The eventual world corporation cannot be

national. It cannot even be Western or Eastern

in its orientation. It must be transcultural

in all its policies and practices.

The "World Corporation":

The Total Commitment

ERICH JANTSCH

Consultant to a number of governments and international institutions, Erich Jantsch is currently Visiting Lecturer, Department of City and Regional Planning, University of California, Berkeley.

INTERNATIONAL business has developed in a variety of ways, adapting to the patterns of specific rights granted by a liberal economic­political system. These rights, in particular. have permitted the extension of relations between producer and consumer beyond the boundaries of nation­states -­ in other Words, the superimposition of an international economic system over a multitude of national and regional systems. This creation of a supersystem made up of parts of national economic systems did not follow any global design or general anticipation-not even to the extent to which the structures of free­market economics are designed in many liberal countries.

The result is something new: a system essentially lacking in any explicit mandate and mechanism for defining norms and values which are compatible with its own over­all practices and policies. The fragile mechanisms of international monetary, trade and tariff control and the various associated consultative bodies constitute but weak, negative feedback control applied to selected economic parameters. This is insufficient for the role international business as now constituted will play in determining the future of the world, as that future will be conditioned by the exploitation of resources, economic and social development, and intercultural relations.

Most of the rules of behavior for international business are set in fragmented ways by nation­states, reflecting not concern for the over­all international system or a world system, but for the narrow interests of subsystems. Adapting to these varying rules, which rarely go further than setting a "management by exception pattern, the multinational corporation has developed responses which are typically summarized by categories of ethnocentric, polycentric and geocentric management. These categories conceivably could span a wide spectrum from a high degree of top management centralization in the home country, with a delegation of lower­grade responsibilities to local management in many countries, all the. way to the concept of top management by a physically separated cosmopolitan group of coordinators of activities in many countries.

Only in the geocentric category does the idea of a "world corporation" become vaguely visible. However, it is this idea which ought to move into the focus of attention today. It offers the possibility of designing policies which take the whole world into account-a possibility which is not realistically available to existing political structures, including the United Nations and its agencies. They are geared to the classical process of political bargaining rather than to searching and forming viable policies for the world. International business has been the most successful institution to date in traversing the boundaries of nation­states and even of power blocs. It is now to its interest to be a leader in the development of world institutions, which will eventually include effective political institutions. The role of business will be crucial in the forthcoming transitional period.

World business should define, and continuously redefine, its roles and its institutional structures in the light of "total system dynamics," i.e. through understanding in which direction the dynamic world situation will develop if specific norms and regulators are brought into play. The institution of business. here, is itself one of the regulating mechanisms. Policy planning, in a business context means reflecting on the corporation's role in a changing environment-where this environment is the entire milieu with which the corporation interacts the social, po1itical, economic, technological, psychological milieu, not just the market place. Such a "top guiding task" for corporate planning is about to find its place in the structure of corporations operating in fields of global impact.

"International business has been the most successful institution to date in traversing the boundaries of nation states and even of power blocs."

The Market Response

fore exploring how the world corporation might find its proper role, it is perhaps illuminating to try to clarify the nature of "total system dynamics." The concept must first be understood before we look at the form the response of business is taking in the context of national and local markets.

The cybernetic process of history and its consequences for humanely dealing with a systematic world sees regulation breaking down into four main fields: ecology-the relations between ourselves and the physical milieu; economy-the relationship among our activities as producers and consumers; politics (in the widest sense)-the relations between ourselves as doers and as "done­by"; and appreciation -in the comprehensive connotation of an inner coherence of our systems of values and norms. This is a useful frame of reference which will help to avoid discussing regulation merely in economic terms, or at best in economic/ecological terms, which is as far as conventional wisdom is prepared to go today.

Business, and above all business dealing with advanced technology is concerned with all four areas in which regulation is breaking down. In highly industrialized countries, regulation in ecology and politics is becoming of greater concern today than regulation of the economy, and the gap between young people's values and the ''establishment's'' is bringing the issue of appreciation to the foreground. In a world context, the breakdown of regulation in the economy (the growing gap between the rich and the poor countries) and appreciation (the imposition of Western values. technology and development patterns on other­cultures and civilizations) constitutes the most burning issue, with ecology and politics coming second only in the fight for subsistence in which the larger part of mankind is involved.

