This article explains
how the United States has influenced the organization of business activities
around the world and predicts the impact of competition on the future of
business models as the global economy changes.
One of the purposes of the article is to give an overview of how the
United States business models and practices have influenced the last 50 years
of global business. This article is important because it tracks the past
influence the United States business model had in the global market place and explains
the future competition the United States model will have going forward. As the
global competitive landscape changes it will be important to understand how
other countries business models affect the firm’s competition in a global
marketplace.
After World War II, the
United States became a powerhouse of industrial ideas sharing ideas to the
global community of a corporate model of ownership and organization, large
scale production, open markets, formal organizational structures and workplace
organization based on collective bargaining which at the time was the only
model for a growing economy (Capelli 2009). In the 1970’s, the rise of Japanese
management practices influenced the international business community (Capelli
2009). Deregulation in the 1970’s influenced the global thought of what it
takes to be a successful economy. The United States was a great example of how
economies could benefit from a decreased role of government and pursued an
increased emphasis on the benefits of private ownership. During this time, the
idea of a market economy and a democratic government spread like wild fire. “The
proportion of countries with democratic governments doubled from 1980 to 2000
to 60%” (Simmons, Dobbin, & Garret) indicating that this business model was
gaining increased acceptance around the world. A development in the United
States business model that is currently applicable to the competitive
environment is the focus on financial goals and shareholder value (Capelli
2009). Financialization also gave rise to the executive performance based compensation
in an effort to maximize shareholder wealth which evidence showed led to
increased firm performance (Capelli 2009). Repercussions of executive based
compensation occurred in the 1990’s when scandals filled the headlines with
executives influencing stock prices by manipulating financial data. The
Sarbanes-Oxley Act of 2002 was in reaction to the scandals requiring United
States companies to increase transparency of financial information ( Capelli
2009). During this time, the “Asian Tigers” (South Korea, Singapore, Hong Kong,
and Taiwan) had rapid growing economies despite the fact that they did not
follow the market capitalism model. These governments were the opposite of the
United States economy that did have full democracies, controlled trade practices,
and government subsidies that allowed these industries to develop (Capelli
2009). China and India also showed fast growing economies in the early 2000’s
with a communist political system and heavy government regulation. The BRIC
nations all have higher government regulation than the United States and are
experiencing growth suggesting that the United States business model may not
the only solution for economies to grow. Evidence to support this shows that
from 1950-1990 the United States accounted for 27% of the world gross domestic
product in 2008 the number dropped 20% (Capelli 2009). Also, in 1980 2 of the
largest 10 corporations were based outside the United States. In 2008, 6 out of
10 were based outside the US suggesting that the world economy is changing and
the United States is becoming less influential in the global marketplace. To
further support that global competition is changing the National Intelligence Council of the U.S.
argues that the “fastest growing economies in the near future will likely
follow a “state capitalism” approach that sees a powerful role for government
in shaping and controlling business (Capelli 2009).
This article is
important for practicing managers as the global competitive environment changes
and there will be increased competition from foreign firms that have industries
that are heavily subsidized and regulated making competition more difficult for
domestic companies. Practicing managers will also need to consider that the
market economy may not be the only way economies are able to grow. Companies
should also consider that as economies for heavily regulated industries thrive
the United States government might increase regulation in an effort to emulate
the successful growing economies.
Cappelli, P. (2009). The Future of the U.S. Business Model
and the Rise of Competitors. Academy Of Management
Perspectives, 23(2), 5-10. doi:10.5465/AMP.2009.39985536
