The BP crisis showed that global corporations are not all-powerful. Now they must adapt to surviveby Nick Butler / August 25, 2010 / Leave a comment
Global conflict: multinationals are often wrong-footed by strong feelings about local issues
Few modern myths are as powerful as the idea that the world has fallen under the control of vast, all-powerful, multinational corporations. Echoes of this can be heard from all the Labour leadership candidates, President Obama and, most recently, in attacks by coalition ministers on the banking industry. But the events of the past three months in the Gulf of Mexico should convince us all that this is nonsense.
The Deepwater Horizon accident itself, and the environmental damage done, were tragic. But the incident has also prompted a tragi-comic clash of two different cultures. On one side, a local aggrieved community whipped up by the US media and politicians conscious of impending elections; on the other, a huge, rich, remote company talking in a European accent.
To better understand this conflict, we must appreciate the huge changes to the corporate world over the past 20 years. For business in general, globalisation in the 1990s came as a rational and attractive step forward, allowing companies to secure access to new markets, resources and talent. Through a series of mergers and acquisitions, BP—which had been just a two-pipeline company operating in the North sea and Alaska—was able to become a global player: one of the three largest companies in its sector alongside Exxon and Shell. By 2006, it was working in over 100 countries. The strategy was simple. As China and others began to develop their economies, the market for energy had become global, and so companies had to play on the world stage. Size mattered.
It was also rational for companies like BP to develop what were termed “global cultures.” The age of imperialism was over and no business could venture into Russia, Angola or China without employing and promoting local citizens. Far from relying on low-paid labour—a particularly inaccurate variant on the multinational myth—international companies were usually the highest payers and the employers of choice.
The watchword was “diversity.” For good economic reasons, companies fostered cultures in which the brightest and the best thrived. The result was the ultimate meritocracy in which no one talked much about religious beliefs or nationality. It was even rumoured that Goldman Sachs was thinking of creating its own passports for staff. And BP dropped the word “British” a decade ago precisely in order to become indisputably global.
Seen from wood-panelled corporate…