Global Business

  • Permalink Gallery

    In some countries, state firms pursue politics more than profits

In some countries, state firms pursue politics more than profits

The global sources of foreign direct investment are changing, and state-owned enterprises (SOEs) are an increasingly large proportion of the pool of available global capital. In 2013, SOEs invested $US160 billion internationally, representing 11 per cent of global foreign direct investment flows, despite making up one per cent of total multinational corporations. SOEs also dominate cross-border mergers and acquisitions: […]

How can companies read early signals of change and adapt?

The world’s economies apparently change at random, reacting unforeseeably. However, certain large-scale processes can be understood and predicted as inter-related, evolving mechanisms driving business, government, and societal behaviour and decision-making. The DRIVE framework shows how the future could unfold through five such processes.

First are the demographic and social changes resulting from current models of population growth. All countries are […]

  • Permalink Gallery

    Mergers that aim at increasing revenue only work with the customers’ blessing

Mergers that aim at increasing revenue only work with the customers’ blessing

When one company acquires or merges with another one in search of revenue synergies, they both face greater risks than if they were aiming at cost synergies: while cost synergies can be forced top-down, revenue synergies depend on customers’ reactions.

Business leaders often equate “risk” to “things can go wrong”. This notion is reinforced by stories of catastrophes (like the merger of AOL […]

  • Permalink Gallery

    The value of intermediaries in the global market for cloud workers

The value of intermediaries in the global market for cloud workers

A variety of online markets have developed in recent years to facilitate trade in labour services. Upwork – previously known as oDesk-eLance (oDesk was founded in 2005 and merged with eLance in 2014) – is the largest global online market for outsourced work, with revenues of around $1 billion a year, making it the ‘behemoth of the human cloud’ […]

  • Permalink Gallery

    Quantitative easing: To deal with the root of the problem, the ECB should tackle non-performing loans

Quantitative easing: To deal with the root of the problem, the ECB should tackle non-performing loans

There were high expectations that during the 10 March 2016, the ECB’s Governing Council would extend its Quantitative Easing Programme. ECB chief Mario Draghi has in the past reiterated his readiness to adopt additional measures should the inflationary objectives not be reached by the upcoming meeting. With the Euro Area core inflation rate well below one percent, further monetary […]

Crime costs Latin America 3 percent of its annual GDP

Crime and violence are of major concern in Latin America and the Caribbean. One in four citizens in the region claim that insecurity is the main problem in their lives, even worse than unemployment or the state of the economy. While the region is home to fewer than nine percent of the world’s population, it accounts for 33 percent […]

  • Permalink Gallery

    The deceleration of emerging markets needs to be taken seriously

The deceleration of emerging markets needs to be taken seriously

The helm of global economic and finance punditocracy converged in Davos between 20 and 23 January 2016 for the annual World Economic Forum under the theme ‘Mastering the Fourth Industrial Revolution’. The theme would be eclipsed by talk on the volatility roller coaster that had rocked the markets at the start of the year with ‘China’ being the near […]

  • Permalink Gallery

    CEOs appear increasingly concerned with the business environment

CEOs appear increasingly concerned with the business environment

Each year, PwC’s Annual Global CEO Survey captures the issues at the top of the agenda for the world’s business community.

This year’s 19th Survey, presented to the World Economic Forum in Davos, certainly captured the mood of the uncertainties facing business: about half (49 percent) of the CEOs who responded to this year’s Survey believe that global economic growth […]

  • Permalink Gallery

    Countries with tight social norms innovate less in the international arena

Countries with tight social norms innovate less in the international arena

An increasingly common way to source creative ideas is to ask the crowd for help. Various companies have launched online platforms to source creative ideas from online communities. For example, PepsiCo has set up “Legion of the Bold”, a community website in which the brand asks fans for marketing and advertising ideas. In 2014, Procter & Gamble announced the […]

  • Permalink Gallery

    When multinationals choose locations, consumers and competitors matter

When multinationals choose locations, consumers and competitors matter

The field of international business has long adopted the view that multinational enterprises (MNEs) may be represented as networks of activities connected via knowledge and product flows. The major determinants of efficient location choices are considered to be proximity to markets, resources and suppliers.

There are two standard approaches to modelling MNEs’ location choices. The first attempts to minimize total […]

  • Permalink Gallery

    Saudi Arabia ponders the risks and opportunities of taking Aramco public

Saudi Arabia ponders the risks and opportunities of taking Aramco public

Ask almost any Saudi citizen which institution works best in his country and the answer will be Saudi Aramco, the state-owned oil giant. Ask international oilmen what is the best-run national oil company in OPEC and the reply will be the same.

