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Introduction

For decades, the term globalisation has been a catch-all explanation of the benefits and dis-benefits of our present economic relationships. Often “Globalisation” is presented as a novel and irresistible logic leading to the unproblematic technological transformation of economic relationships but the internationalisation of trade can be traced deep into history, beyond the establishment of the Silk Road. The Western mercantile tradition developed around a set of technologies which Hirst and Thompson (1996) argue had reached a functional plateau with the reliability and regularity of the steamship and electric telegraph by the conclusion of the nineteenth century. They argue that there had been little change between the teens and nineties of the twentieth century with the period immediately before the outbreak of hostilities in 1914 enjoying equal levels of international trade although the First World War was followed by a retreat into isolationism and recession. While it is important to understand that globalisation does not represent a complete discontinuity, such a view ignores the complex interplay of forces throughout the twentieth century, not least in the transformation of relationships between what was an imperial centre controlling the resources of the marginalised colonial periphery, and the current networked interaction in which production and consumption take place across a network of complexly interacting stakeholders. Camilleri and Falk (1992) argue that the sovereign national state is in many respects a relatively recent phenomenon. The settlements following both world wars in the twentieth century created and defined our current understanding of the nation. They also qualified the concept by creating supra-national levels of accountability for both governments and individuals.

With advancing globalisation, both the freedom of action and the legitimacy of national states are under pressure from the supra-national regulators of the world economy, such as the World trade Organisation (WTO). Traditional means of protecting and developing sub-national regions and national interests though government support and intervention are no longer legitimate. Against decline in participation in local and national elections, individuals, communities and corporations can appeal directly to supra-national entities.

This diffusion of state power through agreement to and participation in multilateral regulation in areas such as trade, security and environment has been matched by the emergence of trans-national corporations operating in internationalised financial and labour markets (Camilleri and Falk 1992). The past century has seen profound shifts in the socio-economic paradigms (Perez 1983) underpinning global trade in international relations and in order to understand the context in which the contributors to this volume of writing, it is necessary to plot the shifts through that period.

By the last quarter of the twentieth century, massive investment in technology, especially information and communication technology, and its production had produced significant changes in the dominant model of the trans-national corporation.

The centenary of the first global war 1914–1918 is a vantage point from which to consider the dynamics of the relationships between East and West which have created the current globalised economy.

A One Hundred Year Trajectory

By the outbreak of the First World War, the key components of twentieth-century development were in place. The Ford motor company had evolved mass manufacturing, international finance had emerged along with reliable communication technologies allowing the administration of the colonised periphery from the developed centre. All of these components underwent rapid development under wartime conditions. However, this development stalled after the cessation of hostilities. The peace settlements disrupted existing relationships across Europe and beyond with the dismemberment of the Austro Hungarian and Ottoman Empires and the emergence of new nations and Soviet Russia.

After the post-war recession of the previous decade, the 1930s saw the emergence of Keynesian economics in various forms around Europe and in the USA. The First World War had been global because it involved European possessions in Africa, Asia and Pacific. Japan, a disappointed participant was mimicking European expansion onto the Asian mainland and confronting the Soviet Union over a divided and conflicted China. The economic models adopted by Italy and Germany under Fascism also saw colonial expansion in Africa in the former case attempted eastward territorial expansion in the latter.

The Second World War that ensued was even more extensive than the First, and by the 1950s the relationship between East and West had shifted further. Once again the technologies of communication, manufacture and administration had seen rapid wartime development with the emergence of operations research and information analysis in the commercial world (Hughes and Hughes 2000).

The conversion of wartime facilities, such as aircraft assembly plants, to civilian production underpinned the post-war location of high-technology manufacturing developments in key Western economies. In both the UK and the USA, government-owned plants were turned over to the private sector. The location of US government-owned, contractor-operated (GOCO) plants determined the diffusion of new industries from the East and West Coasts to locations in the midwest and “New South”. In contrast to the aftermath of the First World War, these technical developments continued on both sides of the ensuing Cold War conflict. The threat of nuclear warfare maintained a fraught peace punctuated with regional and proxy conflicts while emphasising the role of technological innovation in national security.

