World Wide Web Effect on International Business Activity
The Internet changed the way things are for businesses and organizations. It is seen as a significant contributor to the globalization of culture and the economy. The Internet, the World Wide Web, and globalization are almost synonymous because their functions point to the interconnectedness of computers, and communications have become so easy and accessible wherever and whenever. National borders are ignored or removed from the jurisdiction of the nation-state.
The Internet and the World Wide Web have changed the ways of businesses and organizations. The Internet connects computers anywhere and whenever one wants to connect to. With this technological tool, the rules of business have changed. It’s an entirely different ball game. Some commentators say that this is now “the death of distance,”; meaning distance is no anymore a factor because we can communicate with anyone wherever he/she may be.
Moreover, when we mention the Internet, globalization is likely to be talked about. The exponential growth of the Internet in the United States, now being overtaken by the growth in the rest of the world, has led many to question the relationship between a new global network and the future of the sovereignty of the nation-state.
In globalization, firms are faced with more challenges and ambiguity, but they have to cope and go with the flow of social and economic transformations. Inside the organization, structural reforms have changed. The main drivers of globalization are the declining trade and investment barriers as well as advances in communication, transportation, and information technologies.
In the new global environment, patterns of complexity in organizations have changed tremendously because of the wider scope and the unpredictability of business activities. Technology and aggressive competition drive the wheel of time that spins faster and faster. The windows of opportunity are getting shorter and shorter while the time cycle to prepare for market entry is getting longer and longer.
One of the outcomes of the Internet and globalization is outsourcing. Outsourcing is delegating some functions of the organization or business to outside organizations or firms whose main business is to provide services or outsourcing functions to these companies. Outsourcing is not new; it is a force in the business transformation that continues to dominate business functions all throughout the world.
The following are observations on the emergence of the Internet and the World Wide Web:
- Distance is no longer a problem for businesses and organizations.
- Business organizations are free to locate many screen-based activities wherever they can find the best bargain of skills and productivity.
- The world has access to networks that are all interactive.
- There is increased mobility.
The term globalization is the effect of the high-technology tools that have sprung these past decades. We are now in the age of digitization and fast-paced communication.
There are major changes in firms as a result of globalization, and the setup is different: top managers and their boards now assume functions differently from traditional firms. The structures and functions with respect to the roles of top managers and board of directors, the CEO or the Managing Director, and the composition of the Board of Directors are not the same as in traditional firms. The changes are much more pronounced with respect to the scope and the geographical considerations, unlike the organization of proximity.
It is the characteristics of globalization rather than the territorial dimension that makes a difference. This means global firms conduct business differently, with the use of the Internet and other technology, ease, and comfort. There is a wider scope, and things are more unpredictable, faster, and very competitive.
An accepted definition of globalization by economists is that it is the international economic integration that can be pursued through policies of ‘openness’, the liberalization of trade, investment, and finance, leading to an ‘open economy. Internationalization, liberalization, increased competitiveness – are some of the aspects of globalization.
There is a convergence of employment-related aspects of industries. Mills et al. proposed “a theory of the mechanisms of convergence, divergence via path dependence and convergent-divergent”. Global firms have the whole world as their market field that they can offer a wide array of products and services – firms keep growing while others downsize or rightsize. One aspect of globalization is that firms can assign departmental functions, such as marketing, finance, operations, human resource management, and accounting, to other firms – this is known as outsourcing.
Firms use many different structural forms in dealing with globalization. They can use the horizontal structure because this is made easier with the availability of the Internet and Information Technology. It is still possible with the old structure, i.e., the vertical structure where the top echelon of the organization can dictate or take hold of the reins of business even if they are on the other side of the world.
In globalization, some firms centralize control, meaning decisions are made at headquarters. But other firms delegate some important decisions to overseas managers. The relationship between top managers and their boards differs on a global basis, resulting in different structural arrangements among firms.
Functions of the Board vary worldwide. China, for example, has a different setup in its national companies because they include politicians among the Board members, but private Chinese companies would more likely be headed by founders. In Malaysia, a native Malay always heads the board. In the wake of financial debacles in the US and Europe, many nations introduced new legislation mandating what and how boards were to monitor senior managers. Singapore requires that auditors be changed no less frequently than every two years.
There are new paradigm shifts in organizations. Convergence is a new term. This is an outcome of globalization. With the interdependence of organizations and countries, functions and resources are converged and focused on a certain point. Advantages and disadvantages are brought out in the open.
A commonly accepted definition of globalization by economists, says Van Der Bly, is that it is the “international economic integration that can be pursued through policies of ‘openness’, the liberalization of trade, investment, and finance, leading to an ‘open economy”. Internationalization, liberalization, increased competitiveness – are some of the aspects of globalization.
Furthermore, as a consequence of globalization, there is convergence in political institutions, systems, and organizations or global firms. Convergence is the growing similarity of key patterns in employment-related aspects of countries, industrial relation systems, and employment career paths of individuals in selected industrialized societies. Also, as a result of converging policies, employment careers have become increasingly destabilized, uncertain and unstable for all individuals.