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“Vinod embarks on an excellent treatise on the convergence between the physical and digital
worlds. Alongside, he at once recognizes that fundamental economic principles are no longer sac-
rosanct; be they the concepts of scarcity and choice, or the dictates of diminishing returns to scale.
What we know from textbooks are no longer textbook! Global Meets Digital challenges business
leaders to think differently about strategic implications of the global-digital world.”
Dr. Janamitra Devan,
Head of Executive Office/Chief Strategy Officer,
NEOM, Saudi Arabia; former Vice President, The World Bank Group;
former Director, Global Strategy Practice, McKinsey & Co.

“This ‘must-read’ book for students and executives is a deeply reasoned and authoritative review of
how digitalization speeds the international expansion of service providers like Netflix or Spotify,
but it also covers examples of companies that provide physical products to global markets, such as
Nestlé, Bosch, Starbucks, and Peloton. For the latter category of firms selling tangible products,
digitalization has not only speeded up innovation, but for several it has entailed a fundamental
organizational restructuring of their global operations and strategy decisions such as the choice
between internal development and production versus strategic alliances versus acquiring foreign
companies.”
“The book is a ‘deep dive’ into one of the fundamental changes occurring in business today—
as evidenced by as many as 264 useful references on the subject. Yet, at the same time, it is written
in language accessible to students and executives, with lessons for strategy clearly delineated. This
book should be essential reading.”
Dr. Farok J. Contractor,
Distinguished Professor in Management & Global Business,
Rutgers Business School, New Brunswick & Newark, New Jersey

“It is rare to find a book on business strategy that combines the scope and depth of Vinod’s
understanding of strategy with the rigor of academic research that is as accessible in clear prose to
the multinational executive who needs to formulate a strategy that is executable. He provides a
terrific framework at the intersection of economics, strategy, and technology for understanding
the dynamic dialectical process of the global (thesis) meeting digital (antithesis) that enables one
to see opportunities and exigencies in the resulting synthesis in ways far superior to vain efforts to
predict the future.”
R. Lemuel Lasher,
Chairman, Leading Edge Only, Ltd., Managing Director,
Boehme Eckhart LLC; former Vice President-Strategic Projects and Chief Innovation Officer,
Computer Sciences Corporation

“In this excellent book, Jain provides a roadmap for how global firms should leverage digitaliza-
tion to enhance their global competitiveness. Whether your firm is big or small, young or old, a
B2C or a B2B company, Jain shows you how to craft a digital strategy and stay ahead of competi-
tors. Peppered with hundreds of examples from diverse industries and countries, Jain’s book is a
treasure trove of practical insights for managers, academics, and students alike.”
Dr. Ravi Ramamurti,
University Distinguished Professor of International Business & Strategy, and Director,
Center for Emerging Markets, Northeastern University
“The book is far more than a study of the intersection of two megatrends—globalization and
technology. It recognizes that while the axes are nominally orthogonal, they interact powerfully
as the two phenomena evolve in the business world—along with the consequential impacts on our
personal and professional lives. In fact, the author makes clear that this deepening intersection
creates a new need for business capabilities demanding new models and new strategies to succeed
in the global-digital world. The text is clear, well organized and meticulously punctuated with
relevant case studies, and the scholarly works of those attempting to understand the why’s and
broader implications of these phenomena. Finally, it offers a framework for leaders to examine
their corporate strategies and evaluate them for future relevance in a methodical way.”
Dr. Alpheus Bingham,
author of The Open Innovation Marketplace and
One Smart Crowd, and founder of InnoCentive

“Professor Vinod Jain’s latest book Global Meets Digital: Global Strategy for Digital Businesses-
Digital Strategy for Global Businesses is very timely. It used to be no firms had digital strategy; then
some firms had a digital strategy; and today all firms should have a digital strategy, but many do
not. This book will help you learn how to develop a successful one. Professor Jain has written a
very accessible book that clearly explains complex issues about digital strategy and includes many
interesting case studies which help readers to better understand the issues discussed and learn
about international best practice in the area. Global Meets Digital is unique in that it covers strat-
egies for physical, digital, and smart products like the Internet of Things. The book also covers
many important current themes like digital disruption, the paradox of globalization, exponen-
tial technologies, industry 4.0, disruptive business models, competition in digital markets, and
winner-take-all market dynamics. This book is a must-read for any student or executive concerned
about digital strategy.”
Dr. Carl Fey,
Professor of Strategy, BI Norwegian Business School,
Oslo, Norway; former Dean, Nottingham University Business School China

“At last, a book that addresses the inescapable reality of the fusion between the physical and
digital worlds. What impacted me most about this world-class book is the practical and pertinent
applications of its content. Vinod Jain managed to combine his research, knowledge, and industry
experience with relevant case studies delivering a superb book. I’m glad Vinod Jain has so well and
so fully shed light on these two vital and here-to-stay forces.”
Humberto “HAP” Patorniti,
Partner at Tenacity Inc. and Adjunct Professor,
Rutgers State University; former CEO and President, SODEXO, Mexico, North America

“Globalization has been going on since humans started to consume something that was built some-
where else. It started with the Silk Road and then to ships to railways to trucks to airways and
finally the Internet. All of these modes of knowledge and service transport have helped increase the
speed at which the services can move across the globe, and it is just continuing to pick up speed.
“Global Meets Digital” gives you the whole perspective on what is happening and what is yet to
come, and how one by one each industry is getting transformed. If you are in any position in a busi-
ness and are thinking about what Digital means for your business, then this is the book for you!”
Lokesh Kumar,
Chief Technology Officer, sheeva.ai and Co-founder
and Chief Architect, urgent.ly
“I highly recommend Dr. Vinod Jain’s new book, ‘Global Meets Digital’, for several reasons. It is
a book for our time in business that will enable us to also prepare for the future environment of
the melting of ‘older business axioms’ into new, adaptable business strategies to take any business
enterprise into the near and far-reaching future. Jain critically examines not only how we got here,
but more importantly, how we should think about next steps in navigating the ever dynamic and
changing world of business where ‘giants have fallen’ and new entries can generate a meteoric
rise in shareholder value. Essentially, the rules have changed and ALL business must recognize
and plan for the future. I enjoyed the mixture of real-world business case studies with the lessons
learned to prepare one’s own business. In my opinion, this is a ‘must read’ for any organization or
person contemplating how to grow in a digital business environment.”
H.E. The Hon., Dr. Thomas A. Cellucci,
former First Chief Commercialization Officer of the United States of America,
Author of 30 books, and Serial Entrepreneur

“Vinod writes an extremely timely book for today’s executives. It captures two pressing, inter-
connected issues of our time—globalization and digitalization, and offers numerous insights about
how we can address them—in an integrated manner. I highly recommend the book, particularly
to executives aiming to expand their global footprint through a digital strategy.”
Dr. Tony Tong,
Senior Associate Dean for Faculty & Research and Professor of Strategy & Entrepreneurship,
Leeds School of Business, University of Colorado Boulder

“Dr. Jain has long shared his expertise regarding the relationship between global and digital busi-
ness. His latest book, Global Meets Digital, provides a look at the historical evolution of this
relationship. Further, given the unprecedented rate of change today, driven by the twin forces
of globalization and technology, he points to the business revolution that is unfolding real time.
Dr. Jain provides an insightful strategic context to the growing interconnectedness between the
two and offers numerous case examples that allows the reader to peer into the future. Global Meets
Digital explores the opportunities and challenges and is a must read for business leaders who are
struggling to reimagine today’s new normal.”
Keith Darcy,
President, Darcy Partners Inc.; former Independent Senior Advisor,
Deloitte & Touche LLP, and former Chairman, Better Business Bureau Foundation

“Vinod has a unique style of explaining even complex concepts in a simple manner, which makes
this book enjoyable to read. He addresses the challenges of global expansion for new-age digi-
tal businesses and the need for digital transformation of traditional global enterprises in a lucid
fashion with authentic case studies across the spectrum. I recommend this book as compulsory
reading for business leaders looking for practical guidance on several topics not covered in other
management books.”
Sridharan Rangarajan,
Vice President, Platforms, Viessmann, Germany;
former Director, Hybrid Cloud Strategy, Bosch, Germany; and former Program Director,
Bluemix Practice, IBM Software Group
“Dr. Jain captures the importance of growth strategies for Global and Digital businesses through
his impressive research, extensive case studies, academic excellence, and many years of engage-
ment with the world’s leading corporations. This is a brilliant book for executives facing a highly
charged market dynamic in the global-digital world. While most books on strategy tend to focus
on B2C businesses, what I, with over 30 years of senior-level experience in B2B businesses world-
wide, really appreciated is that Global Meets Digital has a whole chapter devoted to competing in
B2B businesses.”
Steven R Zirkel,
President & CEO of Blue Everest LLC;
former Managing Director, Owens Corning Asia Pacific

“As an active practitioner in international business for over 30 years I really appreciated reading
Global Meets Digital by Vinod Jain. I strongly recommend reading this book as it is timely and
it discusses the real issues companies are facing right now. The important concepts are clearly
explained and supported by practical cases so that the reader is able to relate to real situations.
The ideal content to bring ourselves up to date on critical issues that impact global strategy, Vinod
Jain’s new book is, in my view, a must read.”
Jean-Paul DAVID,
CEO of Mercadex Europe & Director of Institut MX, Paris, France

“The title of this book—Global Meets Digital—captures starkly the new reality. In the new era,
global enterprises will thrive only if they embrace the new opportunities and sidestep the chal-
lenges created by the exploding digitization of the global economy. Digitization affects every
aspect of your global strategy—what markets to target, how to win in these markets, and how to
design and manage the global value chain. This book covers these and related topics.”
Dr. Anil K. Gupta,
Michael Dingman Chair in Strategy and Globalization, The University of Maryland,
College Park; Author, The Quest for Global Dominance and Getting China and India Right

“In modern times, it’s not enough to have strategy, you need to have a flexible and resilient execu-
tion feedback loops to maximize outcomes. Vinod combines an approach that does both and
explains in his book how businesses can benefit from taking advantage of the natural contradic-
tions that exist between the physical and digital, the local and the global, and between theory and
practice.”
PV Boccasam,
Chairman of Jôrn Capital
 Global Meets Digital
The world today is at the intersection of two megatrends—Globalization and Digitalization—a
business revolution unfolding in real time. Global Meets Digital captures the many nuances of
this revolution succinctly, including its impact on our lives and business. An immediate implica-
tion of this revolution is that the economic principles that underpinned business and strategy for
hundreds of years, such as diminishing returns to scale and resource scarcity, are no longer valid
for a large and growing number of products and services. The book will challenge you to think
differently not just about digital products, but also about physical products.
In the global-digital world, products are of three kinds—physical, digital, and smart machines
(products that are both physical and digital, and connected to the internet)—a distinction missed
by most books on strategy and global business. The economics of each kind of products is distinct
from that of the others, which has strategic implications for all kinds of businesses—implications
such as how to compete and how to create and capture value.
With several mini case studies and over 300 company examples, the book covers themes and
cutting-edge issues like the paradox of globalization, digital disruption, disruptive business mod-
els, exponential technologies, Internet of Things, competition in digital markets, winner-take-all
market dynamics, Industry 4.0, how to innovate, strategizing for the New Normal, and value cre-
ation and value capture in both B2C and B2B contexts. The book derives its underpinnings from
the practice of global and digital business, while theory remains in the background.
Intended specifically for an executive/professional audience, Global Meets Digital should also
be of value to business students and professors learning to dip their toes into a digital world.

Vinod K. Jain is an expert in global and digital strategy, award-winning professor, Fulbright
Scholar, and author of an MBA textbook, Global Strategy. He taught at the Rutgers Business
School, Newark and New Brunswick, and the Robert H. Smith School of Business, University
of Maryland, College Park. At Maryland, he was also the Founding Director of the federally
funded Center for International Business Education and Research and Academic Director of
Smith School’s Executive MBA program in China. Since leaving Maryland, he has taught in
China, Denmark, Finland, Poland, and India as a visiting or term professor. His opinion pieces
have appeared in The Washington Post, The Baltimore Sun, Mensa Bulletin, and Economic Times and
Mint (India’s #1 and #2 business dailies), among other media. In the past, he worked as a middle-
and senior-level executive with American and British multinationals. Vinod has a PhD in Strategy
and International Business from the University of Maryland, College Park, MS in Management
from UCLA, and MS and BS (Hons) in Statistics from the Indian Statistical Institute, Calcutta.
 Global Meets Digital
Global Strategy for Digital Businesses -
Digital Strategy for Global Businesses

Vinod K. Jain, Ph.D.

First published 2023
by Routledge
605 Third Avenue, New York, NY 10158

and by Routledge
4 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN

Routledge is an imprint of the Taylor & Francis Group, an informa business

© 2023 Vinod K. Jain

The right of Vinod K. Jain to be identified as author of this work has been asserted by him in accordance with sections
77 and 78 of the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic,
mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in writing from the publishers.

Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for
identification and explanation without intent to infringe.

ISBN: 978-0-367-47968-8 (hbk)

ISBN: 978-0-367-47907-7 (pbk)
ISBN: 978-1-003-03744-6 (ebk)

DOI: 10.4324/9781003037446

Typeset in Adobe Garamond Pro

by codeMantra
 For
Kamal, Sumita, and Anupama
Contents

Preface ..................................................................................................................................xi
Acknowledgments ............................................................................................................. xiii
Author ................................................................................................................................. xv

Section 1 tHe conteXt

1 Global Meets Digital ....................................................................................................3
The Global–Digital Economy ............................................................................................ 4
Old Is New Again! ............................................................................................................. 5
Business in the 2020s
Globalization: From Divergence to Interdependence to Convergence to… ................... 8
Technology—On Steroids ............................................................................................13
What’s behind the growth of IT? .............................................................................14
Competition—A Changing Paradigm..........................................................................15
Notes ................................................................................................................................17
2 Paradox of Globalization............................................................................................19
Global Business in 1914
When Did Globalization Begin? ...................................................................................... 20
What Is Behind the Growth of Globalization in Recent Periods? .................................... 23
Multilateral Institutions .............................................................................................. 24
Governments ............................................................................................................... 24
Multinational Enterprises .............................................................................................25
Information and Communication Technologies ...........................................................25
Globalization Today .........................................................................................................25
Reversal of Attitudes toward Globalization ..................................................................25
Reverse Innovation ...................................................................................................... 27
Reverse FDI ................................................................................................................ 28
Reverse Outsourcing/Offshoring ................................................................................. 30
Globalization Today versus in Earlier Eras ........................................................................31
The Paradox ..................................................................................................................... 32
Notes ............................................................................................................................... 32
3 Digital Business: Technology at Warp Speed .............................................................35
Crossing the Chasm
Economics of Digital Products ........................................................................................ 36
Technologies .................................................................................................................... 38

vii
viii ◾ Contents

Artificial Intelligence ................................................................................................... 38

Robotics .......................................................................................................................41
3D Printing ................................................................................................................. 43
Cloud .......................................................................................................................... 44
Blockchain ...................................................................................................................45
5G ............................................................................................................................... 46
Exponential Characteristics of Information Technologies ................................................ 46
Digital Disruption ........................................................................................................... 46
Value Creation and Capture with Technology ................................................................. 50
Notes ................................................................................................................................53

Section 2 StRAteGY
4 Entering Foreign Markets ..........................................................................................57
Netflix Goes Abroad
Foreign Market Selection ..................................................................................................59
The PRISM Framework ....................................................................................................59
P: Political Economy ....................................................................................................61
Political Systems ......................................................................................................61
Economic Systems .................................................................................................. 62
R: Resources................................................................................................................ 63
I: Institutions and Infrastructure ................................................................................. 63
S: Society and Culture................................................................................................. 64
M: Market Potential .....................................................................................................65
Industry Structure ........................................................................................................67
A Systematic Approach ................................................................................................ 68
Learning about Foreign Markets...................................................................................... 69
Entering Foreign Markets ................................................................................................ 69
Exporting/Importing .................................................................................................. 69
Licensing ..................................................................................................................... 70
Franchising.................................................................................................................. 70
Foreign Direct Investment........................................................................................... 72
Strategic Alliances ....................................................................................................... 73
Notes ............................................................................................................................... 73
5 Global Strategy for Digital Businesses .......................................................................75
Digitization-Digitalization-Digital Transformation
Spotify ............................................................................................................................. 77
How Spotify Creates Value ......................................................................................... 78
How Spotify Captures Value ....................................................................................... 80
Spotify’s Global Strategy ..............................................................................................81
Peloton ............................................................................................................................. 82
How Peloton Creates Value ..........................................................................................85
How Peloton Captures Value....................................................................................... 86
Peloton’s Global Strategy ............................................................................................. 86
The Globalization–Localization Dilemma ....................................................................... 87
Global Strategy for Digital Businesses ............................................................................. 88
Network Effects .......................................................................................................... 88
 Contents ◾ ix

Technology and Innovation......................................................................................... 88