In addition to the creation of the United Nations, the war saw the creation of a set of complementary international institutions charged with promoting and regulating international trading relations, from the World Bank and International Monetary Fund to the International Labour Organisation and the General Agreement on Trade and Tariffs, the last named eventually developing into the WTO.

In Western Europe, the 1950s saw the foundations of the European Economic Community being laid. The creation of the European Coal and Steel community in 1951 and the European Centre for Nuclear Research (CERN) in 1954 saw the first steps towards a continuing process of European integration.

In geopolitical terms, the post-war settlement in Europe and the creation of the People’s Republic of China had established a bipolar world order (Ohmae 1995). India had achieved independence from Britain and the disruption of Western influence in the Asia Pacific region during hostilities had seen the emergence of new nations including Indonesia, a state promoting, along with India, a non-aligned status in this new order even as the postcolonial conflicts in Indochina began.

By the 1970s, costly postcolonial proxy conflicts were ending and the decolonisation of African countries was extending to Portugal’s remaining colonies. The end of totalitarian in regimes in Western Europe also led to further expansion of the European Economic Community leading to the later creation of the European Union.

The emergence of Japan as an economic superpower reflected a model of state-managed development which combined American manufacturing techniques promoted during the US occupation with a form of Soviet planning instigated by the Ministry of International Trade and Industry, itself a product of the experience of mainland Asian administration (Johnson 1982; Okimoto 1989).

The People’s Republic of China emerged from a period of relative isolation and, with the support of the USA, took over the United Nations Security Council seat formerly occupied by Taiwan. Despite this change in status, Taiwan emerged over the following years as one of the four “Asian Tiger” economies along with Hong Kong, Singapore and South Korea.

The 1970s also saw growing maturity in the two technologies most responsible for the current global dispensation. The foundations of the all-encompassing commercial information technology (IT) revolution, which came to maturity, were laid over the following decades with the emergence of minicomputers in the commercial sector followed by microcomputers accessible to the smallest enterprises and the US government defense investment in computing and computer-based networking which later led to the emergence of the Internet as a commercial resource. Equally importantly however, the process of containerisation in shipping was gathering pace. Shipping containers had appeared in railroad use decades before; however, their adoption by the US government in the military logistics of the Vietnam War aided the process of standardisation among the private companies that had pioneered the expansion of the technology, initially into US coastal shipping (Levinson 2006).

By the 1970s, multinational corporations were prominent in the economic landscape and being identified as significant investors in and exploiters of knowledge (e.g. Galbraith 1969; Turner 1970; Tugendhat 1971; Vernon 1971) but subsequent developments were poorly anticipated. Tugendhat, for example, does not examine the Third World, arguing that its problems are separate and distinct from those of the developed economies. Forty years ago, Asian involvement in the multinational arena was minimal, Tugendhat’s data for 1969 shows that Japanese investment in the USA was smaller than that from Belgium and Luxembourg. Now East and South Asian companies compete with Western corporations in Africa to provide infrastructure in return for access to resources (Kitissou 2007).

When in the early 1980s North American automotive manufacturers elected to control production lines in their Canadian component plants through data links from the US side of the border, they demonstrated the practicality of the routine and automated means to separate physical and intellectual capital. More significantly, in all but the highest technology undertakings, the divergent, creative activities which produce intellectual capital could be disaggregated from the convergent, focused and increasingly marginalised production process. The post-war “Fordist compromise”, which required manufacturing activity to be matched by co-located consumption has been rendered irrelevant (Lipietz 1992). Production and consumption of goods and services now took place in an increasingly complex web, where both sophisticated and commodified products may be produced and consumed at centre and periphery. It has become possible to minimise the cost of labour by separating producer and consumer as Keynesian economics were succeeded by neoclassic economics and neo-liberal rhetoric.

