YVES DOZ AND JOSE SANTOS PRESENTS
THE METANATIONAL WAVE
global companies that born in the wrong place
A team of researchers of INSEAD based
on a study for Nokia in the 90's «discovered»
a new kind of multinationals that they named «metanationals».
Professor Yves Doz, a well-known professor of Global
Technology and Innovation at INSEAD and Jose Pinto dos
Santos, a portuguese ex-CEO of european multinationals
and professor of International Management at INSEAD,
co-authored with Peter Williamson, also professor at
INSEAD, «From Global to Metanational», a
book just published by Harvard Business School Press.
Gurusonline.tv interviewed Doz and Santos, now at Singapore,
in the new campus of INSEAD.
Interview by Jorge Nascimento Rodrigues (c) 2002 Gurusonline.tv
Why you choose the word «metanational»?
We chose the prefix "meta" in the sense of
"beyond". Metanationals do not have countries
or nation-states as a fundamental dimension. To the
metanational, globalization is not about taking home-country
know-how to other national markets around the globe.
It is about efficiently fishing for knowledge in a global
pool, harnessing that knowledge for innovation, and
then harvesting its value for its stakeholders.
What's the difference with the so-called «born
global» firms studied by the finish scholars,
like Erkko Autio, based also in cases like Nokia?
It is a different classification. Concept such as "born
global" (or "global start-ups") are used
in reference to firms that become international in a
very short period of time say, achieving one
third or more of their sales in foreign markets after
just one year of operations. However, a "born global"
may be a traditional multinational or a metanational.
What's the main target of your book - the global
born start ups or the incumbent multinationals?
Both. But the main target are the traditional multinational
companies. We present a roadmap for the multinationals
to change. Not trying to force-fit an existing multinational
organization and its people into a metanational mold.
That would be a wrong way, that could undermine its
operational excellence and could imperil the company's
very survival. We suggest a way out.
What's wrong with the step-by-step gradual traditional
internationalisation process? That strategy was correct
for the environment of the 70's and 80's?
There is nothing wrong with it, as long as you can
find all you need to achieve global competitive advantage
in your home country (that is, if you have a "diamond"
in your backyard). Indeed, businesses such as consumer
electronics or semiconductors did become global in the
70s and 80s with traditional multinationals
leading the way. But the empirical evidence shows that
as globalisation intensifies and technology continues
to reduce the cost of distance, the probability of succeeding
with a traditional internationalisation strategy is
getting lower by the day
Is the metanational phenomenon typically widespread
in high tech industries or we can find examples everywhere,
in traditional sectors and mature products?
We found examples in many different industries, including
cosmetics, music, and food as well as in biotech,
software, and semiconductors. What matters is the knowledge-intensity
of the product, service, or solution. "High-tech"
industries are usually very high in knowledge-intensity
and therefore it will be more likely to observe metanationals
Why all this research about metanationals and born
global firms is «made in Europe»? Is it
a mere coincidence or is there a reason for that fact?
There is surely a tendency for academics to study the
reality closer to them. Management researchers in the
USA, for example, will tend to look at American firms.
The size of the domestic market in the USA is such that
most companies dont even reach national scale,
let alone international so why be "born
global" there? (However, note that there were references
to global start-ups made in the USA in the early 90s).
And it is not only size: the American economy is of
such scope and competitiveness that it was the home
base of so many traditional multinationals that gained
world scale in many industries so why be metanational?
As we observed when looking at companies from Asia,
Europe, and the USA, the companies that were somewhat
metanational were those that had been "born in
the wrong place", as we say.
Can you give good examples of European metanationals?
STMicroelectronics, for example, a company with French-Italian
state origin, is a very good example of a metanational.
But there are other examples, such as Nokia, Polygram,
Business Objects, or Logitech - and Airbus, of course.
Is cosmopolitanism an important psychological ingredient
for metanational managers and entrepreneurs?
Surely. One of the attributes that we observed in all
the metanational companies that we studied was that
its top managers were cosmopolitan: they had been around
the world and knew it well. They had a network of acquaintances
in several countries. They were at ease in different
cultures. In most cases, that attribute had been developed
during a managerial career in a traditional multinational
company (for example, all but four of the top sixteen
executives at STMicroelectronics had been managers at
companies such as Motorola, Texas Instruments, National
Semiconductors, or Toshiba). In other cases, metanational
entrepreneurs had studied abroad for a while (for example,
the Swiss and Italian founders of Logitech met when
studying at Stanford, Palo Alto).
The "massification" of the Internet and
GSM and the bull financial market and venture capital
of the 90's (before the Nasdaq crash) helped the emergence
The Internet and GSM are part of the technological
evolution that is continuously reducing the cost of
distance, in this case for information. In this sense,
they participate in the creation of the conditions for
the emergence of metanationals. In what refers to the
bull market of the 90s, the generalised optimism
surely helped the financing of some metanational start-ups.
