Introduction

Abstract

Global business shapes the context in which cross-cultural social contact takes place. It is determined by a number of interrelated globalization processes. Economic, governmental, legal, political, and cultural integration are all important aspects of global business. Managers must understand the influence on their worldwide operations and workforce of increasing economic integration among countries. Economic integration addresses the removal of trade barriers between at least two nations and the establishment of greater cooperation and coordination between them. Forms of economic integration include free trade, custom union, common market, economic union, and political union. International economic relations are governed by a variety of institutions such as the International Monetary Fund (IMF), the World Trade Organisation (WTO), and World Bank. These organizations facilitate global business at the macro-economic level. The more a nation-state has an open economy, the more industries and companies operating in their boundaries are exposed to globalization processes and global business developments. A nation-state’s openness refers to the extent to which its national economy is linked to world economics through the inflow and outflow of resources, goods, services, people, knowledge, skills, technology, capital, and information. A multinational company’s financial position is also influenced by global money markets, bond markets, equity markets, and loan markets. This is a highly uncertain and volatile environment that can have sudden and unpredicted impacts on corporate profitability. The Asian Tiger crisis that first afflicted Thailand in June 1997 and subsequently spread to other Southwest and East Asian countries, and the Western financial and economic crisis, precipitated by the bankruptcy of Lehman Brothers in 2008, demonstrate that global and local companies can be seriously affected by many economies through global financial and economic connectivity. Economic growth and stability can only be sustained within the context of wider political and social stability. Therefore, a sound governmental, legal, and political system is essential. The relationship between governments in its host and home countries is probably the most important influencing factor for a multinational company. Governments affect the economic and legal environment in which those companies operate. Governmental actions also influence a nation-state’s competitiveness in relation to national productivity and trade liberalization. Through policy-making and intervention, governments can impact investment, savings, and trade of domestic as well as foreign companies. Examples of trade barriers as a reflection of national protectionism are import tariffs, quotas, voluntary export restraints, commodity inspection standards, and so on. The multinational company is subject to the laws of both its home and host countries. Therefore, a sound legal context within which to conduct business activity is essential to maintaining a nation-state’s competitiveness on a macro-economic level and to ensure domestic and foreign companies continue to invest in local productivity and labor.