Globalization, in the sense of increased economic interdependence among nations, is the issue of our times, but, like many great issues of history, it is poorly understood. In this chapter, looking at the business aspects of globalization, we discuss the key actors in the globalization process, namely the firms that drive this process. This chapter explains the fundamental impediments that prevent most of these firms from becoming truly “global” businesses, in the sense of having a broad and deep penetration of foreign markets across the world. This new view on “globalization” is very different from the conventional, mainstream perspective. The latter perspective focuses primarily on macro-level growth patterns in trade and FDI, and compares these data with national GDP growth rates, but without ever analyzing the equivalent domestic or home region growth data for the MNEs responsible for the trade and FDI flows, World Investment Report (2002).

THE TRIAD POWER CONCEPT

In 1985, Kenichi Ohmae, at that stage a leading McKinsey consultant in Japan, published his landmark study Triad Power, arguably one of the most insightful international management books of the last two decades. The triad, in Ohmae's work, is a geographic space consisting of the United States, the EU and Japan. (Rugman, 2000, presents data on this “core” triad.) This geographic space, according to Ohmae, shares a number of commonalities: low macro-economic growth; a similar technological infrastructure; the presence of large, both capital and knowledge intensive firms in most industries; a relative homogenization of demand (with a convergence of required key product attributes) and protectionist pressures.