In the academic world, it is a rarity that a licentiate thesis leaves a deep mark on future research. Jan's thesis set in the Swedish quality steel sector in the era from 1966 is one staggeringly brilliant exception. Through its discovery that the market for steel did not function as conventional economic theory stipulated, the thesis became the starting point for the department's successful research on industrial networks and firms’ internationalization. Jan became an obvious central figure in the research into the functioning of markets and international business, which gradually gave Uppsala an internationally leading position in these areas.
Fame was achieved even though Jan very sparingly participated in international research conferences. He was a constant source of new approaches and made others feel that research is not only important, but could also be fun. Jan, as a mentor, researcher, and friend, was simply integral to the work that led to international reputation, and which subsequently shaped the “Uppsala School". With his thoughtful manner, soft appearance, and wisdom, he inspired those around him. He worked hard and long hours, but without apparent effort. Despite his unassuming nature, he possessed a strange power to drive research forward by posing stimulating questions rather than delivering directives. The evening walk with the dogs meant that he read our works in the light of the streetlamp. Jan was simply a star. That star has now gone out and made the sky a little darker along our days. A small consolation is that the legacy of his work will inspire generations of researchers for a long time to come. ~ Ulf Andersson
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The 50th AIB UKI conference at the University of Aston Business School saw you receive two certificates of recognition for your service. One from the AIB UK & Ireland Chapter for your long-standing service and one from the Women in AIB shared interest group for organizing WAIB speed mentoring sessions for five consecutive years.
What was your first AIB UKI conference you attended? What was your first impression? 2002 – where I joined the doctoral colloquium. I was very early days in my doctorate, returning to work after family time out. I had been a lecturer in entrepreneurship in the 1990s at The University of Stirling. When did you get involved with the AIB UKI chapter in a formal role? Can you tell us more about the role? I joined the AIB UK executive board as doctoral colloquium convenor 2012-2017, following on from Marian Jones and Anna Morgan Thomas who were previous DCs when a new role was created on the board early 2000s. This involved running the DC each year at the conference with in the region of 30-40 doctoral researcher attending each year. Students were allocated senior academic panelists in small groups of 3 or 4, who provided feedback. An innovation was the creation of two tracks A and B. The former is for students who have completed data collection, the latter for early stage. These provide much needed support in the IB field for PhD students outside of their host institutions and access to the academic network. It aimed to become inclusive and encourage diversity in the research field. For example we saw an increase women PhD students attending the annual conference. You became the co-opted diversity representative on the AIB UKI board in (please fill in year). What initiatives did you introduce? What inspired those initiatives? I became Equality and Diversity officer and member of the executive committee from 2018 to 24. I launched the first UKI WAIB speed mentoring event at the AIB UKI conference University of Sussex 25-27 April, 2019. I have chaired and organized the sessions each year since, and recruited and training co-chairs to support the events. These have included Rose Narooz, Noemi Sinkovics and Melanie Hasslett. Each year in the region of 20 mentors and mentees attend the event. We have a blog and special session information on the annual conference WEB. In 2018 I was chair for the Teaching in IB track and hosted a teaching café in AIB Minneapolis. In 2019 at AIB Copenhagen, I met with Daira Panina who was interest in setting up the Teaching and Education SIG, which I then joined. I incorporated the T&E SIG role as regional representative for UKI. I am very keen to support doctoral researcher and early career academics. Many of the challenges that emerged from the WAIB mentoring sessions are with regards to balancing research, teaching and administration. Teaching has a key role in developing an academic career in business schools, and the AIB T&E SIG has developed a wealth of pedagogy and teaching content to support IB educators. In 2023 at the AIB UKI conference we launched our first teaching cafes and in 2024 I chaired the first T&E Track with Stefan Zagelmeyer. As I stand down from my membership the AIB UKI, I am delighted that we have great support to continue these initiatives. When did you become a member of WAIB? Which was the first WAIB event you attended? I became a member of WAIB quite some time ago, probably when I attended my first AIB world conference in Milan in 2008, or a few years later. There was a special panel that I attended that was very interesting and innovating, raising gender related issues and career paths. I was a WAIB mentor for the first time at the Minneapolis conference in 2018. I was so impressed I liaised with the organizer, Saba Colakoglu to host a session for UKI. From the AIB UKI community, who inspired you the most? Who would you say are your role models? Being based at Strathclyde and Glasgow Universities my key role models there were Professors Stephen Young, Marian Jones, Pavlos Dimitratos and Simon Harris. I owe them a lot. Stephan and Pavlos were my PhD supervisors, Marian became my ESRC post doc mentor and Simon my longstanding career mentor. Key themes from panel of the 50th Anniversary of AIB UK & I Chapter - History and Future The Panel took place on 15 April 2023 at the 49th AIB UK & I Chapter Annual Conference at the University of Glasgow. The panel was composed of Peter Buckley (University of Leeds), Davide Castellani (University of Reading), Margaret Fletcher (University of Glasgow), Marian Jones (University of Sheffield), Marianna Marra (University of Sussex), Hinrich Voss (University of Bristol), Catherine Welch (Trinity College Dublin). The panel was organised by Frank McDonald (University of Leeds) and Heinz-Josef Tuselmann (Manchester Metropolitan University).