First Movers, Fast Seconds, and Imitators ................................................................... 89
Localization ................................................................................................................ 90
Licensing and Partnering............................................................................................. 92
IP Protection ............................................................................................................... 93
Notes ............................................................................................................................... 94
6 Digital Business Models .............................................................................................97
Direct Selling ................................................................................................................... 98
Subscription ..................................................................................................................... 99
Freemium .......................................................................................................................101
Outcome Based...............................................................................................................102
Razor and Blade..............................................................................................................103
Data Monetization ..........................................................................................................104
Platform ..........................................................................................................................105
Ecosystem .......................................................................................................................108
Business Models for Professional Services Firms ............................................................. 111
How Law Firms Bill Their Clients .............................................................................. 111
Productization of Services ..........................................................................................112
Notes ..............................................................................................................................113
7 Digital Strategy for Global B2C Businesses .............................................................115
Three Kinds of Businesses
What Is a Global Business? ............................................................................................. 115
What Is Digital Strategy? ................................................................................................ 117
Economics of Digital Markets ....................................................................................117
Value Creation and Value Capture .............................................................................118
How Value Is Created ........................................................................................... 120
How Value Is Captured ........................................................................................ 122
Competition and Competitive Advantage in Digital Markets ................................... 123
Establishing Competitive Advantage in Digital Markets ...................................... 124
Digital Strategy for Global B2C Businesses ................................................................... 126
Nestlé ............................................................................................................................ 127
Digital Transformation at Nestlé ............................................................................... 127
Nestlé’s Digital Strategy ............................................................................................ 128
Notes ..............................................................................................................................129
8 Digital Strategy for Global B2B Businesses .............................................................131
The Four Industrial Revolutions .....................................................................................131
Industry 4.0 ...............................................................................................................132
How IoT (IIoT) Changes Manufacturing .......................................................................133
Some Specific Advantages of the IIoT ........................................................................133
How XCMG Benefits from the IIoT ......................................................................... 134
Value Creation-Value-Capture Framework for IoT (IIoT) Businesses ..............................135
Value-Creation Layer 1: Physical Thing ......................................................................137
Value-Creation Layer 2: Sensors and Actuators ..........................................................137
Value-Creation Layer 3: Connectivity ........................................................................138
Value-Creation Layer 4: Analytics ..............................................................................138
x ◾ Contents

Value-Creation Layer 5: Digital Service......................................................................138

Bosch...............................................................................................................................139
Digital Transformation at Bosch.................................................................................140
Bosch Group’s Digital Strategy...................................................................................141
Notes...............................................................................................................................143
9 Reinventing Innovation.............................................................................................145
InnoCentive Reinvents Innovation
How Innovation Happens................................................................................................147
Serendipity..................................................................................................................148
Invisible Hand of Market............................................................................................149
Visible Hand of Management......................................................................................149
How to Innovate..............................................................................................................153
The Build|Buy|Ally Framework...................................................................................153
Build: Innovation through Internal Development..................................................153
Buy: Acquiring Innovation through M&A.............................................................155
Ally: Acquiring Innovation through Alliances........................................................157
Open Innovation.........................................................................................................160
Notes...............................................................................................................................161
10 Reimagining Business...............................................................................................163
The Five Megatrends........................................................................................................164
Globalization...............................................................................................................164
Digitalization..............................................................................................................165
Competition................................................................................................................165
The Fourth Industrial Revolution................................................................................166
The New Normal........................................................................................................166
Strategizing for the New Normal.....................................................................................167
It’s a Global–Digital World.........................................................................................168
Reach and Richness....................................................................................................169
Improved Performance................................................................................................170
Value Creation and Value Capture...................................................................................171
1. Globality................................................................................................................172
How to Leverage Globality.....................................................................................172
2. Competition’s New Logic and Logistics.................................................................173
Some Features of Digital Markets...........................................................................174
How to Establish and Sustain Competitive Advantage in Digital Markets.............175
3. Innovation’s New Logistics.....................................................................................175
4. Disrupt/Cannibalize Yourself.................................................................................175
5. The Fourth Industrial Revolution...........................................................................176
6. Disruptive Business Models....................................................................................177
7. Exponential............................................................................................................178
Notes...............................................................................................................................179

Index..................................................................................................................................181
Preface

The confluence of the physical and digital worlds is well underway. It has meant, among other
things, that digital players are moving into physical spaces, and physical incumbent businesses are
fast pursuing digitalization—blurring boundaries between global and digital. That is the context
of Global Meets Digital, with value creation and value capture as the central theme that pervades
throughout the book.
Intended specifically for an executive/professional audience, Global Meets Digital derives its
underpinnings from the practice of global and digital business, while theory remains in the back-
ground. It is imperative for multinational enterprises (MNEs) to learn from the experiences of
other MNEs about how they do business and how they succeeded (or failed) in international and
digital markets.
Well, MNEs have existed for a very long time. So, why now? The context of business in the
last decade, especially in the last 5–6 years, has undergone major changes: (1) growing intercon-
nectedness between the physical and digital worlds; (2) accelerating growth of technologies, such
as artificial intelligence and cloud computing, used not only by IT firms but also increasingly by
firms in practically all industries; (3) growing role of cross-border data flows as international trade
in physical goods is not growing as in the past; (4) health, social, and economic crises brought
forth by COVID-19; (5) a changed political, economic, and social environment in many parts of
the world, including the US, Europe, Asia, and Latin America—with strategic implications for
business.
All these factors pose great challenges (and great opportunities!) for businesses to create and
capture value. That’s because the economics and strategy of physical products are different from
the economics and strategy of digital products, which, in turn, are different from the economics
and strategy of smart machines (products that are both physical and digital and connected to the
internet).
With several minicase studies and over 100 company examples, the book covers themes and
cutting-edge issues like the paradox of globalization, digital disruption, disruptive business mod-
els, exponential technologies, Internet of Things, competition in digital markets, winner-take-all
market dynamics, Industry 4.0, how to innovate, strategizing for the New Normal, and value
creation and value capture in both B2C and B2B contexts.
During my academic career spanning some 30 years, I have taught strategy, global business,
and global strategy at business schools in the US, Europe, China, and India. Prior to that, I
worked with American and British multinationals for many years. As a result, I have been an
observer and a participant in the changing context of business—from legacy to digital. As the
cliché goes, digital changes everything!

xi
Acknowledgments

Over the years, I have learned a great deal during my digital learning journey from many people,
many authors, and many companies, too numerous to mention individually; I am deeply grateful
to all of them. Some, who read and commented on parts of the manuscript, deserve very special
thanks. They are Dr. Alph Bingham, President, Cascade Consulting LLC and former President and
CEO of InnoCentive; Lokesh Kumar, CTO of Sheeva.ai and co-founder of urgent.ly; Humberto
“HAP” Patorniti, faculty member at Rutgers Business School and former President and CEO of
SODEXO Mexico City; and Sridharan Rangarajan, Vice President, Platforms at The Viessmann
Group, Germany.
I am grateful to Kristine Mednansky, senior editor, Taylor & Francis Group, for her patience
and advice during the manuscript’s slow progress over almost 3 years. Also to Rebecca Lyles of the
TextCPR editorial service for continuing help with editing. I would be remiss if I did not express
thanks to my friends at TiE-DC, the Washington DC chapter of TiE.org, a global association of
entrepreneurs and CEOs, most of whom run technology businesses, for helpful conversations with
them, as well as to participants in my seminars and webinars for their questions and thoughtful
comments.
Last, but not least, very special thanks to my wife, Kamlesh (Kamal), a good human being and
a profound thinker, and to our daughters, Sumita and Anupama, for their unflagging support,
love, and pleasant company during our life journeys.

xiii
Author

Vinod Jain is an expert in global and digital strategy, Fulbright

Scholar, award-winning professor, and author of an MBA textbook,
Global Strategy, published by Routledge (New York and London,
2016). Vinod taught at the Rutgers Business School, Newark and
New Brunswick, Nottingham University Business School China,
and the Robert H. Smith School of Business, University of Maryland,
College Park. At Maryland, he was also the Founding Director
of the Center for International Business Education and Research
(CIBER) and Academic Director of Smith School’s Executive MBA
program in China. He has been a visiting/term professor at Aalto
University, Finland; Copenhagen Business School, Denmark; Hult
International Business School Shanghai, China; Indian Institute of
Management Bangalore, India; and Polish American Management
Center at University of Lodz, Poland.
In the past, Vinod worked with British and American multinationals for many years, includ-
ing Macmillan Publishers (Vice President), Molins (Manager Coordination), and Coca-Cola
(Marketing Research Executive). He has conducted over a hundred executive and academic semi-
nars in Bahrain, Brazil, Canada, China, Europe, India, and the US, and has been active on many
boards and professional and trade associations.
Not a techie, Vinod is fascinated by and has flirted with digital strategy and digital business
ever since the dotcom days. (He registered his first internet domain in 1998.) For instance, in
April–May 2000, he conducted a six-Saturday, executive seminar on e-Business Strategy. The
same year, he designed and chaired an All-Academy Symposium on “Business Models in the New
Economy” at Academy of Management’s annual, international conference in Toronto, Canada.
The symposium attracted over 200 participants and had presenters from several universities,
including Alabama, INSEAD, Oregon, Rutgers, Wharton, and a think tank in Canada. Since
then, he has presented talks and seminars on global and digital strategy and even once ran a digital
business for a few years. In March and May 2022, he was invited by the Academy of Management
to offer a webinar on digital strategy for its members.
Vinod’s articles and opinion pieces have appeared in The Washington Post, The Baltimore Sun,
Mensa Bulletin, Economic Times and Mint (India’s #1 and #2 business dailies), and other media.
He has been honored by the Governors of both Ohio and Maryland for his services to interna-
tional and internationalizing businesses in their states.
Vinod has a PhD in Strategy and International Business from the University of Maryland,
College Park, MS in Management from UCLA, and MS and BS (Hons.) in Statistics from the
Indian Statistical Institute, Calcutta. www.vinodjain.com.

xv
THE CONTEXT 1
Chapter 1

Global Meets Digital

It’s all so simple, Anjin-san. Just change your concept of the world.
James Clavell, Shögun, 1975
The world has practically always had global business.
Arab traders had been traveling to spice-producing lands since 4,000–5,000 years ago, along
what have come to be known as the Spice Routes, bringing spices and herbs with them to the
Middle East. During the earliest evolution of trade, spices such as cardamom, ginger, pepper,
and turmeric were important items of trade, some even as valuable as gold today. The Arabs kept
the source of spices (the East Indies) secret for a long time to avoid competition. Over time, the
Romans and other Europeans took control of the spice trade. The Silk Road, a network of trade
and cultural land routes connecting China, India, Persia, the Arabian Peninsula, East Africa,
and Southern Europe, existed around the same time and intermittently brought together traders,
merchants, monks, pilgrims, thieves, and soldiers from different countries. The Silk Road is said
to have begun around 3,200 BCE and lasted several millennia. In addition to silk and other goods
and cultural influences, Buddhism, Islam, Christianity, and even disease and technologies of the
time traveled along the road. The Spice Routes and the Silk Road met and extended each other at
some places—furthering global business.
Digital business, however, is of recent origin. It involves business models that use digital tech-
nologies for products ranging from physical products (such as plant and machinery) to purely
digital (software) to smart machines1 (products that are both physical and digital and connected
to the internet, such as the electric vehicle and drone). Lately, more and more traditional (physical)
businesses in the automotive, consumer goods, and other industrial sectors have been moving into
the digital world—creating a new class of products (smart machines).
The confluence of global business and digital business, a shift long in the making, is now well
underway. Of the important factors that account for this confluence, two, in particular, stand out.
Continuing advances in technology and innovation, now growing at an exponential pace, and the
growing interconnectedness between the physical and digital worlds mean that the boundaries
between global business and digital business are getting increasingly blurred—creating a global–
digital world (Figure 1.1).
The confluence of the physical and digital worlds means, among other things, that digital play-
ers are moving into physical spaces (e.g., Amazon’s move into physical retailing with the acquisition

DOI: 10.4324/9781003037446-2 3
4 ◾ Global and Digital Strategy

Figure 1.1 A global-digital world.

of Whole Foods in 2017 and into healthcare with the acquisition of primary care provider One
Medical in 2022), and physical incumbent businesses are fast pursuing digitalization and digital
business models. For example, John Deere, the agricultural, forestry, and construction machinery
company, which used to manufacture separate engines for a wide range of users, each requiring
a different level of horsepower, can now modify the horsepower of a standard engine using just
software. John Deere is meeting global customer needs for varying designs through software,
rather than hardware. Though it is not just software, other elements of digital technology, such as
artificial intelligence (AI), 3D printing, Internet of Things (IoT), and robotics, are helping to blur
the distinctions between physical business and digital business.
In addition to blurring the distinctions between physical business and digital business, global
meets digital is happening across multiple geographies in multiple contexts. One such context is
the blurring of boundaries between the old economy and the new economy to create what we might
call a connected economy. Another somewhat related context involves repurposing of the old, aban-
doned industrial sites into new uses—old becomes new again.

the Global–Digital economy

New economies emerge following major technological innovations, which typically redefine the
rules of the game and how people live and work. The term new economy has been in use as a
metaphor for transformational change in societies for a long time. The world has seen many new
economies since the first Industrial Revolution of the late eighteenth century, which ushered in
disruptive change in most industries of the time and led to rising prosperity in England. These
changes then spread to the rest of Europe, North America, and eventually to the rest of the world.
The end point of a new economy typically merges with the beginning of another new economy,
though both continue to co-exist and co-evolve. And so it was with the dawn of the second
Industrial Revolution in the early twentieth century with Henry Ford’s moving assembly line that
 Global Meets Digital ◾ 5

launched the era of mass production and continuing rise of prosperity in America. This trans-
formational change in manufacturing technologies and processes indeed changed how people
lived and worked in the decades that followed—all hallmarks of the arrival of a new economy in
America.
The term new economy acquired almost a new meaning in the dot-com era of the late 1990s
and early 2000s when the digital economy was the new economy. This new economy, like the earlier
ones, was born out of technological innovations (e.g., the internet), had its own players (the dot-
coms), playing fields (the World Wide Web), rules of the game (information rules), and business
models (e.g., clicks-and-bricks).
Today the world has both the old economy and the digital economy, as well as a new economy
that has emerged in the last decade or so. This new economy has been called by various names,
such as the second Machine Age2, the third industrial revolution3, and the age of smart machines4.
For sake of simplicity, we will refer to today’s economy as the global-digital economy. This term
comprises the old economy, the digital economy, and the age of the smart machines.5
The global–digital economy consists of consumers, firms, markets, nations, governments, and
other actors that are more connected to each other than at any time in previous eras. As in the past,
such connections are facilitated by the twin forces of globalization and technology, the latter now
at an unprecedented and increasing speed of change.
Some key features of the global–digital economy are:

◾◾ Global—encompassing both developed and developing nations.

◾◾ Goods—range from physical goods, digital goods, and smart machines (goods with digital
characteristics, e.g., hardware, software, and sensors, embedded into them and connected
to the internet).
◾◾ Services—range from simple location-bound services to services that can be performed any-
where and everywhere, not necessarily close to customers.
◾◾ Processes—both physical and digital.
◾◾ Connectivity—provided by multilateral institutions, governments, multinational corpora-
tions, competition, digital technologies, and networks.
◾◾ Speed—business and economic phenomena operate in real time, 24/7, and at increasing
speeds.

Old Is New Again!6

Many of the manufacturing estates and cities in what was once known as the Rust Belt have
experienced a transformational spit and polish in recent years—so much so that some of them
positively shine with dynamism built around high-technology and creative industries. What I
have found is that the old, abandoned industrial sites have been converted into new productive
uses in hundreds of cities across the US and around the world. The story of converting former
abandoned industrial sites into new powerhouses of creative and high-tech industries is a story of
reinvention and renewal that is being witnessed worldwide. Cities and towns formerly known as
major manufacturing hubs—the old economy—are increasingly transitioning to the new economy.
For instance, the old Studebaker automotive plant in South Bend, IN, that closed down in
1963 is now the Renaissance District, the Midwest’s largest mixed-use technology campus, which
houses a data center and educational, industrial, commercial, coworking, residential, and retail
spaces. Ignition Park, located on 140 acres of Studebaker’s famous Engineering Department, is
6 ◾ Global and Digital Strategy

one of the two state-certified technology parks in South Bend, the other being Innovation Park
at the University of Notre Dame just north of downtown South Bend. Ignition Park’s focus is
on high-potential technologies and ventures such as nanotechnology and turbomachines; Notre
Dame’s Turbomachinery Laboratory is located within the Ignition Park. South Bend has perhaps
the densest concentration of fiber optic cables in the country, ideal for data centers and telecom
and cloud services companies.7 It even has a commuter rail offering direct access to downtown
Chicago. The University of Notre Dame provides the intellectual capital for the Ignition Park and
the city’s other businesses.
As President of the (then) Toledo Area International Trade Association and a member of the
faculty of the business school at Bowling Green State University some 20 years ago, I had the
opportunity to explore northwest Ohio, a part of the Rust Belt region, in some depth. Around that
time, I also obtained a Business and International Education (BIE) federal grant with the theme
“Northwest Ohio: From Rust Belt to Prosperity in a Global Economy,” which gave me further
insights into this industrial decay and its potential. The 2-year BIE grant was intended to help
strengthen the international competitiveness of regional businesses through education, research,
and outreach. Over time, I have become quite interested in how some of the old, shuttered manu-
facturing estates and cities resurrected themselves into something new, dynamic, and exciting.
Manchester, NH, reputed to be a global textile capital before World War I, is now home
to knowledge businesses, research institutes, and fancy restaurants. The old, once-crumbling
Riverside Mill District has been reincarnated into a complex of 30 technology firms, includ-
ing Texas Instruments and Autodesk. Dyn, an internet performance company with more than
400 workers during its heyday, was headquartered in one of the repurposed industrial buildings.
Its office space looked like that of a high-tech company in Silicon Valley, complete with indoor
putting greens and playground slides (Oracle acquired Dyn in 2017 but permanently closed it
in January 2020). Some of the nineteenth-century industrial buildings that previously served as
tenement housing for textile mill workers are now stylish, eclectic residential condominiums, and
retail stores.
The University of New Hampshire, which maintains an urban campus in Manchester, has
been strengthening its STEM offerings and has a new biotechnology major. Many members of
its large student body find for-credit internships in the immediate business community, often in
STEM-oriented fields at high-tech companies. The Department of Defense is setting up an $80
million research institute, the Advanced Regenerative Manufacturing Institute, for the biofabrica-
tion of human tissue and organs.
The Crown Cork and Seal Company started operations in Baltimore in 1897 and was once
the largest bottle cap factory in the world. After relocating its headquarters to Philadelphia in
1958, the company sold 30 of its industrial buildings to the City of Baltimore for $1.5 million, but
manufacturing continued at its Highlandtown plant for another 30 years. (It closed its Baltimore
operation in 1987.) The repurposed Crown Cork and Seal building now houses artists’ studios and
light manufacturing enterprises. One of the company’s buildings, the Copycat Building (named
after Copy Cat Printing, which operated in the building decades ago), is now the centerpiece of
Baltimore’s Station North Arts and Entertainment District. It offers studio and living space for
more than 100 artists, musicians, and performers. Another building now houses the Emerging
Technology Center, a nonprofit tech incubator that has worked with more than 100 tech startups
at different stages of their evolution.
In the mid-2010s, James and Deb Fallows went on a 3-year journey across the US in their
single-engine Cirrus SR22 airplane, exploring small- and medium-sized cities that had previ-
ously suffered economic, political, environmental, or some other hardship, but came out of the
 Global Meets Digital ◾ 7

