If there is one sore point with a vocal sector of the U.S. public, it is the practice of outsourcing jobs to international locations. Public sentiment against U.S. corporate efforts to send more and more of their operations overseas is growing. However, many business leaders stand firm in their position that offshoring, or moving jobs to overseas locations, is sometimes needed to allow businesses to work more efficiently. In a speech to the Detroit Economic Club in April, John J. Castellani, president of the Business Roundtable, an organization comprised of CEOs from America’s largest companies, reiterated the group’s pro-offshoring stance, noting that critics of the policy need to “reject isolationist thinking and isolationist rhetoric.” He added that the U.S. has “everything to gain by free trade with other nations,” outlining the benefits of worldwide competition--cost savings, repatriated earnings and the increase in demand for U.S. goods and services.

 

While moving operations to less expensive areas of the world may be an effective cost-cutting measure, the effort will only serve to boost the bottom line temporarily, says Edward D. Hess, executive director of the Center for Entrepreneurship and Corporate Growth and an adjunct professor of organization and management at Emory University’s Goizueta Business School. “The real challenge for company leaders is to gain an entrepreneurial mindset, in order to grow the business organically and creatively,” he notes.

 

Unfortunately, says Hess, “The rules of the corporate game as currently applied tend to penalize risk taking and the entrepreneurial spirit.” He admits that true innovation is certainly harder to accomplish than the budget slashing measures that U.S. corporate leaders have routinely employed—from mass layoffs to offshoring.  “This sort of thing is much easier to do, less risky and more predictable, and it fits better with Wall Street’s myopic quarterly earnings view.”

 

Monica C. Worline, a professor of organization and management at Goizueta, says that the biggest problem is that businesspeople often misconstrue the term “entrepreneur.” She adds, “In the U.S., entrepreneur has come to be known as someone who is starting a new business, and the business is generally seen as a small, bootstrap startup—something you pour your heart, soul and life into. This is a limited notion of the term. Many also associate the term 'entrepreneur' with a risk taker. However, often the best kinds of entrepreneurial ideas are those small innovations on what is already working. ”

 

But just what does having an entrepreneurial perspective do for a company, large or small? According to Worline, having an entrepreneurial sense means that even CEOs of  the largest U.S. companies can “improvise, manage through change and learn to be creative in their leadership.” It means rewarding innovative efforts and accepting small failures as a necessary part of doing business. Worline adds that business leaders must move beyond creative accounting and truly get down to thinking in an entrepreneurial fashion. All too often, she says, the concern has become short-term fluctuations in stock price. “CEOs who care about the short-term swings ultimately become more susceptible to corporate governance problems.”

 

Worline also believes that there needs to be some acknowledgement of the detrimental social effect that job loss has on communities, especially when factories and companies fold, or relocate outside of the country. She cites William Julius Wilson’s groundbreaking book When Work Disappears: The World of the New Urban Poor, and how the loss of manufacturing jobs from the inner city caused tremendous social upheaval. “This effect isn’t confined to any specific area. It doesn’t only happen in urban areas. A similar thing occurred in Michigan, as the auto jobs disappeared. Many small cities around that state deteriorated socially. There was no way to sustain civic life.”

 

Some business leaders have applied creative solutions versus moving operations abroad. When computer support jobs were going overseas due to the cost savings, business leader and Goizueta EMBA graduate W. Cliff Oxford says he took a different path at the company he founded.  In 2002, he regrouped and shifted efforts at STI Knowledge, an enterprise-support solutions company. “I had computer support people and I retrained them to also upsell to the customer after they provided support. They understood the product better than anyone. I moved a cost center into a profit center.” (Oxford sold his remaining interest in STI Knowledge in December.)

 

Despite his success in Corporate America, Oxford prefers to call himself  “an entrepreneur.” The vision and passion needed to make a business work, he says, remains valuable even in large, established companies. (Oxford recently pledged $5 million to Goizueta’s Executive MBA program, now renamed the W. Cliff Oxford Executive MBA at Emory University’s Goizueta Business School, to help foster and advance the school’s entrepreneurial mission.) “Business leaders in the U.S. need to have an entrepreneurial background. We need to equip them with this sort of mindset, so that they can think about how to create wealth and jobs here in the U.S., and not the fastest and cheapest product elsewhere.”

 

Oxford recently started a new business, The Home Shoppe, which he describes as a one-stop retail shop for home remodeling and design services. The company opened its doors in March in Atlanta, and features architects, designers and builders from the area, all housed in one convenient location. He hopes to franchise the business, which is designed to tap into local labor sources and businesses to provide a "turnkey" solution to customers. 
 

Despite entrepreneurial efforts by some business leaders, changing the current corporate focus on short term results remains a challenge. But, says Hess, a business approach needn’t be an all or nothing consideration.  “You can choose to be creative and play by long-term rules and stay out of the fray, giving investors the option of choosing to stay with your stock or not. The second alternative is to be somewhere in the middle—having a portfolio approach of managing the existing business for short-term profit that meets investor demands and a portion of the business that is more long-term oriented and accepting of failure. You can build on a portfolio of entrepreneurial activities. The third approach is a ‘business as usual, short-term whatever it takes’ attitude.”

 

Nonetheless, globalization has forever altered the way Corporate America does business. Whether or not to lament the changes may depend on one’s perspective or personal condition. Notes Hess, “We have already seen globalization result in the commoditization of capital. The second movement was the commoditization of labor. However, the third phase is fast becoming the commoditization of intellect, with higher paying jobs in tech, legal, and financial services at risk.

 

While additional constraints on free trade will raise concerns among corporate leaders who feel that this will place a burden on business, many are arguing that additional measures do need to be in place. Says Hess, “You may find pressures in this country to move toward more nationalistic policies. It has happened in Europe, and many here ridiculed them at the time. Now we face the same question—should the country do something to protect its own workforce? And, how will business leaders balance their short and long-term demands?”