In Brief

The Problem

Countries throughout North America and Europe have experienced waves of anti-globalization sentiment, but most business leaders are uncertain about whether to retreat, change strategy, or stay the course.

The Big Picture

Before making any decisions, it’s important to understand two things. First, the world is less globalized than most people realize. Second, history tells us that even in the face of a trade war, international trade and investment would still be too large for strategists to ignore.

Recommendations

Don’t overreact to protectionist rhetoric, but do make adjustments. If your operations are unprofitable, retrench. Focus more resources on adapting to local needs. And wherever you do business, be sure you’re creating—not just extracting—value.

Business leaders are scrambling to adjust to a world few imagined possible just a year ago. The myth of a borderless world has come crashing down. Traditional pillars of open markets—the United States and the UK—are wobbling, and China is positioning itself as globalization’s staunchest defender. In June 2016, the Brexit vote stunned the European Union, and the news coverage about globalization turned increasingly negative in the U.S. as the presidential election campaign progressed.

A version of this article appeared in the July–August 2017 issue (pp.112–123) of Harvard Business Review.