History of the Chapter The panel began with a reminder of the publication in 2022 of the History of the AIB UK & I Chapter (available on https://www.aib-uki.org/history.html). Marian Jones reflected on her experiences in helping to address the challenges faced by the Chapter, especially cultivating the doctoral work of the Chapter. She also referred to other challenges faced by the Chapter, including encouraging greater involvement by a wide range of scholars and of developing suitable theoretical and methodological approaches to address issues relevant to the discipline. Marian reflected on the ability of the Chapter to effectively address the need for changes it had faced, and she was confident that the Chapter would continue to rise to the key issues it now faces with the grand challenges. What are some of the grand challenges? The presentation by Hinrich Voss (see attached slides) highlighted some of the key grand challenges. These centred on a number of issues that are already evident and that are likely to grow in the coming years. This included climate change and associated issues with loss of land due to rising sea levels, and the availability and security of food and water supplies. Other key issues were the emergence of mega-cities with extremely high populations in the developing world, and high population growth in many parts of the world. These climate change and demographic factors are likely to exerting pressures for large-scale migration of people. The presentation emphasised the need to extend and develop research to enable meaningful contributions to the implications of these matters for the strategy and management of multinational enterprises and for national and international policy issues. Theories and methodologies to address the ‘grand challenges’ Peter Buckley reviewed the history of the emergence of International Business as a discipline and emphasised that it became focused on the strategy and management of the multinational enterprise. Peter illustrated how International Business developed this focus from the work of Hymer, Dunning and others. This had led to well-developed theories such as internalisation theory. These theories had been and were being refined in response to radical changes in international business environments, the rise of emerging economy multinational enterprises, and the development of a better understanding of how diversity in the people that undertake strategy and management issues in multinational enterprises affected outcomes. These changes to the foundations of the study of multinational enterprises had accelerated in recent years and we were now faced were a host of grand challenges that have significant implications for how we should develop the work of our discipline. Peter stressed that solid and robust modelling of the real world is essential to provide the basis for useful work. Catherine Welch emphasised the need for changes in both theorising about and in the selection of appropriate methodologies. This was necessary to enable effective examination of the complex array of phenomena that shaped how international business took place and the effects of this on societies. This required moving away for linear based theorising with oversimplified modelling of the complex factors that influence the activities of and outcomes from multinational enterprises. Developing new non-linear methodological approaches was also highlighted as being necessary. These were available in techniques such as multilevel modelling (MLN) and other quantitative and qualitative approaches that incorporate non-linear causal pathways. See attached Catherine’s slides. Questions raised about the place of theory and methodology to address the grand challenges The place of theory in addressing the grand challenges was clearly regard as a critical issue in the panel’s discussion. A major issue was the level of abstraction from the complexity of the real world (the assumptions made in theories) that was required to decide on appropriate modelling. In the discussions on this issue the role of theory or what is meant by the term theory was often not clear. In some of the discussion theory seemed to be about predicting outcomes determined from postulations based on high levels of abstraction in the modelling process. This approach it was implied requires additions to and developments of existing theory. This often involved interdisciplinary approaches and a multitude of methodologies to enable the application of appropriate theory to understand real world situations. The view appears to suggest that there is a need in addressing grand challenges issues to clearly identify the boundaries of the applicability of theory. This could involve use of non-linear theories and methodologies. The discussion however revealed questioning of the oversimplification of the real world that often accompanies such predictive modelling. This it was argued can lead to a degree of sterility in theory that renders research too abstract to be of value for explaining real world phenomena. This can and often does makes predictions connected to the grand challenges of little value. The more explanatory approach to modelling is focused on explaining and thereby understanding phenomena in many and diverse situations rather than making predictions. Marian Jones referred to a paper by Locke and Golden-Biddle, (1997) that had insights into how we might develop more explanatory approaches to theorising. The debates on what theory is and what it is for in the social sciences is of course not new and has been