hardship successfully. They traveled to about four dozen cities, spending up to 10 days in some
of them. The March 2016 issue of The Atlantic magazine has their detailed story, titled “How
America Is Putting Itself Back Together.”8 Everywhere they went, they saw signs of reinvention
and renewal. They found that despite the major talent destinations of the East and West Coasts,
talent and ambition are widely distributed throughout the US. Duluth, MN, for example, is now
a key aerospace center in the nation and also has new firms in medical equipment, environmental
technology, and other high-tech fields. The space occupied by the former Bethlehem Steel plant
in Bethlehem, PA, now has a performing arts center, a casino resort, and outdoor music venues.
Pittsburgh has metamorphosed from a dying steel city into a major technology hub, aided by its
key universities and local philanthropists (the Mellon, Heinz, Carnegie, and Frick families) com-
mitted to the city’s development.
Such phenomenal changes are not limited to the US. Dozens of European cities have expe-
rienced similar evolution. Like Pittsburgh in the US, entire cities—not just old manufactur-
ing plants—have been transformed into creative and high-tech spaces. For example, the city of
Sheffield9 in the UK was the birthplace of stainless steel manufacturing and a major player in
the first Industrial Revolution. After four devastating rounds of deep recession and other natural
disasters during the 1970s and 1980s, Sheffield’s resurgence during the 1990s and especially during
the early 2000s can be attributed to high levels of public investment, its strong university anchors,
advanced engineering and technical skills, manufacturing heritage, preexisting infrastructure,
and some 13,000 small- and medium-sized enterprises (SMEs) that account for more than 80% of
all private sector jobs in the city. Its new economy companies are involved in hydrogen and other
renewables, digital innovation, environmental technologies, and advanced manufacturing.
One of the reasons for the comeback of downtrodden communities and cities has been the
availability of cheap land in once-abandoned manufacturing estates. But none of the industrial
renaissances would have been possible without the backing of universities with preexisting spe-
cialized research and educational facilities, their manufacturing and industrial heritage, infra-
structure, local philanthropies and economic development agencies, and public investment. These
factors have led to the establishment of incubators and other resources that attract entrepreneurs,
startups, artists, and others looking for affordable places to establish themselves.
In their 2016 book, The Smartest Places on Earth: Why Rustbelts Are the Emerging Hotspots of
Global Innovation, Antoine van Agtmael and Fred Bakker explored why the rust belts of the rich
world are developing into what they call brainbelts. With dozens of examples of rust belt and
nonrust belt cities from the US and Europe, they told stories of how people from different cultures
and backgrounds came together to find global solutions for global problems. They highlighted sev-
eral factors that helped create the brainbelts, such as visionary thinkers, local universities, public
initiatives, startups, and even big corporations. These emerging islands of creativity and innova-
tion have transformed local economies through collaboration between business, academia, and
regional governments working together with ingenuity, new technologies, and new materials.
The January 21, 2001 issue of the Newsweek magazine published a list of ten dying cities of
America, based on the largest population declines in America’s metro cities, that included South
Bend, IN, and Pittsburg, PA.10 Despite declining population, these and many other cities now
present growth trends that span high-tech and creative industries, even growing population in
some—hallmarks of economic resurgence. They offer lessons for erstwhile industrial cities to ben-
efit from their preexisting industrial and infrastructural assets, universities, corporations, local
philanthropists and visionary thinkers, and governments to work together for a new future.
Business in the 2020s is global and digital, almost by definition. Every company today is
global—whether it does business abroad or competes with companies from abroad. With 7.98
8 ◾ Global and Digital Strategy

billion people in the world (as of July 2022), hun-

BUSineSS in tHe 2020S dreds of millions of businesses, and over 13 billion
Predicting the future is hard. But devices connected to the internet, they are all now
preparing for its uncertainties, while part of the digital economy… every business is a digi-
you lie on the beach, can at least tal business.11
be entertaining. It can also broaden To explore the likely trajectory of business in the
the mind and subtly change your 2020s, it is helpful to study some of the major trends
understanding of the present… we observe in the fall of 2022 that could define the
Speculating about the future, even boundaries of business. Here is a list of three trends
if it is far-fetched, can help people which we believe will have the most impact on mul-
and institutions cope with what tinationals’ strategy in this decade and beyond,
comes next. though unexpected risks can derail any strategy no
The Economist, July 6, 2019 matter how carefully it is designed. (Other trends,
(p. 12) including climate change, the rise of international
terrorism, and growing global risks, are not included
here—not because they are not important—but because of the space needed to adequately
cover them.)

◾ Globalization—from divergence to interdependence to convergence to…

◾ Technology—on steroids.
◾ Competition—a changing paradigm.

Globalization: From Divergence to Interdependence to Convergence to…

Globalization is today’s big reality and a defining issue for the twenty-first century.12 It is driven by
technology, international trade and investment, knowledge and cross-border data flows, commu-
nication and transportation networks, the arrival of several developing countries onto the global
stage, multinational enterprises from both developed and developing countries, the actions of
governments and multilateral institutions such as the International Monetary Fund and the World
Trade Organization, geopolitics, and even the actions of nongovernmental organizations. Most of
these actors have been in business for decades, but their impact today is much greater than it used
to be in the earlier eras. (Globalization is, of course, not new. There are many kinds of globaliza-
tion, including ecological globalization, economic globalization, and globalization of terrorism,
disease, and money laundering. We are concerned mainly with economic globalization in this
book.)
The Industrial Revolutions created extraordinary economic growth, but also huge divergence in
living standards between industrialized countries and the rest of the world. Over time, however,
the world has been experiencing greater interactions between and among countries with the rise
of cross-border trade, investment, people migration, technology and data flows, and through the
efforts of multilateral institutions. Interdependence among nations has been the hallmark of grow-
ing globalization in recent decades.
While the Industrial Revolutions and the digital economy continue to bestow great benefits
upon advanced countries, many developing countries that had previously been left out of the
bounty have also lately been experiencing dramatic increase in growth and prosperity. Hence, the
term emerging markets is used for such countries. In China, for example, hundreds of millions of
people have been lifted out of poverty. Now, as industrialized countries are experiencing lower
 Global Meets Digital ◾ 9

growth rates, and developing countries higher growth

rates, there is growing convergence between developed and tHe RiSe oF eMeRGinG
developing countries on several dimensions. According to MARKetS
Michael Spence, the winner of the 2001 Nobel Prize in In terms of size, speed, and
Economic Sciences, directional flow, the global shift
in relative wealth and economic
The huge asymmetries between advanced and power now under way – roughly
developing countries have not disappeared, but they from West to East – is without
are declining, and the pattern for the first time is precedent in modern history.
convergence rather than divergence.13 Global Trends 2025: A
Transformed World. Washington,
Lately, however, there has been talk of slowing globaliza- DC: U.S. National Intelligence
tion, even of deglobalization, meaning decreasing inter- Council, November 2008
dependence and integration among nations. And there
has been backlash against globalization and multilateral
institutions for at least 20 years as well as, more recently, the rise of nationalism in many parts
of the world (e.g., BREXIT in Britain and the election of far-right candidates in the US, Italy,
and Brazil). In parts of Europe and some other countries, antiestablishment political parties have
made significant electoral gains. Even in developing countries, rising living standards are making
citizens demand more. Ian Bremmer, in his 2018 book, (Us vs. Them: The Failure of Globalism),
argued that the worst is yet to come.
As the world’s center of gravity shifts decisively in favor of emerging markets, competitive
challenges and opportunities are being continually and dramatically transformed. Let us take
just three examples of how some developing countries are beginning to have the characteristics of
developed countries, even surpassing them on certain dimensions, such as GDP (gross domestic
product), the number of Fortune Global 500 companies, and middle-class consumption.
Gross domestic product. Ranked number six in the list of the world’s top 10 economies in
2010, China’s GDP was only $1.193 trillion (at current prices) compared to $10.285 trillion for the
US, less than 12% of the US GDP (Table 1.1). Few could have imagined that in 22 years, China’s
economy would be second only to that of the US in terms of GDP at current prices, and larger
than that of the US in terms of GDP at purchasing power parity, or PPP—making China the larg-
est economy in the world. India’s GDP at PPP ranked number three in 2022, compared to number
nine in 2000, surpassing all the G714 countries except the US. The list of top 10 economies (GDP
at PPP) now includes Russia, Brazil, and Indonesia.
Fortune Global 500 companies. Table 1.2 shows the number of Fortune Global 500 (FG500)
companies headquartered in the G7 and BRIC15 countries for 2000, 2005, 2010, and 2019. Each
of the G7 countries shown in the table experienced a decline in the number of FG500 companies
headquartered there over the 19-year period, with the US, the UK, and Japan experiencing the
largest decline. The 2019 list had more than 50 fewer US-headquartered FG500 companies than
in 2000. (This does not indicate the decline of American business, but the rise of everyone else and
the fact that there can be only 500 companies in the FG500 list.) The biggest increase was achieved
by China, with an increase of 110 FG500 companies from 2000 to 2019; a large number of these
companies are state-owned enterprises (SOEs). Among the top 10 FG500 companies are three
Chinese SOEs, Sinopec Group (ranked #2), China National Petroleum (#4), and State Grid (#5).
Several Chinese technology companies also significantly improved their rank in FG500, includ-
ing Alibaba Group Holdings which climbed 182 places and Tencent Holdings which climbed 94
places compared to their ranks in 2018.
10 ◾ Global and Digital Strategy

2000 GDP 2022 GDP

Rank Rank
(2000 At At PPP (2022 Rank At At PPP
GDP at Current ($ GDP at (2022 Current ($
Current Prices ($ Trillion) Current GDP at Prices ($ Trillion)
Prices) Country Trillion) Prices) PPP) Country Trillion)

1 US 10.285 10.285 1 2 US 25.347 25.347

2 Japan 4.731 3.237 2 1 China 19.912 30.178

3 Germany 1.892 2.341 3 4 Japan 4.912 6.110

4 UK 1.497 1.467 4 5 Germany 4.257 5.270

5 France 1.372 1.678 5 3 India 3.535 11.745

6 China 1.193 3.608 6 7 UK 3.376 3.372

7 Italy 1.107 1.565 7 9 France 2.937 3.678

8 Brazil 0.645 1.524 8 15 Canada 2.221 2.234

9 India 0.477 2.148 9 12 Italy 2.058 2.972

10 Russia 0.260 1.531 10 8 Brazil 1.833 3.681

6 Russia 1.829 4.365

10 Indonesia 1.289 3.395

Source: IMF World Economic Outlook Database (2000, 2022).

Note: PPP stands for purchasing power parity; it indicates the value of GDP after taking into
account cost of living differences between countries (e.g., 1 dollar in China has a much
larger purchasing power than 1 dollar in the US).

The BRIC nations now account for 165 of the FG500 companies (145 are in China), compared
to just 14, 19 years ago. Clearly, the world’s economic center of gravity is moving from the devel-
oped toward the developing world and generally from West to East.
Size of middle class. Research by Homi Kharas of the Brookings Institution shows that by
2030, about 65% of the world’s total middle class will likely be living in Asia Pacific (Table 1.3).16
When the middle-class populations in Central and South America, Sub-Saharan Africa, and
Middle East and North Africa are added to this total, it comes to about 80% of the total world-
wide middle-class population. In fact, by the end of 2018, over half the world’s population was
middle class or rich.17
The consumption by the middle-class population in Asia Pacific (including Japan) will likely
be 57% of the total world consumption by 2030 (Table 1.4).
Further, as Table 1.5 shows, India and China are going to be the big spenders in the coming
decades, their share in worldwide consumption eclipsing that of individual countries in the rest
of the world by orders of magnitude. In 2015, the US had the largest middle-class market in the
world ($4.7 trillion), but was overtaken by China in 2020 and will likely be overtaken by India
 Global Meets Digital ◾ 11

Category Country 2000 2005 2010 2022

G7 US 175 175 141 124

UK 39 33 29 18

Germany 34 34 36 28

France 43 40 40 25

Japan 107 81 71 47

Canada 12 14 11 12

Italy 10 10 11 5

BRICs Brazil 2 4 8 7

Russia 2 3 6 4

India 1 5 8 9

China 9 18 47 145

Source: Fortune Magazine, various issues.

Region 2015 2020 2030

North America 335 11% 344 9% 354 7%

Europe 724 24% 736 20% 733 14%

Central and South America 285 9% 303 8% 335 6%

Asia Pacific 1,380 46% 2,023 54% 3,492 65%

Sub-Saharan Africa 114 4% 132 4% 212 4%

Middle East and North Africa 192 6% 228 6% 285 5%

World 3,030 100% 3,766 100% 5,412 100%

Source: Homi Kharas, “The Unprecedented Expansion of the Global Middle Class, An Update”,
February 2017 (Brookings Institution).

in 2030. According to estimates by Homi Kharas of the Brookings Institution, the middle-class
market in advanced economies, having reached maturity, is growing at only 0.5–1% per year. The
middle-class market in emerging economies, by contrast, will likely grow at 6% per year.
There is of course a lot more to globalization than discussed here, which we will explore in
greater detail in Chapter 2.
12 ◾ Global and Digital Strategy

Region 2015 2020 2030

North America 6,174 18% 6,381 15% 6,681 10%

Europe 10,920 31% 11,613 27% 12,573 20%

Central and South America 2,931 8% 3,137 8% 3,630 6%

Asia Pacific 12,332 36% 18,174 43% 36,631 57%

Sub-Saharan Africa 915 3% 1,042 2% 1,661 3%

Middle East and North Africa 1,541 4% 1,933 5% 2,679 4%

World 34,614 100% 42,279 100% 63,854 100%

Source: Homi Kharas, “The Unprecedented Expansion of the Global Middle Class, An Update”,
February 2017 (Brookings Institution).

2015 2020 2030

Country Tn$ Share Country Tn$ Share Country Tn$ Share

(%) (%) (%)

US 4.7 13 China 6.8 16 China 14.3 22

China 4.2 12 US 4.7 11 India 10.7 17

Japan 2.1 6 India 3.7 9 US 4.7 7

India 1.9 5 Japan 2.1 5 Indonesia 2.4 2.4

Russia 1.5 4 Russia 1.6 4 Japan 2.1 2.1

Germany 1.5 4 Germany 1.5 4 Russia 1.6 1.6

Brazil 1.2 3 Indonesia 1.3 3 Germany 1.5 1.5

UK 1.1 3 Brazil 1.2 3 Mexico 1.3 1.3

France 1.1 3 UK 1.2 3 Brazil 1.3 1.3

Italy 0.9 3 France 1.1 3 UK 1.2 1.2

Source: Homi Kharas, “The Unprecedented Expansion of the Global Middle Class, An Update”,
February 2017 (Brookings Institution).
 Global Meets Digital ◾ 13

Technology—On Steroids
Technology is the second big reality in today’s world, and, in fact, it provides the glue for the
global–digital economy. Technology and globalization have gone hand in hand for centuries,
each impacting and being impacted by the other. As noted earlier, technology has been behind
the evolution of new economies ever since the first Industrial Revolution. Over the last several
decades, technology has been advancing at an increasing rate of change in multiple fields, includ-
ing information technology (IT), manufacturing and automation, life sciences, genetic engineer-
ing, renewable energy, materials, automotive, services, processes, and more—so much so it is now
ubiquitous in our everyday lives.
Information technology has seen the greatest advances
There are known knowns.
during the last two decades. There are many more
There are things we know that
advances yet to come, most of which cannot even be visu-
we know. There are known
alized at this time. (This book focuses largely on digital
unknowns. That is to say, there are
technologies.)
things that we now know we don’t
As Donald Rumsfeld, the former US Secretary
know. But there are also unknown
of State for Defense, might say, there are “unknown
unknowns. There are things we do
unknowns.” This is partly because information technolo-
not know we don’t know.
gies are general-purpose technologies18 that can be used
Donald Rumsfeld, US Secretary
in multiple industries in multiple ways. According to Erik
of State for Defense, 2002
Brynjolfsson’s and Andrew McAfee, today’s IT is quanti-
tatively and qualitatively different from its earlier heyday
in that it is digital, exponential, and recombinant.19 Digital technologies are behind most of the
innovations we see today in practically all fields of human endeavor, and their progress has been
exponential as suggested by Moore’s law and Metcalfe’s law of network effects. Moore’s law states
that, for a given price, computing power doubles every 18–24 months, and according to Metcalfe’s
law, the value of a network equals the square of the number of its users; hence, the exponential
characteristic of the digital revolution. Finally, borrowing the term recombinant from genetics
research, Brynjolfsson and McAfee observe that digital innovation is recombinant in the sense
that each innovation “becomes a building block of future innovations.”20 Innovations from mul-
tiple sources get connected and enhanced through networks and open innovation to create entirely
new products and services which may or may not bear any semblance to the products/services
from which they evolved.
Computers and IT form the backbone of new products and services that simply did not exist
even 10 years ago. In manufacturing, the 3D printing technology has taken the world by storm.
One can now literally print not only complex pieces of jewelry at home, but also a handgun using
a 3D printer and design software downloaded from the internet. Several companies now construct
(print) houses, even large buildings, using 3D printing technology. For instance, in 2019, Apis Cor
of the US was hired by Dubai Municipality to print a two-story administrative building, the larg-
est 3D printed building in the world at the time. The 6,998-square-foot building was completed
in just 2 weeks.21 Figure 1.2 shows a 3D printed house in Wallenhausen, Germany.
3D printing is, of course, only one of several disruptive technologies today. It was only a few
years ago that social, mobile, analytics, and cloud (SMAC) were all the rage in technology innova-
tion. Today, some of the maturing, disruptive technologies (in no particular order) are Artificial
intelligence (AI), fifth-generation mobile cellular communications (5G), cloud computing, data
analytics, Internet of Things (IoT), advanced robotics, virtual and augmented reality (VR and
AR), 3D printing, and blockchain.
14 ◾ Global and Digital Strategy

Figure 1.2 A house constructed with 3D printing.

