Globalization and the Empowerment of Talent∗

Globalization has been identified by many experts as a new way firms organize their activities and as the emergence of talent as the new stakeholder in the firm. This paper examines the role of trade integration for the changing nature of the corporation. International trade leads to a ’war for talent’ which makes it more likely that an organizational equilibrium emerges in the integrated world economy in which control is delegated to lower levels of the firms’ hierarchy empowering human capital. Furthermore, trade integration is shown to lead to waves of outsourcing and to convergence in corporate cultures across countries. ∗We thank Elhanan Helpman, Martin Hellwig and in particular Pol Antras for thoughtful suggestions and participants of the NBER International Trade and Organizations Program Meeting, Cambridge, 2003, North American Summer Meeting of the Econometric Society, Evanston, 2003, CEPR European Workshop in International Trade ERWIT 2003, Bern, European Trade Study Group, Madrid, 2003, SFB/TR 15 Workshop, Gummersbach, 2004 and seminar participants at Humboldt University Berlin, University of Southampton, Paris I, International Monetary Fund, Melchior Minerva Center for Growth, Hebrew University Jerusalem and the Vienna Institute for International Economic Studies for helpful comments. Financial support by the Volkswagen Foundation through the network ’Globalization and the Organization of Firms and Markets’ and by the German Science Foundation through SFB/TR 15 and through a research grant is gratefully acknowledged.