extensively discussed for many years (DiMaggio, 1995, Melitz, J., 1965). Obtaining a better idea of the how we should model and design research on issues connected to the grand challenges is however important if we are to make useful contributions to the debate on these crucial issues. It seems that we need a clearer understanding what is meant by theory and its purpose in the context of the grand challenges. Modelling based on predictive theorising using high level abstraction (often involving unrealistic assumptions) might be most useful for macro issues. For example, the importance for the development of key principles for cross-border strategy and management of firms arising from important national and international carbon reduction policies. Explanatory theorising based on modelling with lower levels of abstraction (with more realistic assumptions) might be best suited to understanding micro issues. This may for example include the implications of the psychological and sociological characteristics of managers of multinational enterprises for how adjustment by firms works in the context of national and international policies on carbon reduction. This distinction between predictive and explanatory theory may however be a false dichotomy and the real requirement may be developing and using appropriate theory that has sufficient explanatory power to make meaningful predictions. This may boil down to establishing clear boundary conditions in which the findings of the research prevail. This has implications for the type of research projects that are necessary to address the grand challenges and for the kind of research that is publishable in journals and other types of outlets. There may be a ‘horses for courses’ decision on modelling and methodological approaches that depends on what the research is seeking to achieve and in which conditions the results are appliable. There is it seems a need for reflection and discussion on what is meant by appropriate modelling to effectively address the grand challenges and on finding suitable methodologies required to investigate phenomena associated with the grand challenges. The issue of applying the results of research on the grand challenges to users was not explicitly considered. We need however to consider where our research can usefully be applied. Several possibilities exist: for the strategy and management of multinational enterprises, for those affected by the activities of multinational enterprises, for governmental and non-governmental organisations developing policies towards multinational enterprises. Applying the results of research on the grand challenges to users (in terms of other areas of academic research and for practitioners in the public and private sectors) is crucial if our discipline is to make useful contributions to addressing the grand challenges. The targeting and application of research to users of results of research may have important implications for what is appropriate modelling and methodological approaches to secure useful and robust findings. The importance of interdisciplinary research was acknowledged in the discussions. How to develop such research and how to get it published was touched upon but needs more refection and discussion. Agreement was reached on the need to read widely beyond our discipline and indeed beyond the social sciences to develop a better understanding of how to address the grand challenges. The means to develop collaboration to address the grand challenges Marianna Marra highlighted the opportunities to develop collaboration with the Special Interest Group (SIG) in International Business and International Management of the British Academy of Business (BAM. Joint developments with AIB and the SIG including workshops and special sessions at BAM conferences had and were planned to take place. Opportunities to develop collaboration to help to address the grand challenges were welcomed by the BAM SIG and offered connection to the wider Business and Management community via the BAM network. Margaret Fletcher outlined the resources available and the main activities of the AIB Teaching and Education Shared Interest Group that could be harnessed to help to link research on the grand challenges to teaching. See attached Margaret’s slides. Davide Castellani (Chair of AIB UK & Ireland Chapter) provided assurances that the Chapter was and would continue to develop policies and programmes to help our discipline to address the grand challenges. He also highlighted that the Executive of the Chapter welcomed any thoughts and suggestions to help to develop this work. Comments, questions and discussion on issues raised by the panel are welcomed on this blog. This will hopefully help us to define and develop the key issues that need to be tackled to enable our discipline to respond effectively to the grand challenges. ~ Frank McDonald, University of Leeds References Abbott, A., 1988. Transcending general linear reality. Sociological Theory, 69-186. Locke. K., and Golden-Biddle, K. 1997. Constructing Opportunities for Contribution: Structuring Intertextual Coherence and "Problematizing" in Organizational Studies. Academy of Management Journal 40, 1023-1062 DiMaggio, P.J., 1995. Comments on" What theory is not". Administrative Science Quarterly, 40, 391-397. Melitz, J., 1965. Friedman and Machlup on the significance of testing economic assumptions. Journal of Political Economy, 73, 37-60. Van Tulder, R. and van Mil, E., 2022. Principles of Sustainable Business: Frameworks for Corporate Action on the SDGs. Taylor & Francis.
