Transcript Title VI and the Global Competitiveness of U.S. Firms

Title VI and the Global
Competitiveness of U.S. Firms
Michael A. Hitt
Texas A&M University
March 2009
“German Engineering, Swiss Innovation, American Nothing”
Daimler Advertising Slogan to Promote its “Smart For
Four” Compact Auto (Friedman, 2008)
Partly Explains Why Daimler’s Acquisition of
Chrysler Failed despite the Complementarities
Present and the Potential (Hitt, Harrison & Ireland,
2001)
Understanding Different Cultures and Country Institutional
Environments Is Critical for U.S. Firms to Be Competitive
in Global Markets (Hitt, Keats & DeMarie, 1998; Hitt,
Holmes, Miller & Salmador, 2009)
Cold War, Sputnik, Title VI and Fulbright Hays
There Were Several Addendums in the 1960s and
1970s
U.S. Firms’ International Expansion in 1950s and
1960s
Coca-Cola
Pepsi-Cola
U.S. Firms’ Dominance in Global Markets in 1970s
McDonalds
Automobile Companies
Many U.S. Companies Primarily Used a Global Strategy—
Emphasized U.S. Brands/Styles with Some Local
Adaptation
Major Trade Legislation Passed by Congress in 1979
Rationale for Legislation: Concern about U.S.
Role in World Economy and U.S. Firms Losing
Market Share to Nimble Foreign Competitors
(National Research Council, 2007)
Added New Section to Title VI
Business and International Education Program
(BIE)
• Internationalize Business School Curriculum
• Develop Specialized Educational Materials for
Faculty and Students
• Student and Faculty Fellowships
1980s—Global Competition Increased
Japanese Firms Presented a Major Challenge to
U.S. Firms Gain Global Market Share
Identified U.S. Firms’ Deficiencies in Domestic and
Foreign Markets
Trade and Competitiveness Act of 1988
Goal: To Increase and Promote the Nation’s Capacity
for International Understanding and Economic
Enterprise
Supports International Education and Research
and Language Training to Serve the Human
Capital and Knowledge Requirements of U.S.
Businesses
Enhances Cultural Understanding and
Knowledge of Different Country Institutional
Environments and their Effects
U.S. Firms Learned from Foreign Competitors, Built New
Capabilities, and Enhanced their Competitiveness in Domestic
and International Markets
Global Economic and Competitive Environment Began to
Change
 Increasing Interdependence
 Enhanced Technology (e.g., Internet)
 Growing Internationalization
 Learning New Capabilities
 Greater Innovation
 Higher Performance (Hitt, Hoskisson & Kim, 1997)
 Increasing Global Competition
“Cultural Legacies Have an Impact on Our Twenty-first
Century Intellectual Tasks” (Gladwell, 2008)
If We Had a Math Olympics and Each Country Sent 1000
of Its Brightest 8th Grade Students, Which Countries
Would Place at the top?
China
Hong Kong
Japan
Singapore
South Korea (Boe, May, Barkanic & Borrich, 2002)
Each Have Cultures Shaped by Long, Hard, and
Meaningful Work (Persistence)
“No One Who Can Rise Before Dawn Three
Hundred Sixty Days a Year Fails to Make His
Family Rich.” (Blinco, 1991)
 Increased Number of Cross-Border Mergers &
Acquisitions (Zhu, Hitt, Eden & Tihanyi, 2009)
 More Outsourcing of Functions and Offshoring
(Lei & Hitt, 1995; Lewin, 2005; Holcomb & Hitt,
2007)
 Global Competition Became Fierce (Growing
Capabilities of Emerging Economies)
 BRIC Countries
Four Major Emerging Economies Become Global
Players
China Projected as Largest Economy by 2040-42
India Projected as Third Largest Economy by 2050
Brazil Projected as the Fifth Largest by 2050
Russia Projected as Ninth Largest by 2050 (Hitt &
He, 2008)
Need to Learn from International Markets (Li &
Hitt, 2006; Miller & Hitt, 2009)
Three Bases of Formal and Informal Institutions (Scott, 1995;
2005)
Rules (Regulative)
Norms (Normative)
Culture (Cognitive)
Meyer and Rowan (1977) Suggest that Institutions Establish
the “Rules of the Game” for Organizations (Firms)
North (1990) Suggests that Institutions Influence Economic
Exchange. Laws and Regulations Direct Economic
Transactions
The Varied Nature of Firm Strategies around the World Arise
in Part from the Influences of Institutional Forces (Dunning,
1988; Porter, 1990; Ghemawat, 2001; Hitt, Ahlstrom, Dacin,
Levitas & Svobodina, 2004; Ahlstrom, Levitas, Hitt, Dacin,
& Zhu, 2009)
Regulatory, Economic, Political Institutions and Institutional
Infrastructure (Boddewyn, 1988; Burdekin & Weidenmier,
2001; Matten & Crane, 2005; Khanna & Palepu, 1997;
1999)
Research Has Shown that Institutional Environments (Culture and
Formal Institutions) Affect the Amount of Foreign Direct
Investments in Countries from Foreign Firms (e.g., Hitt et al,
2009)
Countries’ Institutional Environments Affect Firms’ Strategic
Decisions--What Foreign Markets to Enter (e.g., Arregle, Miller,
Hitt & Beamish, 2009)
Country Institutional Environments Affect the Outcomes of Major
International Strategies such as the Performance of Cross-Border
M&As (Zhu et al, 2009) and Innovation (Miller & Hitt, 2009)
We Cannot Expect Our Country or U.S. Businesses to
Compete and Lead in a World that We Do Not
Understand
The U.S. Council on Competitiveness—U.S. Firms Must
Emphasize Innovation to Remain Leaders in Global
Markets (Council on Competitiveness, 2005)
To Be Leaders in Global Innovation Requires a Substantial
Knowledge Advantage—Using Multicultural Knowledge
Kauffman Foundation Report Noted that Highly Skilled
Immigrants Historically Have Contributed to Competitive
Advantages (e.g., High Technology Sector)
Those Who Return to their Home Country Often (50+%)
Start New Businesses, Contributing to the Local Economies
(Wadhwa, 2009)
Recent Research Shows U.S. Entrepreneurs Have Institutional
Advantages over Entrepreneurs in Major Emerging
Economies—More Successful (Batjargal, Tsui, Hitt,
Arregle, Webb & Miller, 2009)
We Need to Have Comprehensive Knowledge of Cultures
and Institutional Forces in the Global Environment and
Use the Intellectual Capital throughout the World to
Remain Leaders in the Global Competitive Landscape
“… the future is our choice, not our fate, … there is nothing
in the universe as powerful as six billion minds wrapping
around one problem… We have exactly enough time—
starting now.” (Friedman, 2008)