Question 4: Please use the below article to guide your response. Minimum of 2 academic references and 1 data for appendix, it could be a graph or table or piechart (2 and half pages NOT double spaced). GENERAL ELECTRIC: AN OUTLIER IN CEO TALENT DEVELOPMENT by W. Glenn Rowe and Roderick E. White and Derek Lehmberg and John R. Phillips W. Glenn Rowe is the Paul MacPherson Chair in Strategic Leadership at the Richard Ivey School of Business, The University of Western Ontario. Roderick E. White is the Associate Dean, Faculty Development and Research at the Richard Ivey School of Business, The University of Western Ontario. Derek Lehmberg is a doctoral student at the Richard Ivey School of Business, The University of Western Ontario. John R. Phillips is an assistant professor at the Odette School of Business, the University of Windsor. A recent Ivey study confirms the commonly held view that General Electric is an excellent breeding ground for future business leaders. This article summarizes the study and its three conclusions: Firms led by CEOs who were trained at GE will outperform firms led by CEOs who were not; GE’s reputation for developing CEO talent is, in fact, well deserved and not mere hype; and GE appears to develop more CEO talent than other noted CEO talent-generating firms. An outlier is an observation that lies outside the overall pattern of a distribution. Usually, the presence of an outlier indicates some sort of problem. In statistics, an outlier is an observation that is numerically distant from the rest of the data. Outliers may be indicative of data points that belong to a different population than the rest of the sample set. - Wikipedia An outlier is something that is situated away from or classed differently from a main or related body; a statistical observation that is markedly different in value from the others of the sample. - Malcolm Gladwell1 The General Electric Corporation (GE) has long been known as an organization that excels at finding and developing managerial talent. In addition, GE managers are sought after by other organizations to serve as senior managers. Consequently, many GE managers leave the firm for employment elsewhere. GE has developed a reputation as a breeding ground for CEOs, and a relatively large number of ex-GE executives have been at the helm of Fortune 500 companies over the last 25 to 30 years. In addition, many business press writers have commented that firms which hire an executive from GE for their Chief Executive Officer (CEO) position experience an immediate increase in their stock market valuation, an increase that is not apparent for firms that hire their CEOs from other firms. This leads to several questions: Do firms that hire CEOs from GE perform better than those firms that hire from the general pool of CEO management talent? Does GE have a better reputation than other firms for developing CEOs, and is this reputation deserved? Are more CEOs developed in GE than in other firms t ...

1. Question 4: Please use the below article to guide your response.
Minimum of 2 academic references and 1 data for appendix, it
could be a graph or table or piechart (2 and half pages NOT
double spaced).
GENERAL ELECTRIC: AN OUTLIER IN CEO TALENT
DEVELOPMENT
by W. Glenn Rowe and Roderick E. White and Derek Lehmberg
and John R. Phillips
W. Glenn Rowe is the Paul MacPherson Chair in Strategic
Leadership at the Richard Ivey School of Business, The
University of Western Ontario.
Roderick E. White is the Associate Dean, Faculty Development
and Research at the Richard Ivey School of Business, The
University of Western Ontario.
Derek Lehmberg is a doctoral student at the Richard Ivey
School of Business, The University of Western Ontario.
John R. Phillips is an assistant professor at the Odette School of
Business, the University of Windsor.
A recent Ivey study confirms the commonly held view that
General Electric is an excellent breeding ground for future
business leaders. This article summarizes the study and its three
conclusions: Firms led by CEOs who were trained at GE will
outperform firms led by CEOs who were not; GE’s reputation
for developing CEO talent is, in fact, well deserved and not
mere hype; and GE appears to develop more CEO talent than
other noted CEO talent-generating firms.
An outlier is an observation that lies outside the overall pattern
of a distribution. Usually, the presence of an outlier indicates
some sort of problem. In statistics, an outlier is an observation
that is numerically distant from the rest of the data. Outliers
may be indicative of data points that belong to a different