Source: 3D-Druck-Haus Wallenhausen, September 19, 2021https://commons.wikimedia.
org/wiki/File:3D-Druck-Haus_Wallenhausen_02.jpg.

Not just manufacturing and construction, these and other digital technologies are upend-
ing most other industries. Take, for instance, MoneyLion, a fintech company launched in 2013.
It offers its members free checking accounts, debit cards usable at over 55,000 ATMs without a
fee, managed investing in ETF portfolios, and, for a fee, cash advances and help with building
credit. It targets people with less than $2,000 in savings on average and already has over 4 million
members and $477.5 million in venture capital funding as of summer 2022. Or, in healthcare,
consider TytoCare, a mobile-health platform that allows anyone to perform guided medical self-
exam with a remote healthcare provider anytime, anywhere. With the Tyto exam kit handheld by
a patient, the medical provider can remotely examine the patient’s heart, throat, abdomen, skin,
ears, and body temperature. The provider can then offer diagnosis, treatment plan, and even order
a prescription, if needed. Founded in 2012, Tyto offers three telehealth products: TytoHome™ for
consumers, TytoPro™ for professionals, and TytoClinic™ for remote point-of-care locations—all
designed to replicate a face-to-face clinic visit.

What’s behind the growth of IT?

In one word … digitization. At the very basic level, without digitization, computers, IT, and every-
thing they enable would not have been possible.
 Global Meets Digital ◾ 15

Digitization involves the conversion of an analog source into a digital source, that is, convert-
ing it into a series of zeros and ones so it can be read by computers—a bridge between the analog
and the digital worlds. The analog source can be a paper book converted into an e-book. It can
be a musical score (a printed manuscript) or a phone conversation (physical sound) converted into
a digital file. So, digitization simply involves converting an analog source into a digital source,
without making any changes to the underlying process itself. That’s the function of digitalization.
Digitalization is the process of moving to digital business; it cannot occur unless the different
elements involved in a process have first been digitized. Digitalization thus involves transforming a
business process using digital technologies. It makes processes easier to perform and more efficient.
It is ubiquitous in our daily lives, so much so it is hard to visualize a world without digitalization.
Digitization and digitalization are what used to be known as computerization in an earlier era.
All this growth and innovation are, however, not without challenges. A key challenge aris-
ing from the adoption and growth of digital technology revolves around digital disruption.
Technologies like AI, data analytics, robotics, and others mentioned earlier (and new entrants into
their industries) are fueling disruption for millions of companies, especially those in legacy indus-
tries wedded to older technologies and unwilling or unable to digitalize their processes, systems,
and business models. A 2019 survey of decision makers conducted by market research firm Vanson
Bourne, and sponsored by Teradata, found that 94% of the businesses surveyed experienced some
form of disruption and were rethinking their business approaches. The survey also found that
61% of the respondents were unprepared to strategically address market-disruptive competitors.
The top sources of disruption included keeping up with customer demands and market dynam-
ics (87% of the respondents), workforce pressures such as skills shortages and employee retention
(85%), and adapting to new business models (74%). Respondents in the survey, called “Adapt or
Perish: The New Reality in a Hyper-digitized World,” were from companies in the US, the UK,
France, Germany, China, and Japan with 1,000 employees or more and annual revenue of at least
$250 million—in financial services, IT, technology, and telecom industries.22
Refer to Chapter 3 for more on technology, its genesis, and its impact on the business world.

Competition—A Changing Paradigm

What pulls together the other forces in the global–digital economy is competition—competition
for markets, technologies, investment, talent, and other resources. Economic competition typi-
cally refers to competition for markets, i.e., rivalry between two or more sellers for sales, market
share, and profits. How firms go about trying to secure the business of prospective customers
changes with the emergence of new economies and new technologies. There has also been a funda-
mental change in how firms compete and create and capture value in the global–digital economy,
which is the crux of this book.
Talking of competition in an economic sense, Harvard Business School professor Michael
Porter popularized the concepts of industry analysis, competitive strategy, and competitive advan-
tage, among other core strategy ideas.23 His theories developed at the height of the old economy
(the 1970s and 1980s) are still relevant today, especially for old economy companies and indus-
tries, i.e., industries in the industrial economy that tend to be relatively stable and mature. Using
Porter’s five forces model for a digital economy industry would, however, be a stretch, though
some of his other theories are still applicable for digital economy firms and industries.24
As economies become more services-oriented25, more connected, and with digitized goods and
services, competition is becoming ever more international in its reach. A company that operates in
multiple markets has the opportunity to spread parts of its value chain among countries as it competes
16 ◾ Global and Digital Strategy

for customers, markets, and resources globally. In markets worldwide, it often meets the same global
players and also has the opportunity to dovetail its competitive stance against specific competitors
differently in different markets. At the same time, it must meet the assault on its home market by
companies from throughout the world, and increasingly by companies from emerging markets.
With new technologies (e.g., AI and 3D printing), new players (digital startups), new products
(IoT devices), new playing fields (digital and emerging markets), new challenges (digital disruption),
new rules of the game (network effects), and new market dynamics (winner-take-all or winner-take-
most), competition is now an entirely new ballgame.
New technologies. Competition in high-technology industries is generally very different from
competition in old-economy industries. Platform-based business models, multisided markets, and
network effects are especially important in considering the impacts of technology on compe-
tition. While new technologies can provide competitive advantage to a firm, for example, by
creating entry barriers for competitors, technology markets also present some unique challenges
for firms. Such challenges include digital disruption caused by newer technologies, startups, and
other entrants into their industries (think Uber/Lyft in the taxi market) as well as by services such
as price comparison websites (e.g., confused.com in the insurance and financial services industries
in the UK). Besides, companies such as Uber/Lyft and Airbnb have not only disrupted the taxi
and hospitality industries, respectively, they have also increased the market size of those industries
and have often bred new startups.
New players. These are companies that have joined the ranks of global competitors from
emerging markets, small and medium-sized enterprises (SMEs) new to international competition
from both developed and emerging markets, as well as new digital players from everywhere. All of
these have negative implications for incumbents in their industries.
New products. Digital technologies and innovation are giving rise to new products and
services—both purely digital and IoT—whose economics and market behavior are very different
from those of physical goods and services.
New playing fields. The fall of the Berlin Wall on November 9, 1989 opened up huge new
markets—markets that had been behind the Iron Curtain for over 50 years—for companies from
all over the world. The growth of developing economies since the 1990s and 2000s has created a
much larger market for companies with international operations or aspirations. These new mar-
kets comprise some 4 billion consumers and millions of businesses—more than the world experi-
enced at any other time in the past. Add online markets to these playing fields.
New challenges. Digital disruption is just one of the challenges brought on by digital.
Businesses today face many other technology-related challenges such as fast-evolving technolo-
gies, budgetary constraints, and security concerns.
New rules of the game. In the global–digital economy, firms have many more competitive
tools available to them than in any of the previous economies. This is partly because it consists of
the old economy, the digital economy, and the age of smart machines—each with its own com-
petitive tools. For old-economy firms, Michael Porter’s generic strategies framework should work
well, i.e., companies can compete through cost leadership, differentiation, and/or scope.
New market dynamics. Digital markets exhibit zero or near zero marginal cost and sig-
nificant economies of scale. Such characteristics, along with network effects, whereby a product
becomes more valuable the more users it has, can generate winner-take-all or winner-take-most
market dynamics.26
Digital economy firms, for which economies of scale and scope tend to be very significant, are
subject to Carl Shapiro’s and Hal Varian’s information rules.27 Digital or information goods are
goods that can be digitized, that is, converted into bits (the smallest possible piece of information,
 Global Meets Digital ◾ 17

represented by a 1 or a 0) and bytes (groups of 8 bits each). As was observed earlier, the marginal
cost of producing a digital good is zero or nearly zero. With zero or near zero marginal cost, and
with significant economies of scale, “[T]he returns in such markets typically follow a distinct
pattern—a power law, or Pareto curve, in which a small number of players reap a disproportionate
share of the rewards. Network effects, whereby a product becomes more valuable the more users it
has, can also generate these kinds of winner-take-all or winner-take-most markets.”28 Examples of
such digital products (with one, two, or three winners in the market, the rest being niche players)
are not hard to find. The Microsoft application software is but one.
Smart products (connected things), on the other hand, are both physical and digital and con-
nected to other smart products through the internet. Because they are physical, they do not have
zero marginal cost. Because they have software and sensors embedded into them, the cost of
producing them is generally greater than for their purely physical equivalents. However, they are
able to command premium prices. The rules of the game for the age of the smart machines are
still evolving and would likely include technology leadership, increasing returns to scale, and first
mover advantages, among others.
Truly, competition in the 2020s is an entirely new ball game! In this new global–digital world,
everyone, including individuals and businesses, will need a new gameplan. That’s where this book
comes in.

notes
1 This term was first used by The Economist, “The age of smart machines,” on May 25, 2013, and popu-
larized by Erik Brynjolfsson and Andrew McAfee in their January 2014 book, The Second Machine
Age (W.W. Norton & Company). Michael E. Porter and James E. Heppelmann referred to such prod-
ucts as “smart, connected products” in their Harvard Business Review articles in November 2014 and
October 2015.
2 Erik Brynjolfsson and Andrew McAfee, The Second Machine Age: Work, Progress, and Prosperity in a
Time of Brilliant Technologies (New York: W.W. Norton & Co., 2014).
3 The Economist, “Manufacturing: The Third Industrial Revolution,” The Economist, April 21, 2012.
4 The Economist, “The Age of Smart Machines,” The Economist, May 24, 2013.
5 For more discussion, see Vinod K. Jain, Global Strategy: Competing in the Connected Economy
(New York and London: Routledge, 2016).
6 An earlier version of this section appeared in the July 2020 issue of the Mensa Bulletin, Vinod K. Jain,
“Old is new again: A dazzling new sheen on the rust belt.” https://www.us.mensa.org/read/bulletin/
features/old-is-new-again/.
7 Paul Tullis, “Pete Buttigieg revived South Bend with tech. Up next: America,” Wired, April 11, 2019.
https://www.wired.com/story/pete-buttigieg-revived-south-bend-with-tech-up-next-america/.
8 James Fallows, “How America is putting itself back together,” The Atlantic, March 6, 2016. https://www.
theatlantic.com/magazine/archive/2016/03/how-america-is-putting-itself-back-together/426882/.
9 Laura Lane, Ben Grubb, & Anne Power, “Sheffield City Story,” CASEreport 103, May 2016, LSE
Center for Analysis and Social Exclusion.
10 Mainstreet, “America’s dying cities,” Newsweek, January 21, 2011. https://www.newsweek.com/
americas-dying-cities-66873.
11 Jorge Lopez, “Digital business is everyone’s business,” Forbes, May 7, 2014. https://www.forbes.
com/sites/gartnergroup/2014/05/07/digital-business-is-everyones-business/#4952ea4b7f82. See also:
https://knowledge.wharton.upenn.edu/article/every-business-digital-business/.
12 Jagdish Bhagwati, In Defense of Globalization (New York: Oxford University Press, 2007), p. 3.
13 Michael Spence, The Next Convergence: The Future of Economic Growth in a Multispeed World (New
York: Farrar, Straus and Giroux, 2011), p. 15.
18 ◾ Global and Digital Strategy
Chapter 2

Paradox of Globalization

What an extraordinary episode in the economic progress of man that age was which
came to an end in August 1914! … The inhabitant of London could order by tele-
phone, sipping his morning tea in bed, the various products of the whole earth, in
such quantity as he might see fit, and reasonably expect their early delivery upon his
doorstep; he could at the same moment and by the same means adventure his wealth
in the natural resources and new enterprises of any quarter of the world …
John Maynard Keynes, The Economic Consequences of the
Peace (London: Macmillan & Co., Ltd., 1919) p. 6
This is how John Maynard Keynes (1883–1946), the renowned economist and man of quite a
range of interests and influence, described globalization as it existed (for the upper classes in
Britain) during the pre-World War I era—in some respects a bit akin to what exists today. His
1919 book, The Economic Consequences of the Peace, from which the above quotation was taken,
made him a celebrity, well before he formulated Keynesian Economics and became famous.
The railroads, steamships, telegraph, and telephone—multinational communication net-
works—already existed by the year 1900. Prior to 1914, people, goods, and capital could move
between countries much more easily than today—largely unimpeded by trade and investment bar-
riers, visas, and such. Hence, a London inhabitant could indeed order on phone what he needed
to purchase or invest his capital in any part of the world relatively easily.
So, what is globalization and when did it begin? And what is the paradox? It depends on whom
you ask.
Views on globalization range from it being the root of all evil to a solution for many of the
problems the world is facing. Perhaps there is some truth to both positions. However, there are
many kinds of globalization, such as cultural, ecological, economic, and political. Even though
these types are somewhat interconnected, economic globalization tends to be the most prominent
and bears the brunt of criticism. Some people tend to ascribe anything and everything to (eco-
nomic) globalization, without making distinctions among the different kinds of globalization.
In this book, we will mostly be concerned with economic globalization, defined as growing inte-
gration and economic interdependence among nations—via international trade and investment,
and people, capital, and technology and data flows. The paradox centers on positive and negative
forces impacting globalization, discussed later in this chapter.

DOI: 10.4324/9781003037446-3 19
20 ◾ Global and Digital Strategy

Economic globalization derives its underpinnings from Adam Smith’s The Wealth of Nations,
published in 1776 during the early years of the first Industrial Revolution, which explored the role
of free trade, specialization, division of labor, and markets in raising productivity and prosperity
in nations. However, globalization actually preceded Adam Smith by thousands of years.

When Did Globalization Begin?

Well, if globalization implies growing integration and interdependence among nations, it truly
began with the Silk Road and the Spice Routes some 4,000–5,000 years ago. The Silk Road was
a network of international trade and cultural routes connecting China, India, Persia, and the
Mediterranean and intermittently bringing together traders, merchants, pilgrims, monks, thieves,
and soldiers from different countries. Claimed to have begun around 3,200 BC, the Silk Road
lasted several millennia. Not just silk and cultural influences, many other goods, even disease, reli-
gions (e.g., Buddhism and Christianity), and technologies of the time traveled along the road—
early signs of the growing integration of the world. The Silk Road followed land routes, but the
Spice Routes were largely sea routes (Figure 2.1).
The map shows trading routes centered on the Silk Road, shown as thick lines mostly on
land. Other trading routes are shown in thin lines on both land and sea, including the Spice
Routes mostly on sea. Both these trade and cultural routes helped connect the East and the West.1
According to a description of the Spice Routes on a UNESCO website:

The principal and most profitable goods they traded in were spices... But precious
goods were not the only points of exchange between the traders. Perhaps more impor-
tant was the exchange of knowledge: knowledge of new peoples and their religions,

Figure 2.1 the Silk Road and the Spice Routes.