A sign of his stature in the field of international business was reflected when he was appointed the international business specialist for the Business and Management Panel for the first RAE (the precursor to REF) in 1992. He reprised this role again in 2007. His research output was prodigious and made significant contributions to our discipline. When he retired from his post at the University of Glasgow in 2014 many leading scholars in international business paid tribute to the work of Steve. His work with Neil Hood played an important role in stimulating research in some of the fundamental issues in international business. Throughout his career he influenced many scholars several of whom became leading lights in our discipline. A notable person whose work was greatly influenced by Steve was Pavlos Dimitratos, who also sadly departed from us this year.
It is notable that those that knew him all mention that he was an excellent scholar, but they were all struck by what a fine person he was. They mention his humility and his interest not only in the academic development of people, especially PhD students and earlier career researchers, but also for their general well-being. Many people in our community, including several of our leading lights, acknowledge a debt of gratitude to Steve not only as a scholar that helped them to develop their work, but as a friend who generously gave of his time and talent to help them. He stands as an example to us that being a good scholar is more than being a producer of high-quality research. It involves contributing towards the development of all scholars in our community and of taking an interest in their well-being. Steve was a first-rate scholar and more importantly a fine human being. He will be sadly missed. - Executive Board of AIB UK & Ireland Chapter
Pavlos was a highly regarded and prolific scholar, publishing widely in the area of international entrepreneurship and SMEs. His work on micro-multinationals was pioneering. His research has been very influential and received several thousand citations, significantly advancing our knowledge of phenomena at the intersection of IB and IE. However, Pavlos stood out for his modesty, not seeking accolades for himself but sharing the credit with others. Furthermore, his passion for, and support and guidance of, doctoral students and early career researchers has made a major contribution to the development of the next generation of IB/IE researchers.
We will organize an event in the forthcoming AIB UK&I conference to celebrate the achievements of Pavlos as well as a remembrance book to enable colleagues to write their memories of Pavlos, which will be treasured by his wife Lyudmyla and his young daughter Jorcina, and all who knew him. We will never forget Pavlos. His memory will live on and he will always have a special place in our hearts. AIB UK&I Board Improving the Transparency of Your Research: Authors: Aggie Chidlow (University of Birmingham, UK) & Catherine Welch (University of Sydney, Australia)
As scholars we embrace the opportunities to contribute to and move forward ongoing research debates via the creation and publication of journal articles within the academic communities to which we belong. In doing so, our work plays an important part of the evolutionary process of knowledge development and, therefore, should be guided by disciplinary norms and values of science centered on openness, replicability and transparency. Surprisingly, and as pointed out by Eden (2010), John et al., (2012), Ioannidis et al., (2014) and Banks et al., (2016), these fundamental pillars of science have not (yet) been fully embraced by all researchers due, apparently, to the absence of persuasive incentives that would nudge scientific practices towards them. So, to influence that a number of academic associations and journals have started to either revise or develop their policies and procedures for publications in order to enhance evidence trails and reanalysis of data as part of their code of ethics. For example, the Academy of International Business hosted a panel during its annual meeting in 2020 dedicated to provide an overview of what different academic associations and research communities are doing to encourage or even mandate practices to improve transparency. What is more, the Journal of International Business Studies, which is the leading journal in our scientific field, has recently published an editorial setting out a new approach to data access and research transparency (DART) within the international business community (Beugelsdijk et al., 2020). The aim of DART (as a policy) is to encourage sharing of research data to enable the further accumulation of knowledge. However, as sharing of data is not always feasible or ethically appropriate, the intention of DART is to enhance research transparency in an actionable, sensitive, and pragmatic way, while at the same time enabling researchers to pursue a wide range of research methodologies. So, what is research transparency? Generally speaking, in social science the term “research transparency” relates to a shared principle that “academic scholars have an ethical obligation to disclose their evidence-based knowledge claims in order to facilitate replicability of their work (Lupia & Elman, 2014; Moravcsik, 2019). The concept has three normative dimensions:
What it means? All those three components form an integral part of research transparency. So, if research data is unavailable, data collection procedures mysterious and the analysis of the data used baffling then the methodological underpinning of knowledge creation becomes opaque, leaving readers not only to doubt the research findings, but also unable to debate, replicate and extend it. This does not just damage the credibility of the research, but also hampers future research on the topic. Why should we care? Academic journals, professional associations, publishers, review boards, governmental funding bodies and the public, to name a few, are increasingly pressing via their code of ethics and data policies for scholars to make their data, methods and analysis widely available in order to ensure legitimacy and credibility of their empirical scholarly work. It is becoming harder to obtain funding, publish in top journals as well as debate and justify a cagey academic study. All Higher Education Institutions, irrespective of their geographical locations, are increasingly mandating transparency and rigour as research standards across all their disciplines. These requirements are normally set out in their statements on research integrity as well as research strategies. So, the insurgency in research transparency that is currently taking place across the social sciences is not going to go away. Watch out: The change is already on its way! We need to embrace it in order to ensure the credibility of our scientific claims.  The AIB UK&I chapter hosts a Speed-Mentoring Event for Women in AIB as part of the annual AIB UK&I conference. The aim is to provide a supportive platform for junior faculty, early career researchers and doctoral students to engage in one-on-one interactions with senior women academic mentors through a series of focused conversations about career-related issues. Mentees will meet with mentors in a ‘speed-dating’ format. The mentor-mentee conversation is intended to provide helpful advice on a wide range of topics to women looking for answers and insights to career-related questions and challenges they are facing.
Please refer to the conference pages for details on how to attend this event.
Please note: The number of participants accepted for this event is limited. Applications will be processed on a first-come, first-served basis. We look forward to meeting you there. Session Chair: Dr Margaret Fletcher, University of Glasgow Co-Chair: Dr Rose Narooz, University of University of Glasgow By Dr Margaret Fletcher, Adam Smith Business School, University of Glasgow
Why participate in speed mentoring? The WAIB speed mentoring events offer junior and early career academic female staff the opportunity to access specific knowledge to manage their academic career based on the experiences of senior female academics who have an established track record in International Business. Whilst the institutions and schools we work in may provide formal mentoring opportunities these will be limited to having one mentor and the mentor may not be part of the IB community, or have faced specific gender related issues that women experience. Formal mentoring requires significant resources to operate and as a result may be limited to a specific time frame, such as during probation / new lecturer programmes, other initiatives that support later stage career development may be terminated due to changes in resource allocation, or may not be routinely provided by the School. Relevant IB mentors may not be available in the workplace. The WAIB speed mentoring can provide specific advise tailored to issues that predominantly affect women. I was very fortunate to be awarded a Post Doc Scholarship that included mentoring in a strong IB group, but this isn’t the case for all. The events not only support the mentees, the mentors have found participating enjoyable and beneficial. Mentors get the opportunity to meet with their peers, the other mentors, as well as the mentees. It really is a great forum for women at all stages in their careers and lives to connect and support each other. The events provide opportunities to build, develop and enhance networks of global scholars, between and amongst mentees and mentors. As a mentor, I was able to reflect on the experience, knowledge, expertise and strategies I had acquired since completing my own doctorate, that I was able to share at the session. Questions can be based around personal and family or specific work based issues, and be general or very specific. For example common questions address how to manage work-life balance, develop career progression in terms of research and publications, build an academic network in international conferences, become an editorial board member (and does this help for publications), balance research, teaching and administration, keep motivate for continuous publications? The advantage of the speed mentoring format is that participants can gain access to different experiences of several successful academics from around the world to help them gain confidence to develop and manage their own career pathways. cpoib prize at the AIB UKI 2019 conference not By Prof Christoph Dörrenbächer, Editor of Critical Perspectives on International Business