In response to these developments in organisational technologies, organisation theorists produced a number of descriptions of the new organisational forms that emerged. The rise of the Internet and e-commerce as facilitators of trans-national commerce has led to a range of formulations of the “networked organisation”. Castells has described such networks in his Informational City, as a “space of flows”, arguing that access to flows of information and resources is the key to participation in the wider economy (Castells 1989) echoing an earlier formulation of the “city as communications system”, (Webber 1964) intended to move established planning conceptions from physical built form to the quality of interaction in cultural life through the exchange of information.

By the 1990s, the bipolar divide had become relaxed and was further weakened by the collapse of the Soviet Union. Subsequent changes in Eastern Europe led to further dramatic expansion of the European Union. China had embarked upon its programme of modernisation which would transform its role in the global economy and India had abandoned a period of protection and self-development, embarking on a process of opening up to foreign investment which led to World Trade Organization accession in 1995.

The last quarter of the twentieth century saw significant changes in the dominant model of the trans-national corporation. The vertically integrated multinational corporation, under unified ownership, was being superseded by networks of externalised relationships between associated but often autonomous firms. This paradigm shift is encapsulated in Saxenian’s comparison between Route 128 around Boston and its associated high-technology industries and Silicon Valley in Northern California (Saxenian 1994). The East Coast paradigm relied upon established corporations and a new relationship with universities and central government, the core of Eisenhower’s “military–industrial complex” and the “Triple Helix” described by Leydesdorff (2000).

The closed nature of these large, individual organisations contrasts with the densely networked environment of the more dynamic West Coast firms. Silicon Valley is dominated by companies which grew up with the new technologies they promote. Manuel Castells (1989) describes the complex web of relationships necessary to sustain this level of multidisciplinary knowledge creation as a “creative milieu”. Such a milieu extends beyond the boundaries of the high-tech firms themselves into a hinterland of rich knowledge resources, involving universities, sympathetic financial institutions and a highly sophisticated labour market.

Despite its freewheeling entrepreneurial milieu, Silicon Valley was as dependent upon public sector, defence-related expenditure for its genesis as Route 128 had been a decade earlier. The Internet was derived from the ARPANet, named after the Advanced Research Projects Agency of the US Department of Defense. The intention was to share expensive research resources efficiently, and in a Cold War frame, to ensure the survivability of a fragmented or degraded network under physical attack. The World Wide Web originated with a project to share documentation and other materials seamlessly among the thousands of dispersed scientists involved in basic science at CERN, the European Centre for Nuclear Research. The National Center for Supercomputing Applications at the University of Illinois at Urbana-Champaign contributed the Mosaic browser that underpinned its commercial and open-source counterparts from Netscape and Microsoft. The Silicon Valley paradox is that much of the robustness and ease of use of Internet-based applications, a key to their rapid commercial dissemination, can be traced to the requirements of large public sector institutions. This was a lesson better learned by the developmental nation states of East Asia, Singapore, Taiwan and Korea in particular (Thorpe and Little 2001).

Entrants to the global marketplace from East Asia quickly became aware of the need to exploit their presence in the established economies and to maintain value through a knowledge-intensive approach to the delivery and support of goods, and began investing in the established economies. James and Howell (2001) showed how Asian companies established or acquired research and development (R&D) facilities within the UK and the USA. There are two motives for this approach to the capture of intellectual capital for capacity building. Knowledge of regional markets can be obtained by the route of partnership or part ownership followed by acquisition. It can also be captured through R&D focussed on local product development, informed by feedback from local customers and incorporated in regionally targeted products, which could also be modified for the “home” market. At the same time, access to a broader intellectual capital base can be obtained through tapping into regional knowledge, which might enhance home-based operations. Both Malaysian and Korean automotive companies acquired British-based engineering and design companies to further develop their home capabilities. Silicon Valley itself has attracted not just North American but Asian and European entrepreneurs. The incomers’ strategy is to create a point of presence for networks that reach back to their home locations in India, Taiwan or France. These previously disconnected networks can then access the core milieu.

