Drivers of Globalization - A Stylized Model
The key to an understanding of globalization is to analyze it as the outcome of
conflicting explanatory variables. Our analysis focuses on firm behavior, both with
regard to resource allocation and innovation. We distinguish three factors that
determine a firm´s exposure to globalization: technology, institutions and competitive
dynamics. These factors we call globalization drivers: it is their interaction that has
culminated in an organizational innovation that we call global production networks
(GPN).
Each of these factors obviously serves as a proxy for a bundle of factors that, in
reality, are quite complex. In line with the structuralist theory of growth (Lipsey 1997;
Lipsey and Bekar, 1995), technology is considered to be the primary determinant of
economic growth in the following specific sense: i) Technology interacts with the
existing facilitating structure to produce economic results, “such as specific outputs at
the micro-level and the size and distribution of the GDP, and employment and
unemployment at the macro-level.” (Lipsey, 1997, p.75) ii) As the technology changes,
the facilitating structure adapts to it, but with a lag. iii) The causal linkages between
technology and structure work both ways: changes in the latter can also cause changes
in the former.
The weak point of this model is the definition of the facilitating structure
which lumps together institutions, market structures, policies and behavioral patterns.
We prefer to talk about institutions. Douglas North (1996: p.12) defines them as “the
rules of the game of a society that structure human interaction”. They are composed of
formal rules (statute law, common law, regulations), informal constraints
(conventions, norms of behavior, and self-imposed codes of conduct), and the
enforcement characteristics of both. Institutions shape the allocation of resources, the
rules of competition and firm behavior63. Important...