3. Administrative distances and international interactions

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Из курса от партнера IESE Business School

Globalization of Business Enterprise

18 оценки

IESE Business School

Globalization of Business Enterprise

18 оценки

The majority of businesses say they want to become more global. And business leaders say that the lack of people with global intelligence is the key constraint holding them back. This course will address both gaps — at the business and the personal level, it will focus on practical strategies for dealing with the real consequences of globalization.

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Week 4 - Administrative Distance

This session will focus on the second dimension of the CAGE Distance Framework, namely Administrative Distance. Administrative attributes specific to a particular country, such as autocratic policies or weak institutions and high levels of corruption, profoundly affect that country’s international connections—but so do bilateral/multilateral factors, such as whether two countries are part of the same regional trading agreement, or had a colony-colonizer relationship in the past. This session will provide you with greater insight into how differences in such respects matter, with a particular emphasis on variations in how business enterprises are structured and governed around the world.

1. Outside the United Nations General Assembly building (New York City)4:16

2. Administrative globaloney?8:50

3. Administrative distances and international interactions6:10

4. Differences in business administration around the world9:17

5. Patterns in the differences15:57

6. Possible explanations10:19

Познакомьтесь с преподавателями

Pankaj Ghemawat
Professor of Strategic Management Anselmo Rubiralta Chair of Strategy and Globalization
Department of Strategic Management

[MUSIC]

In the first segment of the session,

we spent some time looking at administrative globaloney and

why it's a better idea to think of the world not as something that is globally

administered or even regionally administered, but as a world in which most

of the administrative action is still at the national or the subnational level.

What we're going to do in this segment is look at how

differences across these national administrative entities, countries,

how administered differences across them influence their international actions.

And perhaps the place to start is with this little table on

the CAGE distance framework that I've already put up in earlier sessions.

So, when we talk about administrative distance, we're talking about factors like

lack of colonial ties, lack of shared regional trading blocks,

lack of a common currency, political hostility, whether a country has a closed

economy, whether it's particularly home biased, whether institutions are weak,

whether the society is internally subject to conflict, etc.

And so of these administrative variables, I took the ones that are in bold and

along with the other variables in bold on this particular side,

slide, ran multivariate regressions trying to

explain bilateral flows between each possible pair of countries.

To start with the trade results first, and here I'm focusing on

merchandise trade and I'm oh, only reporting the results for

some of the, some of the variables that were included in the regressions.

What we see actually having a colonial linkage in one's past, a colony-colonizer

tie, boost trade by more than 100% relative to the level that one would

expect of two otherwise similar countries that didn't share that colonial era tie.

So, that's a very large effect ha, being part of a common regional trade agreement.

The second bar in this particular chart ha does have a significant defective as well.

But the effect is relatively small, reminding us that there are varieties of

different trade agreements in terms of how effective they actually are at

achieving their stated goal of boosting trade integration.

And so, just as we saw for

common language, colonial linkage in particular is an administrative factor

that seems to affect not just trade flows, but flows all across the board.

So, on this slide, I've summarized how much 12 different categories

of cross-border interactions are boosted by situations in which the two countries

are being, being looked at actually had a colony-colonizer link in their past.

And we find that the impact of this is invariably positive,

generally statistically significant in all but two of cases.

And the median effect is actually a little bit greater than 100%, ranging from a low

of 62% for international tourist arrivals to a high of a 400% boost on

immigration intensities if two countries had this kind of colonial era tie.

So so just like common language helps explain a whole bunch

of cross-border actions administratively, having a colony-colonizer

linkage in the past helps explain a whole bunch of cross-border interaction.

And in fact, a common trade agreement also has

a positive significant effect in the case of about half the variables or

half the types of flows listed on this particular chart.

More broadly, there have been literally dozens, if not hundreds of studies,

actually looking at how other kinds of administrative variables also

affect international interactions, especially trade.

And some of the kinds of variables that have been found to

have had a significant positive effect if they connote similarity or

a significant negative effect, if they connote a difference,

turned out to significant across at least number of different studies.

So, having the same currency tends to boost international interactions,

differences in corruption levels tend to dampen international interactions, so

forth and so on.

So, what one is left with is a sense that there are myriad administrative factors

that affect whether two countries are relatively close to each other or

relatively apart, far apart from each other.

And that myriad of policy factors starts to suggest, obviously, all kinds of policy

levers that could be pulled to a greater extent than, say, in the case of some of

the geographic elements of distance that we will look at in the next session.

Those are a little bit hard to manipulate in some respects through policy choices.

In contrast, these kinds of administrative factors really do fall under the influence

of governmental policies, and therefore are a place to start in terms of thinking

about how a country might go about boosting its international connectivity.

[MUSIC]

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