European national governments and the European Union are encouraging companies to seek alliances and opportunities in the opposite direction, to the less developed economies of South East Asia. This is presented both as a means of accessing the market potential of these growing economies and as a means of improving offshore manufacturing resources in relation to both home and export markets (EC/UNCTAD 1996). In some instances, complementary manufacturing takes place at both ends of such relationships. Overseas plants are increasingly selling to both local and home markets. Japan too has conceded this logic by serving initially the lower value end of the domestic consumer electronics markets from overseas plants built to serve offshore markets from China and Malaysia.

Crash and Recovery: The Turbulent Present

By the turn of the twenty-first century, the twin innovations of containerisation and IT had transformed the transaction costs of international trade. The efficiency and security of containers coupled with instantaneous communication of the Internet allowed radical realignment production and consumption. The vertically integrated multinational corporation, under unified ownership, had been superseded by networks of externalised relationships between associated but often autonomous firms. The centripetal model of international flows of assets and capabilities over time from an innovating centre to a periphery dealing with mature activities was unable to account for the intensely networked and distributed global system which had emerged. Notions of technological diffusion and technology transfer were displaced by the need to network, and Silicon Valley was the embodiment of this.

The contestation between command economy, mixed economy and free-market economy reflected ideological positions rendered irrelevant by the end of the Cold War in the closing decade of the twentieth century. The cessation of crypto-hostilities led to the end of what several writers have termed a “bi-polar discipline” (Ohmae 1995). The removal of constraining ideological blocs was followed by accelerating attempts at global economic integration characterised by the “strong globalisation” view typified by Kenichi Ohmae (1990). In Ohmae’s view, globalisation is dominated by a core “triad” of economic regions: North America, Western Europe and North East Asia (then predominantly Japan, now China) which share the bulk of international trade. However, the increasingly tightly coupled relationships and global financial flows meant that in one country or region quickly propagated through the system. The 1990s saw a significant check on the progress of East and South East Asian economies. South Korea Thailand, Malaysia and Indonesia experienced currency crises. These led to a reassessment of the developmental state model and a move to closer integration with the developed economies through greater openness to foreign direct investment and restructuring into less hierarchical and more openly networked relationships between firms, exemplified in the change to the South Korean Chaebols.

As the first Asian tigers faltered and Japan entered a prolonged period of stagnation, the next generation of high-growth economies were identified as the BRICS—Brazil, Russia, India, China and South Africa (O’Neill 2001). Nevertheless, the first decade of the twenty-first century saw a much deeper global recession throughout the highly connected global economy, this time driven by the irresponsible lending against low interest rates which reflective the high level of saving in Asia after their crisis, the consequent search for higher returns from riskier investment and the pooling of debt into securitised products (Economist 2013).

In the contemporary economy of flows of both human and intellectual capital (virtual and physical, legal and illegal), national governments and regional blocs find it difficult to chart a path of recovery. The emergent global system is one of complex interpenetration of peripheries and cores. These terms no longer reflect physical location, but rather reflect access and competence in the underpinning information and communication infrastructure. Tensions are appearing in this system around access to resources, from energy to water and agricultural land and skilled labour. Uneven development and residual conflicts are driving large-scale migration which places pressure on the societies at both ends of the movements (Castles and Miller 1993).

National and regional policymakers are finding that low capital, labour-intensive operations share physical locations with high-value capital-intensive activities in both developed and developing economies. At the same time, increasing complexity and specialisation mean that knowledge-intensive operations must make use of virtual forms of co-location in order to create a critical mass of intellectual and physical resources. The notion of a production chain representing a geographical hierarchy of resources, manufacturers and consumers is itself being superseded by an understanding of global production networks. The physical and logical relationship between “centre” and “periphery” becomes fluid. The new pattern of global production, distribution and consumption forces a choice: compete purely on cost terms or move to activities which enable product differentiation and customer support to add value to goods and services. Such a shift makes the distinction between products and services less obvious and leads to an intensification of knowledge requirements since a focus at end of the chain requires closer adjustment to cultural variation among users and customers to maintain value.