Business operates in this situation, which is characterized by a desperate need for regulation-a regulation which still has a chance of being established in a decentralized cybernetic and free way, not as rigidly imposed control from the top. Business, as one of the potentially most creative institutions of society and. together with government and the university, the manager of science and technology, finds itself at a crossroads. Business can take an active or a passive attitude vis-à-vis the task of "planning for society," of participating in the comprehensive regulation of the world system and of developing a suitable role for itself within such a policy. Or it can go on interacting with fragmented social systems such as markets, and act itself as fragmented social system pursuing the goals inherent in its existing structure. The challenge is to become a leader in a movement toward a more fully integrated society. The decision to be made now will in the long run determine the life or death of the business corporation as a free agent in the psychosocial evolution of mankind.

Some of the responses of business at the national level include attempts to foresee the impacts of potential technological options on the systems of human living,-in other words, to make technological forecasting at strategic levels a publicly stimulated and coordinated task. The weakness of this approach lies in the lack of mechanisms providing normative guidelines and criteria to be applied to matters of choice among alternative technologies. It can at best lead to something like a 'free market for technology" which is curbed by legal constraints established ad hoc wherever bad "side-effects" are recognized in anticipation or post factum.

If greater importance are conscious efforts in business organizations to recognize broad categories of need for technology in society and to organize their activities around such needs rather than around the exploitation of specific raw materials or skills. Examples of such broad needs would be energy generation and transmission, telecommunications, transportation, information health, food production and distribution, education, etc. I can easily be seen that focusing on such needs implies gaining flexibility of capabilities in respect of the means (technologies, products) to be applied.

Calling this emerging trend in business · problem-orientation," as is sometimes suggested, grasps only part of its essence. The task here is not to solve problems once and forever, or one after the other, as in dealing with complex technology, but to invent and design parts of viable socio­technological systems. This means that business activity is no longer only economic or economic/ecological in nature, but must include the dimensions of politics and appreciation.

Such an integrative approach, particularly in the development of technology, will have a natural built-in tendency to link corporate policy with societal policy; to "reach up" to the level where the dynamics of societal systems become of concern, and thus to make business play a political role, in the broadest sense of the word, as a "planner for society." With this definition of a complex role structure in a societal context the business corporation participates in the cybernetic cycle and engages actively and consciously in shaping mankinds future. This stage has not yet been fully reached, but a start has been made in this general direction. Awareness of the necessity of new roles for business is increasing and gradually changing business attitudes.

"If the present world population lived at the average technological level enjoyed by the U.S. citizen, this would mean a 7­fold increase in the use of the earth's resources"

At the national level there exists a mandate for regulation. It is entrusted to government, whether dictatorial or democratic. But the design of workable complex systems of which a particular society and technology are constituted, requires a degree of inventiveness and creativity that rules out any possibility that government can play more than a synthesizing and coordinating role. The modern business corporation is moving away from a hierarchical organization in which ideas and plans are handed down from the top toward approaches characterized decentralized initiative and centralized synthesis. An interlinking of new roles for government, business and the university may be expected to emerge and to marshal the resources of science and technology to redesign society's systems. These are, developments which still lie in the future

At the international level, however, no mandate for regulation is given in any but the weakest and noncommittal forms. The international corporation has already become the most effective agent not only in the transfer of technology but also of Western civilization. Western culture and civilization, and western attitudes toward ecology. It will find opportunities to participate in the regulation of the world, perhaps in a more natural way than it will find opportunities to develop a role within a nation­state. A world corporation defining its role in this way would go beyond the geocentric corporation. It would also go beyond the global problem­solving corporation such as a world weather forecasting corporation. Its vision would embrace more than just "the world as a total market"

Paths to Integration

Integration of worldwide activities may mean two different approaches for the "world corporation," and the decision between them will be of crucial importance.

One approach consists of imposing Western patterns and Western dynamics of economic, industrial and, implicitly, political, social and cultural development on the rest of the world. It is increasingly recognized that such a policy is inherently disastrous. If the present world population lived at the average technological level enjoyed by the U.S. citizen, this would mean a seven-fold increase in the use of the earth's resources -- and this is already consciously rejected even by representatives of poor countries. Nevertheless, it remains so far the only direction in which the international forerunners of a world corporation have made significant headway.

