IMPACT OF INFORMATION TECHNOLOGY ON GLOBALIZATION AND BUSINESS

In the past few sections we have defined what globalization is, its effects on society and its relationship
with business. The one topic I have yet to go over is how exactly globalization is able to have this much
of an impact on the global landscape and the key catalyst for globalization is, information technology.
The progression towards globalization has been around for centuries, but it really became noticeable in
the early 1900’s with technological advances. The telegraph and telephone allowed people to
communicate across borders in seconds when previously it would take weeks or months to relay
messages. The invention of the airplane allowed for much quicker international travel, while
communication devices such as the radio allowed people all over the globe to listen to news from all
over the world in near real time. Keep in mind however, that this is not what we consider globalization
today. The early 1900’s were one of the major stepping stones in helping us get to our current state of
globalization, but during that period there was no collective worldwide integration as many of the global
processes of that time were still one-dimensional. Globalization really came to being in the latter part of
the 20th century with advances in information technology. Information technology was the driver in
creating the worldwide integration of various global markets that make up globalization. It would again
be near impossible to discuss every influential technological advance over the past 30 years, but there
are a select number of advances that truly have had a monumental impact on the progression of
globalization and its relationship with business.

1) Rise of the Personal Computer – The rise of the Windows-based PC, which popularized personal
computing, eliminated another important barrier that was restricting globalization: the limit on the
amount of information that an individual could obtain, author, modify, and distribute. The PC allowed
individuals to author their own digital content and share them with places all around the world. What
soon followed the PC was the invention of the dial-up modem in which users could connect to a phone
line and send e-mails through service providers.

Separately, advances such as the PC, fax, and the dial-up modem were important advances, but when
people started combining the PC, fax machines and dial-up modems together in the mid 90’s, they
created a new platform that started a global information revolution. This common platform gave
individuals both reach and scale, as they could create and distribute information in so many different
ways and send their information to so many more people around the world.

2) Invention of the World Wide Web – Perhaps the greatest influence on the progression of
globalization was the invention of the World Wide Web in 1991. Before the World Wide Web, we had
the internet which connected the globe, but with the World Wide Web individuals were now more than
ever able to post their own digital content for anyone across the globe to see. The internet is a series of
networks that sends out ‘packets’ of information at supersonic speeds. What made the Web so
important was that it created a link between the computer and the internet. The Web made the internet
useful to people. Within 5 years of the invention of the Web, internet users soared from 600,000 to 40
million. A recent study claims, “…the rise in Internet use both by companies and in the population at
large accelerates the pace of globalization”.5 The internet accelerated the progress of globalization
because of it allows for the sharing of knowledge and information almost instantaneously across the
globe. With the web now in place users needed a common way of viewing the web and a small company
named Netscape would give users what they needed. Netscape created a browser that made the
Internet accessible for almost anyone, because it gave everyone a common way of accessing and sharing
information and digital content. In this way, people all over the world could be assured that someone
across the globe was accessing similar information in the same way as they were and in that way people
could communicate with people from all over the world like never before.

3) Fiber-Optic Cables – The first fiber-optic cable system was implemented in 1977, made of pure glass
arranged in bundles that could be used to carry digitized packets of information. The most important
benefit of the fiber-optic cable is that it has a much higher bandwidth signal capacity than other types of
transmission cables. The Telecommunications act of 1996 launched an enormous boost in the laying
fiberoptic cables world-wide. Telecom companies saw a huge opportunity for investment in fiber-optic
cables, as they felt that with the rise of the internet, people were going to be begging for increased
speed and bandwidth power. As popularity continued to grow and advances on the cables continued,
the capacity allowed by these cables continued to grow, making it even cheaper and easier to transmit
information and digital content to any part of the world.

4) Creation of Work Flow Software – One of the first major information technology’s that was geared to
businesses was the creation of work flow software in the mid- 1990’s. Work flow software is basically a
software package that automates business procedures as well as being able to pass along “workflows”
such as documents, information, tasks, etc…from one employee to another. When work flow software
was first adopted, it enabled employees in different locations in the same company to collaborate,
manage and design business data that had previously had to be handled manually. The first major
breakthrough in increased workflow was when companies began to utilize the PC and its ability to e-
mail. Previously, work flow progressed through a business manually as people in different departments
passed information by having to physically walk to each department and that process continued until
the final department received it. With the combination of the PC and e-mail work flow suddenly became
so much quicker, easier and more effective. Everything could be passed electronically by each person,
without ever having to leave their desks. The only problem was that when companies first began
utilizing work flow software there were not many standards, even within the same company. To fix this
problem software companies began creating transmission protocols and languages such as, SMTP for
email, HTML for web documents, and TCP/IP for a common transportation of electronic data within the
company. With businesses utilizing new work flow software and with the development of transmission
protocols, companies were well on their way to becoming faster, more effective and more cost efficient.
Along with this quickening of business processes, companies were now able to communicate with
businesses in other countries because they knew they were using the same standards of transmission as
their partners and this helped immensely in the progression of globalization.

