Globalisation & It

MIS FOR MBA
IMPACT OF IT IN GLOBALISATION
INTRODUCTION
Globalisation is the process of interaction and integration among people, companies, and
governments worldwide. As a complex and multifaceted phenomenon, globalisation is
considered by some as a form of capitalist expansion which entails the integration of local
and national economies into a global, unregulated market economy. Globalisation has grown
due to advances in transportation and communication technology. With the increased global
interactions comes the growth of international trade, ideas, and culture. Globalisation is
primarily an economic process of interaction and integration that's associated with social and
cultural aspects. However, conflicts and diplomacy are also large parts of the history of
globalisation, and modern globalisation.
IMPACT OF IT IN GLOBALISATION
Advancements in technology have considerably facilitated globalization. In fact,

technological progress has been one of the main forces driving globalization. Technological
breakthroughs compel business enterprises to become global by increasing the economies of
scale and the market size needed to break even.
Technological advancements reduce costs of transportation and communication across

nations and thereby facilitate global sourcing of raw materials and other inputs. Patented
technology encourages globalization as the firm owning the patent can exploit foreign
markets without much competition.
Information technology has led to the emergence of the global village. For example, the
world wide web has reduced the barriers of time and place in business dealings. Buyers and
sellers can now make transactions at any time and any part of the globe. Technological
change also affects investments.
Earlier, high technology production was limited to rich countries with high wages. Now
technology is easily transferable to developing countries where high tech production can be
combined with low wages. A large number of firms in advanced countries are now
outsourcing labour intensive services from developing countries like India.
Technology is understood to be the driving force of globalization that began in the 18th
century and has continued ever since to the 21st century, in-between three industrial
revolutions have taken place. The 1st industrialization revolution was in the 18th century that
took place in manufacturing industries. The 2nd industrialization revolution was in the
services industries. The 3rd industrialization revolution of the 21st century which we are
going through is know as information age as described by Adam Smith.
Technological development has helped increased globalization. A prime example of

technological globalization is that China and India have benefited economically as
technologies like airplane, container ships have allowed China to export its goods to Europe
and US vice versa and allowed countries to exploit their comparative advantage in trade.
Globalization accelerates the change of technology. Every day it seems that a new
technological innovation is being created. The pace of change occurs so rapidly many people
are always playing catch up, trying to purchase or update their new devices. Technology is
now the forefront of the modern world creating new jobs, innovations, and networking sites
to allow individuals to connect globally. The timeline below shows the rapid transformation
of how technology has accelerated within the last 20 years to 2012.
 18 years ago: Internet commercialized
 17 years ago: first mobile phone with Internet connectivity
 15 years ago: Google named the search engine of choice by PC magazine
 12 years ago: Blackberry launched
 9 years ago: Facebook launched
 7 years ago: Twitter launched
 6 years ago: iPhone, the first of the smart phones, introduced
 5 years ago: Groupon introduced
 3 years ago: 17 million smart tablets sold — estimated that 100 + million by 2014
 1 year ago: Google Glass announced
 Every 60 seconds (so it seems): new apps, tailored to users’ specific needs created
INNOVATION AND EMPLOYMENT
Technological change in DCs is mainly imported and innovation is inherently connected with
trade, foreign direct investments (FDI) and consequent international technology transfer.
Globalization can imply a substantial technological up-grading in DCs through opening
different channels. On the one hand, a developing country can implement embodied
technological change (ETC) through the importation of “mature” machineries from more
industrialized countries. On the other hand, a late starter DC can enjoy the “last comer”
benefit of jumping directly on a relatively new technology.
Moreover, in addition to a direct effect through ETC, imports and FDI inflows may generate
technological spill overs in favour of domestic firms which can absorb new imported
technologies through labour mobility, input-output relationships and reverse engineering.
Finally, technological catch-up may be induced by exporting to richer countries both through
substituting/replacing outdated technologies in the exporting sectors and through the
development of entirely new businesses characterized by process and product innovations.
The aim here is satisfying a more sophisticated demand coming from the industrialized
countries.
SKILL-BIASED TECHNOLOGICAL CHANGE
From a theoretical perspective both globalization and technological change can be

responsible for the observed pattern of increased relative demand for skilled labour in the
developing world. Two processes are supposed to have opposite effects in this regard. On the
one hand new technologies shift the labour demand in favour of more skilled workers. On the
other hand, the HOSS mechanism predicts that a DC trading with skill-abundant richer
economies should specialize in the production of unskilled-labour intensive goods, and
therefore experience a relative increase in the demand for unskilled labour. However, if the
HOSS assumption of homogeneous production functions and identical technologies between
countries is relaxed, then international openness may facilitate technology transfer from
industrialized to developing countries through the different channels discussed in the
previous section. This implies that globalization and technological change are complementary
rather than alternative mechanisms, both resulting in an increase in the demand for skilled
workers.
While technology plays a vital role in shrinking the planet, all technologies are created
differently and culture plays a big role in how technology is used worldwide.
For example, as Americans, we take pride in our innovations and how we embrace
technology in our lives, however, the U.S. is falling behind in a variety of areas, such as
Internet speed. The U.S. doesn’t rank in the top ten when it comes to Internet speed, which is
partially due to the lack of competition amongst Internet providers.
In contrast, most European and Asian countries receive better Internet performance compared
to the U.S., due to an extensive amount of competitive Internet providers. But what are the
consequences of having slower Internet speed? For businesses, slower Internet speed leads to
decreased productivity and accessibility, which means other countries have a competitive
advantage over the U.S.
Ultimately, when it comes to technology, culture plays a huge role in determining success or
failure. For instance, Facebook is commonly used in western countries, however, the social
marketing platform isn’t as popular in Asia and China. This is because Facebook’s design
and functionality appeals to a western mindset, whereas Asian cultures prefer a different way
of sharing on social media platforms.
In addition, effective marketing techniques vary depending on the culture. Manufacturers

must consider marketing techniques in the early development of products, in order to
determine the most effective marketing technique to ensure success in the target geographic
location.

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MIS FOR MBA

Advancements in technology have considerably facilitated globalization. In fact,

Technological advancements reduce costs of transportation and communication across

Technological development has helped increased globalization. A prime example of

 18 years ago: Internet commercialized

 17 years ago: first mobile phone with Internet connectivity

 15 years ago: Google named the search engine of choice by PC magazine

 12 years ago: Blackberry launched

 9 years ago: Facebook launched

 7 years ago: Twitter launched

 6 years ago: iPhone, the first of the smart phones, introduced

 5 years ago: Groupon introduced

 1 year ago: Google Glass announced

SKILL-BIASED TECHNOLOGICAL CHANGE

From a theoretical perspective both globalization and technological change can be

In addition, effective marketing techniques vary depending on the culture. Manufacturers

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