This is the third year in a row in which the critical perspectives on international business (cpoib) prize at the AIB UKI conference was not awarded. The prize is awarded for ‘the most innovative paper which tackles a new or under-researched topic and which contributes to the understanding of the impact of international business on society’. In one year, we did not hand out the prize on request of one co-author of the nominated paper who was a central figure in the organizing committee of that year’s AIB UKI conference. In the two other years, the shortlist of the three best-ranked papers provided by the organizing committee of the AIB UKI conference did not allow for a nomination due to a missing fit with the criteria for the prize. Even extending the list to the top 10 ranked papers did not lead to a positive result. Does this mean we ask for something impossible? For sure, asking for a new or under-researched topic that contributes to the understanding of the impact of international business on society is a double hurdle. But while a decent number of papers that applied in the past for the cpoib award dealt with new and under-researched topics, hardly any paper aimed at understanding the impact of international business activity on society. This is astonishing, as calls for more societal relevance of IB research have been around for long – it is now almost 30 years since the debate about the ‘future of IB’ took off. More recently, this debate and the calls for more societal relevance of IB research seem to gain steam. A number of contributions claim that IB researchers should (re)engage with the real world (Delios, 2017) and tackle ‘societies’ grand challenges’ (Buckley, Doh, and Benischke, 2017). Does this imply that we have to wait yet another year for submissions to the next AIB UKI conference? I guess not. I rather go with Jonathan Doh’s (2017) argument that scholarly outlets in IB are often not interested in publishing more applied direct and relevant insights. cpoib surely is interested in and does publish such research. But so far, the journal is not on the radar of many IB scholars. A recent investigation* into who writes for cpoib and who cites papers published there found that cpoib is well recognized outside the IB discipline, e.g. in general management, business ethics and organization studies. At the same time, recognition from within the IB field is weak. It is often scholars at a more mature career development stage who publish there; those who can afford publishing in a CABS 2* journal. Here is where we need to take action. We (those who work for the journal) need to intensify our efforts to make cpoib better known in the IB scholarly field and move up the rankings. At the same time, we hope that more scholars interested in a societally engaged IB will consider cpoib as a useful outlet to publish their research. This will turn the nomination for the cpoib award from a hopeless endeavour today to a research competition that matters. *Dörrenbächer C. and Gammelgaard, J. (2019), “Critical and mainstream international business research. Making critical IB an integral part of a societally engaged international business discipline”, Critical perspectives on international business, issue 2/3, forthcoming By Dr Laszlo Czaban, The University of Manchester, UK [email protected]
Since the triggering of Article 50 (Brexit), a number of international manufacturing companies announced that they would relocate production, component manufacturing or assembly from the UK. Some stated that it has nothing to do with Brexit, some that Brexit affected their decision, and some that it was due to Brexit. Obviously, tons of evidence could be piled up for any of these narratives – the data are infinite, so there would be some supporting the argument (and if there are contradictory data, we could always resort to probabilities, relative weights, and so on). These pieces of data in combination with the narrative become stylised facts – it is partly a theoretical necessity, partly a practical solution. Just consider the following: the manufacturing of the components starts in Britain, then makes its way to Northern France, then to Germany, finally back to Britain for assembly the Mini (which is owned by BMW and only really sells in the UK)[1]. Obviously, Brexit would affect this. And Brexit would affect the sandwich company whose many components are transported from the EU, assembled in the UK, and sold in France[2], or those destined to the UK market whose ingredients, apart from the bread derive from a rather long supply chain, and only assembled here[3]. On the other hand, Brexit would not affect the fish caught just off the coast of the UK, transported to China[4] (more recently to Vietnam) where it is filleted, returned to the UK, and sold in chip shops. Yet, there are ups and downs in this trade, and not quite dissimilar to the one Brexit may cause, just triggered by prices, costs and alike. Let’s leave the fish filleting industry, and sandwich making for the rest of this post, and let’s turn to manufacturing (actually both fish fillets and sandwiches are manufacturing sectors, just we not associate them with the sector). While this Brexit upheaval has been going on supposedly causing the relocation of manufacturers (oddly the Japanese ones didn’t move to Continental Europe, but back to Japan), or the denial of it (blaming on the falling demand for, let’s say, diesel cars), or exploiting short-term government subsidies to produce something or other in Singapore, German car