2. population than the rest of the sample set.
- Wikipedia
An outlier is something that is situated away from or classed
differently from a main or related body; a statistical observation
that is markedly different in value from the others of the
sample.
- Malcolm Gladwell1
The General Electric Corporation (GE) has long been known as
an organization that excels at finding and developing
managerial talent. In addition, GE managers are sought after by
other organizations to serve as senior managers. Consequently,
many GE managers leave the firm for employment elsewhere.
GE has developed a reputation as a breeding ground for CEOs,
and a relatively large number of ex-GE executives have been at
the helm of Fortune 500 companies over the last 25 to 30 years.
In addition, many business press writers have commented that
firms which hire an executive from GE for their Chief Executive
Officer (CEO) position experience an immediate increase in
their stock market valuation, an increase that is not apparent for
firms that hire their CEOs from other firms.
This leads to several questions: Do firms that hire CEOs from
GE perform better than those firms that hire from the general
pool of CEO management talent? Does GE have a better
reputation than other firms for developing CEOs, and is this
reputation deserved? Are more CEOs developed in GE than in
other firms that also have a reputation for being a CEO talent
generator?
In a study recently conducted at the Richard Ivey School of
Business2, we attempted to answer these questions. The results
are intriguing and of interest to those interested in senior
leadership development, selection and training. We discuss the
results in this article.
To assess the performance implications of selecting a CEO from
the talent pool at GE versus the general CEO talent pool, we
assessed the cumulative abnormal returns to stockholders over
the three-day period surrounding the date the appointment of a

3. new CEO was announced by 78 firms – 39 who announced the
hiring of CEOs from GE and 39 who announced the appointment
of CEOs from the general CEO talent pool.
We searched GE’s annual reports from 1977 to 2002 to identify
the company’s senior leaders over that period. We found 651
senior leaders. From this group we selected 39, based on the
following criteria. They had to have spent a minimum of five
years with GE and become the CEO of a publicly traded
company after leaving GE. Further, there had to be no other
significant events in a 20-day period surrounding the
announcement of each CEO appointment. Examples of other
significant events are renegotiation of bank loans, outcomes of
major lawsuits, major changes in strategic direction and going
ex-dividend.
In the following manner, we then searched for our comparison
group of CEOs from the general talent pool for CEOs. First, for
each ex-GE CEO, we found a group of CEOs from the general
talent pool who were outsiders and who had been announced as
their respective firm’s CEO within a one-month period of the
ex-GE CEO’s announcement date. Second, for each of these
groups of CEOs, we determined the market capitalization for the
firm led by each CEO and selected the CEO whose firm had the
closest capitalization to the firm led by the respective ex-GE
CEO. Finally, we matched as closely as possible with respect to
industry. These comparison CEOs also had to have served with
their previous firms for five years or more. This gave us 39 ex-
GE CEOs and 39 non-GE CEOs, all of whom were outsiders
when appointed CEOs of their respective firms. This meant we
had 39 pairs of CEOs (one from GE and one not from GE in
each pair) whose appointments were announced within one
month of each other and whose firm’s market capitalization
were closely matched.
GE: An outlier
GE is an outlier in many respects and we discuss three of them.
First, it is one of a very few successful U.S.-based
conglomerates. While conglomerates were very popular in the