Source: The Silk Road and Spice Routes, 1st Century CE, https://commons.wikimedia.org/
wiki/File:Transasia_trade_routes_1stC_CE_gr2.png.
 Paradox of Globalization ◾ 21

languages, expertise, artistic and scientific skills. The ports along the Maritime Silk
Roads (Spice Routes) acted as melting pots for ideas and information. With every ship
that swept out with a cargo of valuables on board, fresh knowledge was carried over
the seas to the ship’s next port of call.2

More recently, explorers like Marco Polo (thirteenth and fourteenth centuries), Zheng He
(fifteenth century), Christopher Columbus (fifteenth and sixteenth centuries), Vasco da Gama
(fifteenth and sixteenth centuries), and David Livingstone3 (nineteenth century) were some of the
early torchbearers of globalization.
Marco Polo, for instance, traveled the Silk Road with his uncle and father eastward from their
home in Venice in 1271, taking a somewhat different route from the one his uncle and father had
taken 10 years earlier. While in China, Marco Polo served in the court of the Great Kublai Khan
for 17 years, in various important, high-ranking positions, and traveled a great deal on official mis-
sions within China and even to Burma and India. Some of the places Marco Polo visited during
his travels were not seen by the Europeans until centuries later. The Polos returned to Venice in
1295 with great wealth, singing tales of the wonders and the wealth of the Chinese civilization.
Three years after his return to Venice, war broke out between Venice and the rival city of Genoa.
Marco joined the army but was captured and spent a year in a Genoese prison. While in prison,
he dictated the story of his travels to a fellow prisoner, a writer, who recorded his tales. The story
turned out to be one of the greatest travelogues in history, The Description of the World or The
Travels of Marco Polo, a “bestseller” in Medieval Europe. However, the book came to be known as
Il Milione (The Million Lies), because no one believed that any country could actually be as rich and
cultured as China. The book had a tremendous impact as Europeans began to learn more about
the East, and future explorers, including Columbus, read it with interest. Much of what Marco
Polo wrote was later verified by travelers in the eighteenth and nineteenth centuries. Even Chinese
historians found the book of great value as it helped them better understand the thirteenth century
China.4
Some of the “more recent” traders were the various East India Companies of the seventeenth
to nineteenth centuries from Britain, the Netherlands, France, etc. For example, the British East
India Company was chartered in Britain in 1600 to trade with the East Indies, and the Dutch
East India Company was chartered in the Netherlands in 1602 with a 21-year monopoly to trade
with Asia. Some have referred to the East India Companies as the first multinational corporations
(MNCs).5 Not really, they were indeed chartered to conduct trade, but they also carried armies
with them, conquered lands, and subjugated native populations in those lands for hundreds of
years. The British East India Company became involved in politics and acted as an agent of British
imperialism in India from the early eighteenth to the mid-nineteenth centuries.6 The company
was also a catalyst for British imperialism in China. The Dutch East India Company was, in
fact, given “quasi-government powers, including the ability to wage war, imprison and execute
convicts, negotiate treaties, strike its own coins, and establish colonies.”7 They were no MNCs.
Zheng He, an Admiral during China’s Ming dynasty, led an armada of the largest ships8 in the
world at the time exploring the Indian Ocean, including India, Ceylon (now Sri Lanka), Arabia,
and East Africa, on seven voyages in the early 1400s. The armada had over 27,000 crew members
and soldiers and 300 ships, the longest being 400 ft by 160 ft. (By comparison, in 1492, Columbus
had 90 sailors on three ships, of which the longest ship, the Santa Maria, was 85 ft long.) The pur-
pose of his voyages was apparently to obtain recognition and gifts for emperor Yongle from rulers
of the lands he visited, rather than to conquer or colonize them. He did use force against those
who refused to respect the emperor’s wishes.
22 ◾ Global and Digital Strategy

During the Age of Discovery, a period from the fifteenth to the eighteenth centuries, Europeans
carried out many global explorations and discovered many ocean routes, such as to the West in
1492 when Christopher Columbus reached the Americas and to the East in 1498 when Vasco
da Gama reached India. The conquistadors, professional warriors from Portugal and Spain, con-
quered the Americas, especially Mexico and Peru in the sixteenth century, and ruled the region for
300 years. European explorers also set up trading posts in Africa, Americas, and Asia for tradable
goods such as spices, gold, silver, firearms, and slaves.
Angus Maddison (1926–2010), formerly Professor Emeritus at the University of Groningen,
was a noted British economist who had specialized in measuring and analyzing economic growth
and development during long periods of time in dozens of countries. His databases are important
sources for analyzing long-term economic growth and are used by academic researchers and policy
analysts worldwide. Table 2.1 presents excerpts from one of his databases highlighting how the
different countries and regions of the world fared over the last 1,000 years.9 Although China and
India had the highest gross domestic product (GDP) in the world early on, they were overtaken
by Western Europe by 1870 (not shown in the table), by the US by 1913, by the former USSR by
1950, and by Japan by 1973.
These data show the GDP in different countries and regions, but they do not show the extent
to which these countries/regions were involved in trade. Table 2.2 presents Maddison’s estimates
of merchandise exports as a share of GDP for a selected group of countries, which give an indica-
tion of the extent to which they were involved in international trade from 1870 to 1998. The most
active exporters throughout this period were the European countries included in the table, though
Spain and France seem to have joined the club of big exporters of manufactured goods only in

T
Country/
Region 1000 1500 1700 1820 1913 1950 1973 2003

Western 10,925 44,183 81,213 159,851 902,210 1,396,078 4,096,764 7,857,394

Europe

Former 2,840 8,458 16,196 37,678 232,351 510,243 1,513,070 1,552,231

USSR

US 520 800 527 12,548 517,383 1,455,916 3,536,622 8,430,762

Japan 3,188 7,700 15,390 20,739 71,653 160,966 1,242,932 2,699,261

China 26,550 61,800 82,800 228,600 241,431 244,985 739,414 6,187,984

India 33,750 60,500 90,750 111,417 204,242 222,222 494,832 2,267,136

Total Asia 81,683 153,617 214,281 391,738 609,135 830,428 2,621,624 13,855,834
(excl.
Japan)

Africa 13,835 19,383 25,776 31,266 79,486 203,131 549,993 1,322,087

World 120,379 248,445 371,428 694,598 2,733,365 5,331,689 16,022,888 40,913,389

Source: Angus Maddison, Contours of the World Economy, 1–2030 AD: Essays in Macroeconomic
History (London: Oxford University Press, 2007), p. 379.
 Paradox of Globalization ◾ 23

Country 1870 1913 1929 1950 1973 1998

France 4.9 7.8 8.6 7.6 15.2 28.7

Germany 9.5 16.1 12.8 6.2 23.8 38.9

Netherlands 17.4 17.3 17.2 12.2 40.7 25.0

UK 12.2 17.5 13.3 11.3 14.0 25.0

Spain 3.8 8.1 5.0 3.0 5.0 23.5

US 2.5 3.7 3.6 3.0 4.9 10.1

Mexico 3.9 9.1 12.5 3.0 1.9 10.7

Brazil 12.2 9.8 6.9 3.9 2.5 5.4

China 0.7 1.7 1.8 2.6 1.5 4.9

India 2.6 4.6 3.7 2.9 2.0 2.4

Japan 0.2 2.4 3.5 2.2 7.7 13.4

World 4.6 7.9 9.0 5.5 10.5 17.3

Source: Angus Maddison, The World Economy: A Millennial Perspective, Vols. I and II, (OECD 2006),
p. 362.

the 1990s. The US, on the other hand, had not been a big exporter throughout this period, partly
because of its huge domestic consumption.10
According to Maddison’s analysis, the causes for the ascent of the West compared to the rest
of the world included higher population growth, dramatic progress in shipping and navigation,
scientific progress, and technical innovations. For instance, population grew five-fold in the West
between 1000 and 1820, somewhat less than four times in the rest of the world. Progress of
Western shipping and navigation, a result of scientific discoveries and innovation, led to twenty-
fold increase in world trade between 1500 and 1820. Table 2.3 shows that world trade had been
growing much faster than the world GDP throughout the period shown in the table, except dur-
ing 1913–1950 because of the two world wars and the near collapse of world trade and cross-
border capital flows.11

What is Behind the Growth of Globalization in Recent Periods?

In more recent periods, i.e., over the last 200 years or so, integration of the world was driven
by technology and transportation—such as steam power, telegraphy, telephony, radio, television,
shipping, and the airplane. Still more recently, i.e., over the last 70 years or so, economic integra-
tion of the world (globalization) has been driven by at least four forces—multilateral institutions,
governments, multinational enterprises (MNEs), and information and communication technolo-
gies (ICTs).
24 ◾ Global and Digital Strategy

World Trade World GDP Col. 1/Col. 2

1500–1820 0.96 0.32 3.0

1820–1870 4.18 0.93 4.5

1870–1913 3.40 2.11 1.6

1913–1950 0.90 1.82 0.5

1950–1973 7.88 4.90 1.6

1973–2001 5.22 3.05 1.7

1820–2001 3.93 2.22 1.8

Source: Angus Maddison, Growth and Interaction in the World Economy: The Roots of Modernity
(Washington, DC: The AEI Press, 2004), p. 22.

Multilateral Institutions
The devastation caused by the two world wars and most countries’ desire to create a calmer world
led to the creation of three multilateral institutions—the International Monetary Fund (IMF),
the World Bank, and the General Agreement on Tariffs and Trade (GATT); GATT was later
absorbed into the World Trade Organization (WTO) on January 1, 1995. Representatives from 44
nations met in Bretton Woods, New Hampshire in the US from 1944 to 1947 to try and develop
international institutions that would help create stability in the world’s economic, financial, and
trading systems, and to help rebuild Europe. The idea behind the creation of these institutions was
that they would help manage, regulate, and police the global marketplace, and provide financial
assistance to countries when needed. They did and continue to do all of that—at least to some
extent—and have had a major influence in helping to create an increasingly integrated and inter-
dependent world.

Governments
Member countries must fulfill their obligations as members of the three multilateral institutions—
obligations to which they had previously agreed at the Bretton Woods Conference and at later
meetings and discussion rounds. Over the years, governments of individual countries have taken
many actions in their own interest, though some of them also helped bring countries together eco-
nomically, politically, and culturally. For instance, countries within certain regions (though not
always in the same region) have formed economic integration agreements, such as the European
Union (EU) and the US–Mexico–Canada Agreement (USMCA), which replaced NAFTA (North
American Free Trade Agreement) in March 2020. Such agreements are designed to help countries
benefit from free trade over and above what they could achieve as WTO members. There are many
other such actions taken by country governments to foster their economic interests and have a
greater say in world affairs, which also led to greater interaction among nations.
 Paradox of Globalization ◾ 25

Multinational Enterprises
An MNC or an MNE is a firm that has manufacturing and/or service presence in two or more
countries. As of 2018, there were an estimated 60,000 MNCs in the world, with about 500,000
subsidiaries worldwide.12 Unlike a few decades ago, many of today’s MNEs come from developing
countries. Some MNEs are small- and medium-sized enterprises (SMEs) and some were even born
global. The latter category includes companies that operate on the internet, such as Skype, Netflix,
and Google, serving customers anywhere and everywhere. Netflix shows are available in dozens
of countries, some in their own language and some dubbed or with subtitles, and with Google
Translate, enabling people from throughout the world read foreign-language newspapers; it’s often
the MNEs that are now helping integrate the world.

Information and Communication Technologies

We discussed the role of technologies, including ICTs, in the first chapter. The ICTs have indeed
made the world seem smaller—bringing people, companies, industries, and nations together more
than any other technologies and at any time in the past.
These four forces are, of course, not the only factors behind recent growth of globalization, but
they are the more important ones. Other major factors in globalization in the last few decades were
the development of containers in shipping and NGOs (nongovernmental organizations or civil
society organizations), which are set up by concerned citizens as not-for-profit entities. An NGO
is often concerned with one or more specific issues and raises funds to work on those issues, over
and above what governments do. Most NGOs typically work within the countries in which they
are established, but many have cross-border charters, such as Greenpeace, CARE, and OXFAM.
A discussion of NGOs is beyond the scope of this book.

Globalization today
The result of the recent growth in globalization is that the world today is much more integrated and
more interdependent than it was even a few decades ago, even taking into account growing trade
tensions, protectionism, and move away from democratic and free market institutions. Furthermore,
there is a growing convergence between the developed and developing worlds. However, the impacts
of globalization extend much beyond that. We now observe trends depicting role reversal between
developed and developing nations, which is redefining the rules of global competition.

Reversal of Attitudes toward Globalization

With the formation of GATT in 1947, developed countries began promoting the idea of liberaliz-
ing trade and investments in the 1950s and 1960s as a means of achieving prosperity for both rich
and poor countries. The developing countries, however, had been fearful of integration and turned
away from using trade and investments as instruments for development and growth.
Although developed countries in the 1950s/1960s were generally pro-globalization and devel-
oping countries antiglobalization, national sentiments seem to have reversed since then. For the
last two to three decades, the antiglobalization sentiment has been running high in many of the
developed countries, while the emerging and developing countries are beginning to see globaliza-
tion as a positive force.
26 ◾ Global and Digital Strategy

T
Advanced
US Countriesa Emerging Countries

Views on Trade 2014 2018 2014 2018 2014 2018

Trade is good 68% 74% 84% 87% 78% 83%

Trade creates jobs 20 36 44 47 52 56

Trade decreases prices N/A 37 28 28 24 18

Trade raises wages 17 31 25 31 45 47

a Excluding the US.
Source: The 2014 and 2018 Global Attitudes & Trends Surveys, Pew Research Center.

T
Foreign Companies Building Foreign Companies Buying
Country Category Factories in Our Country Is Good Our Companies Is Good

Advanced 74% 31%

Emerging 70 44

Developing 85 57

Global median 74 45

Source: Global Attitudes and Trends.

The 2014 and the 2018 Global Attitudes Surveys conducted by the Pew Research Center,13 a
Washington, DC-based think tank, found that most countries believe that globalization is good
for their country at least in some respects (see Table 2.4). However, respondents in advanced coun-
tries, especially in the US (and Japan and Italy, not shown in the table), seem to be ambivalent
about its benefits on trade in matters relating to jobs and wages, whereas emerging countries are
the strongest supporters of trade and globalization.
Foreign direct investment, the second pillar of globalization (the first being trade), is generally
welcomed by countries, both advanced and emerging. More specifically, greenfield investment
which involves creating a new business in a foreign country (e.g., building a new factory) as com-
pared to executing mergers and acquisitions (M&As; taking possession of existing businesses) is
generally preferred, because it can mean creation of new employment and dissemination of new
technologies, new management methods, and other intangibles in the host market. Table 2.5
shows countries’ contrasting views on greenfield investment versus M&As. A global average of
74% of the survey respondents approved of foreign firms building new factories in their countries,
but only 45% said that foreign companies acquiring local enterprises was a good thing. The dis-
tinction is even more pronounced for advanced countries—74% approving building new factories
compared to only 31% approving foreign acquisitions of domestic enterprises. However, the dif-
ference in public opinion between greenfield investment and M&A is less pronounced among
emerging and developing countries. In developing countries, especially, 85% of the respondents
 Paradox of Globalization ◾ 27

T
Foreign Companies Building Foreign Companies Buying
Country Factories in Our Country Is Good Our Companies Is Good

Israel 83% 60%

South Korea 76 27

Japan 57 33

Brazil 72 41

Mexico 73 51

South Africa 67 45

Nigeria 89 38

India 62 43

Indonesia 44 28

Turkey 46 24

Source: Global Attitudes and Trends Survey, 2019, Pew Research Center Survey, 2014, Pew
Research Center.

thought that greenfield investment was good, but 57% said that foreign acquisitions of domestic
enterprises was good.
Pew Research Center repeated the survey in 2019, but only for 15 selected countries. Of the G7
countries, only Japan was included in the survey. The results are generally in the same direction as
for the 2014 survey, but with some significant differences. On an average, 72% of the respondents
in the 15 countries surveyed said that foreign companies making greenfield investments in their
countries was a good thing, while only 40% thought that foreign companies buying companies
in their countries was a good thing. Table 2.6 shows differences of views in 10 of the 15 countries
surveyed in 2019.

Reverse Innovation
General Electric’s former Chairman and CEO, Jeffrey Immelt and Dartmouth College Tuck
School professors, Vijay Govindarajan and Chris Trimble, coined and popularized the term reverse
innovation in their 2009 Harvard Business Review article.14 Reverse innovation, also known as
trickle-up innovation, refers to any innovation developed for emerging markets that is then sold
in developed markets. General Electric and most MNEs typically sold modified Western products
in emerging markets (a process often called glocalization); reverse innovation, as the term implies,
is just the reverse.
The best-known example of reverse innovation is GE MAC 400—an inexpensive, portable
electrocardiogram (ECG) machine developed by GE Healthcare in Bangalore, India in 2007
for the rural market in India—that was later launched in the US as GE MAC 800. Another
good example, also from GE, is the conventional ultrasound machine sold in sophisticated hos-
pital imaging centers in China in 2002 for $100,000 and more. The local R&D team in China
28 ◾ Global and Digital Strategy

developed an inexpensive, portable ultrasound machine using a laptop computer that was sold for
$30,000–$40,000 in 2002 in China. By 2007, cheaper models were selling at $15,000 and found
a huge, growing market in China, the US, and elsewhere.
Other examples of reverse innovation include Procter & Gamble’s Vicks Honey Cough, a rem-
edy for cold and cough developed by the company in Mexico, which found success in America and
Europe, and Coca-Cola’s Minute Maid Pulpy, orange fruit juice with real orange pulp, popular in
the Chinese market. Later introduced in other Asian markets and in New Zealand, Minute Maid
Pulpy is the first billion-dollar Coca-Cola brand to emerge from China. Microsoft created an app
for dumb (nonsmart) phones to allow their users in India and South Africa access to websites, such
as Facebook and Twitter. The app has found new use as a low-cost cloud computing platform.
MNEs have been investing in R&D in emerging and developing nations for over two decades—
primarily to develop products for local use, but also to arbitrage the cost and talent advantage of
such nations for R&D work for developed nations. Now, with reverse innovation, some of the
products developed by the MNEs in emerging nations find markets in developed nations.
Strategy &, the consulting arm of PwC, conducts the annual Global Innovation 1000 study of the
world’s top 1000 R&D spenders. Since 2005, the study has been charting the pattern of innovation
spending by these top spenders. In the 2015 Global Innovation 1000 study, PwC reported that 94%
of the world’s largest innovation spenders conducted key elements of their R&D programs overseas,
with Asia being the top destination, followed by North America and Europe. The top 1000 R&D
spenders, for instance, spent a total of $28 billion in India in 2015, a 115% increase since 2007.
Multinationals have been relocating R&D to India for a variety of reasons, with cost not necessarily
being the most important. According to Denise Ramos, the CEO of the US-based ITT Corporation,
“Our tech center in India gives us an around-the-clock capability to accelerate development work due
to the time difference with the US... Highest priority was access to technical talent that was in close
proximity to regional customers. The fact that some of the labor is lower cost was nice to have, but not
a primary driver.” As for moving R&D to China, 71% of the survey respondents mentioned proximity
to high-growth market as their top reason for moving R&D to China, followed by proximity to key
manufacturing sites (59%) and key suppliers (54%), and a cost advantage (53%).15

Reverse FDI
For too long, international investment between developed and developing countries was a one-way
street, with investment flowing from the developed to the developing countries. In recent decades,
however, we have been seeing a reversal, whereby developing countries have also been investing
in developed countries. China, for instance, has been making substantial outward foreign direct
investment (FDI) for many years—investing in both developed and developing countries—rank-
ing as the #2, #3, or #4 largest foreign direct investor nation in the world; with state-owned
enterprises (SOEs) accounting for a dominant share of Chinese firms’ outward FDI. However,
outward FDI from China has been declining since 2016 (when it was $196.149 billion, the second
largest foreign direct investor nation in the world)—due to stricter government regulations against
capital outflows, slowdown due to COVID-19, and security concerns in recipient countries due to
Chinese companies’ investments there.
The US had been the largest foreign direct investor nation for a long time but lost its top rank
in 2018 as American MNEs began repatriating their foreign investments and earnings back to the
US as a result of the Tax Cuts and Jobs Act of 2017. The US regained its status as the largest foreign
direct investor nation in the world in 2020. Table 2.7 shows the list of the top five foreign direct
investor nations during 2019–2021.16
 Paradox of Globalization ◾ 29

T
2021 2020 2019

US 403.101 US 234.919 Japan 232.627

Germany 151.690 China 153.710 Germany 137.293

Japan 146.782 Japan 95.664 China 136.905

China 145.190 UK 65.363 France 33.818

UK 107.741 Germany 60.624 US 28.596

Source: UNCTAD, World Investment Report, Various Years.

