1. Globalisation,
Environment and Business
Dr. Peter Cullen
University of Urbino
Language and Culture for Business
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2. Globalisation, Environment and
Business
I. Historical relationships between world systems, and
business
II. Worlds systems and globalisation – what’s changed?
III. World environmental relationships.
IV. Business impacts and business solutions.
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3. I. Historical relationships between
world systems and business
Douglas North (Understanding the Process of Economic Change):
Humans seek to minimise the gap between
competence and difficulty in decision making by
creating rule structures called institutions. (Heiner 1983)
“By channeling choices, institutions can improve the ability of the
agent to control the environment”
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4. I. Historical relationships between
world systems and business
Human institutions act to reduce perceived uncertainty in human
relationships.
Businesses are: socio-technical
pluri-purpose
partially open
vital systems
Designed to produce goods and/or services with an acceptable
degree of stability.
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5. I. Historical relationships between
world systems, and business
Immanuel Wallerstein:
3 types of human social systems:
mini-systems (isolated, tribal, local)
single-state empires (centre-periphery, i.e., UK and Fr 19° cent)
multi-polity economies (i.e. cold war, today)
Each system was included or excluded in certain world-systems.
The current world system has it’s roots in the 16° century.
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6. I. Historical relationships between
world systems, and business
Andre Gunder-Frank:
World systems are at least 5000 years old.
Geographical advantage in relation to relative technology and
material culture promotes shifts in world-systems balance.
J. Abu-Lughud: Europe = periphery of “old world-system”.
i.e., the spice trade was a political, economic and cultural system
based on comparative advantages and in agricutlural systems
dependent on cultural tastes in food.
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7. I. Historical relationships between
world systems, and business
World systems functions are based on
utility and efficiency of transactions.
Political and economic transactions
(treaties, declarations, sales, purchase, construction, distribution, ecc.) are forms of
institutional communication.
They represent shared belief systems that help reduce uncertainty
in social behaviour.
They are not free from the physical environment – they develop in
the context of the physical environment.
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8. II. World systems and globalisation
What’s changed?
UN: globalisation is:
in an economic context, the reduction and removal of barriers
between national borders in order to facilitate the flow of
goods, capital, services and labour.
This includes the transfer and sharing of knowledge,
communications, and document flow.
It has promoted pan-national political support for barrier-
reduction and communications development.
Labour is stickier.
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9. II. World systems and globalisation
What’s changed?
Term: “international” – a system involving at least 1
relationship between at least 2 nation-states.
Term: “global”, different sectors of life (political, socio-
cultural, economic) interact with a large degree of freedom
irrespective of national borders.
Transaction costs are low
Perceived uncertainty is contained
Institutional guarantees shift away from national judicial
systems.
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10. II. World systems and globalisation
What’s changed?
Barraclough (1964):
The success of European international systems in the 19°
century ultimately put them into violent conflict and the
world system dynamic shifted to Asia and North America.
More room for demographic growth
Learned lessons of urban efficiency
This shift (WWI and WWII resulting) slowed globalisation.
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11. II. Worlds systems and globalisation
What’s changed?
US and Asian response to European internationalism has
challenged European formats of institutional conduct:
1) Euro inter-nationalism was based on a policy of
creating national identity within Europe – it was
politicaly competitive.
2) Since WWII, US political culture has granted
increasing freedom to independent economic agents –
reducing the role of national government in reducing
uncertainty.
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12. II. Worlds systems and globalisation
What’s changed?
The US approach: pushed technological and social
innovation outside the realm of political direction. Politics is
now reactive to global change.
National identities are tested and confirmed or modified
constantly through global communications networks.
EU, NATO, SEATO, NAFTA
IMF, WORLD BANK, OECD, WTO
CNN, Al Jazeera, Sky Email, Facebook, Youtube
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13. II. Worlds systems and globalisation
What’s changed?
Networks – exponential growth in connectivity and access.
Jonathan Friedman: Global = multiple level access
between many local, regional and world systems – this is
new.
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14. II. Worlds systems and globalisation
What’s changed?
In the exchange of goods, services and money, institutions
need increasing knowledge input to make effective
decisions concerning economic, political and cultural
contexts.