4. 60s and 70s, they became less popular in the 80s. Today, there
are very few conglomerates. GE has not only survived as a
conglomerate, it has prospered and become one of the largest,
most successful, diversified firms in the world.
Second, GE is an outlier from a performance perspective.
During the period, 1993 to 2002, it had phenomenal success in
creating value for shareholders. It ranked either first or second
in the Stern Stewart Performance 1000 on Market Value Added
(MVA). In 2001, it ranked first with a MVA of $427 billion.3
GE competed with Coca-Cola for top spot in the MVA rankings
from 1993 to 1996. From 1997 to 2002, its main competitor was
Microsoft.
Third, GE is an outlier in its ability to develop managerial and
leadership talent. One business writer stated that GE’s
managerial development system, in addition to producing senior
managers for GE, produced “an astonishing number of CEOs of
other major companies.”4
Of course, these three characteristics that help make GE an
outlier are related. Several writers have detailed how GE’s
performance is a result of GE’s executive development system.
In addition, GE’s diversity in, and large number of, business
units creates the necessity to deploy, and offers the opportunity
to enhance, the general management and strategic leadership
abilities of its middle and senior level managers. This capability
is a very important source of sustained competitive advantage
for GE.
Leadership development at GE
GE’s leadership development system is probably due to its
informal, tacit, socially complex, and path-dependent nature.
Numerous business press writers have hailed GE’s leadership
and managerial capabilities. The corporation has been described
has one of two legendary “caldrons of managerial brilliance.”5
One writer called GE a “CEO breeding ground.”6 Another
business writer said that: “[w]when a bank needs a loan, it goes
to a bank. When a company needs a CEO, it goes to GE.”7
Finally, it has been argued that executives at GE have been

5. shaped by a system that is better than any other outside of the
military, and that is unparalleled in its ability to identify and
develop leadership talent.
Of course, GE has a long history of leadership development. A
long succession of GE CEOs has emphasized the development
of leadership talent. The John F. Welch Leadership Center at
Crotonville, NY will be 53 years old in 2009. GE’s president in
1958, Ralph Cordiner, stated that: “Not customers, not products,
not plants, not money but managers may be the limit of General
Electric’s growth.”8 Jack Welch said it differently with his
“people first, strategy second”9 mantra, but the emphasis was
still on people.
An important point is that GE develops much more leadership
talent than it needs or uses. The system selects and develops
good leaders, and is combined with a disciplined evaluation and
promotion system that is merit based. Those not selected for the
highest leadership position at GE, or those who have
inappropriate timing,10 leave GE for CEO positions with other
firms – a process that is supported and even facilitated by GE.
Two contenders to succeed Jack Welch, James McNerney and
Robert Nardelli, were told by Welch to find CEO jobs outside
GE when Jeff Immelt won the horse race to replace him in 2001.
The timing of choosing a successor is inappropriate for some, as
GE chooses relatively young CEOs (both Welch and Immelt
were approximately 45 years old when selected) in its last two
CEO succession processes.
The GE Effect
Stock prices generally change in accordance with the positive or
negative expectations of shareholders when significant events
such as the renegotiation of major bank loans, outcomes of
major lawsuits, major changes in strategic direction, going ex-
dividend and the announcement of a new CEO happen. We
assume that these expectations are the result of information
surrounding these important events and this information being
made publicly available. In addition, these expectations are a
function of the net present value of the expected future

6. discounted cash flows of the firm as a result of these events.
With current statistical techniques, we measure the cumulative
abnormal returns to shareholders that are related to a particular
firm event – such as the announcement of the appointment of a
new CEO. When these returns are positive, it suggests that
shareholders expect that the firm will perform better under the
leadership of that CEO.
In our study, we measured the stock price increase surrounding
each of the 78 CEO announcements over a three day period –
the day before, the day of, and the day after each
announcement. We then assessed whether each of these three-
day cumulative relative returns was significantly higher than,
equal to, or less than zero. Further, we examined if the average
for the group of ex-GE executives was significantly different
and higher than the average for the group of newly appointed
CEOs who came from the general CEO talent pool.
The results in Table 1 are very telling. First, we see that the
value of shares for the ex-GE CEOs ranged between -8.2
percent to 30.2 percent, while that for the CEOs from the
general CEO talent pool was -23.6 percent to 26.0 percent.
Second, the averages were 3.92 percent versus -0.61 percent,
respectively. Third, the Z scores tell us that the average for the
ex-GE CEOs was significantly different from zero and
significantly higher than the average for the CEOs from the
general CEO talent pool. A final interesting result was the
plus/minus ratio. This shows that shareholders expressed
confidence that 25 CEOs in the ex-GE CEO group would
improve performance, while they expected that only 14 would
not improve performance. The corresponding numbers for the
group of CEOs who did not come from GE was 17 to 22.
These results suggest that shareholders believe that performance
is more likely to improve under CEOs who have been developed
in GE’s management development and training system. The
majority of firms that hired CEOs who came from GE had a
positive increase in stock price in the three-day period
surrounding the announcement of their appointment. This more