According to Sanford C. Bernstein, a Wall Street research firm, the Chinese are “increasingly
aspirational and conspicuous consumers.”17 The same can also be said of Chinese corporates. For
example, Chinese carmaker Geely acquired Volvo from Ford and took a 9.69% stake in Germany’s
Daimler AG. Lenovo acquired IBM’s PC division with the right to use the IBM logo for 5 years.
China National Chemical Corporation’s (ChemChina’s) wholly owned subsidiary China National
Tire & Rubber Co. acquired Italy’s tire maker Pirelli, while Dongfeng Motor took a 14% stake
in France’s PSA Peugeot Citroen. Chinese companies go to developed countries for a variety of
reasons, including seeking new markets, global brands, advanced technologies, and global man-
agement expertise. With China’s going out policy, companies often receive significant government
support in their efforts to become world leaders in their respective industries. SOEs may especially
be driven to be seen as national champions in the eyes of their government.18
Indian companies had been making investments abroad for much longer, though mostly in
developing countries in the past. Since about 2000, however, some two-thirds of Indian MNEs’
foreign direct investments have gone up-market—to highly developed countries such as the US, the
UK, Germany, and France. India’s Tata Steel acquired the British-Dutch steelmaker Corus, Tata
Motors acquired Jaguar Cars and Land Rover from Ford, and Suzlon Energy acquired Germany’s
Repower. Other foreign acquisitions by Indian firms included HCL Technologies’ acquisition of
UK’s Axon Group, an SAP consulting company, and Tata Consultancy Services’ acquisition of
the French IT services firm, Alti SA. The Indian-owned Mittal Steel Company acquired Arcelor
(France, Spain, and Luxembourg) through a hostile takeover in 2006 and became the world’s larg-
est steel maker, ArcelorMittal SA, headquartered in Luxembourg city.
India Inc.’s investments in developed countries result from several factors, including Indian
companies’ ability to arbitrage their cost advantage; India’s human capital, both technical and
managerial; a huge domestic market with cut-throat competition in many industries; well-devel-
oped institutions (compared to many other emerging markets); business acumen resulting from
deeply embedded entrepreneurial traditions; and a long exposure to Western and Japanese multi-
nationals and their management practices.19
In addition to the Chinese and Indian MNEs, companies from other emerging and developing
countries have also been investing in advanced countries. When Mexico’s cement firm, CEMEX,
decided to go global in 1992, it acquired two cement firms in Spain, Valenciana, and Sanson,
for reasons of cultural and linguistic affinity. Much of the investment between Spain and Latin
America had been a one-way street for decades. Reversing two decades of Spain’s acquisition spree
into Latin America, Latin American firms spent more on acquiring Spanish firms for the first time
in 2013 than the other way around. In fact, Mexican firms were the biggest acquirers of Spanish
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"5. Two famous Pillars, Jachin and Boaz.
"6. Three great Lights: the Sun Hieroglyphical to rule the Day, the Moon
Emblematical to rule the Night; a Master Mason Political to rule his—Lodge.
"7. The Entered Prentice's Token.
"8. The Letter G famous in Masonry for differencing the Fellow Craft's Lodge from
that of Prentices.
"9. The Funeral of a Grand Master, according to the Rites of the Order, with the 15
loving Brethren.
"10. A Master Mason's Lodge.
"11. Grand Band of Musick.
"12. Two Trophies; one being that of a Black-shoe Boy and Link Boy, the other that
of a Chimney Sweeper.
"13. The Equipage of the Grand Master, all the Attendants wearing Mystical
Jewels."
A different, but a smaller, print of this Mock Procession was printed in May 1742,
with the following memoranda, viz. "The great Demand there has been for The
Westminster Journal, of the 8th instant, occasion'd reprinting the following piece.
"From my own Apartments in Spring Gardens.
"Though I do not belong to the Fraternity mentioned in the following piece, and
therefore am little concerned in the annual disputes, I think it my duty, as a
Watchman of the city of Westminster, to preserve the memory of the late
extraordinary Cavalcade, the like to which hath never happened since I have been
in office. As more solemn processions have of late years been very rare, it cannot
surely be taken amiss, either by the Free Masons, or the Scald-Miserables, that I
give so much distinction to this.
"T. Touchit.
"The Free Mason's Downfall, or the Restoration of the Scald-Miserables."
After the print follows: "A Key, or Explanation of the solemn and stately Procession
of the Scald-Miserable Masons, as it was martial'd on Tuesday the 27th past, by
their Scald-Pursuivant Black Mantle—set forth by Order of the Grand Master
Poncy."—Printed by J. Mechell, at The Kings Arms in Fleet-street, and sold by the
Pamphlet-shops, &c. Price Two-pence.
Extracts from The London Daily Post, March 20, 1740-1, &c. "Yesterday some
mock Free-Masons marched through Pall-Mall and The Strand, as far as Temple-
Bar, in procession; first went fellows on jack-asses, with cows horns in their
hands; then a kettle-drummer on a jack-ass, having two butter-firkins for kettle-
drums; then followed two carts drawn by jack-asses, having in them the stewards
with several badges of their order; then came a mourning coach drawn by six
horses, each of a different colour and size, in which were the grand master and
wardens; the whole attended by a vast mob. They stayed without Temple Bar till
the Masons came by, and paid their compliments to them, who returned the same
with an agreeable humour that possibly disappointed the witty contriver of this
mock scene, whole misfortune is, that though he has some wit, his subjects are
generally so ill chosen, that he loses by it as many friends as other people of more
judgement gain."
Again, April 28, 1742. "Yesterday being the annual feast of the ancient and
honourable society of Free and Accepted Masons, they made a grand procession
from Brook-street to Haberdashers Hall, where an elegant entertainment was
provided for them, and the evening was concluded with that harmony and
decency peculiar to the society."
"Some time before the society began their cavalcade, a number of shoe-cleaners,
chimney-sweepers, &c. on foot and in carts, with ridiculous pageants carried
before them, went in procession to Temple-Bar, by way of jest on the Free-
Masons, at the expence, as we hear, of one hundred pounds sterling, which
occasioned a great deal of diversion."
Again, May 3, 1744. "Yesterday several of the mock masons were taken up by the
constable empowered to impress men for his Majesty's service, and confined till
they can be examined by the justices."

24. Sancho, at the magnificent feast, &c. starved by his Physician.

On the top of this plate are the following words: "This original print
was invented and engraved by William Hogarth. Price 1 s." At
bottom we read, W. Hogarth inv. & sculp. Printed for H. Overton and
J. Hoole. Perhaps this design was meant as a rival to that of Coypel
on the same subject; or might be intended by way of specimen of a
complete set of plates for Don Quixote. Mr. S. Ireland has the
original drawing.

25. Impression from a tankard belonging to a club of artists, who

met weekly at The Bull's Head in Clare-Market. Of this society
Hogarth was a member. A shepherd and his flock are here
represented.
26. The Gin Drinkers. This may have been one of Hogarth's early
performances; and, if such, is to be considered as a rude fore-runner
of his Gin-Lane. But I do not vouch for its authencity.

27. The Oratory.[1] Orator Henley on a scaffold, a monkey (over

whom is written Amen) by his side. A box of pills and the Hyp Doctor
lying beside him. Over his head, "The Oratory. Inveniam viam, aut
faciam."[2] Over the door. "Ingredere ut proficias."[3] A Parson
receiving the money for admission. Under him, "The Treasury." A
Butcher stands as porter. On the left hand, Modesty in a cloud; Folly
in a coach; and a gibbet prepared for Merit; people laughing. One
marked The Scout,[4] introducing a Puritan Divine. A Boy easing
nature. Several grotesque figures, one of them (marked Tee-Hee) in a
violent fit of laughter. I discover no reason for regarding this as a
production of Hogarth, though his name, cut from the bottom of one
of his smaller works, was fraudulently affixed to an impression of it
belonging to the late worthy Mr. Ingham Foster, whose prints were
sold at Barford's, in March 1783. Hogarth, whose resources, both
from fancy and observation, were large, was never, like the author of
this plate, reduced to the poor necessity of peopling his comic
designs with Pierot, Scaramouch, and the other hackneyed rabble of
French and Italian farces.
Underneath a second impression of it, is the following inscription:

"An extempore Epigram, made at the Oratory:

"O Orator! with brazen face and lungs,
Whose jargon's form'd of ten unlearned tongues,
Why stand'st thou there a whole long hour haranguing,
When half the time fits better men for hanging!"
Geo. B—k—h[5] jun. Copper-scratcher
and Grub-Street invent. sculp.
[1] There are such coincidences between this print and that of The Beggar's
Opera, as incline me to think they were both by the same hand.
[2] The motto on the medals which Mr Henley dispersed as tickets to his
subscribers. See Note on Dunciad, III. 199.
[3] This inscription is over the outer door of St. Paul's school.
[4] On what personage the name of Scout was bestowed, I am unable to inform
the reader, though I recollect having seen the same figure in several other prints,
particularly one from which it appears that he was at last murdered.
[5] B—k—h. Perhaps this was an intended mistake for B—k—m.

28. Orator Henley christening a child. John Sympson jun. fecit.

Mezzotinto (commonly of a greenish colour), with the following
verses under it:

Behold Vilaria lately brought to bed,

Her cheeks now strangers to their rosy red;
Languid her eyes, yet lovely she appears!
And oh! what fondness her lord's visage wears!
The pamper'd priest, in whose extended arms
The female infant lies, with budding charms,
Seeming to ask the name e'er he baptise,
Casts at the handsome gossips his wanton eyes,
While gay Sir Fopling, an accomplish'd ass,
Is courting his own dear image in the glass:
The Midwife busied too, with mighty care,
Adjusts the cap, shews innocency fair.
Behind her stands the Clerk, on whose grave face
Sleek Abigal cannot forbear to gaze:
But master, without thought, poor harmless child,
Has on the floor the holy-water spill'd,
Thrown down the hat; the lap-dog gnaws the rose;
And at the fire the Nurse is warming cloaths.
One guest enquires the Parson's name;—says Friendly,
Why, dont you know, Sir?—'tis Hyp-Doctor[1] H——y.

Sold by J. Sympson, at the Dove in Russel-Court, Drury-Lane. An

original sketch in oil, on the same subject, is in the possession of Mr.
S. Ireland.[2]
[1] He wrote a periodical paper under that title.
[2] See p. 415. for an etching from it.

29. A woman swearing a child to a grave citizen.[1] W. Hogarth pinx.

J. Sympson jun. sculp. Sold by J. Sympson engraver and print-seller,
at The Dove in Russel-Court, Drury-Lane. This Mr. Walpole observes
to be a very bad print. Perhaps he had only seen some wretched
impression, or copy of it (for there are two, the one in a small size,
the other large, but fit for no other purpose than to adorn the walls
of a country Inn), and therefore spoke with contempt of a
performance which hardly deserves so unfavourable a character. This
entire design, however, is stolen from a picture of Heemskirk, which
has been since engraved in mezzotinto by W. Dickinson of New
Bond-street, and published March 10, 1772. The original picture is in
the possession of Mr. Watson, surgeon, in Rathbone Place.
The title given to this plate by the ingenious engraver, is The Village
Magistrate. All the male figures are monkies; all the female ones,
cats. Hogarth has likewise been indebted to its companion—The
Constable of the Night. Few impressions from these plates having
been hitherto sold, they are both in excellent condition, and the
former of them exhibits an indisputable instance of Hogarth's
plagiarism.
While Picart was preparing his Religious Ceremonies, he wrote to
some friend here, to supply him with representations illustrative of
his subject. His correspondent, either through ignorance or design,
furnished him with the two preceding plates by Hogarth. Picart has
engraved the former with a few variations, and the latter with the
utmost fidelity. The one is called by him Le Serment de la Fille qui se
trouve enceinte; the other, Le Baptême domestique. The first
contains a supposed portrait of Sir Thomas de Veil. For the
conversion of a civil into a religious ceremony, let the Frenchman, or
his purveyor, be answerable. The lines under Hogarth's performance
are as follows:

Here Justice triumphs in his elbow chair,

And makes his market of the trading fair;
His office-shelves with parish laws are grac'd,
But spelling-books, and guides between 'em placed
Here pregnant madam screens the real fire,
And falsely swears her bastard child for hire
Upon a rich old letcher, who denies
The fact, and vows the naughty Hussif lies;
His wife enrag'd, exclaims against her spouse,
And swears she'll be reveng'd upon his brows;
The jade, the justice, and church ward'ns agree,
And force him to provide security.

Hogarth's picture is in the possession of the Rev. Mr. Whalley, at

Ecton, Northamptonshire.
Mr. Whalley is the nephew of John Palmer, whose portrait is
mentioned among the works of Hogarth. See p. 295. This picture too
is at Ecton. The foregoing print (as already observed, p. 121.) must
have been published before the year 1735.
[1] A copy of this forms the head-piece to a tale printed in Banks's Works, vol, I.
p. 248, intituled, "The Substitute Father."

30. Right Hon. Gustavus Lord Viscount Boyne, &c. &c. Whole length,
mezzotinto. W. Hogarth pinx. Andrew Miller fecit. "A very bad print,
done in Ireland."
I have since met with an early impression of this mezzotinto. The
inscription, dedication, &c. underneath it, are as follows:
"W. Hogarth pinx. Ford fecit. The Rt. Honble. Gustavus Lord Visct.
Boyne, Baron of Stackallen, one of his Majesty's most Honble. Priuy
Council, one of the Comrs. of the Revenue of Ireland, &c.
"To the Rt. Honble. the Earl of Kildare this plate is humbly dedicated
by his Lordship's most obedient humble servt. Mich. Ford.
"Published and sold by Mich. Ford, Painter and Print-seller on Cork
Hill. Price 5s. 5.d. [i. e. five thirteens."]
Mr. Walpole's is probably a later or a retouched impression from the
same plate, after it had fallen into the hands of one Andrew Miller,
who effaced the name of Ford, and substituted his own.
This scarce print will undoubtedly suffer from comparison with the
works of Smith, M'Ardell, Earlom, Jones, &c. and yet perhaps it is the
best mezzotinto that Ireland has hitherto produced. It must be
confessed, however, that Hogarth's whole-length figure of Lord
Boyne is equally void of grace, meaning, and proportion; but these
defects have no connection with the labours of Ford, which would
have appeared to more advantage had they been exerted on a
better subject.

31. Mr. Pine (the celebrated engraver), in the manner of Rembrandt.

Mezzotinto (about the year 1746), by M'Ardell, Price 2 s. The original
was in the possession of the late Mr. Ranby the surgeon.
There is a second head of Mr. Pine, a mezzotinto; both his hands
leaning on a cane. Printed for George Pulley, at Rembrandt's Head,
the corner of Bride-court, Fleet-street.
I have called this "a second head," but know not which of the two
was first published.
In the first edition of the present work I had described this plate as
an unfinished one, but have since met with it in a perfect state.

32. A View of Mr. Ranby's house at Chiswick. Etched by Hogarth.

This view, I am informed, was taken in 1750, but was not designed
for sale.

33. Daniel Lock, Esq. F. S. A. formerly an architect. He retired from

business with a good fortune, lived in Surrey-street, and was buried
in the chapel of Trinity College, Cambridge. Mezzotinto. W. Hogarth
pinx. J. M'Ardell fecit. Price 1 s. 6 d.

34. Christ and his disciples; persons at a distance carried to an

hospital. "In as much as ye have done it unto one of the least of
these my brethren, ye have done it unto me." St. Matt. xxv. ver. 40.
W. Hogarth inv. C. Grignion sculp. Ticket for The London Hospital.
As this charitable foundation was instituted in 1740, probably the
ticket was engraved soon afterwards.

35. Original of the same, in a smaller size, with the Duke of

Richmond's arms as president.