manufacturers simply couldn’t satisfy the domestic demand for their personal vehicles. While this Brexit upheaval has been going on, and German car manufacturers cannot meet the demand mainly because their sluggish response to the new emission standards, and while there is demand for their cars, Audi is considering the cutting out of one shift a day (which will also have a major effect on the supply chain)[5]. So, supply chain. It sounds boring in an academic article, but it is much more interesting seeing it. Just try to visualise it: one of the Audi assembly factories is in Iglostadt, and the engine factory supplying it is in Hungary, so about 650 km away. That’s about 7-8 hours’ drive or 11 hours on the train. Inputs to the engine factory comes from many places, mainly (but not exclusively) on road. The engines leave the factory mainly (two thirds) by train. That’s 60 wagons a day at normal times[6]. There must be an economic reason behind it. It was Peter Dicken who summarised the regionalisation of the automotive industry (and manufacturing in general) in the most convincing way that became a paradigm[7]. It was based on evidence, and a clear logic (economies of scale and value/weight ratio in combination with Dunning’s eclectic theory). By the time it gained sufficient attention, it became undermined by the findings of global commodity chain (now GVC) approach – economies of scale (for example, in assembly (Volkswagen), or in cutting (US garment industry) regionalised, production as a whole globalised utilising the relatively low transportation cost (still value/weight ratio), and global efficiencies in low value added parts (that is adjusting the value/weight ratio with accounting for margins)[8]. And there was something else: China[9] All these, the regionalisation of production, the long supply chains chosen on the grounds of various considerations in combination with lean production, and other kinds of modern in-factory management techniques make completely common sense. There is economies of scale in assembly, in components, in transportation, there is low inventory, the globalisation opened trading routes, companies are able to optimise the location of various aspects of the production (be it via subsidiaries or outsourcing) by production factors or total production factor. And it offers the basis for Industry 4.0. Yet, these stylised facts cannot explain why German car manufacturing couldn’t comply with the new emission requirements in terms of output, why Japanese car manufacturers (among them the most productive in Europe) withdraw, and seem to choose centralised manufacturing and distribution – the Brexit argument is not a sufficient explanation, the drop in demand for diesel engine cars is not a sufficient explanation because we are supposedly talking about those wonderfully modern, advanced, intelligent, technology focused, whatever companies, so such a simple Fordist, because this is what they are, answer does not seem to match those stylised facts. Not only that – it seems that we are within a year from the next recession, which will probably be led by manufacturing, and for the first time it may take China to recession[10]. So, what’s going on? It would be nice if economics could get a kind of working partnership with management studies (and vice versa) at a theoretical level, and then for the practical level we would also need psychology, sociology and so on to give an explanation. I will try to keep it simple. I will talk about cars, but the points are valid for most manufacturing sectors. Cars are not produced faster today than towards the end of the 1970s. Workers cannot jump in the skeleton cars quicker to fasten the screws, human biology hasn’t changed to accommodate the higher speed of the conveyor belt. Yet, the HPV (hours per vehicle) has come down[11]. Why? Well, firstly, there is less waste (quality problem), which obviously reduces the useful hour per vehicle. However, even if all problems are addressed in the free time of the workers, it is now at a level that cannot really be further reduced. Secondly, workers (teams really) operate at the highest possible speed, so it cannot be further increased. Replacing them with robots means being exposed to capacity utilisation, so there are limits to that too. In financial terms it would expose companies to market changes more. Third, a lot of back office staff and supervisors have been fired, replaced by teamwork and by versions of artificial intelligence, thus their hours are now taken out of the calculations. Not many more people could be fired[12]. Fourth, the combination of platform and model numbers are at a technological crunch. Every new model increases the HPV, less so on the same platform, but platforms can accommodate only a limited number of models (and the same applies for the shared components), thus new platforms are needed, increasing the HPV. However, the decisions on the models and platforms are not driven by HPV (unlike the poor factory manager’s KPI), but by market segmentation and competition, thus it is largely beyond the control of the modern optimising managers, and it is unlikely to provide more productivity gains. Now we get to the supply chains. Supply chains don’t only reduce the cost (through location and negotiating position between the assemblers and the component manufacturers, or through shared R&D), but they