AS THE SYSTEM GROWS AND
INTEGRATES, THE NATURE OF THE
SYSTEM CHANGES
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15. III. World environmental relationships.
Human world systems, culminating in current globalised
economic, social and political networks have integrated
relationships among local, regional and global systems.
The environment is a global system with humans
as part of it.
Human societies have an increasing effect on the
environment – shifting the nature of uncertainties.
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16. III. World environmental relationships.
Nature and “baselines”
The planetary environment changes naturally – creating
human desire to reduce uncertainty.
Vostok ice cores Saharan iron
transfer
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17. III. World environmental relationships.
• Global-scale changes that affect the functioning of the
Earth System
• Much more than climate change
• Socio-economic as well as bio-physical
For example, changes in:
Reid & Miller (1989)
Vitousek (1994)
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18. III. World environmental relationships.
For example, changes in:
U.S. Bureau of the Census
Mackenzie et al (2002)
Richards (1991), WRI (1990)
NOAA
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19. III. World environmental relationships.
The Earth’s
system is
millions of
years old
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20. III. World environmental relationships.
Burning
fossil fuels
has
upset natural
Cycles in CO2
output
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21. III. World environmental relationships.
1
Northern Hemisphere
Temperature (°C)
0.5
0
-0.5
1000 1500 2000
Mann et al (1999) and IPCC 2000
Temperatures have increased, and human
activities are partially responsible
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22. III. World environmental 6 IPCC Projections
2100 AD
relationships. 5
Global Temp (°C)
4
We are now about 5°C warmer 3
than the last ice age!
2
1
N.H. Temp (°C)
1
0.5 0
0
-0.5 Mann et al (1999) and IPCC
2000
1000 1500 2000
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23. III. World environmental relationships.
Increase population
puts increased stress
on local, regional and Global dem
global environmental rise since 1800
systems.
The nature of risk and uncertainty has
changed as material culture globalises!
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24. III. World environmental relationships.
Relative population densities
Providing immediate needs creates environmental stress
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25. III. World environmental relationships.
Observed environments change according to Braudel’s construct:
i.e. global warming:
long term patterns (40,000 year glacial cycles)
conjunctural patterns – last 150 years = +.5°C
event patterns – last 3 years – polar ice melting
Agricultural societies changes dramatically with environmental cycles at
all three rates.
What about industrial societies?
What about service sector societies?
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26. III. World environmental relationships.
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27. IV. Business impacts and business
solutions.
Environmental changes affect businesses on local, regional
and global levels -
ACROSS THE VALUE CHAIN!!!
Environmental Events
Mid term convergences
Long-term shifts
DO NOT necessarily coincide with business cycles
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28. IV. Business impacts and business
solutions.
Increasingly business must manage:
Environmental events themselves:
Costs of mitigation
taxes, cap and trade systems, certifications
Costs of adaptation
process and technology innovations,
market re-orientation
Costs of communication
stakeholder briefings, global market adjustments,
institutional reporting, third party buzz
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29. IV. Business impacts and business
solutions.
Current global environmental issues are an opportunity for
businesses to
EXPLORE AND IMPLEMENT SUSTAINABLE PROCESSES IN VALUE
CREATION.
Life Cycle Assessment – choosing least damaging business
processes in terms of environment
Pro-active communications – strengthens image position in market
and with stakeholders
Early, but spread investment – facilitates costs of tech investment.
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30. IV. Business impacts and business
solutions.
Business has an advantage:
In the pursuit of growth, business has internalised the
need for communications – putting it at the forefront of the
knowledge network on the topic of global environmental
change.
Old, “grow or die” business models must change – spreading
profit margins over greater time periods to come into line
with environmental changes.
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31. IV. Business impacts and business
solutions.
Globalisation has increased knowledge circulation about global,
international, national, regional and local systems
Not all institutions can adapt to global changes at the same rate
Levels of perceived uncertainty have increased and shifted due to
global relationships between business and the environment.
Free-market enterprise has the responsibility and opportunity to
facilitate mitigation of and adaptation to global change – playing a
pro-active role in reducing uncertainty at each level.
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32. IV. Business impacts and business
solutions.
Success will require a cultural and communications
shift
This must be global
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33. THANK YOU!!!
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