7. than offset the impact of the 14 firms whose stock price did not
increase because performance was not expected to improve.
TABLE 1: Relative Returns for CEO Announcements over 3-
Day Event Window
N
Min
Max
Mean
Z Score
+/- Ratio
Ex-GE Executives
39
-8.20%
30.20%
3.92%
5.95
25:14
CEOs not from GE
39
-23.6%
26.00%
-0.61%
-0.53
17:22
GE’s reputation: Deserved or hype?
The second question we examined was whether GE deserved its
reputation or whether it was hype created and sustained by the
business practitioner press. We assessed this in two ways. First,
we looked for as many lists as possible that highlighted firms
which were considered CEO talent generators. We found nine
such lists – one from 1981 and the rest from 2002 to 2007.
These are listed at the bottom of Table 2.
There were 66 firms found on these nine lists. However, only
six were listed five or more times. These six are listed in Table
2. GE is mentioned on all nine lists and IBM is next, being

8. listed on seven of the nine lists. This suggests that GE has a
reputation for the development of CEO talent that is recognized
by those who compile these lists. But, is this reputation
deserved or is it hype?
Our study found that firms which hire CEOs developed at GE
have persistent positive abnormal returns. We considered this
support for our notion that firms with CEOs from GE
outperform their rivals. We know it is possible for shareholders
in a market to make mistakes, but it is hard to believe that they
would make mistakes consistently over the 25-year period of
our study. If firms managed by CEOs from GE are unable to
outperform rivals, we believe, over time, that shareholders will
notice this failure to meet performance expectations.
This means that the abnormal returns to shareholders found in
our study would decline over time. But, over the period of our
study they did not decline - they persisted. If we are to believe
that the observed GE effect is hype, it then requires us to
believe that markets do not learn and are highly inefficient. The
fact that the returns persist suggests that GE’s reputation is not
hype but in fact is well deserved.
TABLE 2: Firms Considered CEO Talent Generators
Firm Name
1981
2002
2003
2005
2005
2006
2006
2007
2007
Total
General Electric
Yes
Yes
Yes

9. Yes
Yes
Yes
Yes
Yes
Yes
9
IBM
Yes
Yes
Yes
Yes
Yes
Yes
Yes
7
Proctor & Gamble
Yes
Yes
Yes
Yes
Yes
Yes
6
Johnson & Johnson
Yes
Yes
Yes
Yes

10. Yes
5
Dell Computer
Yes
Yes
Yes
Yes
Yes
5
Colgate-Palmolive
Yes
Yes
Yes
Yes
Yes
5
Source
Fortune
Hewitt Associates
Hewitt Associates
Hewitt Associates
Hay Group
Hay Group
Groysberg in HBR
Hewitt Associates
Hay Group

11. GE versus other firms
The final question asks: Does GE develop more CEOs than
other firms that have a reputation for being a CEO talent
generator? A corollary question is whether the CEOs from these
other firms are expected to improve performance in a manner
that is better than, similar to or worse than ex-GE CEOs? To
answer this question we searched for all CEOs who had been
developed in the firms listed in Table 2. We found 20 useable
(see the sidebar for our criteria) CEO announcements – 13 from
GE and 7from the other five firms. We then assessed the impact
on stock price over a three-day period, when each firm
announced its choice for CEO as we did for our earlier study.
The results are shown in Table 3.
TABLE 3: Relative Returns for CEO Announcements over 3-
Day Event Window
N
Mean
Z Score
+/- Ratio
Ex-GE Executives
13
8.17%
3.39
12:1
Ex-Talent Generator Executives
7
-2.92%
-0.16
3:4
These results suggest that GE does develop more senior leaders
who become CEOs than any other firm that is known for
developing senior leaders. In addition, the impact on stock price
when the appointment of each of these 20 CEOs was announced
is even more dramatic than in our previous study. The average