also increase responsiveness and variety. Indeed, as it is written in the textbooks. This, in combination with lean management techniques, has been the main life support of the current structure of manufacturing. Automobile companies have been squeezing drips from the five points above, here a percent, there two, and this with the growing and more segmented market provided further impetus to maintain and perfect the existing production system. To put it simple: the current system has no ability to deal with any larger impediment than a few drops of rain on the road. Fluctuation at any point of the system creates an increasing wave of diversions from the expected norm, and the effects are enduring as the production system has limited capacity to catch up with itself. A week-long strike somewhere would stop the output for 3 days somewhere else, and then extra resources needed to catch up – all these have to be financed from the limited margins. Now, match this with such a shock as Brexit or new emission criteria. The point is – the unsustainability of the production system. Not only in environmental terms, not only in terms of global politics, not only in terms of international trade rules, but also in terms of management. We know companies where suppliers suddenly gained an upper hand[13]. We know companies where quality checks are a problem[14]. We know companies where the opportunity cost between flexibility and margins tilted, and cannot be balanced[15]. All these are happening when in some sectors (the most observed is automotive) a major technological upheaval is imminent (alternative energy, autonomous cars, etc.) but without much knowledge about the winner – which one would become the dominant technology, the “dominant design”. So now back to the theory. We have had the valid theoretical argument when Fordism in some sectors and in some parts of the world got into crisis. We have had a valid theoretical argument when regionalised production emerged. We have had a valid theoretical argument when regionalised production with global supply chains emerged. There has always been a problem when applying these models to concrete cases (it’s an epistemological problem that cannot be resolved at the level of the theory or at the level of the concrete case – inductive and deductive inferential reasoning really). It is too easy to get distracted right now with the turmoil caused by Brexit, regulatory changes, trade wars and so on. The point is: these are triggers and not causes. What all these suggest, when accounting for the key characteristics of the business models, of international business, of management of processes of the concrete firms: the current model of international manufacturing reached its limits – the cause of its crisis is internal, and the solution is unlikely be anything but managerial. Thus the theoretical analysis, be it from the firm to the theory of international business or from the theory of international business to the firm, it should treat the consequential point as a frame, and hence recognise the crisis. [1] https://www.theguardian.com/business/2017/mar/03/brexit-uk-car-industry-mini-britain-eu [2] https://www.ft.com/content/2097f502-95ad-11e8-b67b-b8205561c3fe [3] https://www.politico.eu/article/brexit-will-kill-the-sandwich/ [4] https://www.robedwards.com/2009/08/the-madness-of-filleting-scottish-fish-in-china.html [5]https://www.reuters.com/article/us-volkswagen-audi/vws-audi-mulls-cutting-night-shifts-at-ingolstadt-plant-handelsblatt-idUSKCN1Q818T [6]https://www.kisalfold.hu/gyori_hirek/tudta_hogy_a_gyorben_keszult_audik_ketharmada_vasuton_hagyja_el_a_gyarat/2538544/ [7] Dicken, P. (1986): Global Shift: Industrial Change in a Turbulent World, Harpercollins College. It was effectively the first edition of the Global Shift (now in the 7th edition. [8] Of course, the global commodity chain concept did not come from nothing. There have been articles about outsourcing by Swedish companies or by the US apparel industry as far back as the 1970s. [9] The Chinese domestic market has been a conceptual problem to both the Global Shift and to GVC. It has become more and more localised (regionalised), but because of the conceptual problem, it was worth leaving it to those who were writing about China rather than those who were writing about international business, thus avoiding uncomfortable questions about the boundaries of these theories (The Chinese domestic economy is international business through and through – just a different kind, and not “just” – it is one of the main components of the outward FDI from China: the outward FDI supports the localisation/regionalisation of manufacturing production and assembly in China). [10] China has been buying time via soft loans and quasi-quantitative easing. It can maintain it for a long time. [11] https://www.emeraldinsight.com/doi/abs/10.1108/IJPPM-08-2015-0117 https://www.tandfonline.com/doi/abs/10.1080/00207541003627837 [12] I’m not going into the replacement of professionals with AI. It is happening and it will continue to happen, but the research is quite weak (in terms of evidence). [13] Sorry for bringing in Porter’s Five Forces. [14] I chose this example because according to textbooks it wasn’t supposed to happen: https://www.bbc.co.uk/news/business-43298649 [15] The entire retail sector really. |
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