Values-Based Multinational Management: Achieving Enterprise Sustainability through a Human Rights Strategy

1. Global Integration: Its Driving Force and Pervasive Impact

3 C H A P T E R o n e Global Integration Its Driving Force and Pervasive Impact The process of open interaction among individuals and institutions across the world that has come to be known as globalization has changed the lives of these individuals and their institutions. The driving force of global integration is the digital revolution. With the implementation of integrated circuits, computational memory and speeds have doubled every two years. Among the multiple effects of this technology is its influence on the availability of information. The reach and pervasive influence of this information technology over the last quarter century is molding our institutional interactions and changing their balances of power. With the continued advance of computer technology and its influence on the availability of information, this rate of change will continue, even as the effects of the global recession work their way out of the system. 4 the new multinational environment I. THE DIGITAL REVOLUTION The development of the integrated circuit in 1968 initiated the “digital revolution” in its current phase. The remarkable pace of advancement has penetrated every facet of our lives and interactions within our various communities. Computation Technology The introduction of integrated circuits began the era of increasing calculation speeds and ever-smaller circuits that continues today. The pace with which computation technology has progressed since that time is startling.1 In 1965, Gordon Moore, one of the inventors of integrated circuits (and then chairman of INTEL), predicted an exponential growth in computing power, known as Moore’s “Law of Integrated Computers.” He predicted that transistor-die sizes would be cut in half every twenty-four months, meaning that both computing capacity (i.e., the number of transistors on a chip) and the speed of each transistor would double every two years. As it turns out, Moore’s predictions have held.2 Indicators of this progress include the following: • As of the end of the last century (2000), “Computers are about a hundred million times more powerful for the same unit cost as they were at the half-century mark.3 • Measured as the calculations per second that can be purchased for $1,000, the calculations were ten per second in 1950 and 108 in 1999.4 • The cost of a megabyte of storage fell from $10,000 in 1958 to less than $0.001 in 2005.5 This exponential rate of change is difficult for us to grasp. It begins slowly but becomes very large very quickly. Taking 1968 as a base rate, computing speed would increase every two years, first by a factor of 2 in 1970, then 4 in 1972, then 8, 16, 32, . . . and would be up to 512 times faster in 1986 and 1,024 times faster in 1988. In 2006 the multiplier would be in the neighborhood of 500,000.6 Compare this rate of change to the industrial revolution, which took generations to take hold.7 global integration 5 The increased speed of calculations and decreased size of the integrated circuit have found their way into multiple aspects of our lives—medicine, the cars we drive, airplanes we fly, indeed, almost every product we use. Information technology has triggered the current phase of globalization through the enhancement of person-to-person communication and information retrieval. Information Technology The Internet emerged in the early 1980s, building on a scientific network in the late 1960s and on military communications after 1975.8 Following the introduction of the first IBM PC in 1981, the network came together in the late 1980s and the early 1990s through the diffusion of personal computers with dial-up modems, creating global telephone networks.9 In the mid-1990s computerized interaction went from a platform based on personal computers (PCs) to an Internet based on e-mail and Internet browsing. Thomas Friedman dates the start of this phase as August 9, 1995, when Netscape went public.10 Netscape provided not only the browser but software products that assured open standards.11 A huge investment (over-investment) in fiber-optic cables dramatically reduced the cost of global telephone and data transmissions.12 The next step was workflow software, which connected application to application just as e-mail and the Internet browser had connected persons to each other.13 The hardware and software enabled interaction among people and among applications, which provided the platform for new kinds of global collaboration. Friedman identifies these as...