36. Another, almost the same as N° 34, but with a view of The
London Hospital.

37. Six prints for Don Quixote. W. Hogarth inv. & sculp.
When Lord Carteret, about the year 1737, was seeking artists to
design, &c. plates for his Spanish edition of this famous novel,
published in 1738, Hogarth, of course, was not overlooked. His
performances, however, gave so little satisfaction to his noble
employer, that they were paid for, and then laid aside in favour of
Vandrebank's drawings, afterwards engraved by Vandergucht. The
plates remaining in the hands of Mr. Tonson, his lordship's publisher,
at his death, were bought by Mr. Dodsley, who, finding they
exhibited no descriptions that could render them welcome to the
possessors of any copy of Don Quixote whatever, had the titles of
the chapters, &c. to which they belong, together with references to
the corresponding pages in Jarvis's translation, engraved under each
of them. The subjects of them are, I. Funeral of Chrysostom, and
Marcella vindicating herself; vol. I. p. 71. II. The Inn-keeper's wife
and daughter taking care of the Don after being beaten and bruised,
p. 129. III. Don Quixote releases the galley slaves, p. 129. IV. The
unfortunate Knight of the Rock meeting Don Quixote, p. 140. V. Don
Quixote seizes the barber's bason for Mambrino's helmet, p. 155. VI.
The Curate and Barber disguising themselves to convey Don Quixote
home, p. 166. Tonson had several specimens of plates, both in
quarto and octavo sizes, executed for editions of Shakspeare, but
they shared the same fate with the others prepared for Don Quixote.

38. An oval, with two figures representing Hymen and Cupid. A view
of a magnificent villa at a distance. This print was intended as a
ticket for Sigismunda, which Hogarth proposed to be raffled for. It is
often marked with ink 2 l. 2 s. The number of each ticket was to
have been inserted on the scroll hanging down from the knee of the
principal figure. Perhaps none of them were ever disposed of. This
plate, however, must have been engraved about 1762 or 3. Had I
not seen many copies of it marked by the hand of Hogarth, I should
have supposed it to have been only a ticket for a concert or music-
meeting.

39. Four heads from the cartoons at Hampton-Court. An etching.

Mr. Walpole, in his Anecdotes of Painting, &c. vol. IV. p. 22. speaking
of Sir James Thornhill's attention to these celebrated pictures, has
the following remark: "He made copious studies of the heads,
hands, and feet, and intended to publish an exact account of the
whole, for the use of students: but his work never appeared."
As this plate was found among others engraved by Hogarth, it might
probably have been one of his early performances. His widow has
directed a few impressions to be taken from it, and they are sold at
her house in Leicester-square.

40. A Scene in a Pantomime Entertainment lately exhibited;

designed by a Knight of Malta. A satire on the Royal Incorporated
Society of Artists of Great Britain. No name.
This design is difficult to be explained, as it alludes to some
forgotten dissentions among the artists before the Royal Academy
was founded. Sir William Chambers, Kirby, Rooker the Engraver and
Harlequin, Liotard, remarkable for having adopted the Turkish dress,
and others, are introduced in it. The hat and head of Hogarth also
appear on one of the necks of a Hydra. It is hardly credible,
therefore, that he should have rendered himself an object of his own
satire. A mere etched outline of the same design, with additions,
was afterwards published, and is marked plate II. It is larger than
the original plate, and must be considered as a slight temporary
sketch, of which the author is uncertain.

41. A Ticket-porter carrying a load of chamber-pots to some place of

public resort, from the entrance of which three grenadiers are
keeping off the crowd. At the bottom is written.
"Jack in an Office, or Peter Necessary, with Choice of Chamber-pots.
"A Ticket for the——————————Price 6 d."
Of the following articles the 49th, and 53d, are the undoubted
productions of Hogarth. Some of the rest may admit of dispute.
Those marked * I have not yet seen in any collection but that of Mr.
S. Ireland.

* 42. Arms of George Lambart [Lambert] the painter, an intimate

friend of our artist.

* 43. Arms of Gore, engraved on a silver waiter.

* 44. Arms of a Duke of Kendal. N. B. There never was a Duke of

Kendal, but an infant son of James II. The arms mentioned are
certainly those of the Dutchess of Kendal. The male shield must be a
mistake.

* 45. Arms of Chudleigh; motto "Aut vincam, aut peribo." Done for
Major L'Emery, whilst Hogarth was apprentice.

46. The Great Seal of England, from a large silver table. This was
given to Mr. S. Ireland by a Mr. Bonneau, who took off the
impression before the year 1740.

47. Twenty-six figures, on two large sheets, engraved for "A

Compendium of Military Discipline, as it is practised by the
Honourable the Artillery Company of the City of London, for the
initiating and instructing Officers of the Trained Bands of the said
City, &c. Most humbly dedicated to his Royal Highness George Prince
of Wales, Captain General of the Honourable the Artillery Company.
By John Blackwell, Adjutant and Clerk to the said Company.
"London. Printed for the Author; and are to be sold at his house in
Well-Court in Queen-Street, near Cheapside, 1726."

48. Farinelli, Cuzzoni, and Heydegger. Cuzzoni and Farinelli are

singing a duet. The latter is in the character of a prisoner, being
chained by his little finger. Heydegger sits behind, and is supposed
to utter the eight following lines, which are engraved under the
plate:

Thou tuneful scarecrow, and thou warbling bird,

No shelter for your notes these lands afford.
This town protects no more the singsong strain,
Whilst Balls and Masquerades triumphant reign.
Sooner than midnight revels ere should fail,
And ore Ridottos Harmony prevail;
The cap (a refuge once) my head shall grace,
And save from ruin this harmonious face.[1]

I am told, however, that this plate was designed by the last Countess
of Burlington, and etched by Goupy. I may add, that the figures in it,
though slightly done on the whole, consist of more than a single
stroke, being retouched and heightened by the burin in several
places. On the contrary, Hogarth's plate, intituled The Charmers of
the Age, only offers an etched outline, which at once afforded the
extent of his design, leaving no room for improvement. The former
print exhibits traces of perseverance and assiduity; the latter is an
effort of genius that completes its purpose without elaboration.
[1] He had once enlisted as a private soldier in the Guards, for a protection. See p.
152.

49. The Discovery. This scarce plate is acknowledged as genuine by

Mrs. Hogarth. The subject is a black woman in bed; her eyes archly
turned on her gallant just risen, who expresses his astonishment on
the entrance of three laughing friends, one of them with a candle in
his hand. Underneath the print is this apposite motto:

Qui color albus erat nunc est contrarius albo.

A similar circumstance occurs in Fletcher's Monsieur Thomas, and in

Foote's Cozeners.
I know not of any among our artist's works that displays so little
character. It must have been one of his early performances.
It should be observed that, being founded on a private occurrence,
this print was never designed for general circulation. Mr. Highmore
the manager of Drury-Lane, who bought Cibber's share in the
patent, is the Hero of it. A few copies only were distributed among
Hogarth's particular friends, and the gentlemen whose portraits it
contains. At the bottom of the plate there is no descriptive title. The
Discovery was that by which Mrs. Hogarth mentioned it when she
recollected the very laughable circumstance here commemorated by
her husband's pencil.

* 50. The Cottage. An impression from a breeches-button, the size

of a crown-piece; a sketch made for Mr. Camfield, a surgeon, on a
subject that will not bear explanation. There is a copy of this little
plate by Mr. S. Ireland.

51. Pug the Painter. This has been usually understood as a satire on
Hogarth, rather than a design by him. Mr. Ireland once told me it
was etched by Dawes, and that our artist gave a copy of it, as his
own design, to Mr. Kirby. But I am assured with superior confidence
by another gentleman, that the true author of it is to be sought
among those artists whom Hogarth had provoked by his
contemptuous treatment of their works. If Pug was not designed as
his representative, why is the animal exhibited in the act of painting
the ridiculous figure of the Priest in The Good Samaritan?

52. A Head in an oval, coarsely engraved, and subscribed "Samuel

Butler Author of Hudibras." Several connoisseurs, beside Mr. Thane
who possesses the plate, conceive it to be an undoubted work of
Hogarth. For what purpose it was executed, and why suppressed
(for no one has hitherto met with even a proof from it) it is vain to
enquire. I am silent on the subject, heartily wishing that throughout
this work I had had the opinions of more friends to record, and had
offered fewer sentiments of my own.

53. "A very rare hieroglyphic print; representing Royalty, Episcopacy,

and Law, composed of emblematic attributes, and no human
features or limbs; with attendants of similar ingredients. Beneath is
this inscription. Some of the principal inhabitants of the Moon, as
they were discovered by a telescope, brought to the greatest
perfection since the last eclipse; exactly engraved from the objects,
whereby the Curious may guess at their Religion, Manners, &c. Price
Six-pence."
A kind of scaffold above the clouds is the theatre of this
representation. Monarchy, Episcopacy, and Law, appear
characteristically seated. Their faces are—a Crown-piece—a Jew's
Harp, and—a Mallet. The monarch holds a globe and sceptre, with
crescents on the tops of them. Instead of a collar of esses, he wears
a string of bubbles; his side is ornamented with a pointed star; and
a circle, the emblem of perpetuity, is embroidered on the cloth under
his throne. Episcopacy is working at a pump (a type I suppose of the
Church) by the assistance of a bell-rope. The Bible is fastened to the
handle of the pump, and out of the nose of it issues money that falls
into a chest discriminated by an armorial escutcheon, containing a
knife and fork, properly emblazoned, with a mitre by way of crest.
The lid of the coffer leans against a pillar, that serves also to support
a triple pile of cushions. Over the top of the pump (which is
fashioned much like a steeple) is a weathercock on a small pyramid
supported by balls; and below it, through a circular opening, a little
bell appears to ring. Under the sacerdotal robe, a cloven foot peeps
out. Law sustains a sword; and behind him appears a dagger thrust
through the bottom of a sieve. The attendants on Monarchy are of
various materials. The bodies and legs of such as seem designed for
soldiers, are composed of circular fire-screens resembling shields.
The trunks of the courtiers are large looking-glasses, the sconces
with candles in them serving for hands and arms. The face of the
chief of these is the reverse of a sixpence; and a key significantly
appended to his sash, at once denotes his sex and office. Under the
figure of law are a male and female modishly drest. Her head is a
tea-pot, her neck a drinking-glass, and her body a fan half spread.
On the oval that forms the countenance of her paramour, is a coat of
arms with supporters. His right honourable legs are fan-sticks, and
he seems in the act of courtship. How this couple are immediately
connected with Law, is not very clearly pointed out. Hogarth,
however, we may suppose, had planned some explanation of his
hieroglyphics, as the letters a, b, c, d, e, f, g, are placed over some
of them, and beneath others.
From the form of the perukes exhibited in this design, I should
suppose it was made above forty years ago. Other circumstances in
it need no decyphering.

* 54. The Master of the Vineyard. St. Matthew chap. xxi. v. 28. "Son,
go work to-day in my Vineyard."

* 55. The London Infirmary for charitably relieving sick and diseased
Manufacturers and Seamen in the Merchants' service, their Wives
and Children. A blank certificate for Pupils in Surgery and Anatomy,
printed on a half sheet, folio.

56. A ticket for the benefit of Spiller the player. He died in the year
1729.
In the plate before us, which possesses no small share of humour,
poor Spiller is represented in a melancholy posture. His finances are
weighed against his debts, and outweighed by them. His taylor's bill
appears to be of great length, and many others for ale, gin, &c. are
on the ground near him. A bailiff is clapping him on the shoulder—a
prison is in sight—ladies and gentlemen are taking tickets, &c. This
very uncommon and beautiful little print is, at present, found only in
the collection of Mr. Ireland.
57. St. Mary's Chapel. Five at night. Several performers playing on
different instruments. William Hogarth inv. G. Vandergucht sculpt.
This was certainly an ornament at the top of a ticket for a music-
meeting. The name of Hogarth is affixed to it, and the whole design
might have been his. I do not, however, believe it was so. A few of
the figures appear to have been collected from his works by some
other hand, rather than grouped by his own. Vandergucht too was
so thoroughly a mannerist, and especially in small subjects, that he
was rarely faithful to the expressions of countenance he undertook
to trace on copper. There is no humour, and indeed little merit of any
kind, in this performance. It has not hitherto been met with on the
entire piece of paper to which it must originally have belonged.

A print called The Scotch Congregation, by Hogarth, is almost

unique, on account of its extreme indecency. One copy of it was in a
collection of his works belonging to Mr. Alexander of Edinburgh. He
is said to have had it from Mrs. Hogarth. A second copy is reported
to exist in the possession of another gentleman. No more
impressions of it are known.

A correspondent at Dublin informs me, that in the collection of Dr.

Hopkins of that city are the following seven prints by Hogarth:

1. The History of Witchcraft. Humbly dedicated to the Wise.

Allegorically modernized. Part the First. Published according to act of
Parliament. Hogarth inv. et sculpt.
Half sheet print. At one end, Witches attending the punishment of
two human figures; at the other, several at their different
occupations.
2. The History of Witchcraft. Part the Second. Published according to
act of Parliament. Hogarth inv. et sculpt.
Same size as the former. Witches dancing; others at various
amusements. These two prints contain a great variety of distorted
figures.

3. A Suit of Law fits me better than a Suit of Clothes. Invented and

engraved by W. H. and published pursuant to an Act of Parliament,
1740.
An upright half-sheet. A Man in embroidered clothes, his hat under
his arm. A scroll in his left hand, inscribed, "I'll go to Law."
Huntsmen, dogs, and horses in the back ground. Four lines in verse
underneath.
Useful in all families. Invented and engraved by W. H. and published
pursuant to an Act of Parliament, 1740.

4. The same man in a tattered garment in a wild country; a staff in

his right hand, and a scroll in his left, inscribed, "To shew that I went
to law, and got the better." Four lines at the bottom.
These two may be classed among his indifferent prints.

5. The Caledonian March and Embarkation. Hogarth invent. London,

printed for T. Baldwin.
A number of Scotchmen embarking in the Caledonian Transport.
Labels issuing from their mouths.
The Laird of the Posts, or the Bonnets exalted. Printed for T.
Baldwin, London. Hogarth inv.

6. A Scotch Nobleman and his Friends taking possession of several

posts, having kick'd down the former Possessors. Labels from their
mouths too tedious to copy. A Lion on the fore-ground, hood-winked
by a Scotch plaid.
Supposed to be printed for The London Magazine.

7. The Lion entranced. Printed for T. Baldwin, London. Hogarth inv.

1762.
A Lion in a Coffin. A plate on the cover, inscribed, "Leo Britanicus,
Ob. An. 1762. Requiescat in pace." Attended by state mourners with
labels as above. In one corner Hibernia supplicating for her Sister's
interest.

A respect for the obliging communicator has induced me to publish

this supposed addition to the foregoing catalogue of Hogarth's
works. But, without ocular proof, I cannot receive as genuine any
one of the plates enumerated. The name of our Artist has more than
once been subscribed to the wretched productions of others; and a
collector at Dublin must have had singular good fortune indeed, if he
has met with seven authentic curiosities unknown to the most
confidential friends of Hogarth, and the most industrious
connoisseurs about London. I may add, that two, if not three, of the
above-mentioned anti-ministeral pieces, appeared in 1762, the very
year in which our artist was appointed Serjeant Painter. Till that
period he is unsuspected of having engaged his pencil in the service
of politicks; and T. Baldwin (perhaps a fictitious name) is not known
to have been on any former occasion his publisher. So much for the
probability of Hogarth's having ushered performances like these into
the world.

Chance, and the kindness of my friends, have not enabled me to

form a more accurate series of Hogarth's labours. Those of the
collector, however, are still incomplete, unless he can furnish himself
with a specimen of several other pieces, said, I think, to have been
produced a little before our artist's marriage. I forbear to keep my
readers in suspense on the occasion. Hogarth once taking up some
plain ivory fishes that lay on his future wife's card-table, observed
how much was wanting to render them natural representations.
Having delivered this remark with becoming gravity, he proceeded to
engrave scales, fins, &c. on each of them. A few impressions have
been taken from these curiosities, which remain in Mrs. Hogarth's
possession. As a button decorated by her husband has been
received into the foregoing catalogue of his works, it can hardly be
disgraced by this brief mention of the ornaments he bestowed on a
counter.

