Thoughts on Leadership and Globalization

On Wednesday and Thursday mornings, I would get up early, visit the faculty to get myself a cup of tea and sit down while reading the news or whatever study material I ran behind. The class would start at 10:30 for International Business on Wednesday, and the Intro to Managing and Organizing on Thursday. Globalization happens to be an overlapping topic in these two classes, which drives the train of thoughts in my mind. It is a word that I have been hearing since I was in elementary school. One could write many things on this topic, but here I will focus on leaders/managers as the agents of globalization.

Since the 19th century, globalization has exerted unprecedented influence on organizations worldwide. Rapid advancements in information technology and the decreasing cost of logistics have blurred market boundaries globally, which is a defining characteristic of globalization. Neo-liberalists argue that this represents the dawn of a new economic era. Modern economic theory now often views companies as networks of contracts between individuals and groups within the organization—managers, shareholders, creditors, customers, and others—who all cooperate toward common goals. In this increasingly complex environment, where businesses and other types of organizations operate under dynamic and diverse conditions, effective management skills have become essential.

This complexity challenges traditional management doctrines, such as the Friedman doctrine, which suggests that a corporation’s sole objective is profit. In the 21st century, this narrow focus may be insufficient. Companies are now expected to go beyond profit and efficiency to include goals such as sustainability, social responsibility, and inclusivity. These objectives add meaning to the organization, allowing people to engage with it on a deeper level. This process, through which individuals and groups find meaning in their roles and contributions, is known as sense-making. It has become an essential part of management in a globalized, interconnected economy.

Given the importance of sense-making, a critical question emerges: how do managers decide what matters most? This skill—the ability to discern between relevant and irrelevant factors—is called framing. Naturally, managers cannot expend resources on every possible interest, nor should they. Instead, informed managers focus on specific, impactful priorities. Consider OpenAI, a prominent company in artificial intelligence. As a leader in AI research and deployment, OpenAI’s mission is to ensure that artificial intelligence benefits all of humanity. However, as it moves toward becoming a publicly traded company, OpenAI must also satisfy its shareholders by generating profit. This dual focus exemplifies the modern balancing act between mission-driven goals and financial accountability.

There are two main perspectives on how management should operate in this evolving landscape: managerialism and managerial rationality. Managerialism promotes the application of uniform managerial techniques across all areas of work—a one-size-fits-all approach that claims legitimacy based on ideology, expertise, and exclusivity. However, while managerialism can be effective in some contexts, history has shown that rigid, top-down approaches can stifle innovation and, in some cases, contribute to organizational and societal decline. 

In contrast, managerial rationality views management as a flexible and adaptable practice, one that shifts depending on context and circumstances. This approach emphasizes decisions based on data and economic rationale, leading to optimized resources and efficient processes. While each perspective has strengths, neither provides a universal solution. Instead, effective managers should judiciously apply elements of both approaches, adapting as needed based on situational demands.

As globalization continues to reshape business practices, it introduces a new range of challenges. Today’s globalized economy is marked by integrated and interdependent national markets, facilitated by advances in information systems and the shift toward digitalization. Digitalization, which uses digital technologies and data to streamline organizational processes, offers both efficiency and flexibility. Digital processes reduce the need for physical resources, like paperwork, and allow for remote work that connects employees across different locations. However, digitalization introduces significant challenges, including ethical concerns about labor practices and the need for effective cross-cultural communication. 

For example, companies in high-cost countries often offshore work to countries with lower labor costs. A U.S.-based accounting firm might outsource work to India, where labor is less expensive. While this strategy can cut costs, it raises ethical questions about compensation and presents challenges related to cross-cultural management. Managers must understand and respect cultural and economic differences to effectively lead in these settings, a requirement that globalization has made indispensable.

The reliance on cross-border supply chains and international markets is a central driver of globalization today. The global economy has become not only integrated but also highly interdependent, with countries working together and relying on each other’s economic stability. As a result, globalization significantly influences management practices by introducing national differences, particularly in ethics and cultural norms, which managers must navigate.

Understanding globalization’s diverse dimensions is essential for effective management. Globalization represents more than just interconnected markets; it also reflects liberalization, with reduced regulatory restrictions, and financialization, where financial incentives often drive cross-border relationships. Beyond economics, globalization entails internalization, or the exchange of goods, ideas, capital, and culture across borders. Some see globalization as a form of universalization, a convergence of values and ideologies across the world. Others interpret it as westernization, whereby Western values—capitalism, rationalism, urbanism, and more—dominate and shape global social structures.

Managers play a central role as agents of globalization, driving knowledge work and facilitating global operations. They bridge industries such as consulting, education, law, and information technology, all essential components of the global knowledge economy. These knowledge industries often depend on secondary industries that maintain the infrastructure for the knowledge workforce. Additionally, multinational corporations and NGOs are instrumental in establishing global supply chains, while international organizations like NATO and the World Bank provide frameworks to enable globalization. Political leaders, such as Margaret Thatcher, have also championed liberalization policies that further drive global integration.

In this complex and interconnected environment, managers face the challenging task of balancing traditional economic goals with broader, mission-driven frameworks that add meaning, purpose, and social value. By embracing both managerialism and managerial rationality, by making sense of their roles as globalizers, and by adapting to the demands of digitalization, managers can navigate the challenges of a globalized, digitized world. In doing so, they contribute to organizations that are not only profitable but also sustainable, responsible, and attuned to the needs of a rapidly changing global society.