BUSI 604 Week 2 DB Forum 1: Parts 2-3 Example

Discussion Board Forum 1: Parts 2-3, Key Term Thread and Replies

BUSI 604 International Business, Discussion Board Forum 1: Parts 2-3 (thread and 3 replies)

Thread by [Student Name]

The section headings stand in for the course's own thread template, and the three classmates and their key terms are composites; the articles and Scripture cited are real, and the requirements follow Liberty's public course guide for BUSI 604.

Key Term and Definition

The key term I reserved is deglobalization. Witt (2019) defines it as a process of weakening interdependence among the world's nations, the reverse of globalization, which deepens that interdependence through flows of goods, services, capital, people and information. The definition matters because it describes a direction of change rather than an end state. The world economy can remain highly connected while becoming less connected than it was, and managers need to know which way the flows are moving as much as how large they are.

Article Selection

I reviewed five recent scholarly articles on deglobalization and related ideas, including work on economic sanctions, on regionalization of supply chains, on the effects of the pandemic on global business and on the future of globalization after COVID-19. I chose Witt (2019) because it does three things the others do not do together: it defines the term carefully, it compares how different theoretical traditions explain the trend, and it draws out consequences for multinational enterprises. The other articles were useful for application but assumed a definition rather than building one.

Summary of the Article

Witt (2019) argues that the world entered a period of deglobalization after the global financial crisis, as measures of trade and investment openness stopped rising and in some cases fell. He identifies two main drivers. The first is a shift in the balance of power between the United States and China, which has turned economic interdependence from a source of shared gains into a source of strategic vulnerability. The second is the rise of populist politics in many countries, fed by the unequal distribution of globalization's benefits within nations.

Witt then compares what several theoretical traditions predict. Perspectives from international relations that emphasize power and security suggest that rival powers will limit interdependence to protect themselves, while perspectives emphasizing institutions and economic gains suggest that the costs of disengaging will slow the process. His overall assessment is that deglobalization is likely to continue for some time, though not to return the world to the closed economies of the past. For international business, he predicts more attention to political risk, more regional rather than global strategies and more pressure on firms to align with their home governments.

Analysis

The article's strength is that it treats deglobalization as a political process with economic consequences, not simply as a temporary dip in trade statistics. That framing has aged well. Since its publication, the pandemic exposed the fragility of long supply chains, export controls on advanced semiconductors restricted technology flows between the United States and China, and sanctions following Russia's invasion of Ukraine cut off a large economy from much of the West. Each event fits Witt's account of security concerns overriding the efficiency logic of global integration.

A later article offers a useful contrast. Ciravegna and Michailova (2022) argue that the world economy needs more globalization in the decade after COVID-19, because problems such as pandemics and climate change cannot be solved by countries acting alone, but that it will not get it, because the political forces Witt describes remain strong. Read together, the two articles suggest that deglobalization is less a choice that firms make than an environment they must operate in. Neither article predicts a collapse of international business; both predict a world in which crossing borders carries more political cost and uncertainty than it did in the decades before 2008.

Application to Business

Consider a composite Ohio manufacturer of industrial pumps that buys castings from a single supplier in China. For two decades that arrangement made sense: the castings were cheaper, the quality was reliable and shipping was predictable. In a deglobalizing environment, the risks have changed. Tariffs can be imposed with little warning, export controls can expand to new product categories, and a geopolitical crisis could interrupt shipments entirely. Witt's analysis suggests that the manufacturer should treat these as structural rather than temporary risks.

A practical response would not be to abandon the Chinese supplier overnight, which would raise costs and create its own risks, but to qualify a second supplier in Mexico, where trade with the United States is governed by the United States-Mexico-Canada Agreement, and to shift a growing share of volume there over two or three years. This regional strategy fits Witt's prediction that firms will organize more around regions than around a single global network. It also preserves the option of returning volume to China if relations improve. The cost of this hedge is real: the Mexican castings may cost more at first, and qualifying a new supplier takes engineering time and test runs. But the manufacturer would be paying a known, modest premium to reduce an unknown and potentially severe risk, which is the logic of insurance. The decision should be revisited each year as the political environment changes.

Biblical Integration

Proverbs 22:3 contrasts the sensible person, who spots trouble coming and finds shelter, with the naive one who walks on into it and pays the price. A manager who recognizes that the conditions that made long global supply chains attractive have changed, and adjusts before a crisis forces the change, practices that prudence. Scripture also calls for justice toward the poor and the stranger, a reminder that decisions to move production carry consequences for workers in every country involved, which deserve weight alongside cost and risk.

Reply to Ashley

Ashley, your thread on comparative advantage explained Ricardo's idea clearly, and your example of wine and cloth made the logic easy to follow. One connection to my own term: Witt (2019) argues that security concerns are now overriding efficiency in trade policy, which means countries may deliberately give up some gains from comparative advantage to reduce dependence on rivals. Semiconductor subsidies in the United States are a current example. A second example is the push by several countries to produce critical medicines domestically after pandemic shortages, even where imports were cheaper. Do you think comparative advantage still explains where most goods are made, or are governments now shaping it more than markets?

Reply to Daniel

Daniel, your review of the liability of foreignness made a strong case that foreign firms face extra costs from unfamiliarity and discrimination in host countries. I wonder whether deglobalization raises those costs. When governments emphasize national security, foreign firms may face more scrutiny of acquisitions and more pressure from customers who prefer domestic suppliers. Ciravegna and Michailova (2022) describe that kind of political environment as likely to persist. Foreign firms in sensitive industries such as telecommunications, energy and data services already report this kind of pressure, which suggests the liability is growing where security concerns are strongest. Did the article you reviewed suggest any strategies that help foreign firms reduce these costs, such as local partnerships or local leadership?

Reply to Monica

Monica, your thread on global value chains showed how a single product can involve suppliers in many countries, and your diagram of a smartphone's components was helpful. Your article's emphasis on lead firms coordinating those chains connects to my term. If deglobalization continues, lead firms may shorten their chains or regionalize them, as my Ohio example suggests. I would be interested in whether your article discussed the costs of doing so, since a shorter chain is often more expensive even when it is more resilient. Some firms seem to be answering with dual sourcing, keeping a low-cost supplier for most volume and a nearer one for security. How do you think firms should weigh resilience against cost?

References

Ciravegna, L., & Michailova, S. (2022). Why the world economy needs, but will not get, more globalization in the post-COVID-19 decade. Journal of International Business Studies, 53(1), 172-186. https://doi.org/10.1057/s41267-021-00467-6

Witt, M. A. (2019). De-globalization: Theories, predictions, and opportunities for international business research. Journal of International Business Studies, 50(7), 1053-1077. https://doi.org/10.1057/s41267-019-00219-7