Here is the conclusion of a brilliant article (“The New Mission for Multinationals”) co-authored by José F.P. Santos and Peter J. Williamson that appeared in MIT Sloan Management Review. To read the complete article, check out others, and obtain subscription information, please click here.
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Some multinationals can be successful without local integration by turning their foreignness into a virtue. For example, Coca-Cola, Levi Strauss and Disney can continue to sell a piece of American lifestyle, Prada can continue to clothe its foreign customers in Italian fashion sense, and Porsche and BMW can profit from promoting German engineering. Excessive adaptation or local integration would risk undermining the very thing that makes such brands uniquely attractive.
But many other companies that have relied on the traditional advantages of multinationals will continue to see their advantages erode as globalization allows local champions to access similar knowledge and capabilities. To restore their edge, senior executives working for multinationals must make a choice: Either build on their foreignness or integrate locally to create new layers of advantage. Companies that simply rely on adapting the formula they perfected at home will be “stuck in the middle” — neither benefiting from foreign distinctiveness nor enjoying the benefits of becoming a local insider.
Capturing the huge benefits of becoming locally integrated will require both country and headquarters executives and the global organization to change. Multinationals that choose this path will need to look beyond the global strategies that have dominated their thinking over the past 30 years and embrace a new mission: Integrate locally and adapt globally.
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Here is a direct link to the complete article.
José F.P. Santos is an affiliated professor of practice in global management at INSEAD in Fontainebleau, France. Peter J. Williamson is a professor of international management at the University of Cambridge’s Judge Business School in Cambridge, United Kingdom.