Well-publicized protests against multinational corporations make economic globalization seem real. But is it actually happening?
According to research by Professor Alan Rugman of Indiana University and Templeton College, University of Oxford, the answer is no.
For three years Rugman has built the Templeton Global Performance Index, which ranks leading multinationals by the profitability of their foreign operations.
His work, funded by the Economic and Social Research Council, shows that very few Fortune 500 companies have a genuinely global presence, and that many companies are turning away from globalization.
Rugman found that 430 of the Fortune 500 companies are based in a core triad comprising the US, the EU and Japan. Few, however, have a significant presence in all three areas. And only a small number, including Nestle and Unilever, are truly global enterprises.
Rugman also found that most so-called multinationals are focusing on sales in their home region rather than pursuing a global strategy, and that many of their foreign operations are struggling.
While this isn’t the case across the board — the pharmaceutical industry, for example, consistently performs well — the gap between the best and worst global companies has widened dramatically in the past three years.
So much so, in fact, that it suggests a trend away from globalization toward de-globalization in the face of poor performance.