Karl Moore and Alan Rugman argue that globalisation isn’t what it seems.
“Go global”. That’s what CEOs have been hearing from gurus and academics for a while now. But how global are the US’ biggest multinational enterprises (MNEs)? We argue: not very global at all. Each year Fortune magazine ranks the world’s largest MNEs in its annual Fortune 500. The US accounts for 185 of the companies; the European Union (EU) has 141 and Japan 104. Together this “triad” has 430 of the top 500 companies.
But, if you examine the data on the US’ 25 largest multinationals it becomes clear that they are what we would call home-region based. Of the US’ 25 largest MNEs 22 have more than 50 per cent of their sales in their home region of North America. None of these US MNEs are “global”. For example, Wal-Mart has 94.1 per cent of its sales in the North American Free Trade Area; GM has 81 per cent – and so on. Indeed, the average intra-regional sales figures for all the 185 US MNEs is 77.3 per cent. With well over two-thirds of their sales in North America, these are home-triad based MNE. So much for the globe-girdling US MNE.