Globalisation, Environment And Business

Language and Culture for Business - Language and Culture for Business - University of UrbinoUniversity of Urbino

1104/12/2304/12/23

Globalisation, Globalisation, Environment and Environment and

BusinessBusiness

Dr. Peter CullenDr. Peter Cullen

University of UrbinoUniversity of Urbino

Language and Culture for BusinessLanguage and Culture for Business


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Globalisation, Environment and Globalisation, Environment and BusinessBusiness

I.I. Historical relationships between world systems, and Historical relationships between world systems, and businessbusiness

II.II. Worlds systems and globalisation – what’s changed?Worlds systems and globalisation – what’s changed?

III.III. World environmental relationships.World environmental relationships.

IV.IV. Business impacts and business solutions.Business impacts and business solutions.


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I.I. Historical relationships Historical relationships betweenbetweenworld systems and businessworld systems and business

Douglas North Douglas North (Understanding the Process of Economic Change):(Understanding the Process of Economic Change):

Humans seek to minimise the gap betweenHumans seek to minimise the gap between

competencecompetence and difficulty in and difficulty in decision makingdecision making by bycreating rule structures called creating rule structures called institutionsinstitutions. . (Heiner 1983)(Heiner 1983)

““By channeling choices, institutions can improve the By channeling choices, institutions can improve the ability of theability of the

agent to agent to controlcontrol the environment” the environment”


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I.I. Historical relationships Historical relationships betweenbetweenworld systems and businessworld systems and business

Human institutions act to reduce Human institutions act to reduce perceived uncertaintyperceived uncertainty in in human relationships.human relationships.

Businesses are:Businesses are: socio-technicalsocio-technical

pluri-purposepluri-purpose

partially openpartially open

vitalvital systems systems

Designed to produce goods and/or services with an Designed to produce goods and/or services with an acceptable degree of acceptable degree of stabilitystability..


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I.I. Historical relationships Historical relationships betweenbetweenworld systems, and businessworld systems, and business

Immanuel Wallerstein: Immanuel Wallerstein:

3 types of human social systems:3 types of human social systems:

mini-systems (isolated, tribal, local)mini-systems (isolated, tribal, local)

single-state empires (centre-periphery, i.e., UK and Fr 19° single-state empires (centre-periphery, i.e., UK and Fr 19° cent)cent)

multi-polity economies (i.e. cold war, today)multi-polity economies (i.e. cold war, today)

Each system was included or excluded in certain Each system was included or excluded in certain world-systemsworld-systems..

The current world system has it’s roots in the The current world system has it’s roots in the 16° century16° century..


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Andre Gunder-Frank:Andre Gunder-Frank:

World systems are at least World systems are at least 5000 years5000 years old. old.

GeographicalGeographical advantage in relation to relative advantage in relation to relative technology technology and material culture and material culture promotes shifts in world-systems promotes shifts in world-systems balance.balance.

J. Abu-Lughud: Europe = periphery of “old world-system”.J. Abu-Lughud: Europe = periphery of “old world-system”.

i.e., the i.e., the spice tradespice trade was a political, economic and cultural was a political, economic and cultural system based on comparative advantages and in system based on comparative advantages and in agricutlural systems dependent on cultural tastes in food.agricutlural systems dependent on cultural tastes in food.


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World systems functions are based on World systems functions are based on

utility and efficiency of utility and efficiency of transactionstransactions..

Political and economic transactions Political and economic transactions (treaties, declarations, sales, (treaties, declarations, sales,

purchase, construction, distribution, ecc.)purchase, construction, distribution, ecc.) are forms of institutional are forms of institutional communicationcommunication..

They represent shared belief systems that help reduce They represent shared belief systems that help reduce uncertainty in uncertainty in social behavioursocial behaviour..

They are not free from the They are not free from the physical environmentphysical environment – they – they develop in the context of the physical environment.develop in the context of the physical environment.


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II. World systems and globalisationII. World systems and globalisationWhat’s changed?What’s changed?

UN: globalisation is:UN: globalisation is:

in an in an economic contexteconomic context, the reduction and removal of , the reduction and removal of barriers between national borders in order to facilitate barriers between national borders in order to facilitate the flow of goods, capital, services and labour.the flow of goods, capital, services and labour.

This includes the transfer and sharing of knowledge, This includes the transfer and sharing of knowledge, communications, and document flow.communications, and document flow.

It has promoted It has promoted pan-nationalpan-national political support for political support for barrier-reduction and communications development.barrier-reduction and communications development.

Labour is stickier.Labour is stickier.


