Global Enterprise and Innovation Essay Example | Topics and Well Written Essays - 3000 words

Global Enterprise and Innovation - Essay Example The world has witnessed major changes in the global marketplace since the 1980s (Chai 1998). Liberalisation of capital markets and world trade encouraged by globalisation has produced a new competitive field for all businesses. With the development towards more interdependence among countries, a number of adjustments in the business setting have appeared. There has been an appearance of international markets for financial investment, labour, products, and services. The demands of consumers all over the world have met. Growing liberalisation of trade and investment promoted by developments in communication and transportation technologies has led to even more global business transactions. These developments have resulted in two major impacts of globalisation, namely, (1) global market opportunities, and (2) global market threats. It is clear that the process of globalisation not just provides more opportunities to business organisations, but greater degree of threats as well. Although opportunities can be created by globalisation, instability and competition are unavoidable. Even though largely cited in earlier literature, studies connecting these influences to business performance remain limited. This requires more research on the relationships between globalisation and firm performance. These two areas will be discussed in relation to international business activities in China. The Impact of Legal and Political Environment of China on Business Activities Because economic change started in 1978, the Chinese government has intentionally initiated commercial and legal reforms in order to exploit the economic interest of China, both locally and internationally (Guthrie 2008). Loosening of regulations on foreign direct investment (FDI), changing State ownership and economic liberalisation in general are just practical instruments. The government views the free market as a way to achieve its goals, not as an ideological tool (Wei & Xiaming 2001). The policies will tr ansform whenever it is believed that it is important to do so. The Chinese government is acting in harmony with Confucianism; laissez-faire capitalism is applied to create wealth (Wei & Xiaming 2001), but it is the state’s duty to make sure that the produced wealth is spent for the most needed goals. New policies on FDI are proclaimed almost every year and smaller regulatory reforms more frequently than that. The 1990s also witnessed the start of a development towards power devolution to local and regional governments (Xiaojuan 2003). Hence, one of the most important rules of dealing with the Chinese government is to acknowledge that various departments at various levels could have the right to meddle with business activities. And, they could each be operating towards completely distinct objectives. The Chinese government has major powers. It can turn down future projects, and it can remove permits from current ones. In 1996, on a single day, the Tianjin government remove per mits for numerous joint ventures, because of conflicts between partners and/or problem with productivity (Ambler & Witzel 2003). Government also has major influence. As different from power, this implies that the Chinese gover