12. for our group of ex-GE CEOs is 8.2 percent while that for the
CEOs from the other noted CEO talent generators is -2.9
percent. The Z scores suggest that these are significantly
different from each other. Finally, the plus/minus ratio is 12:1
for the ex-GE group and 3:4 for the non-GE group. These
results suggest that shareholders expected firms led by ex-GE
CEOs to perform much better than firms led by CEOs from the
other five firms that are considered to be CEO talent generators.
Conclusion
Shareholders expect that firms led by CEOs who were trained in
the GE managerial-development and training system will
outperform firms led by CEOs who came from the general talent
pool for CEOs. Second, GE has a reputation for developing
CEO talent that is deserved and not just the result of hype in the
business press. Third, GE appears to develop more CEO talent
than other noted CEO talent-generating firms, and these ex-GE
CEOs are expected to lead their firms to better performance.
Is GE an outlier? Is it a firm that lies outside of the overall
pattern of CEO talent generators? Is it possible that GE belongs
to a different population than other CEO talent generators?
Based on our studies, we believe that GE is a unique developer
of CEO talent. It is an outlier. The emphasis on leadership
development by successive CEOs, the merit-based promotion
system, the ability to bring people in at the bottom and develop
them, or have them leave if they are in the bottom ten percent,
leads GE to develop many more leaders with a CEO capability
than the corporation needs. This excess in CEO talent gets
dispersed among the general population of firms and helps make
GE an outlier in the development of CEO talent.
Question 5: Discuss the costs and benefits of globalization.
Provide examples of how globalization has helped or harmed
individual nations and the world economy. Please use the below
lecture note to guide your response. Minimum of 2 academic
references and 1 data representation for appendix, it could be a

13. graph or table or piechart (2 and half pages NOT double
spaced).
The Benefits and Costs of Globalization
Globalization is highly controversial. One need only look at
television coverage of angry protests at recent meetings of the
World Trade Organization, World Bank, and International
Monetary Fund to see that not all people and organizations
believe that globalization—at least as currently practiced—is a
positive force. Yet, many others feel that globalization holds
tremendous potential for pulling nations out of poverty,
spreading technological innovation, and allowing people
everywhere to enjoy the bounty generated by modern business.
Clearly, some benefit from globalization, while others do not.
In this section, we present some of the arguments advanced by
both sides in the debate over this important issue.
Benefits of Globalization
Proponents of globalization point to its many benefits. One of
the most important of these is that globalization tends to
increase economic productivity. That means, simply, that more
is produced with the same effort.
Why should that be? As the economist David Ricardo first
pointed out, productivity rises more quickly when countries
produce goods and services for which they have a natural talent.
He called this the theory of comparative advantage. Suppose,
for example, that one country had a climate and terrain ideally
suited for raising sheep, giving it an advantage in the
production of wool and woolen goods. A second country had a
favorable combination of iron, coal, and water power that
allowed it to produce high-grade steel. The first country would
benefit from trading its woolen goods for the second country’s
steel, and vice versa; and the world’s economy overall would be
more productive than
if both countries had tried to make everything they needed for
themselves. In other words, in the context of free trade,
specialization (everyone does what they are best at) makes the