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Term: “Term: “internationalinternational” – a system involving at least 1 ” – a system involving at least 1 relationship between at least 2 nation-states.relationship between at least 2 nation-states.

Term: “Term: “globalglobal”, different sectors of life (political, ”, different sectors of life (political, socio-cultural, economic) interact with a large socio-cultural, economic) interact with a large degree of freedom irrespective of national borders.degree of freedom irrespective of national borders.

Transaction costs Transaction costs are loware low

Perceived uncertaintyPerceived uncertainty is contained is contained

Institutional Institutional guarantees shiftguarantees shift away from national away from national judicial systems.judicial systems.


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Barraclough Barraclough (1964):(1964):

The success of European The success of European international systemsinternational systems in in the 19° century ultimately put them into violent the 19° century ultimately put them into violent conflict and the world system dynamic shifted to conflict and the world system dynamic shifted to Asia and North America.Asia and North America.

More room for demographic growthMore room for demographic growth

Learned lessons of urban efficiencyLearned lessons of urban efficiency

This shift (WWI and WWII resulting) slowed This shift (WWI and WWII resulting) slowed globalisation.globalisation.


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II. Worlds systems and II. Worlds systems and globalisationglobalisationWhat’s changed?What’s changed?

US and Asian responseUS and Asian response to European internationalism to European internationalism has challenged European formats of institutional has challenged European formats of institutional conduct:conduct:

1)1) Euro inter-nationalism was based on a policy of Euro inter-nationalism was based on a policy of creating creating national identitynational identity within Europe – it was within Europe – it was politicaly competitive.politicaly competitive.

2)2) Since WWII, US political culture has granted Since WWII, US political culture has granted increasing freedom to independent economic increasing freedom to independent economic agents – reducing the role of national agents – reducing the role of national government in government in reducing uncertaintyreducing uncertainty..


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The US approach: pushed technological and social The US approach: pushed technological and social innovation outside the realm of political direction. innovation outside the realm of political direction. Politics is now reactive to global change.Politics is now reactive to global change.

National National identitiesidentities are tested and confirmed or are tested and confirmed or modified constantly modified constantly through global communicationsthrough global communications networks.networks.

EU, NATO, SEATO, NAFTAEU, NATO, SEATO, NAFTA

IMF, WORLD BANK, OECD, WTOIMF, WORLD BANK, OECD, WTO

CNN, Al Jazeera, Sky Email, Facebook, YoutubeCNN, Al Jazeera, Sky Email, Facebook, Youtube


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Networks – Networks – exponential growthexponential growth in connectivity and in connectivity and access.access.

Jonathan Friedman: Global = Jonathan Friedman: Global = multiple level accessmultiple level access between many local, regional and world systems – between many local, regional and world systems – this is new.this is new.


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In the In the exchangeexchange of goods, services and money, of goods, services and money, institutions need institutions need increasing knowledgeincreasing knowledge input to input to make effective decisions concerning economic, make effective decisions concerning economic, political and cultural contexts.political and cultural contexts.

AS THE SYSTEM GROWS AND AS THE SYSTEM GROWS AND INTEGRATES, THE NATURE OF INTEGRATES, THE NATURE OF

THE SYSTEM CHANGESTHE SYSTEM CHANGES


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III. World environmental III. World environmental relationships.relationships.

Human world Human world systemssystems, culminating in current , culminating in current globalised economic, social and political globalised economic, social and political networksnetworks have integrated relationships among have integrated relationships among local, regional local, regional and globaland global systems. systems.

The environment is a global system with The environment is a global system with humans as part of it.humans as part of it.

Human societies have an increasing Human societies have an increasing effecteffect on the on the environment – shifting the nature of uncertainties.environment – shifting the nature of uncertainties.


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Nature and “baselines”Nature and “baselines”

The The planetary environmentplanetary environment changes naturally – changes naturally – creating human desire to reduce uncertainty.creating human desire to reduce uncertainty.

Vostok ice coresVostok ice cores Saharan iron Saharan iron transfertransfer

04/12/2304/12/23 Language and Culture for Business - Language and Culture for Business - University of UrbinoUniversity of Urbino

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Vitousek (1994)

• GlobalGlobal-scale changes-scale changes that affect the that affect the functioning of functioning of the Earth Systemthe Earth System

• Much more than climate changeMuch more than climate change• Socio-economic as well as bio-physicalSocio-economic as well as bio-physical

For example, changes in:For example, changes in:

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The The Earth’s Earth’s systemsystem is is millions of millions of years oldyears old


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Burning Burning fossil fuelsfossil fuels hashasupset upset naturalnaturalCycles in Cycles in CO2CO2outputoutput


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TemperaturesTemperatures havehave increased increased, and human , and human activities are partially responsibleactivities are partially responsible



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IPCC 2000IPCC 2000

We are now about 5°C warmer We are now about 5°C warmer than the last ice age!than the last ice age!