The other approach would attempt to coordinate development efforts geared it different cultural patterns in such a way that the world could be regulated as a ''transcultural system." This approach, which corresponds to the valid role of the world corporation, leads to the questioning of the Western cultural basis itself. This is just becoming barely visible in some of the attitudes developing in business, but the consequences are so penetrating that few people yet dare to discuss them seriously and in an unbiased way.

Within the Western approach, the traditional colonial attitude of restricting the innovation process to the home country and of building merely production places in a strategic pattern around the world -- focusing on a market concept of the world -- still holds strong. It may be identified with the low-integration notion of a multinational corporation. Only where innovation is carried out through international decentralization, which may be identified with the attitude of a truly international corporation, has a genuine (if tentative ) role for the world corporation been recognized and developed.

A number of illustrations are available: ( 1 ) A network of corporate­level laboratories, spread over a number of countries and directed and staffed primarily by local scientists and engineers who interact directly with corporate management (CIBA, Shell, Unilever ) . ( 2 ) Interaction between a restricted number of corporate­level laboratories and a large number of laboratories owned by regional coordination offices. A typical local laboratory will carry out activities along three lines: adapting technology available in the corporate pool to local requirements; improving corporate pool technology by its own developments, usually triggered by specific local needs; and finally participating in a coordinated, or sometimes deliberately competitive effort to enrich the corporate pool (ITT, Philips ). (3 ) Interaction within a laboratory pattern similar to (2) but in such a way that the innovation process is coordinated centrally and managed separately from all other affairs through a network of communication channels tied together at the corporate level (IBM).

From a Western point of view, such internationalized processes of technological innovation are effective in many ways: the corporation may tap creative resources ( people, skills - not transferable to the home country; skills in advanced technologies are developed in countries lacking them; the brain drain finds a remedy; and local activities in science and technology are usually stimulated beyond the areas of immediate interest to the corporation.

The Transcultural Approach

A fully developed transcultural approach, in contrast to the Western approach, would start by looking at the world system and the dynamic situation in which it is trapped, at the instabilities developing on a global scale and the breakdown of self­regulation. It would then look at the impact of various cultural values, attitudes and standards on the world system, and above all at the distortions inflicted on it by the cancerous behavioral patterns of Western society.

Again, in the conceptual framework of Vickers' scheme, some of the implications are far­reaching.

In the sociological area, regulation is endangered by Western efforts to dominate nature, exploit its resources wherever single­dimensional economic criteria are believed to warrant it, generate waste through open­cycle economics, upset natural cycles and introduce new types of feedback interaction between man and his environment to a potentially dangerous extent.

In the economic area, regulation is endangered by the growing gap between the rich and the poor countries, by Western growth patterns and stagnation elsewhere, by a growing mismatch between and separation of production, distribution and consumption activities, by technological gaps and by the distortion of the reward system. Whereas raw materials remain stagnant in price, or become even cheaper as a result of competition with the appearance of artificial materials associated with technological advancement, price increases develop for the benefit primarily of finished products and the service sector. The almost total failure of the United Nations, First Development Decade bears but this basic insufficiency of the reward system. The Western "self-exciting", economic system (as Vicke's justly calls it) cannot go on in the same direction much further. But, w­here appeals to self­restrain t rarely go beyond asking for some attenuation in the rate of growth, what actually may become necessary is a voluntary lowering of the Western material standard of life (and waste) if the task of establishing some viable world balance is taken seriously.

. . . what may become necessary is a voluntary lowering of the Western material standard of life . . "

In the political area, regulation is endangered by the powerful linear development trends, increasing complexity and clogging of the systems of human life. Threats to human freedom and dignity are unleashed by the indiscriminate development of technological potentials. The cancerous nature of this development is also augmenting other cancers, such as population growth. If the systematic interactions of technology are becoming of major concern now for Western society, they are causing even greater distortions in those parts of the world whose cultural basis until recently engendered only modest uses of technology.

