: How U.S. Trade Policy Uncertainty Affects Small Businesses." Harvard Business School Working Paper, No. 25-048, April 2025.

Taylor Guitars: Making Employee Ownership Work The Taylor Way

By: Dennis Campbell, Petros Kusmu and Stacy Straaberg
  • March 2025 |
  • Case |
  • Faculty Research
In 2013, guitar manufacturer Taylor Guitars’ co-founders Bob Taylor and Kurt Listug were considering several exit options including selling to a competitor or to a private equity firm. The co-founders decided, instead, to embark on a seven-year process to transfer 100% of the ownership of the company from themselves and third owner partner Andy Powers to Taylor Guitars employees. The co-founders felt an employee stock ownership plan (ESOP) would best preserve the company’s values and distinct culture. In 2024, the co-founders, Powers (now president and CEO), CFO Barbara Wight, and Vice President of Human Resources Shaun Paluczak took time to reflect on the ESOP. Many employees were still unclear about what the ESOP meant for them, with some likening it to a retirement plan. The challenge for the leadership team was how to activate employees’ sense of ownership in the company to enhance Taylor Guitars’ performance.
Keywords: Business Exit or Shutdown; Communication Strategy; Strategy; Announcements; Decisions; Music Entertainment; Values and Beliefs; Borrowing and Debt; Geographic Location; Global Range; Governance; Employee Stock Ownership Plan; Management Style; Organizational Culture; Organizational Structure; Private Ownership; Business Strategy; Management Succession; Manufacturing Industry; Entertainment and Recreation Industry; United States; California; San Diego; Mexico; Netherlands
Citation
Educators
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Campbell, Dennis, Petros Kusmu, and Stacy Straaberg. "Taylor Guitars: Making Employee Ownership Work The Taylor Way." Harvard Business School Case 125-054, March 2025.

Turning Away from the State: Trade Shocks and Informal Insurance in Brazil

By: Paula Rettl
  • 2025 |
  • Working Paper |
  • Faculty Research
How does economic globalization affect vote choices? Conventional wisdom holds that voters who lose from economic integration support parties that propose expanding the welfare state. However, in the Global South, where the state is frequently weak or under-resourced, people often turn to non-state organizations (such as churches) for protection against economic decline. I argue that, in these contexts, negative globalization shocks increase local communities’ dependence on non-state organizations, thereby making the leaders within such organizations more effective political brokers. To test this argument, I propose a shift-share instrument that measures the exposure of Brazilian local labor markets to exogenous changes in exports. By matching this instrument with electoral and survey data, I provide evidence that declining exports increased the power of evangelical leaders to persuade their congregations to vote against parties that favor welfare-state expansion. My findings help explain and describe the contingencies underlying the political consequences of globalization.
Keywords: Global Strategy; Globalized Economies and Regions; Governance; Government Administration; Political Elections; Voting; Latin America; Brazil; South America
Citation
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Rettl, Paula. "Turning Away from the State: Trade Shocks and Informal Insurance in Brazil." Harvard Business School Working Paper, No. 25-038, February 2025.

Research: The Costs of Circumventing Tariffs

By: Jaya Y. Wen, Ebehi Iyoha, Edmund Malesky and Sung-Ju Wu
  • February 13, 2025 |
  • Article |
  • Harvard Business Review Digital Articles
When tariffs are levied against a specific country, that country might attempt to circumvent the tariff by rerouting products through a third country to avoid the higher taxes. Research in the aftermath of the 2018 U.S.-China trade war examined this phenomenon, finding that, while tariff circumvention through Vietnam did happen, it wasn’t as widespread as many had initially thought. That said, there still was an increase in tariff circumvention more broadly, and specifically via Chinese-owned firms in Vietnam. The findings suggest that if a country is considering implementing tariffs, a better approach might involve ownership-based duties or firm-specific sanctions instead of blanket tariffs.
Keywords: Trade; Global Strategy; International Relations; United States; China
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Wen, Jaya Y., Ebehi Iyoha, Edmund Malesky, and Sung-Ju Wu. "Research: The Costs of Circumventing Tariffs." Harvard Business Review Digital Articles (February 13, 2025).

Luca de Meo at Renault Group (A) (Abridged)

By: Emily Truelove, Linda A. Hill and Lydia Begag
  • February 2025 |
  • Case |
  • Faculty Research
When Luca de Meo became CEO of Renault Group in 2020, the 122-year-old French automaker faced financial challenges and the double technological disruption of the automotive industry: the shift to electric vehicles (EVs) and the rise of software-defined vehicles (SDVs). Within three years, he had turned the company around through his ambitious “Renaulution” strategy, which stabilized Renault’s finances, modernized its vehicle lineup, and began shifting the traditional automaker into a technology and mobility services company.

This case highlights innovative elements of de Meo’s approach to leading change within an incumbent firm, including pulling mid-level managers out of their day jobs to help implement strategy and leveraging different communication tactics to align and inspire employees. de Meo’s unique leadership style—an unusual blend of visionary decisiveness and collaborative engagement—is explored, along with the challenges of building the will and skill of top management teams facing industry and technological disruption.

Designed for MBA and executive education audiences, the case facilitates discussions on leading change amidst industry disruption, managing oneself as a leader, and navigating the dynamics of top management teams in times of transformation.
Keywords: Change Management; Transformation; Transition; Interpersonal Communication; Forms of Communication; Talent and Talent Management; Experience and Expertise; Customer Value and Value Chain; Decision Making; Economic Growth; Financial Crisis; Alternative Energy; Engineering; Global Strategy; Governance; Digital Transformation; Digital Strategy; Technology Adoption; Disruptive Innovation; Technological Innovation; Innovation Leadership; Collaborative Innovation and Invention; Leading Change; Leadership Development; Leadership Style; Crisis Management; Management Skills; Business Processes; Organizational Culture; Organizational Structure; Performance Efficiency; Transportation; Auto Industry; Battery Industry; Energy Industry; Green Technology Industry; Transportation Industry; France; Europe; China
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Truelove, Emily, Linda A. Hill, and Lydia Begag. "Luca de Meo at Renault Group (A) (Abridged)." Harvard Business School Case 425-067, February 2025.
More Publications

Faculty

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

Seminars & Conferences

May 14
  • 14 May 2025
HBS Finance Unit/Harvard Economics Department Seminars
Amit Seru, 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
    • April 2025
    • Case

    Lisa Su and AMD (A)

    By: Joshua D. Margolis, Matthew Preble and Dave Habeeb
→More Harvard Business Publishing
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