III. World III. World environmental environmental relationships.relationships.


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Increase population Increase population puts increased puts increased stressstress on local, on local, regional and global regional and global environmental environmental systems.systems.

The nature of risk and uncertainty has The nature of risk and uncertainty has changed as material culture globalises!changed as material culture globalises!

Global demGlobal demrise since 1800rise since 1800


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Relative population densitiesRelative population densities

Providing immediate needs creates Providing immediate needs creates environmental stressenvironmental stress


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Observed environments change according to Braudel’s Observed environments change according to Braudel’s construct:construct:

i.e. global warming:i.e. global warming:

long termlong term patterns (40,000 year glacial cycles) patterns (40,000 year glacial cycles)conjuncturalconjunctural patterns – last 150 years = +.5°C patterns – last 150 years = +.5°C eventevent patterns – last 3 years – polar ice melting patterns – last 3 years – polar ice melting

Agricultural societiesAgricultural societies changes dramatically with environmental changes dramatically with environmental cycles at all three rates.cycles at all three rates.

What about What about industrial societiesindustrial societies??What about What about service sector societiesservice sector societies??


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IV. Business impacts and businessIV. Business impacts and businesssolutions.solutions.

Environmental changes affect businesses on local, Environmental changes affect businesses on local, regional and global levels -regional and global levels -

ACROSS THE VALUE CHAIN!!!ACROSS THE VALUE CHAIN!!!

Environmental Environmental EventsEvents

Mid term Mid term convergencesconvergences

Long-term Long-term shiftsshifts

DO NOT necessarily coincide with business cyclesDO NOT necessarily coincide with business cycles


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Increasingly business must manage:Increasingly business must manage:

Environmental events themselves:Environmental events themselves:

Costs of Costs of mitigationmitigation

taxes, cap and trade systems, taxes, cap and trade systems, certificationscertifications

Costs of Costs of adaptationadaptation

process and technology innovations,process and technology innovations,

market re-orientationmarket re-orientation

Costs of Costs of communicationcommunication

stakeholder briefings, global market stakeholder briefings, global market adjustments, adjustments,

institutional reporting, third party institutional reporting, third party buzzbuzz


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Current global environmental issues are an opportunity for Current global environmental issues are an opportunity for businesses tobusinesses to

EXPLORE AND IMPLEMENT EXPLORE AND IMPLEMENT SUSTAINABLE PROCESSESSUSTAINABLE PROCESSES IN IN VALUEVALUE

CREATION.CREATION.

Life Cycle AssessmentLife Cycle Assessment – choosing least damaging business – choosing least damaging business processes in terms of processes in terms of

environmentenvironment

Pro-active communicationsPro-active communications – strengthens image position in – strengthens image position in market market

and with stakeholdersand with stakeholders

Early, but spread investmentEarly, but spread investment – facilitates costs of tech – facilitates costs of tech investment.investment.


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Business has an advantage:Business has an advantage:

In the pursuit of growth, business has internalised In the pursuit of growth, business has internalised the need for the need for communicationscommunications – putting it at the – putting it at the forefront of the forefront of the knowledge networkknowledge network on the topic of on the topic of global environmental change.global environmental change.

Old, “grow or die” business models must change – Old, “grow or die” business models must change – spreading profit margins over greater time periods spreading profit margins over greater time periods to come into line with environmental changes.to come into line with environmental changes.


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Globalisation has increased knowledge circulation about Globalisation has increased knowledge circulation about global, international, national, regional and local systemsglobal, international, national, regional and local systems

Not all institutions can adapt to global changes at the same Not all institutions can adapt to global changes at the same raterate

Levels of Levels of perceived uncertaintyperceived uncertainty have increased and shifted have increased and shifted due to global relationships between business and the due to global relationships between business and the

environment.environment.

Free-market enterprise has the Free-market enterprise has the responsibilityresponsibility and and opportunityopportunity to facilitate mitigation of and adaptation to global change – to facilitate mitigation of and adaptation to global change –

playing a pro-active role in reducing uncertainty at each level.playing a pro-active role in reducing uncertainty at each level.


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Success will require a Success will require a cultural cultural and and communications shiftcommunications shift

This must be This must be globalglobal


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THANK YOU!!!THANK YOU!!!

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Globalisation, Environment And Business