In 2020 Covid-19 pandemic crisis, for its dimension, duration, risk of infection, and the restrictive measures, came out as a challenge and an opportunity for international business.
After a series of alterations, such as new work models and communication and leisure channels and online shopping, neither our lives nor international business will ever be the same again.
A year so atypical as 2020 gave us changes to which we had to adapt. There was a decrease of more than 90% in the air transport offer and an increase in the international freight and the price of containers.
We are living in times of insecurity and uncertainty that led businesses into a process of adaptation to a new paradigm, expanding the horizons for new ways of evolution.
Ana Teresa Lehmann, Director of the Executive Master in International Business and Expert in International Business, participated in the MBA Networking Event, promoted by Porto Business School and IESIDE Business Institute, on September 24, when she spoke about the route, challenges and opportunities of international business in an increasingly digital world.
Ana Teresa Lehmann presented four major trends that will continue to impact the international business journey towards the digital transformation we are still adjusting to.
The increase of relevance of emerging economies, the rise of protectionist trade and investment policies, and issues related to national security and sovereignty impact international business.
A relevant fact regarding international business lies in the power shifts in the economic and technological fields. The oceanic infrastructure of internet connectors, considered critical, is own by technology giants, such as Google. Territorial boundaries are losing relevance. And most large-scale data centers are in the United States. We are not coexisting in a traditional conflict, but in a technology one.
The concept of traditional geopolitics, in which governments centralized control and decision power is no longer sufficient because digital brings along a new economic sphere and a new type of market. And the rising of new private agents, extraterritoriality gains ground, defining business models.
Globalization, featured by increasing flows of business, investment, talent movement, and cultural exchange, has been conquering more relevance until the Global Financial Crisis, in 2007. In this context of globalization of production and innovation, emerging economies conquered a rising importance.
In the post global financial crisis’ scenario there has been a deceleration of worldwide economic integration. Business and investment are rising at a slower pace. In addition, new trade conflicts between world powers and critical issues, such as sustainability and climate changes, have been, and will be, the key challenges for international business.
In the last few years, we have been watching a vertiginous trajectory of environmental degradation and resource depletion due to human action. “As a civilization we went too far”, highlighted Ana Teresa Lehmann.
Going through the pandemic experience and the concern for future pandemics led to a growing awareness about the need of altering our behaviors, mainly more sustainable production, and consumption patterns. “In a pandemic scenario we need to reinforce cooperation”, asserted Ana Teresa Lehmann.
Industry 4.0, aiming for optimizing resource use, preventing unnecessary waste, and promoting the circular economy, alongside the new techno-economic paradigm offer an opportunity for increased sustainability.
The circumstances brought by the pandemic call for distinct and more sustainable business models and strategies integrated in a holistic view (economic, social, and environmental). For instance, it is important to adopt more regional supply chains and less remote supplies, decreasing risks of supply disruption and reducing negative environmental impact. Covid-19 accelerated these dynamics. The pandemic emerged in a time of significant transformations for the global economy: techno-economic (digitalization); geopolitical (with a retraction in the intensity of globalization); and societal (growing awareness of the sustainability imperative). The pandemic exposed the structured weaknesses of countries and companies, and the need of more resilient value chains by greater proximity.
4. Contemporary Innovation
Nowadays innovation is a complex phenomenon that converges different stakeholders, technologies, and types of knowledge. We are living an era of Open Innovation (Chesbrough, 2003) and User Innovation, increasingly more democratic (von Hippel, 1986, 2005). No one innovates alone. It is necessary to adopt collaborative approaches and a vision of the ecosystems that include a contribution of the new generation of consumers.
This “New Consumer” is vital in the process of innovation, as seeking not only to be a user of the good or service, but also a co-creator, and even a co-producer and co-distributor. This process of innovation more interactive, with a more demanding consumer, increases the need of ensuring more agile operations that are closer to the user.
What to expect from international business after the pandemic? It is foreseen, for example, the continuity of the investment in the acceleration of digitalization and the remote work and e-commerce as part of the present and future.