The end of the multinational corporation?

The multinational corporation (MNC) is not going anywhere. But the top man at IBM says a new term is needed, because some MNCs are so radically multinational at every level - R&D, production, distribution, etc.

The latest Foreign Affairs has an article by Samuel Palmisano, the CEO of IBM. (He's also actually the chair of the board and the president of the company - some call him "the top man.") A somewhat odd publication for a business leader to choose for a forum? Not really: His article, "The Globally Integrated Enterprise," addresses what he calls a shift from MNCs to globally integrated enterprises (GIEs), and it provides some food for thought for people interested in international organization and international political economy.

It might sound like a PR ploy to give a more friendly-sounding name to MNCs, which are often a target of the wrath of both the right and left wings - and Lou Dobbs. But it's not that simple. First, the 80 percent of Americans in the center of the spectrum probably take no issue with MNCs. It's just the Pat Buchanans and the black-clad younger generation of anti-globalists. And Lou Dobbs. Second, there are significant differences between MNCs and GIEs. However, the new term - if accepted as more than a PR gimmick and adopted universally - does have a softer sound to it.

Glooooobal. And it's not just elements from a few different countries just working together, it's the whole world. Aw. And it's integrated. And it's not even a company! Enterprise sounds a lot more small-business, local, spunky... all the things it's probably not. And this may draw even more criticism from Dobbs and company - IBM is taking the "nation" out it! Sound the One-World-Government alarm! But I think it's mostly meant to assuage the fears of the folks who don't hate MNCs, but do prefer to Buy American when possible.

But facade aside, there is merit to the use of the term. The MNCs of today are quite different from the MNCs of 20, even 10 years ago. They used to have some factories overseas, but that was about it. Furthermore, geographical locations aside, firms used to do everything themselves. Now, companies contract out a considerable amount of work. P&G, for example, instead of setting up shop everywhere, just contracts with locals. R&D, everything. And that probably is the gist of the article: The "company" as we know it has changed.

Palmisano doesn't mention Nokia, but they're an example. They were primarily a lumber company, but they got out of the wood business and got into cell phones. They shifted their structure to a different supply chain, different everything - and it worked. What does P&G sell? Everything. Whatever they want. If Jif and Ivory stop selling, they'll get some new flagship products. Swiffers and... whatever the next big product is. The company is just an overarching structure; It's an assembly line where anything on the line can be changed, and locations don't matter much.

Anyway, some might see the article as more proof of global integration (see EU studies), or at least an indication that states matter a little less than they used to. Others might see it as MBA-school mumbo jumbo. I thought it was interesting to think about. I realize I probably wrote more about the PR aspects than the meat of the article, but whatever.

Note, however: GIE is a totally made-up term. Do a blogsearch.google.com query, or check google.com/news. Nothing. If you do a normal google.com search, the first entry is a page on ibm.com (I'm not in school; I have no access to LexisNexis.) So the CEO of IBM is putting a new term into the Business Dictionary. He might be one of the persons most qualified to do so... but we'll see if actually catches on and becomes common parlance.