Organizational Psychology (PSY510)
Globalization may simply be defined as the free movement of:
o Goods and services
across various countries of the world.
According to the Wikipedia online encyclopedia, Globalization refers to a process of increasing global
connectivity and integration between nation-states, households/individuals corporations and other
organizations. It is an umbrella term referring to increased interdependence in the economic, social,
technological, cultural, political, and ecological spheres. In the context of global trade, the term
Globalization is the opposite of protectionism. Theodore Levitt is usually credited with globalization's first
use in an economic context.
The IMF International Monetary Fund stresses the growing economic interdependence of countries
worldwide through increasing volume and variety of cross-border transactions ... free international capital
flows, and more rapid and widespread diffusion of technology
A less economic-focused definition from the Encyclopedia Britannica states that globalization is the
"process by which the experience of everyday life ... is becoming standardized around the world."
The question arises that is globalization just a buzzword or is it a real phenomenon? The world in which we
live today, the word distance here has virtually no meanings in it. You can move around the globe in lesser
time than the globe takes to revolve around its own axis. In other words, the different parts of the world
seem to be connected and moving from one part to another is not a big deal today. A few centuries from
today, man had to travel months on land and through sea to reach from one continent to another. Trade
was very slow and its volume was negligible as compared to today. But today, as we see, this is no more the
case; ships, aircrafts and land transport is fast enough to cover the distance or around the globe in no more
than a few hours. This is resulted in brining together various countries and culture of the world. People are
now more dependent on each other. For instance, the United States is depended in most of its goods on
China, whereas many countries are dependent on Pakistan for the supply of crops. Therefore, the world has
become what we call a "Global Village." Although its huge, yet the dependencies have rendered the world
like a small village where everyone has to play its part for everybody else's survival.
Further question arises that is Globalization a recent phenomenon? The phenomenon of Globalization was
given much more importance during the last few decades and the general perception is that Globalization is
a recent phenomenon. In fact, Globalization has been on since the history of mankind. If we trace back the
history of mankind, we would find the earliest well-recorded history is that of the Egyptian civilization. The
Egyptian civilization was established around river Nile. It was discovered that the Egyptians used to trade
wood through this river. Later during the Roman and the Greek civilization, trade was not uncommon.
Therefore, we see that since long, man has been involved in conducting commerce and trade across
countries and dependencies have been created since long. The city states of Samarkand and Bokhara are
said to have flourished because of trade which was carried out between Asia and Europe during the 16th and
the 17th centuries. This should make it clear that the path towards Globalization was paved centuries ago,
only the pace has increased rapidly today. This is why today we feel that Globalization is a recent
Aspects of Globalization
We have already discussed what Globalization is; in order to get a better picture of the impact of
Globalization of the lives of human beings, we need to consider the various aspects of Globalization which
may be categorized as follows:
Every country in the world is moving towards specialization. Specialization may be referred to as the
phenomenon of producing only that product in which the country has competitive advantage in terms of
cost. For example, Singapore specializes in pharmaceutical while the US specializes in military equipment.
Therefore, the countries exchange their industrial products, which is known as trade, and fulfill the
requirements of their people. Every country of the world today is involved in trade and is depended on
some other country one way or the other. The US is the biggest economy in the world and even that is
Organizational Psychology (PSY510)
depended on other countries for many of its needs. Hence the industries of the world today are considered
to be working not for their native countries but for the world as a whole. This is known as Industrial
Furthermore, today various world-wide standards have been developed which ensure that the products of
all the countries around the world meet certain quality requirements. For example the ISO 9000 standards
are applicable worldwide as quality standards. The markets of the world have united and the products could
be sold anywhere without any hindrance. In other words emergence of worldwide production markets and
broader access to a range of goods for consumers and companies is known as Industrial Globalization.
It may be defined as the emergence of worldwide financial markets and better access to external financing
for corporate, national and sub-national borrowers. For example, the Tarbela Dam and the Mangle Dam
projects in Pakistan were sponsored by foreign investors. They may be in the form of international
organizations or independent investors. The IMF and the World Bank today give funds to various countries
for developmental projects. We may say, that today the financial markets of the world have untied in such a
way that finances are easily available throughout the world. This is known as Financial Globalization.
This may simply be defined as the development of political interests of countries in other countries.
This aspect of Globalization has perhaps had the greatest impact on the world today. Sitting at one end of
the world, you can have access to the information available in any other part of the world with just the push
of a button. Internet, television, telephone, fax, etc. are some of the inventions that may be considered as a
part of the informational Globalization process where the information flow has dramatically increased
between geographically remote areas of the world.
In the context of Organizational Psychology, this is another important aspect of Globalization which refers
to the growth of cross-cultural contacts. The cultures of the world have become similar and have had
influence from one another in many ways. This has changed the environment of mankind and it is known
as Cultural Globalization.
