Theodore levitt's “the globalization of markets”

CHAPTER 1

An Evaluation After Two Decades
Richard S. Tedlow Rawi Abdelal

Two decades ago, Theodore Levitt published “The Globalization of Markets” in the Harvard Business Review. Doing business across national borders had long been a topic of academic analysis, but Levitt’s article, published in the “magazine of decision makers,” was aimed separately at business managers. It hit itstarget. Levitt himself was “globalized” by 1983. He was world famous for his provocative pronouncements on the new thinking and new action needed to propel business management into the new world it had to create. His articles were widely translated and anthologized, and the Harvard Business Review made a small fortune selling his reprints. When Levitt spoke (through the medium of the printed word),managers listened. Teaching globalization today, it is not difficult, with the priceless benefit of hindsight, to see the flaws in Levitt’s argument. In the pages that follow, we make those flaws quite clear. We do, however, believe that this article remains important not just as an artifact of its time but as a picture of the world from which managers can benefit today. It is no accident that this articleis still so widely read. In this chapter, we seek to locate globalization in the context of Levitt’s oeuvre. We then offer a new way of thinking about this article, an angle of vision that we believe demonstrates its enduring usefulness.

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Theodore Levitt’s “The Globalization of Markets”

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THE GLOBAL MARKET

The MarketingMessage of Theodore Levitt
“And if you want biographies,” Friedrich Nietzsche once wrote, “do not look for the legend ‘Mr. So-and-so, and his times,’ but for one whose title might be inscribed ‘a fighter against his time.’” That is the role—as a “fighter against his time”—that Theodore Levitt has played during his intellectual life. This was a role he earned the right to play. Levitt mastered “normalscience” before setting off in search of new “paradigms.”1 His doctoral dissertation, “World War II Manpower Mobilization and Utilization in a Local Labor Market,” was squarely in the mainstream of academic endeavor.2 Firmly grounded in economics through his doctoral training at Ohio State, Levitt proved he could satisfy the most rigorous standards of his profession by publishing in the AmericanEconomic Review, the Review of Economics and Statistics, the Journal of Finance, and elsewhere.3 Levitt’s goal, however, was always to make a difference—a big difference not only in his own discipline but in academics as a whole and indeed in society. He wanted to think creatively. It was the combination of his background in formal economics along with a jagged streak of lightning called genius thatenabled him to succeed at so doing. One of Levitt’s articles is entitled “Marketing Success Through Differentiation—of Anything.”4 His own greatest achievement in differentiation has been of himself. Theodore Levitt has written numerous articles that have changed the way important people think about important matters (which was his own standard when he served as editor of the Harvard BusinessReview). Among the most noteworthy of these is “The Globalization of Markets,” published in 1983.5 The article’s argument is that new technology, which has “proletarianized” communication, transport, and travel, has created “a new commercial reality—the emergence of global markets for standardized consumer products” of a hitherto undreamed-of magnitude. The era of the “multinational corporation” wasdrawing to a close, Levitt asserted. The future belonged to the “global corporation.” The global corporation did not cater to local differences in taste. Those differences were being overwhelmed by the ability of the global corporation to market standardized products of high quality at a cost lower than that of competitors due to “enormous

THEODORE LEVITT’S “THE GLOBALIZATION OF MARKETS”...