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Introduction
Globalization, in the sense of increased economic interdependence among nations, is a poorly understood phenomenon. In this paper, we focus on the key actors in the globalization process, namely the firms that drive this process. A relatively small set of multinational enterprises (MNEs) accounts for most of the world's trade and investment. Indeed, the largest 500 MNEs account for over 90% of the world's stock of foreign direct investment (FDI) and they, themselves, conduct about half the world's trade (Rugman, 2000). Yet, this paper demonstrates that most of these firms are not 'global' companies, in the sense of having a broad and deep penetration of foreign markets across the world. Instead, most of them have the vast majority of their sales within their home leg of the 'triad', namely in North America, the European Union (EU) or Asia. This new view on 'globalization' is very different from the conventional, mainstream perspective. The latter perspective focuses primarily on macro-level growth patterns in trade and FDI, and compares these data with national GDP growth rates, but without ever analyzing the equivalent micro-level growth data for the MNEs responsible for the trade and FDI flows (United Nations, 2002).
The triad power concept
American economic hegemony, characteristic of the post-World War II era, ended in the early 1970s. The closing of the gold window and the floating of the dollar in 1971 can be considered an early indicator of the new world order, with economic power more dispersed across the triad of North America, the EU and Asia. The evolution of the world stock of FDI is indicative of the relative decline in US economic power: in 1967 the United States still represented the majority (50.4%) of the total stock of outward FDI; by 1990 this share had declined to only one-quarter (25.4%) (Dunning, 2001). Van Den Bulcke (1995) provides an insightful account of the evolution toward a triadic world economy.
In 1985 Kenichi Ohmae, at that stage a leading McKinsey consultant in Japan, published his landmark study Triad Power, arguably one of the most insightful, international management books of the last two decades. The triad, in Ohmae's work, was a geographic space consisting of the United States, the EU and Japan. This geographic space, according to...