In the appreciative area, finally, the growing dominance of Western values not only endangers a cultural plurality in the world but is at the very roots of the breakdown of world regulation. Christian thought knows a beginning and an end of the world and an in-between "progress." In life, man has to achieve something that is usually measured quantitatively-the acquisition of material wealth, a higher standard of living. This leads to overemphasis on the value of competition; individual competition - leading to increasing alienation, neurosis and even violence, competition among enterprises and competition among nation-states including various forms of war. Responsibility, which would lead in the formation of a role structure capable of acting as a regulator, does not yet share equal importance with competition.

On the other hand, other cultures and religions (e.g. in Asia) know a completely different basis of thought and action closer to balance and cyclical development. For them, achievement is not a dominant theme for life on earth. And work is not a value in itself. Where Christian man, excelled from paradise and condemned to work, has made work his new Paradise, Asian values have favored learning and contemplation as man's Paradise on earth. The results, it must be said, have in some instances been degradation into stagnation, failure to free man from his most basic and vital needs (food, shelter, clothing, etc.), and a desperate fight for new, richer environments, intercultural exchange in the form of Western technology upsetting the population balance in less dynamic civilizations of the world has dramatically increased this calamity.

Coordination-Not Dominance

The Western approach has fully worked only in the case of Japan, which has abandoned its own cultural basis in record time and accepted Western standards as articles of faith, making them even more incisive than in the West. To many observers, however, the outcome of this cultural heart transplant is still uncertain; the price for economic success is possibly very high. The point, however, is that joining the Western bandwagon is simply impossible for the whole world-because the Western subsystem has soared beyond any level tenable for world stability.

Cultural plurality is a most important asset in this transitory situation, during which gross distortions of the interaction between subsystems will have to be remedied. The value of such a pluralistic approach is becoming evident initially in the relations between the United States and Europe, and even between the United States and Canada.

The key to the maintenance of cultural plurality is coordination, which will have to replace dominance. Coordination is not to be confused with centralized rigid control, or enforced cooperation. It means bringing into play energies and ambition at all system levels. Neither national nor western nor any other subsystem views should govern this coordination, but the common purposes of mankind -- which in many instance are yet to be clearly defined.

The corresponding systems notion is that of a multi-echelon or multi-level, multi-goal system, which is "alive" in all its elements. The direction of the over-all, the world system, would then not be determined by an subsystem or coordinator, but by the aspirations of all parts of all levels of the system to the extent that cultures, indigenous institutions, specific instrumentalities, down to individuals, can be coordinated toward a common aim.

Currently, economic thinking is not coordinated in such a way: neither within a world, nor within a national subsystem, Rather it represents so­called stratified hierarchical thinking , with different sets of principles, axioms, concepts and views of the over­all system objective to be found at each level, such as the levels pertaining to economic blocs, national economies, corporations, divisions, etc.

With these ideas in mind, the primary role for the emerging world corporation may now be seen as a highly complex, but utterly important one. It is nothing less than the coordination of a transcultural, total mankind­oriented approach to shaping the systems of human living. In planning and implementing ways of coordination the world corporation will act as a world institution - the first real one, if weak attempts at planning and coordinating by some of the UN agencies (the Food and Agricultural Organization-FAO) are discounted. This new world institution will need a wide variety of instrumental approaches to be carried out by individual and, to a certain degree by competing corporations, all of which accept the basic role of the world corporation.

First attempts to recognize such a coordinating role may already be found. Examples are provided in regional development tasks ( Greece, Algeria, Pakistan, etc.) undertaken by private corporations, or in more specific tasks such as the integral development of iron ore mining and transportation in Algeria. In the latter example, personnel from General Electric and the Chinese People's Republic are reported to be planning arid carrying out different parts of the project under Algerian direction. Another start may be seen in corporations providing essential educational services to countries in which they are active (Sheh)

Much will depend on the response business in general will make to the challenge of becoming what Daniel Beh calls a "knowledge institution" and the extent to which business regards this as one of the important features of the ''post­industrial society." Taking up this challenge would mean going beyond production and service activities and forming what has already been named the "quaternary sector," focusing on knowledge and information. For this sector, competition would no longer take place so much in terms of products and services, but in terms of organizing the latter, in terms of inventing, designing and planning the systematic structures in which production and services can become effective. Such a trend toward "social software" as a new area of endeavor is already becoming visible in business today. Giving it a world perspective would imply gaining a flexibility plurality and effectiveness which governments may never attain even if they should agree on a global approach.