Effects of Globalization
As discussed earlier, Globalization refers to the greater international movement of commodities, money,
information, and people; and the development of technology, organizations, legal systems, and
infrastructures to allow this movement. The effects that Globalization has had on the modern day living of
mankind are as follows:
· International Cultural exchange
· Greater international travel and tourism
· Greater immigration, including illegal immigration
· Spread of local consumer products (e.g., food) to other countries (often adapted to their culture)
· World-wide fads and fashions
· World-wide sporting events such as Cricket world cup
· Formation or development of a set of universal values
· Development of a global telecommunications infrastructure
· Greater trans-border data flow,
· Increase in the number of standards applied globally; e.g. copyright laws, patents and world trade
· International criminal court and international justice movements.
· Development of world-wide commerce
· Improvement in standard of living
· Corporate Imperialism: Dominance of MNCs
· Cultural Imperialism
Organizational Psychology (PSY510)
· Harmful effects on environment due to rapid industrialization
· Suppressing of underdeveloped countries
· Greater market access for firms
Globalization has also affected OP in major ways;
Trade between nations has become huge
6 million foreign nationals are employed by 100 companies
450,000 multinationals exist today
Every organization is moving towards diversity in order to have diverse view points from within the
Information Globalization has affected the work and organizations in seven ways
· Flattening: Organizations have today have smaller hierarchy and layers of management
· Downsizing: Organizations employee lesser number of employees today for the same jobs as it did
previously due to dependence on machines.
· Paperlessness: Organizations are dependent on paperless communication, i.e., communications through
· Brain mimicking: Organizations are dependent on computers and artificial intelligence which is similar
to the working of the brain of a human being.
· E-business/commerce/intranets: Organizations are dependent on E-Business, i.e. business over the
internet and are connected internally through networks called intranets. Business to business is five
times greater than business to consumer (B2B greater than B2C).
· Knowledge management: It is the management of intangible assets of knowledge, i.e. outcomes,
patents, copyrights and of intangible asset, i.e. intelligence, skills of workers. Organizations are able to
better acquire and share knowledge internally and externally.
· Human/intellectual capital: Human capital and intellectual capital has had increased importance due to
globalization and extreme competitiveness. Human/intellectual capital is experience, skills and ideas of
people. 40-90% market value of firm is human capital.
· Levitt, Theodore. Globalization of markets, Harvard Business Review, 1983
· Shariff, Ismail. GLOBAL ECONOMIC INTEGRATION: PROSPECTS AND PROBLEMS. From
An International Journal of Development Economics. Development Review, Vol1, No.2 (2003): p.
· Keith Porter, "The Future of Terrorism":
· Asta Maskaliunaite, "Terrorism and Globalization: Recent Debates" :
· Gad Barzilai. (2003). Communities and Law: Politics and Cultures of Legal Identities. University of
Michigan Press. ISBN 0-472-11315-1
· Thomas L. Friedman. (2006). The World Is Flat, Farrar, Straus and Giroux. ISBN 0-374-29279-5
· Hans Köchler, ed. (2000). Globality versus Democracy? The Changing Nature of International Relations in the Era
of Globalization. (Studies in International Relations, XXV.) Vienna: International Progress Organization.
ISBN 3-900704-19-8 (Google Print)
· Hans Köchler, "Philosophical Aspects of Globalization. Basic Theses on the Interrelation of
Economics, Politics, Morals and Metaphysics in a Globalized World," in: Globality versus Democracy?, pp.
· Alex MacGillivray. (2006). A Brief History of Globalization: the Untold Story of our Incredible
Shrinking Planet, Carroll & Graf. ISBN 0-7867-1710-6
· Manfred Steger. (2003). Globalization: A Very Short Introduction, Oxford University Press. ISBN 0-
Organizational Psychology (PSY510)
Joseph E. Stiglitz. (2006). Making Globalization Work, New York: W.W. Norton & Company. ISBN 0-
Joseph E. Stiglitz. (2002). Globalization and Its Discontents, New York: W.W. Norton & Company.
Sedere Upali M, Globalization and Low Income Economies -Reforming Education : The Crisis of
Vision, ISBN 1-58112-745-6, Universal Publishers, Florida
Globalisation shakes the world BBC News: http://news.bbc.co.uk/2/hi/business/6279679.stm
Globalization: The Long-Run Big Picture by the economist George Reisman:
Global Culture essays on globalization and its impact on global culture: http://global-
Great Transition Initiative Alternative scenarios of globalization: http://www.gtinitiative.org/
Index of Globalization: http://www.globalization-index.org/
YaleGlobal Online - An online publication of the Yale Center for the Study of Globalization:
Stanford Encyclopedia of Philosophy: http://plato.stanford.edu/entries/globalization/
Scientific American Magazine (April 2006 Issue) Does Globalization Help or Hurt the World's Poor?:
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