14. world economy as a whole more efficient, so living standards
rise.
Many countries today have developed a specialization in one or
another skill or industry. India, with its excellent system of
technical education, has become a world powerhouse in the
production of software engineers. France and Italy, with their
strong networks of skilled craftspeople and designers, are
acknowledged leaders in the world’s high fashion and footwear
design industries. The United States, with its concentration of
actors, directors, special effects experts, and screenwriters, is
the global headquarters for the movie industry.
Comparative advantage can come from a number of possible
sources, including natural resources; the skills, education, or
experience of a critical mass of people; or an existing
production infrastructure.
Globalization also tends to reduce prices for consumers. If a
shopper in the United States goes into Wal-Mart to buy a shirt,
he or she is likely to find one at a very reasonable price. Wal-
Mart sources its apparel from all over the world, enabling it to
push down production costs. Globalization also benefits
consumers by giving them access to a wide range of diverse
goods and the latest “big thing.” Teenagers in Malaysia can
enjoy the latest Tom Cruise or Will Smith movie, while
American children can play with new Nintendo or Sega games
from Japan.
For the developing world, globalization also brings benefits. It
helps entrepreneurs the world over by giving all countries
access to foreign investment funds to support economic
development. Globalization also transfers technology. In a
competitive world marketplace, the best ideas and newest
innovations spread quickly. Multinational corporations train
their employees and partners how to make the fastest computer
chips, the most productive food crops, and the most efficient
lightbulbs. In many nations of the developing world,
globalization has meant more manufacturing jobs in export
sectors and training for workers eager to enhance their skills.

15. The futurist Allen Hammond identifies two additional benefits
of globalization. First, he says that world trade has the potential
of supporting the spread of democracy and freedom.
The very nature of economic activity in free markets . . .
requires broad access to information, the spread of competence,
and the exercise of individual decision-making throughout the
workforce—conditions that are more compatible with free
societies and democratic forms of government than with
authoritarian regimes.9
Second, according to Hammond, global commerce can reduce
military conflict by acting as a force that binds disparate
peoples together on the common ground of business interaction.
“Nations that once competed for territorial dominance,” he
writes, “will now compete for market share, with money that
once supported military forces invested in new ports,
telecommunications, and other infrastructure.” In this view,
global business can become both a stabilizing force and a
conduit for Western ideas about democracy and freedom.
Costs of Globalization
If globalization has all these benefits, why are so many
individuals and organizations so critical of it? The answer is
complex. Just as some gain from
globalization, others are hurt by it. From the perspective of its
victims, globalization does not look nearly so attractive.
One of the costs of globalization is job insecurity. As
businesses move manufacturing across national borders in
search of cheaper labor, workers at home are laid off. Jobs in
the domestic economy are lost as imports replace homemade
goods and services.
In the American South, tens of thousands of jobs in the textile
industry have been lost over the past several decades, as jobs
have shifted to low-labor cost areas of the world, leaving whole
communities devastated. In 2003, Pillowtex, the last remaining
major textile company operating in the region, declared
bankruptcy and shut down 16 plants, citing intense foreign
competition. Pillowtex (formerly Fieldcrest Cannon) had at one

16. time been the world’s largest producer of household textiles like
towels, sheets, and blankets.
In the past, mainly manufacturing was affected by the shift of
jobs abroad; today, clerical, white-collar and professional jobs
are, too. Many customer service calls originating in the United
States are now answered by operators in the Philippines and
India. The back office operations of many banks—sorting and
recording check transactions, for example—are done in India
and China. Aircraft manufacturers are using aeronautical
specialists in Russia to design parts for new planes. By one
estimate, as many as 3.3 million white-collar jobs will be
outsourced from the United States to lower wage countries by
2015.10 Even when jobs are not actually relocated, wages may
be driven down because companies facing foreign competition
try to keep their costs in check. Much of the opposition to
globalization in affluent nations comes from people who feel
their own jobs, pay, and livelihoods threatened by workers
abroad who can do their work more cheaply.
Not only workers in rich countries are affected by globalization.
When workers in Indonesia began organizing for higher wages,
Nike Corporation moved much of its production to Vietnam and
China. Many Indonesian workers lost their jobs. Some call this
feature of global capitalism the “race to the bottom.”
Another cost of globalization is that environmental and labor
standards may be weakened as companies seek manufacturing
sites where regulations are most lax. Just as companies may
desire locations offering the cheapest labor, they may also
search for locations with few environmental protections; weak
regulation of occupational health and safety, hours of work, and
discrimination; and few rights for unions. For example, the so-
called gold coast of southeastern China has become a world
manufacturing center for many products, especially electronics.
One journalist offered the following description of a young
worker there:
Pan Qing Mei hoists a soldering gun and briskly fastens chips
and wires to motherboards streaming past on a conveyor belt.

