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CHAPTER 1
GLOBALIZATION, POLITICAL ECONOMY, BUSINESS AND SOCIETY IN PANDEMIC TIMES
Tony Fang and John Hassler
The coronavirus âSARS-CoV-2,â since its outbreak in China in the beginning of January 2020, developed into a public health emergency of international concern on January 30, 2020 and a COVID-19 pandemic on March 11, 2020. Within only one year, this ongoing pandemic killed 3 million people and infected 120 million more worldwide. Although in history humanity was plagued by countless epidemic including AIDS, Avian flu, SARS, MERS, Ebola, and Zika in recent decades, the current COVID-19 pandemic finds no parallel in terms of scale, scope and speed with which the impact has been caused. To problematize this unprecedented phenomenon to produce interesting knowledge with policy implications, we organized a multidisciplinary academic conference (5th EMIC) at Stockholm University during May 14â15, 2020, and this edited book is a product of the conference.
The purpose of the book is to arrive at a holistic understanding of the impact of the COVID-19 pandemic on politics, economy, business and society in a globalized world. The scientific community acted swiftly to study COVID-19 and its various possible societal correlations. During the past year, many academic journals started speedily publishing COVID-19 related papers, many of which have been made available to the public, contributing timely to new knowledge production and dissemination. However, a multidisciplinary approach to the study of COVID-19 has been rare. This book contributes to the growing literature on COVID-19 through a multidisciplinary approach by addressing both macro and micro issues from both local and global angles in both critical and self-critical tones. Many questions raised at the conference in 2020 remain under-researched:
What impact has the pandemic had on our business, economy, research and development, and society at large?
How to understand the antecedents and consequences of the pandemic in light of globalization and deglobalization?
What are the implications of pandemic for climate change?
How to balance and integrate the traditional divide between public health and economic activity in the larger picture of political economy?
How to understand the pandemic and technological innovation from a historical perspective?
How can entrepreneurs meet the challenges and capture the opportunities right in the pandemic to develop innovative and sustainable businesses in the long run?
Why have certain countries/regions/cultures managed to cope with the pandemic challenges more effectively and speedily than other countries/regions/cultures?
What would be the most desired leadership style (or combination of styles) during the pandemic?
What are the implications of pandemic for international relations, international exchanges, and international business?
How can multinational enterprises (MNEs) better manage their global value chains (GVCs) in an increasingly bifurcated business world?
We have tried to address these and many other questions in this book. We aim to examine COVID-19âs damaging effects (such as the death of millions of people and the collapse of small business caused by the pandemic), its inspirational aspects (such as the emergent entrepreneurship catalyzed and fostered by the pandemic), and its broader implications (such as the USâChina rivalry and the increasing need for reconfiguration of GVCs). Compared with the 1918 influenza pandemic, the COVID-19 pandemic came at a time when nations and people on this planet were unprecedentedly interconnected with each other physically and digitally in what social anthropologist Thomas Hylland Eriksen (2020, also see Chapter 2 in this book) called âan overheated world.â From the socio-anthropological perspective, the rapid spread of the coronavirus across national and regional borders may be seen as an inevitable âpunishmentâ embedded in the inherent vulnerability of the ever accelerating interconnectedness that globalization has brought to human society during the past three decades. Yet, it is the very same interconnectedness created by globalization and digitalization that has helped save hundreds of millions of jobs by enabling business and society to switch swiftly and almost seamlessly to operating in digital platforms or ecosystems overnight.
Working from home (WFH) or remote work is a telling example. Modern society has never witnessed such a large proportion of WFH workforce as practiced collectively in the COVID-19 pandemic since March 2020. Now, a year later, WFH is a norm that has come to stay, at least in part, for good; hybrid workplace with physical and digital involvement and participation is emerging as a new form of organization. Despite its disadvantages such as âlack of face-to-face supervision,â âlack of access to information,â âsocial isolation,â and âdistractions at homeâ (Larson, Vroman, & Makarius, 2020), WFH has its unique and somehow unexpected advantages. Barrero, Bloom, and Davis (2021) showed that 20% of full workdays will be provided from home after the pandemic ends, compared with only 5% before the pandemic and gave five reasons why WFH as a trend developed in the pandemic will continue after the pandemic:
better-than-expected WFH experiences, new investments in physical and human capital that enable WFH, greatly diminished stigma associated with WFH, lingering concerns about crowds and contagion risks, and a pandemic-driven surge in technological innovations that support WFH.
A survey on employee loyalty conducted between 2019 and 31 March 2021 with 263 companies in eight European countries showed that since the pandemic started, employee satisfaction has been higher than before and that Swedish employees expect to continue WFH for about half of the total working hours in the post-pandemic era (Svt Nyheter, 2021). WFH is becoming a competitive means for attracting and retaining talents, thereby placing a higher demand on leadership and organizational culture than the situation prior to the pandemic.