These metanational start-ups are riskier than traditional
ones, given the nature of the challenge and the managerial
and organisational capabilities required.
Being born in the wrong place - far away from the
Silicon Valleys and the main industrial districts of
the world - is critical for metanational strategies?
It was certainly critical for the metanational pioneers
that we have identified in our research. In essence,
necessity was the mother of invention. When Shiseido
wants to become a global player in cosmetics or Nokia
aspires at being a leader in mobile phones, it is clear
that Japan or Finland are not the right places to be.
However, there is nothing in our current theoretical
model that prevents a metanational strategy from any
origin. And what seems evident now is that very few
"right places" remain out there: even Silicon
Valley is no longer enough for Intel.
The so-called clusters of Michael Porter are not
important for these metanational strategies? Or they
«lock» the firms in domestic markets and
international value chains leaded by the incumbent multinationals?
Clusters were and will continue to be relevant. But,
as you say, the views of clusters as self-contained
and integral will most likely lock companies in the
typical projection mode of traditional multinationals.
Some limitations of an integral cluster have been overcome
by locating different activities in different clusters
and moving products or components around the
world. But the conventional wisdom remains that the
knowledge-intense activities (namely, innovation activities
such as R&D or new product development) should be
done in the home cluster. What the metanational does
is to innovate by bridging various clusters, by bringing
together knowledge that is dispersed around the world.
What has changed in the competitive advantage theory?
It is now clear that scale is not the source of competitive
advantage in almost all industries. There is a much
better understanding of the dynamics of competition
as well as the realization that more important
than some "position" in the market is the
quality of the resources owned by the firm. The key
source of sustainable competitive advantage is valuable,
firm-specific tacit knowledge.
North-American companies are usually conservative
in their internationalisation strategies. The same happens
with the New Economy stars like Yahoo! and Amazon?
Yes, absolutely. Both cases are good examples of traditional
multinational companies only much faster in their
internationalisation than their elder cousins such as
Ford or McDonalds (and they seem to have been unable
to learn from the experience of such companies as they
moved abroad). But both Yahoo! and Amazon are essentially
American creations for the American market, a representation
of the high level of development of information technologies
in the USA. The case of Amazon is remarkable: after
only one month of operations, it had exported to 45
different countries (I believe that this is a world
record that will be very hard to beat). But it took
the company several years to even begin to realize the
potential of such foreign markets, and it did so in
the most conventional of ways: sequentially, country
by country, starting with a subsidiary in the UK. Whats
Some of them are creating some «Centers of
Excellence» in Europe, trying to «mobilize»
the european knowledge...
I do not like very much that label of «center
of excellence». It could give the idea that only
there, in one or some places, we can find excellence.
As we mention in our book, knowledge is dispersed globaly,
is increasingly scattered around the world, is fragmented.
So, the real challenge is to build a network of excellence,
connecting globally dispersed knowledge. Connectivity
is the key word. We must access multiple sources of
new knowledge, probably from outside the multinational's
current network of subsidiaries.
The so-called global federalism of ABB and the multi
localism of Unilever are valid approaches?
Yes, in what concerns what we call the "operations
plane", the locus for strategies to exploit and
leverage the value of innovations worldwide. In another
way, these are strategies to optimise the capture of
value by a multinational company, but not the creation
of value. The logic of "operations" is efficiency,
flexibility, and financial discipline. Those approaches
are valid if they perform well in these three dimensions.
Let me note that "global federalism" and "multi-localism"
are not alternatives to a metanational approach. Metanational
is the alternative to projecting from a home country.
But you reverse the famous «glocalization»
theory of Percy Barnevick...
We say that the real challenge is think local and act
global - not think global and act local. We have to
learn from the periphery and then «meld»
the local innovations. We must act like a vacuum cleaner
and then meld the various knowledges.
What's the difference with the «transnational»
concept of Bartlett and Ghoshal?
We are in the same tradition. We think, however, that
they put the right questions, but give the wrong answer.
We put more substance in the global learning problem
and we separate clearly the new metanational capabilities,
the new skill sets, from the operational field, where
the transnational concept work.
Cases like Altitude Software in software, Chipidea
in semiconductors, Euronavy in painting and Swear-Choes
in the footwear industry are probably examples of Portuguese
metanationals. Are you interested to «expand»
the research to SME in small countries like Portugal?
Yes, of course. Portugal is a perfect example of a
country that has developed certain capabilities that
may be the source of great development if (and only
if) they are integrated with other capabilities or lead
markets that exist elsewhere in the world. If we want
to have "diamonds" in Portugal we will not
go far. I do not really know the examples that you mentioned.
But I know well the case of many companies in the portuguese
mould-making industry, such as Iberomoldes, that grew
to become well recognised in the world even if
many of the technologies and demanding markets they
needed to achieve global excellence were far, far away.
That did not stop them from accessing those "pieces"
of knowledge that were situated in distant locations
and inside foreign customers, and then melding them
with their own skills and competencies.