17. Fumes from the lead solder rise past her face toward a
ventilating fan high above the floor of the spotless factory. Pan,
a 23-year-old migrant worker, said the fumes made her light-
_headed when she first arrived from a distant farm village three
years ago. Now she’s used to them—just as she’s used to the
marathon shifts, sometimes 18 hours a day.11
Weak health and safety and environmental regulations—and lax
enforcement of the laws that do exist—are a major draw for the
companies that manufacture in factories in China’s industrial
zones.
A related concern is that the World Trade Organization’s most
favored nation rules make it
difficult for individual nations to adopt policies promoting
environmental or social objectives, if these have the effect of
discriminating against products from another country.
One incident that provoked considerable controversy involved
protection for endangered sea turtles. In response to concerns
voiced by consumers and environmentalists, the United States
passed a law that required shrimp trawlers to use nets equipped
with special devices that allowed turtles to escape. It also
banned the import of wild shrimp from nations that did not
require such devices. Shortly thereafter, Thailand, Pakistan,
Malaysia, and India brought a complaint before the WTO,
saying that the U.S. law violated trade rules by discriminating
against their shrimp (which were caught without protection for
sea turtles). The WTO ruled against the United States and
ordered it to either change its law or pay compensation to the
other nations for lost trade.
Critics of globalization say that incidents such as this one show
that free trade rules are being used to restrict the right of
sovereign nations to make their own laws setting environmental
or social standards for imported products.
Another cost of globalization is that it erodes regional and
national cultures and undermines cultural, linguistic, and
religious diversity. In other words, global commerce makes us
all very much the same. Is a world in which everyone is

18. drinking Coke, watching Hollywood movies, talking on
Motorola cell phones, and wearing Gap jeans a world we want,
or not? Some have argued that the deep anti-Americanism
present in many parts of the world reflects resentment at the
penetration of the values of dominant U.S.-based transnational
corporations into every corner of the world.
With respect to the point that globalization promotes
democracy, critics charge that market capitalism is just as
compatible with despotism as it is with freedom. Indeed,
transnational corporations are often drawn to nations that are
governed by antidemocratic or military regimes, because they
are so effective at controlling labor and blocking efforts to
protect the environment. For example, Unocal’s joint-venture
collaboration to build a gas pipeline with the military
government of Myanmar (Burma), a notorious abuser of human
rights, may have brought significant financial benefits to the
petroleum company.
Figure 7.3 summarizes the major points in the discussion about
the costs and benefits of globalization.
What is public opinion on these issues? A survey of 20,000
people in 20 countries around the world in 2005 found that in
all countries except one (France), most people thought that the
free market economic system was best. But solid majorities in
all countries also favored more regulation of big companies to
protect the environment and the rights of workers, consumers,
and shareholders. The director of the study concluded, “There is
now an extraordinary level of consensus about the best
economic system. But . . . there is also near-unanimous
rejection of unbridled capitalism.”12
This discussion raises the very real possibility that globalization
may benefit the world economy as a whole, while
simultaneously hurting many individuals and localities. An
ongoing challenge to business, government, and society is to
find ways to extend the benefits of globalization to all, while
mitigating its adverse effects.