5) Open-Sourcing- A community-driven software movement where companies and individuals make

their source code available online, so that others could contribute to their work and in turn their
software programs benefited because of it. One of the most successful open-source tools is ‘Apache’, a
web server product owned by IBM, which powers nearly two-thirds of all the world’s web sites. What is
so fascinating is that anyone around the world can download the software for free and contribute to the
source code; all they have to do is redistribute it back for further use. What makes this so useful for
businesses is that, if a company comes out with a new software product and they make it open-source,
the company is gaining knowledge and expertise from specialists located anywhere around the globe for
free. This has such an effect on globalization because you could be from anywhere in the world, India,
China or South America and you could be just as effective at using or contributing to a certain software
package as the person that may have created it in Silicon Valley. It gives enormous empowerment to the
individual located anywhere across the globe.

6) Supply Chaining- A method of integrating horizontally between suppliers, retailers and customers to
create value for the company. Wal-Mart is a perfect example of supply-chaining; as soon as a customer
picks an item of the shelf and the cashier scans it, a signal is sent to the supplier of the product, no
matter their location around the globe. The signal is received by the supplier and the supplier packs the
item and ships it to the Wal-Mart store that sold the item, Wal-Mart never even touches any of its
products until they reach the store. Because of this supply chain, Wal-Mart can move 2.3 bullion
merchandise cartons world-wide per year. Supply chaining has influenced globalization because as
supply chains grow, the more global standards are needed, and as standards increase they begin to
eliminate border frictions and as companies begin to feed off other companies, it creates a global
collaboration for all to share. Globalization also helps companies build their supply chains as companies
can find both the best producers as well as the lowest prices around the globe. In that sense supply
chaining helps progress globalization as well, because now companies from countries all over the world
can find and sell products from countries all over the world, the movement away from Euro-centrism as
discussed before.

7) Digital, Mobile, Personal and Virtual Movement – More recently the world has been swarmed with
digital cameras, mobile PDA’s and cell phones along with personal laptops and this is having a profound
effect on the progression of globalization. With the growing popularity of these types of technologies
individuals and companies are able to collaborate with one another more frequently and in so many
more ways than ever before. There are technologies such as instant messaging that allow people to
communicate instantaneously, and they can be located anywhere around the world as long as they have
a running internet connection and a messaging service. In this way companies can communicate with
clients and employees who are around the world and give them the latest news that they may need to
know in order to do business with clients or other companies. There is also a relatively new technology
called Voice-Over Internet Protocol, known as VoIP, which allows you to make phone calls over the
internet. An employee on a business trip now can connect their laptop to the internet, open up either
the business’ network or a VoIP service such as Skpe and call their company or client and communicate.
You may be asking why not just use a cell phone, well the main advantage of VoIP is that is it makes
almost all calls virtually free, while cell phones have higher costs, especially when making international
calls. There are many other technologies similar to these out there but, these two give you the general
direction in which people are beginning to communicate and how much of an affect it is having on
globalization and its relationship with business. Alone, these types of advances have an effect on
business and globalization, but when businesses start combining these advances together, they end up
creating a global market place that is more level than ever before. Businesses are now adopting new
habits, skills and processes in order to compete and maintain an advantage in today’s global
marketplace. Globalization’s trend towards greater integration of mature and emerging markets and
economic policies correlates with information technology’s ability to create standardization of global
computing platforms. This new platform that companies are using enables collaboration and innovation
the likes of which have never been seen. This platform now operates with no regard for distance, time,
or geographic location, which enables businesses to scour the globe for opportunities that can create
value that were once unimaginable. The one major point that must be remembered is that, companies
just using the technologies will never get very far in this level global landscape. What businesses need to
do to really boost productivity is to combine these new technologies with new ways of doing businesses.
Businesses need to find ways to take advantage of the new, powerful platforms that are available to
them. The relationship between information technology and new business processes is a cyclical one,
new business processes make information technologies more valuable and new and improved
technologies make the new and more valuable business process possible. Looking back on my
introductory story about the hockey stick made by a Canadian company in China, it has now become
apparent to me as to why a company would feel the need to expand their business into other countries.
The world is changing and the global business landscape is changing with it. If your business is not
changing, you will get left behind. The globe has become a dynamic environment and businesses must
be able to adapt to the new and ever present changes that are happening at an increasing rate, not just
on a commerce level, but also at social, economic and political levels. Businesses must have a
commitment to globalization with their infrastructure, strategies, and processes, or else they will not be
able compete in the global marketplace. In summary, information technology has become the driving
force behind globalization and has become an integral part of an organization’s business strategy. The
technology provides the means by which can move into the global marketplace. In the next section I will
cover specific examples of how companies can use information technology to create global strategies
that will help them compete and maintain a completive advantage in the global environment.