Klein argues that in consumer goods directed to customers, this approach to value represents a shift in focus by what were formerly manufacturing organisations from material production to a form of cultural production (Klein 2000). She argues that the apparent global expansion of high-profile brands is in fact accompanied by a downsizing or hollowing out in which all functions except the management and development of the brand itself are subcontracted. This represents the apotheosis of the outsourcing movement of the 1990s, facilitated by both a reduction of transaction costs and the alteration of the relative advantages and economies of scale. These changes in turn have increased the significance of both intellectual property and intellectual capital leveraged by the technologies on which it depends. The emergence of business-to-business branding along the supply chain suggests that in an extended networked organisation, brands may serve as an internal carrier of organisational values. Ultimately, brands may become the carrier of the core values and emotional capital of what were once physically extensive organisations that have been reconfigured in the terms described by Castells (2000) as network enterprises.

Across the new networked economy as a whole R&D, raw materials sources and routine manufacturing, final assembly, markets and after-market support are increasingly co-located. Plants located in China by foreign companies to serve overseas markets are increasingly serving Chinese domestic consumers as the Chinese government seeks to develop domestic consumption. Even as Asian companies invest in R&D facilities in their Western markets, Western companies invest in R&D in China and India.

Complex layering of labour markets is exacerbating unevenness of development within and between both core and peripheral economies to a degree which threatens the sustainability of the total system. Differences within individual nation states can be at least as significant as those between them. Consequently, Ohmae (1995) argues that “zebra strategies” directed at only the strongest parts of adjacent regional economies are being pursued in order to create sufficient levels of formal economic activity for entry into the world system. Such strategies can only reinforce existing inequities and result in migration both within and between national boundaries and produce dispersed communities. Both China, through successive five-year plans promoting “harmonious society”, and the European Union, through the Committee of Regions and DG Regio, are pursuing policies aimed to reduce such regional disparities while maintaining global competitiveness.

The recent driver of globalisation has been the reduction of transaction costs achieved through information and communications technologies which replace a production or supply “chain” with much more densely networked patterns. The dynamics of the underlying information and communication technologies mean that the focus of attention has shifted from flows of material to flows of information and knowledge. This brings the opportunity for both innovation in the development and exploitation of ever improving technologies and entrepreneurship though the development of new business models and relationships.

However, these networks are sufficiently open to allow the entrance of start-ups and innovative small and medium enterprises (SMEs) and the following chapters show how the capability of firms of all sizes can be leveraged by the global accessibility afforded by these technologies. While large incumbent firms implement “intrapreneurship”, small and agile innovators maintain their entrepreneurial edge in the pursuit of process, product and business model innovation. This book examines the opportunities for innovation and entrepreneurship this provides.

Part I: Negotiating Innovation

The first set of chapters, from both academics and practitioners, addresses the negotiation of innovation both in the sense of navigating the complexly interacting components of a robust innovation system and in achieving the mutual engagement of the stakeholders involved.

In Chap. 2, Halemane, Janszen and Go present a structured simulation-based approach to the management of innovation. Drawing on practice at Inpaqt, they propose five levels of maturity in innovation capability. They then describe a set of e-learning modules covering the innovation process from the perspective of both innovator and manager.

In Chap. 3, Carlisle and McMillan present an overview of the application of complexity theory to strategic planning in contemporary organisations. They argue that regarding strategy as a learning process, which can be combined with a complexity perspective, offers radical possibilities for twenty-first century organisations.

In Chap. 4, Geng and Huang present a conceptual framework growing on both institutional theory and economic geography to explain how formal and informal institutions influence knowledge exchanges within and across geographical locations in developing economies. They illustrate their framework with a discussion of the effect of informal institutions on innovative activities and in various firms operating in China. By drawing on two disciplines which have developed largely independently, they provide new perspective on the role of geographic proximity on economic and entrepreneurial activities.

