Commentary: The Quiet Debate Among CEOs: Are We American Companies or Not?

As a young correspondent for United Press International in Lansing, Mich. In 1975, I drove up to Midland to interview [...]

December 14 2005 by Chief Executive


As a young correspondent for United Press International in Lansing, Mich. In 1975, I drove up to Midland to interview Carl Gerstacker, then CEO of Dow Chemical, about his statement that he wanted Dow to have its headquarters on its own island out in the ocean. He didn’t want to be domiciled in a single country.

 

In short, the debate about whether major U.S.-based companies with extensive global sales should consider themselves “American” has been going on-quietly-for at least 30 years. CEOs whose companies have 80 or 90 percent of their sales in the U.S. don’t ponder this question very much. It’s clearly the big guys like Intel, United Technologies, Coca-Cola that may have 60 percent or more of their sales outside the U.S. that are at the eye of this philosophical storm.

 

We see threads of this debate in the storm over outsourcing of Information Technology jobs and Business Process Outsourcing jobs, as well as the debate about the investments that major companies are making abroad. Microsoft is investing $1.3 billion in India; Intel is investing aggressively as well in India and other emerging markets. Craig Barrett of Intel has come out and said, in effect, if we can’t find the skills sets we need in the United States, why should we invest here? General Motors CEO Rick Wagoner is sending much the same message to Washington: if you don’t implement better health care policies, we’ll keep closing plants and moving jobs elsewhere. And as expressed by George David of United Technologies, his company has an obligation to governments and societies wherever the company operates. One isn’t necessarily more important than another.

 

I certainly believe that CEOs must manage global companies and they must move economic activity to where the markets and skills are. But there’s a danger in concluding that these major companies aren’t “American.” From having written Business Week’s 1990 cover story, The Stateless Corporation, I know that Japanese and German and French CEOs don’t have this debate. They realize they are grounded in their national political, social and educational contexts.

 

The biggest single reason American CEOs shouldn’t succumb to the island-in-the-ocean dream is that they still depend on a policy climate and reputation in the United States, still their largest market. Government policy touches on health care, pensions, R&D policies, taxation, educational spending, regulation, financial disclosures and much more. To the extent that U.S. CEOs profess to become stateless, they lose tremendous leverage in shaping the mix of policies and politics that affect their ability to function, i.e. make money. In the brutal global competitive battles that we’re now witnessing, companies that can best shape their home-market operating climates will be the winners.

 

To respond for possible posting, email Chief Executive’s Editor In Chief William J. Holstein at bholstein@chiefexecutive.net.  


 

Respone To: Commentary: The Quiet Debate Among CEOs: Are We American Companies or Not?

Interesting that the companies you referenced in the article as having diversified sales may still operate as US rather than global companies. I recently visited Coke’s headquarters in Thailand and was shocked by the similarity to their US headquarters. The American executive displayed a surprising level of arrogance and lack of understanding of the Thai culture that was reinforced in a subsequent visit to the executives of a major customer.

American companies wishing to become global companies must globalize their leadership drawing on ideas and strengths from throughout the world. The measure should be global representation on corporate boards, product development, and leadership. In the case of Coke, despite high global sales, you still have a US company.


Eric H. Bowles, Managing Director, The Hawkshurst Group