Despite its negative perception, digital globalization has a lot to offer for multinational companies. Depending on the industry, digital globalization can offer new opportunities and challenges. For instance, media industries are ideal candidates for globalization. However, there are also a number of limitations to digital globalization.
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Media industries are perfect candidates for globalization
Historically, media have been a part of the human experience. However, the modern age has brought with it technological innovations, such as the internet, which have fueled the growth of global media. This has resulted in more sophisticated media technologies that complement the legacy media consumed by many. This has led to an increasing interconnectedness between nations and their inhabitants. In turn, it has led to an increased appetite for global goods and services.
One of the hottest industries to tap into the internet is the news business. With the advent of social networking sites, the news industry has had to up its game to keep up with the competition. For instance, news outlets such as CNN have gained enormous influence in the worldwide viewing pool. As a result, the news industry has shifted from print to digital media.
The rise of multinational media companies has changed how people communicate. The ability to access content and information has enabled millions of people to hear their local radio station from the comfort of their home or office, anywhere in the world. This has resulted in new revenue streams and talent pools. Moreover, the availability of digital technologies has enabled resistance in authoritarian regimes.
The modern global media industry can be traced back to the year 1975. The early 1990s saw an increase in desktop computers and the subsequent emergence of the Internet as a medium of exchange, which in turn, spawned the aforementioned media technologies. This has resulted in the most efficient media environments in modern times. In addition, it has also facilitated the creation of a smorgasbord of digital media applications that complement the traditional forms of media consumption. In short, the digital media has helped to create a new media ecosphere, which in turn has created a more diverse and complex media landscape.
The first step in going global is to adjust internal operations to meet the new challenges. Likewise, it is important to consider the needs and interests of a foreign audience to properly tailor the media outputs to their preferences. For example, a company may need to change its marketing strategy to address the nuances of a particular culture.
New advantages of digital globalization for MNEs
Managing digital globalization is a challenge for MNEs. As a result, MNEs are changing the way they conduct cross-border business. In addition, they are expanding their global footprint rapidly. This new paradigm will reshape the internationalization process and the definition of MNEs. Ultimately, it will create a new globalization epoch.
A digital MNE’s advantages include accelerated access to global open resources, virtual nourishment of internal communication, and the ability to participate in global value chains. These digital technologies are also supporting the diffusion of innovation across nations. This enables MNEs to expand their businesses across international borders, connecting people, industries, and countries. It provides new opportunities for MNEs to grow and boost competitiveness across all sectors. However, it is important to note that MNEs must be careful to navigate bilateral political tensions. This could affect MNEs’ legitimacy in host countries.
To successfully manage this shift in the internationalization process, MNEs must develop a multi-level strategy. In particular, they need to be prepared for disruptive government interventions. These may affect operations and knowledge sharing. Moreover, MNEs may lose some of their advantages based on scale, knowledge sourcing, and international coordination. For example, MNEs may need to adapt their organizational forms and restructure their integrated supply chains.
Furthermore, MNEs should incorporate geopolitics into their risk management strategies. They should avoid high-profile activities in countries that are disfavoured by their home country society. This would enable MNEs to play a role in shaping values and perceptions in their host country. In addition, MNEs may influence local individuals to identify with national political agendas and show loyalty to them.
Lastly, MNEs should actively promote liberalist perspectives. This will benefit MNE shareholders and stakeholders. It will also help MNEs to better align their interests with those of their subsidiaries. But if their goals and strategies do not align with those of the host country, they may not be able to achieve their full potential.
Hence, it is essential for MNEs to carefully consider and monitor their interactions with governments and stakeholders in the countries where they operate. They must take into account the different political environments of host countries, as well as the competing pressures to demonstrate “loyalty” to national agendas.
Impact of COVID-19 on the role of information and communication technologies
During the COVID-19 pandemic, a variety of government initiatives were initiated to combat the virus. These include quarantine facilities, contact tracing, and testing. These policies could lead to substantial advances in workforce adaptation, social welfare, and governance. But in order to make these improvements possible, countries must apply ICT in a fair and proportionate manner. This is particularly important because these measures must be temporary.
During the crisis, companies responded by accelerating the digitization of their internal operations and customer interactions. More than half of executives report refocusing their entire business on digital technologies. However, many companies still have not yet fully implemented their changes.
As economic conditions change, more changes will be necessary. However, most respondents expect most changes to be permanent. Among those responding, most reported an acceleration of digitization of core internal processes and supply chains.
The survey also showed that many organizations have already refocused their offerings during the pandemic. For example, respondents in professional services reported more than twice the revenue growth compared to their peers. On the other hand, executives in CPG companies and automotive and assembly sectors reported relatively low levels of change. These differences are largely attributable to the time frames that manufacturing changes take.
Companies that reacted quickly and were early to market with innovations during the crisis refocused resources to support new initiatives. These efforts resulted in significant increases in their revenue. In fact, companies that invested in technology for competitive advantage grew twice as much as other companies.
These results are evidence that information and communication technologies have played an essential role in both pandemic relief and long-term resiliency against future pandemics. However, these initiatives carry challenges that include privacy, accountability, and transparency.
The McKinsey Global Survey of executives, which was conducted July 7 to July 31, 2020, included responses from 899 C-level executives across all types of companies. The results are based on a variety of questions related to the role of ICT in digital globalization.
The study highlights the importance of learning during organizational and business changes. In addition, it identifies six major transformations that can shape pathways toward sustainable development: consumption, human capacity, production, food, decarbonization, and smart cities.
Limitations of digital globalization
During the last decade, the volume of cross-border data flows has grown more than four-fold. This trend is expected to accelerate over the next five years. The impact of these flows on global economic growth is more significant than the flow of physical goods. However, these flows also present legitimate concerns. These include privacy, cybersecurity, and intellectual property theft. In order to protect the interests of those affected, countries must set detailed frameworks for governing these flows.
Digital technologies have allowed companies to expand into more markets and broaden their labor pools. They also have facilitated the growth of small businesses, who can now compete with global business giants in e-commerce.
The digital economy has introduced a new set of legitimate concerns. This includes the ability to copy and replicate products built overseas. It also presents the risk of design and intellectual property theft. These concerns can be addressed through global cooperation.
Nevertheless, there are also subtle forms of digital protectionism. These can include banning instant messaging services or websites with controversial content. In addition, some governments have imposed data localization requirements, which can limit the flow of data.
These restrictions can impose significant costs on companies. Many of these are aimed at addressing legitimate concerns about data privacy and cybersecurity. Yet, they complicate the development of international norms. Ultimately, successful flows of data depend on cooperative attitudes of national governments. In other words, a global framework for regulating the flow of data is necessary.
As digital technologies continue to disrupt the traditional rules of business, policy makers must reassess their strategies. They need to promote digital globalization by establishing a framework that doesn’t restrict the benefits of the digital revolution.
For instance, businesses taking advantage of globalization can pay lower salaries in less developed nations and have access to lower overheads. By saving in these countries, they can avoid paying red tape and taxes in their home country. In turn, these savings can help reduce business costs.
While the effects of twenty-first-century globalization are not yet well-known, they can cause disruption to local communities and industries. These disruptions can lead to job losses and decreased productivity.