In Chap. 5, Little draws on literature on open innovation and global supply chains to place innovative and high-tech SMEs in their increasingly global context. It argues that new forms of intermediation and dis-intermediation between businesses and between these businesses and their customers provide both an opportunity and an imperative for entrepreneurs and start-ups to develop new forms of strategy with which to engage an increasingly complex environment.

Part II: Positioning Within Global Networks

The second set of chapters examines sectoral and regional strategies emerging in response to the demand for a global approach to entrepreneurship and innovation.

In Chap. 6, Goto examines how countries’ industry and firms become progressively integrated and embedded in trans-national production and distribution networks. Drawing on the case of the Asian apparel value chain and its role as a non-resource-based export manufacturing sector, he demonstrates how it has assisted later developing countries to enter a global economy and to increase the value of their contribution.

In Chap. 7, Breukel and Zeegers diagnose the very different situation of high-tech small and medium enterprises in a developed economy with two case studies of innovating firms offering technological breakthroughs and seeking the necessary resources from the geographical and institutional context to enter a prospective global marketplace.

In Chap. 8, Messenger and Shackleton present a case study of a major initiative in China seeking to raise intermediate skills to support the rapid pace of economic development through the adoption of a set of international skill standards. While much literature emphasises the role of the high-skilled scientific and technical workforce innovation and entrepreneurship, significant economic development requires a range of appropriate skills at all levels within a workforce and the absorptive capacity of the location depends on the nature and development of the full range of the workforce available.

In Chap. 9, Israels draws on extensive experience in consultancy to present a set of rules for the successful provision of the global IT services required by the distributed production networks of the twenty-first century.

Part III: Creating Value in Chains and Networks

The third set of chapters presents case studies and discussions from sectors impacted by or developed with the technologies underpinning the global turn.

In Chap. 10, Palit and Mukherjee compare the fortunes of Indian companies in the textile and software histories and their contribution to value chains linking India to the European Union. Both industries have become integrated into global value chains with textiles reflecting a long historic tradition of manufacturing and software reflecting the more recent integration union economy drawing on equally ancient traditions in mathematics. Both sectors are benefited with partnerships and collaboration with both European and North American parties and both are moving into higher value market sectors.

In Chap. 11, Fujiwara presents a case study of an industry dealing with the need to abandon a highly successful business model in the face of the diffusion of the core technology, namely inkjet printing, and the emergence of low-cost competition in the consumable components of cartridge and ink. The chapter examines the responses of established companies and the difficulties facing them.

In Chap. 12, Poon and Chan review the development of a novel and lucrative sector, mobile gaming which has developed in sophistication and value alongside the transformation of the mobile phone from telephony into a platform for mobile services. Their analysis of the changing structure of this sector’s value chain illustrates how technology allows small players to access a potentially global market, while new forms of intermediary have emerged to broker this process.

In Chap. 13, Kale provides a study of how the Indian pharmaceutical industry has responded to radical changes in government policy. Having developed behind government protection and favourable intellectual property rules as efficient manufacturers of imitative generic drugs, the industry has had to adjust to the consequences of WTO and compliance with an intellectual property regime requiring innovation. The chapter identifies the responses of Indian firms in the transformation of their business models.

Part IV: Maintaining Identity as a Resource

The fourth set of chapters touches on the intangible contribution to economic activity and development from cultural organisations and events with case studies and discussions of organisational responses to the global re-contextualisation of their contribution to development by cultural and tourist organisations and networks.

In Chap. 14, Rosu and Zamar use case studies of two European orchestras to show how the role of arts organisations has developed in response to a shift from an environment of direct national and local government support to one requiring an entrepreneurial frame of reference. Reduced financial support has resulted in an expansion of their role within their respective communities.

In Chap. 15, Beek and Go provide an extensive literature review and analysis of large-scale hallmark events and their role in stimulating social and economic development.

Finally, Chap. 16 reflects on the book as a whole and its contribution to both academic research and practice in the future.