"Harmony and Progress"

If business can shift part of its activities to global software the global imbalances in the production pattern may have a better chance of being ultimately corrected than with a continuation of present structures and attitudes. "Harmony and Progress," the motto of the Osaka World Exposition, as interpreted by Saburo Okita -- harmony for the developed, and progress for the developing countries -- will be realized only if coordinating a pluralistic world approach changes the course on which Western society is set.

For a transitory period, in which progress in production is mandatory for large regions of the world, both approaches to world integration-an enlightened Western approach of decentralizing technological and managerial innovation and a transcultural approach-may be combined. This may become important in developing a basic infrastructure which may be viewed as the common prerequisite for many cultures.

. . . nothing less than the coordination of a transcultural, total mankind

oriented approach to shaping the systems of human living"

Two considerations are important. The first is that there is no world government to him to for the creation of a "public goods" market ­­ n contrast to the national scene where government may be asked to provide, for example, a "pollution market." Plans not geared expressly to goals of specific subsystems but developed with a world view will frequently become categorized as "public goods" for which no government will readily accept responsibility.

The World Bank, up to now instrumental in implanting Western package deals, probably has the potential to become additionally a transcultural institution. In this ease, it might be instrumental in stimulating and orienting the development of the world corporation as its chief partner in planning and coordinating. It might also become the guarantor of a special transnational charter for private world corporations.

The second consideration concerns the tentative formation of world policies as a necessary prerequisite for the world corporation to define clearly its proper role. Certainly such policies should not be developed in isolation. Jointly sponsored studies may be envisaged to develop a common background for individual corporate guidance. Herman Kahn and his associates at the Hudson Institute have recently embarked on a forerunner to such studies, sponsored by 60 international corporations and focusing on political, social, economic and technological developments in the coming decades on a global scale.

Other .studies might be undertaken for groups of corporations active in a specific functional area. It would, for example, be of the utmost importance for the food production and distribution industry to know with more precision than anyone can offer today whether non-agricultural food production technologies will become necessary for the world or not. The short­range or hindsight trends published by FAO can only serve to obscure the long­range picture.

Ultimately, the world corporation might be expected to be helped by "Institutes for the Future" of the type developed at present in Middletown, Connecticut, partly under the patronage of the National Industrial Conference Board-but in contrast, with global, not national or Western scope. Such global institutes might, of course, then depend partly on contributions from regional or cultural study centers. In this report, it is of interest that the Organization of American States is considering the possibility of setting up a Latin American Institute for the Future.

Such Institutes for the Future may start by investigating the opportunity costs for acting in an anticipatory way in areas of potential crises-and the penalty costs of acting in the wrong way, or not acting at all. A world full of turmoil would be the death blow to the international corporation as it thrives today, and as it is setting out to operate in a world market. It is the active development of roles and institutional structures, capable of offering effective partnership in the transcultural regulation of the world system, that will pave the way for the evolution from the multi- and international corporation to the true world corporation

Notes:

1 Howard Perlmutter, "The Tortuous Evolution of the Multinational Corporation," Columbia Journal of World Business, January­February, 1969.

2 Geoffrey Vickers, Freedom in a Rocking Boat: Changing Values in an Unstable Society, London: The Penguin Press, 1970.

3 "Perspectives on Business," Daedalus, Winter 1969, especially the contributions of Neil W. Chamberlain, Michel Crozier, Eli Goldston and Leonard S. Silk.

4 Arthur Barber, "Global problem Solving-A New Corporate Mission, Innovation. October 1970.

5 Report on the conference Technology: Social Goals and Cultural Option," sponsored by the International Association for Cultural Freedom and the Aspen Institute of Humanistic Studies, Aspen, Colorado, Augst 29­September 3, 1970, Innovation, October 1970; the same trend also became visible in the Second International Conference on the Problems of Modernization in Asia and the Pacific, Honolulu, Hawaii. August 9­15, 1970.

6 Victor C. Ferkiss, Technological Man: The Myth and the Reality, New York: George Braziher, and London: Heinemann, 1969.

7 Barber, op. cit.