There are three large volumes in quarto by Lavater, a minister at

Zurich (with great numbers of plates), on Physiognomy. Among
these are two containing several groups of figures from different
prints of Hogarth, together with the portraits of Lord Lovat and
Wilkes. For what particular purpose they are introduced, remains to
me a secret.[1]
In "An Address of Thanks to the Broad Bottoms, for the good things
they have done, and the evil things they have not done, since their
elevation, 1745," is what the author calls "A curious emblematic
Frontispiece, taken from an original painting of the ingenious Mr. H
——th;" a palpable imposition.
Mr. Walpole, Anecdotes of Painting, Vol. IV. 63, observes, that
"Hogarth drew the supposed funeral of Vanaken, attended by the
painters he worked for, discovering every mark of grief and despair."
To explain this passage, it should be added, that "he was employed
by several considerable artists here, to draw the attitudes, and dress
the figures in their pictures."
The merits of Hogarth, as an engraver, are inconsiderable. His hand
was faithful to character, but had little acquaintance with the powers
of light and shade. In some of his early prints he was an assiduous
imitator of Callot, but deviated at last into a manner of his own,
which suffers much by comparison with that of his coadjutors,
Ravenet and Sullivan. In the pieces finished by these masters of
their art, there is a clearness that Hogarth could never reach. His
strokes sometimes look as if fortuitously disposed, and sometimes
confusedly thwart each other in almost every possible direction.
What he wanted in skill, he strove to make up in labour; but the
result of it was a universal haze and indistinctness, that, by
excluding force and transparency, has rendered several of his larger
plates less captivating than they would have been, had he entrusted
the sole execution of them to either of the artists already mentioned.
His smaller etchings, indeed, such as The Laughing Pit, &c. cannot
receive too much commendation.
Mr. Walpole has justly observed, that "many wretched prints came
out to ridicule" the Analysis of Beauty. He might have added, that no
small number of the same quality were produced immediately after
the Times made its appearance. I wish it had been in my power to
have afforded my readers a complete list of these performances,
that as little as possible might have been wanting to the history of
poor Hogarth's first and second persecution. Such a catalogue,
however, not being necessary to the explanation of his works, it is
with the less regret omitted.[2]
The scarceness of the good impressions of Hogarth's larger works is
in great measure owing to their having been pasted on canvas or
boards, to be framed and glazed for furniture. There were few
people who collected his prints for any other purpose at their first
appearance. The majority of these sets being hung up in London
houses, have been utterly spoiled by smoke. Since foreigners have
learned the value of the same performances, they have also been
exported in considerable numbers. Wherever a taste for the fine arts
has prevailed, the works of this great master are to be found.
Messieurs Torré have frequent commissions to send them into Italy.
I am credibly informed that the Empress of Russia has expressed
uncommon pleasure in examining such genuine representations of
English manners; and I have seen a set of cups and saucers with
The Harlot's Progress painted on them in China about the year 1739.
Of all such engravings as are Mrs. Hogarth's property, the later
impressions continue selling on terms specified many years ago in
her printed catalogue, which the reader will find at the end of this
pamphlet. The few elder proofs that remain undisposed of, may be
likewise had from her agent at an advance of price. As to the plates
which our artist had not retained as his own property, when any of
these desiderata are found (perhaps in a state of corrosion), they
are immediately vamped up, and impressions from them are offered
to sale, at three, four, or five times their original value. They are also
stained to give them the appearance of age; and on these occasions
we are confidently assured, that only a few copies, which had lurked
in some obscure warehouse, or neglected port-feuille, had been just
discovered. This information is usually accompanied by sober advice
to buy while we may, as the vender has scarce a moment free from
the repeated solicitations of the nobility and gentry, whom he always
wishes to oblige, still affording that preference to the connoisseur
which he withholds from the less enlightened purchaser. It is scarce
needful to observe, that no man ever visited the shops of these
polite dealers, without soon fancying himself entitled to the more
creditable of the aforesaid distinctions. Thus becoming a dupe to his
own vanity, as well as to the artifice of the tradesman, he has
speedily the mortification to find his supposed rarities are to be met
with in every collection, and not long afterwards on every stall. The
caution may not prove useless to those who are ambitious to
assemble the works of Hogarth. Such a pursuit needs no apology;
for sure, of all his fraternity, whether ancient or modern, he bent the
keenest eye on the follies and vices of mankind, and expressed them
with a degree of variety and force, which it would be vain to seek
among the satiric compositions of any other painters. In short, what
is observed by Hamlet concerning a player's office, may, with some
few exceptions, be applied to the designs of Hogarth. "Their end,
both at the first, and now, was, and is, to hold as 'twere the mirror
up to nature; to shew virtue her own feature, scorn her own image,
and the very age and body of the time his own form and pressure."
I may add, that, since the appearance of Mr. Walpole's Catalogue, a
disposition to attribute several anonymous plates, on ludicrous
subjects, to Hogarth, has betrayed itself in more than a single
instance:[3] a supposition has also prevailed that there was a time
when Hogarth had the whole field of satire to himself, and we could
boast of no designers whose performances could be mistaken for his
own. The latter notion is undoubtedly true, if real judges are to
decide; and yet many prints, very slightly impregnated with humour,
continue to be ascribed to him. It should therefore be observed,
that, at the same period, Bickham, Vandergucht, Boitard, Gravelot,
Laguerre the younger, &c. were occasionally publishing satirical
Sketches, and engraving laughable frontispieces for books and
pamphlets. To many of these, for various reasons, they forbore to
set their names; and we have at present collectors, who, to obtain
the credit of having made discoveries, are willing to adopt such
performances as the genuine effusions of Hogarth, although every
way beneath his talents, and repugnant to his style of engraving.
Perhaps also the names of other painters and designers have been
occasionally obliterated, to countenance the same fallacy. Copies
likewise have been palmed on the unwary for originals. "Therefore"
(gentle reader) for once be content to follow the advice of Pistol,
"Go clear thy chrystals, and Caveto be thy counsellor." For if all such
fatherless engravings, as the vanity of some, and the interest, or the
ignorance, of others, would introduce among the works of our artist,
were to be admitted, when would the collector's labour and expence
be at end?
Among other anonymous plates ascribed to Hogarth, but omitted in
the present catalogue, is the following, A living Dog is better than a
dead Lion, or, The Vanity of human Glory; a design for the
Monument of General Wolfe, 1760. A medallion of our hero appears
on the side of a pyramid. On the base of it is the well known speech
of Shakespeare's Brutus,
 Set Honour in one hand, and Death in t' other,
And I will look on both indifferent:
And let the Gods so speed me, as I love
The name of Honour more than I fear Death.

At the bottom a dying Lion is extended, while a Dog (with Minden on

his collar, and Honour's a jest, &c. issuing from his mouth) is at once
lifting up his leg against the noble brute, and treading on a wreath
of laurel. Here lies Honour, is also written on the side of the expiring
animal. I have since been assured that this print was by another
artist, whose name I omit to mention, because perhaps he would
wish it, on the present occasion, suppressed.
[1] This book, I am told, is now translated into French.
[2] One of these productions, however, should be singled from the rest. The print,
entitled The Connoisseurs, was suspected to be a work of Hogarth himself. It is
placed with some of his other undisputed designs in the back-ground of The
Author run Mad (which is known to be one of Mr. Sandby's performances), and has
the following reference—"A. his own Dunciad."
[3] Thus the frontispiece to Taste, designed, if not etched by Worsdale (for whose
benefit this dramatic piece was performed), and Sawney in the Bog-house, an
anonymous satire on the Scotch, that made its appearance near forty years ago,
and was revived during the administration of Lord Bute, are at present imputed to
our artist, whose name is already engraved at the bottom of the latter.

POSTSCRIPT.
The Author of this pamphlet, being convinced that, in spite of all his
care and attention, some errors may still be found in his catalogue,
list of variations, &c. will think himself highly obliged by any
gentlemen who will point them out, and enable him to correct them.
Such favours shall be gratefully acknowledged, if the present rude
Essay towards an account of Hogarth's different performances
should happen to reach another edition.
As in consequence of the extraordinary prices lately paid for the
collected works of this great master, certain dealers, &c. are
supposed to be assembling as many of his prints as they can meet
with,—binding them up in pompous volumes,—writing "fine old
impressions" either over or under them—specifying the precise sums
pretended to have been disbursed for several of them (perhaps a
guinea for a three shilling article)—preparing to offer a few rare
trifles to sale, overloaded with a heap of wretched proofs from our
artist's more capital performances;—exhibiting imperfect suites of
such as are cut out of books; and intending to station puffers at
future auctions, whose office will be to intimate they have received
commissions to bid up as far as such or such an amount (i. e. the
sum under which the concealed proprietor resolves not to part with
his ware), &c. &c. it is hoped the reader will excuse a few parting
words of admonition. Perhaps it may be in the power of Mrs.
Hogarth to select a few sets from such of her husband's pieces as
have remained in her own custody from the hour of their
publication. Let the multitude, who of course cannot be supplied
with these, become their own collectors. Even ignorance is a more
trusty guide than professional artifice. It may be urged, indeed, that
the proportionate value of impressions[1] can be ascertained only by
those who have examined many of them in their various states, with
diligence and acuteness. But surely to qualify ourselves for
estimating the merit of the curiosities we are ambitious to purchase,
is wiser than to rely altogether on the information of people whose
interest is commonly the reverse of our own. Let it also be
remembered, that the least precious of all Hogarth's productions are
by far the scarcest; and that when, at an immoderate expence, we
have procured impressions from tankards ornamented by him, or
armorial ensigns engraved for the books of his customers, we shall
be found at last to have added nothing to his fame, or the
entertaining quality of our own collections. By such means, however,
we may open a door to imposition. A work like The Harlot's Progress
will certainly remain unimitated as well as inimitable; but it is in the
power of every bungler to create fresh coats of arms, or shop bills
with our artist's name subscribed to them: and wherein will the Lion
or Griffin of Hogarth be discovered to excell the same representation
by a meaner hand? A crafty selection of paper, and a slight attention
to chronology and choice of subjects, with the aid of the hot-press,
may, in the end, prove an overmatch for the sagacity of the ablest
connoisseur. A single detection of such a forgery would at least give
rise to suspicions that might operate even where no fallacy had been
designed. How many fraudulent imitations of the smaller works of
Rembrandt are known to have been circulated with success!—But it
may be asked, perhaps, from what source the author of this
pamphlet derives his knowledge of such transactions. His answer is,
from the majority of collectors whom he has talked with in
consequence of his present undertaking.
He ought not, however, to conclude without observing, that several
genuine works of Hogarth yet remain to be engraved. He is happy
also to add that a young artist, every way qualified for such a task,
has already published a few of these by subscription.
J. N.
[1] Prints have, of late years, been judiciously rated according to the quality of
their impressions. But the very term impression, as applied to copper-plates,
perhaps is a novelty among us. If we refer to the earliest and most valuable
assemblage of portraits (such as that catalogued by Ames, afterwards purchased
by Dr. Fothergill, and lately sold to Mr. Thane), we shall have little reason to
suppose any regard was once paid to a particular of so much importance. As fast
as heads were met with, they were indiscriminately received; and the faintest
proofs do not appear to have been excluded at a time when the strongest might
easily have been procured. In consequence of an àmás so carelessly formed, the
volumes already mentioned, were found to display alternately the most beautiful
and the most defective specimens of the graphic art.

J. N. had once thoughts of adding a list of the copies made from the
works of Hogarth; but finding them to be numerous, beyond
expectation, has desisted from a task he could not easily accomplish.
This pursuit, however, has enabled him to suggest yet another
caution to his readers. Some of the early invaders of Hogarth's
property were less audacious than the rest; and, forbearing to make
exact imitations of his plates, were content with only borrowing
particular circumstances from each of them, which they worked up
into a similar fable. A set of The Rake's Progress, in which the
figures were thus disguised and differently grouped, has been lately
found. But since the rage of collection broke out with its present
vehemence, those dealers who have met with any such diversified
copies, have been desirous of putting them off either as the first
thoughts of Hogarth, or as the inferior productions of elder artists on
whose designs he had improved. There, is also a very small set of
The Rake's Progress, contrived and executed with the varieties
already mentioned; and even this has been offered to sale under the
former of these descriptions. Thus, as Shakspeare says, While we
shut the gate upon one imposition, another knocks at the door.
It may not be impertinent to conclude these cautions with another
notice for the benefit of unexperienced collectors, who in their
choice of prints usually prefer the blackest. The earliest copies of
Hogarth's works are often fainter than such as have been retouched.
The excellence of the former consists in clearness as well as
strength; but strength only is the characteristic of the latter. The first
and third copies of The Harlot's Progress will abundantly illustrate
my remark, which, however, is confined to good impressions of the
plates in either state; for some are now to be met with that no more
possess the recommendation of transparency than that of force. I
may add, that when plates are much worn, it is customary to load
them with a double quantity of colour, that their weakness, as far as
possible, may escape the eye of the purchaser. This practice the
copper-plate printers facetiously entitle—coaxing; and, by the aid of
it, the deeper strokes of the graver which are not wholly obliterated,
become clogged with ink, while every finer trace, which was of a
nature less permanent, is no longer visible. Thus in the modern
proofs of Garrick in King Richard III. the armour, tent, and habit,
continue to have considerable strength, though the delicate
markings in the face, and the shadows on the inside of the hand,
have long since disappeared. Yet this print, even in its faintest state,
is still preferable to such smutty impositions as have been recently
described. The modern impressions of The Fair, and The March to
Finchley, will yet more forcibly illustrate the same remark.

To the original paintings of Hogarth already enumerated may be

added a Breakfast-piece, preserved in Hill-Street, Berkeley-Square, in
the possession of William Strode, Esq; of Northaw, Herts. It contains
portraits of his father the late William Strode, Esq; his mother Lady
Anne (who was sister to the late Earl of Salisbury), Colonel Strode,
and Dr. Arthur Smith (afterwards Archbishop of Dublin).

ADDITION.
Four Times of the Day, p. 250.
It should have been observed, that the third of these plates was
engraved by Baron, the figure of the girl excepted, which, being an
after-thought, was added by our artist's own hand.

APPENDIX.

N° 1. [See p. 23.]

The following letter, printed in The Public Advertiser soon after the
first edition of the present work made its appearance, may possibly
contain some authentic particulars of the early life of the famous
Monsieur St. André. Mr. Woodfall's ingenious correspondent does
not, however, dispose me to retract a syllable of what is advanced in
the text; for he fails throughout in his attempts to exculpate our
hero from any one of the charges alledged against him. On the
contrary, he confirms, with additions, a considerable part of them,
and strives only to evade or overwhelm the rest by studied
amplifications of the little good which industrious partiality could pick
out of its favourite character. I shall now subjoin his epistle, with a
few unconnected remarks appended to it. A rambling performance
must apologize for a desultory refutation.
"Sir,
"The entertaining author of the last biography of the admirable
Hogarth, in the excess of commendation of a particular risible
subject for his pencil, has written too disadvantageously of the late
Mr. St. André. One who knew him intimately (but was never under
the smallest obligation to him) for the last twenty years of his life,
and has learned the tradition of his earlier conduct seemingly better
than the editor of the article in question, takes the liberty to give a
more favourable idea of him, and without intending to enter into a
controversy with this agreeable Collector of Anecdotes, to vindicate
this notorious man, who must be allowed to have been such; but it
is to be hoped in the milder sense Lord Clarendon often or always
uses the epithet. The making a subject of Mr. St. André is therefore
merely accidental. The writer expects to derive no praise from
exhibiting that person as the Hero of a page. He thinks it is only
doing justice (for the Dead deserve justice as well as the Living)
when he draws his pen against some very injurious insinuations,
thrown out with more inadvertence and at a venture than in malice,
against the memory of an acquaintance and of a foreigner (to whom
perhaps more mercy is due than to a native), who is more roughly
handled than he appears to deserve.
"Mr. Nathaniel St. André came over, or rather was brought over, very
early from Switzerland, his native country, in the train of a Mendez,
or Salvadore, or some Jewish family. Next to his countryman
Heidegger, he became the most considerable person that has been
imported from thence. He probably arrived in England in no better
than a menial station. Possibly his family was not originally obscure,
for he has been heard to declare, that he had a rightful claim to a
title, but it was not worth while to take it up so late in life. He had
undoubtedly all the qualifications of a Swiss. He talked French in all
its provincial dialects, and superintended the press, if the
information is to be depended upon, and perhaps taught it, as his
sister did at Chelsea boarding-school. He was early initiated in
music, for he played upon some musical instrument as soon as he
was old enough to handle one, to entertain his benefactors. He had
the good fortune to be placed by them with a surgeon of eminence,
and became very skilful in his profession. His duty and gratitude to
his father, whom he maintained when he was no longer able to
maintain himself, was exemplary and deserving of high
commendation. Let this charity cover a multitude of his sins! His
great thirst for anatomical knowledge (for which he became
afterwards so famous as to have books dedicated to him on that
subject), and his unwearied application, soon made him so compleat
an anatomist, that he undertook to read public lectures (and he was
the first in London who read any), which gave general satisfaction.
The most ingenious and considerable men in the kingdom became
his pupils. Dr. Hunter, now at the head of his profession, speaks
highly of his predecessor, and considers him (if the information is
genuine) as the wonder of his time. He continued his love of
anatomy to the last, and left noble preparations behind him, which
he was continually improving. The time of his introduction into Mr.
Molyneux's family is not known to the writer of this account.
Whether anatomy, surgery, knowledge, or music, or his performance
on the Viol de Gambo, on which he was the greatest master, got him
the intimacy with Mr. Molyneux, is not easy to determine. Certain it
is, that he attended his friend in his last illness, who died of a
dangerous disorder (but not under his hands), which Mr. Molyneux is
said to have pronounced, from the first, would be fatal. Scandal, and
Mr. Pope's satirical half-line, talked afterwards of 'The Poisoning
Wife.' She, perhaps, was in too great a hurry, as the report ran, in
marrying when she did, according to the practised delicacy of her
sex, and her very high quality. The unlucky business in which one
Howard, a surgeon at Guildford, involved him, who was the
projector, or accessary of the impudent imposture of Mary Tofts,
alias the Rabbit-woman of Godalmin, occasioned him to become the
talk and ridicule of the whole kingdom. The report made by St.
André, and others, induced many inconsiderately to take it for a
reality. The public horror was so great, that the rent of rabbit-
warrens sunk to nothing; and nobody, till the delusion was over,
presumed to eat a rabbit. The credulous Whiston believed the story
(for to some people every thing is credible that comes from a
credible witness), and wrote a pamphlet, to prove this monstrous
conception to be the exact completion of an old prophecy in Esdras.
The part St. André acted in this affair ruined his interest at Court,
where he had before been so great a favourite with King George I.
that he presented him with a sword which he wore himself. Now, on
his return out of the country, he met with a personal affront, and
never went to Court again. But he continued anatomist to the Royal
Houshold to his dying day, though he never took the salary. He
probably was imposed upon in this matter. And has it not been the
lot of men, in intellectual accomplishments vastly above his, such as
Boyle, for instance, a man infinitely his superior, to be over-reached
and misled? He took up the pen on the occasion (and it was not the
first time, for he wrote some years before a bantering pamphlet on
Dr. Mead), which could at best but demonstrate his sincerity, but
exposed the weakness of his judgement, on that case. It had been
insinuated he adopted this scheme, to ruin some persons of his own
profession. If he had a mind to make an experiment upon the
national belief, and to tamper with their willingness to swallow any
absurdity (which a certain nobleman [Duke of Montagu] ventured to
do, in the affair of a man who undertook to jump into a quart
bottle), he was deservedly punished with contempt. Swift (according
to Whiston), and perhaps Arbuthnot, exercised their pens upon him.
The cheat was soon discovered, and rabbits began to make their
appearance again at table as usual. But they were not at his own
table, nor made a dish, in any form of cookery, at that of his friends.
Perhaps they imagined that the name or sight of that animal might
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