Given the company’s exemplary reputation, it is surprising that the Saudi kingdom’s Deputy Crown Prince Mohammad bin Salman mentioned his […]

Are firms with offshore headquarters worth more?

Over the last two decades, an increasing number of companies have chosen to register or establish subsidiaries in offshore financial centres. OFCs are characterized by low taxation, flexible regulations, and secrecy policies (see Fig 1 for the list of OFCs, ranked by Offshore Attitude Index). Many companies with subsidiaries offshore are market icons, such as Google Inc., Apple Inc., […]

  • Permalink Gallery

    Nigeria in 2016: walking a tightrope between slowdown and inflation

Nigeria in 2016: walking a tightrope between slowdown and inflation

Every so often we have an event that steals the headlines for what it was not about and such was the case for Christine Lagarde’s four-day visit to Nigeria in January 2016. The IMF Managing Director sought to disabuse widespread speculation that Africa’s largest economy  ($ 500.0 billion in GDP size) was out to secure bailout in view of […]

  • Permalink Gallery

    In search of greater regulatory freedom, some banks resort to cross-border acquisitions

In search of greater regulatory freedom, some banks resort to cross-border acquisitions

The recent global financial crisis, caused in part by systemic failures in bank regulation, has sparked, among other things, a strong push for both stricter capital requirements and greater international coordination in regulation. For example, seven of the 10 recommendations of the 2011 Report of the Cross-Border Bank Resolution Group of the Basel Committee for Banking Supervision (BCBS) propose […]

  • Permalink Gallery

    Currency depreciation and diverging inflation rates block the road to monetary union in Africa

Currency depreciation and diverging inflation rates block the road to monetary union in Africa

The chase for regional monetary unions seems to be part of Africa’s 21st century holy grail:

In November 2013, Heads of State of the East African Community (EAC) signed the region’s monetary union protocol in accordance with Article 5 of the EAC Treaty of Establishment.
The Southern African Development Community Protocol on Trade (1996) envisions a Monetary Union as one of […]

  • Permalink Gallery

    Exporters attract more competitive female workers, but pay them less than their male counterparts

Exporters attract more competitive female workers, but pay them less than their male counterparts

The link between globalisation and income inequality has received a lot of attention in economic research as well as in the popular press. However, the discussion has almost completely ignored one important dimension of inequality, namely the gender wage gap. At the same time, the debate about why the gender wage gap persists continues at full strength. We argue […]

  • Permalink Gallery

    India plays catch-up with China to enhance its involvement in Africa

India plays catch-up with China to enhance its involvement in Africa

A month ago, the third India-Africa Forum Summit (IAFS) in Delhi elevated India’s relations with the continent to an unusually prominent position between 26-29 October.  Now, once again, China overshadowed India’s relations with Africa with the 6th Forum on China Africa Cooperation in Johannesburg in early December.

The series of Africa events organised by the government of India culminating in […]

  • Permalink Gallery

    As the world economy slumps, African countries embrace intra-regional trade

As the world economy slumps, African countries embrace intra-regional trade

By and large, the world is caught in a phase of global economic transition: the possibility of the US and Europe exiting the zero-interest-rate terrain lurks in the horizon, despite seeming remote in the recent past; in China, the government is attempting to rebalance growth from over-reliance on exports as aggregate growth moderates toward the 6-to-7 percent band in […]

  • Permalink Gallery

    How can firms manage multi-ethnic workforces in countries with violent ethnic conflicts?

How can firms manage multi-ethnic workforces in countries with violent ethnic conflicts?

The recent terror attacks in Paris have triggered a renewed debate on the multi-ethnic, multi-cultural, and/or multi-religion society in Europe. A multi-ethnic society inevitably creates multi-ethnic workplaces, hence ethnic diversity is rapidly increasing in all parts of business, both in domestic and international operations. What do we know about the implications of multi-ethnic workplaces in the face of violent […]

China has an image problem in Africa

China is swiftly becoming one of the world’s largest investors, especially in Sub-Saharan Africa, with the biggest investments made in Nigeria, Sudan, South Africa and Angola. In 2012 China was estimated to have a total stock of $531 billion in investments abroad, with four percent of it — $22 billion — in Africa. A small sum at first glance, […]