The Globe: A Cautionary Tale for Emerging Market Giants

Reprint: R1009J

Competitors from the developing world are rising fast. Will they come to rule the global economy? Not necessarily, say Insead’s Black and Morrison, who argue that today’s emerging giants look an awful lot like Japanese corporations in the 1990s. Japan’s star has since fallen, and the country no longer dominates the Global 500 as it once did.

Drawing on 25 years of research, the authors found that four factors drove Japanese firms’ early export growth: strong corporate models and cultures; a domestic market isolated from competition; an agreeable labor force; and cohesive, homogenous leadership. But when the firms moved into foreign markets, those strengths became downfalls. Entrenched in their corporate ways, they were too narrow-minded to look for local insights, and they lacked leaders who had international knowledge. They were also unprepared for contentious overseas labor relations and the sophistication and expertise of their global competitors.

To avoid Japan’s fate, emerging giants must change their business models, reduce their reliance on protected domestic markets, learn to cope with diverse labor, and shake up their leadership.