Political economy and cross-national comparison between political systems in COVID-19 response and economic recovery have been debated in the literature. Combating the pandemic and saving the economy tend to be viewed as a tradeoff by policy makers (Lewis, 2021). A tradeoff may exist when policies are optimal, but in general suboptimal policies give room for improvements in all dimensions. Geffrey Sachs (2020, p. 31; original italics) explained:
The Asia-Pacific successes in suppressing the virus were achieved with lower economic losses than in the North Atlantic region, disproving the hypothesis of a tradeoff between the economy and suppressing transmission of the diseases. It appears that effective deployment of nonpharmaceutical interventions (NPIs) enables both the suppression of disease and transmission and an earlier economic recovery compared with two extreme alternatives (either to do little to suppress the epidemic or to shut down the economy to a prolonged basis).
Sachs (2020) compared the performance in suppressing the epidemic between Asia-Pacific region and North Atlantic region and found that the former was âvastly superiorâ to the latter. Sachs attributed the North Atlantic regionâs failure to public health populism, lack of regional cooperation, misplaced claims of âfreedom,â lack of preparedness, and information technology deployment.
The role of government has been debated. A recent study of the impact of national culture vs. government stringency on social distancing during the first wave of the COVID-19 pandemic shows that âgovernment stringency has more impacts on social distancing than national cultureâ (Wang, 2021, p. 12). Yet, there are studies showing that while political systems and government measures have played a role, culture may have played a bigger hidden role. In their study of government stringency during the first 91-days of the pandemic in 107 nations, Dheer, Egri and Treviño (2021) discovered that âgovernment stringency attenuated pandemic growth, and this attenuation effect was more significant in collectivistic than in individualistic nations, and in high rather than low power distance nationsâ and that âcollectivistic nations experienced lower case growth over time than individualistic nations.â
Assertions have been made about the superiority of democracy over non-democracy or vice versa (e.g., Fukuyama, 2020; Karabulut, Zimmermann, Asli, & Doker, 2021; Li, 2020; The Economist, 2020; Zhao, 2021). However, we remain cautious about quick generalizations. We observed that societies with a strong influence of Confucian tradition such as China, Japan, Singapore, and South Korea have much in common in their coping strategies despite the differences in their political systems. The Eastern approach adopted in the Confucian societies may be understood as being characterized by state-driven initiatives, stringent government control mechanisms, high sense of urgency, communal good, and a fundamental view that this worldly life matters most, whereas the Western approach as featured by multiple interest-driven initiatives, loose control, low sense of urgency, individual freedom, and a fundamental view that there is arguably little difference between this worldly life and spiritual life (Fig. 1.1).
The sense of urgency in Swedish society toward COVID-19 is probably the lowest in the Western world. The Swedish welfare state and the inbuilt social security may be one reason. The fact that Sweden has not had a war since 1814 may be a more in-depth explanation. Swedenâs approach to combating COVID-19 relied, particularly during the beginning of the pandemic, fundamentally on individualsâ self-conscience and self-regulation in a high trust Swedish society, subject to relatively little governmental regulation (see also Milne, 2020; WHO, 2020). Two groups of the Swedish population, i.e., old people in nursing and care homes and immigrants in suburbs suffered most, showing some of the societyâs structured problems. High mortality in Sweden is found to be associated with not only higher age and male gender but also less education and low income (Diderichsen, 2020).
Fig. 1.1. Combating the Pandemic: East Versus West. Source: Own Illustration.
The pandemic has prompted us to rethink how international economy should be structured and question our earlier seemingly limitless quest for lean production and just-in-time logistics. The pandemic showed
the dangers of complex global supply chains where any node can become a âchoke point,â and the risks of overspecialization or concentration of technological knowledge and/or production capacity in a single country or region. (Kobrin, 2020, p. 280)
At the same time, the globalized economy proved to be surprisingly flexible and able to reorganize production. Nevertheless, there is an increasing consensus for building up more resilient organizations and supply chains through diversified sourcing patterns in international business (Gereffi, 2020). There is a growing call for a shift from the mentality of just-in-time to that of just-in-case with the appropriate amount of fiscal buffers (IMF, 2020) as well as physical buffers and borders (Brakman, Garretsen, & van Witteloostuijn, 2020, p. 1) to be built into our economic and manufacturing systems. This growing consensus/call coincided with and was used as support for deglobalization and the anti-globalization arguments that emerged in recent years in the larger picture of USâChina rivalry (Meyer, 2017; Witt, 2019a, b; Witt, Li, VĂ€likangas, & Lewin, 2021; see also Zhao, in this book). The COVID-19 pandemic has pushed and inspired nations and organizations to develop their dynamic capabilities to better balance and integrate their economic activities at home and abroad. However, building more resilient economies is not synonymous with deglobalization. A disintegrated world where countries rely largely on domestic production for their needs may be less, not more resili...
