Introduction to the International Summer School Schmalkalden

The International Summer School Schmalkalden focuses on the challenges confronting the world economy under the conditions of cross-cultural management.

The second millennium ended by bringing a truly global dimension to economic activity: the prerogative of the market extended its reach even to those countries which had resisted it for decades; the well-advanced internationalisation of economic relationships has resulted in significant interdependence between regions and countries. It has also let to an increasing integration of previously peripheral societies into the world economy. Matching these empirical trends, theories of 'globalisation' have grown to influence academic and public policy circles since the end of the Cold War. According to this emerging orthodoxy, long-standing conditions of time, space and territoriality have been transformed, or even made obsolete, by world-wide trends.

The third millennium has begun in the realisation that world-wide economic activity does not necessarily involve a growing similarity between systems of economic governance and business practices, even though multinational companies and the free flow of capital around the globe has continued to increase in importance. Instead, inherited tradition and cultural difference are said to play a more important role than ever before as global trade and investment bring once nationally orientated economies and firms into intimate contact and therefore intense competition with one another. These developments make the role of contrasting and sometimes conflicting cultural value systems highly relevant in two regards. The first is that differing approaches to the means and purposes of economic activity deriving from non-Western philosophies and cultures have consequences for the way in which countries understand their role in the international economy. The second is that individual firms interested in expanding their activities to countries where 'western' technocratic rationalism is confronted by religious-based value systems (e.g. Hinduism, Buddhism, Confucianism, Christianity or Islam), have to be able to adjust their market-entry, negotiating and trading strategies to 'fit in' with local conventions and sensibilities.

The challenges of the new economic reality do not stop there. The enormous increase in international financial transactions, especially on the currency markets, over the past decades has been one of the clearest indications of the interconnected nature of today's world economy. Financial crises, for example, are no longer limited to one country, or continent, but instead they can have global implications. At the same time international capital flows and international trading act as a motor for further globalisation which links the fates of the richest and poorest economies. The developed democratic states face competing and possibly contradictory demands which are the creation of appropriate conditions for economic growth in global markets (flexibility) versus the maintenance of social cohesion (regulation). The ever-more integrated world economy is also made to be responsible for global ecological damage, financial and economic instability, starvation and mass migratory pressures, and the gap in wealth and health that separates the rich West from the poor rest.

Some of the most trenchant and fundamental recent critiques of global markets have notably come from practitioners and former proponents of free market capitalism. The speculator George Soros has commented that he finds "it easier to imagine the collapse of the global marketplace than the continuation of the present regime", while one-time neo-liberal advisor to Margaret Thatcher, Prof. John Gray, now believes that "by allowing ... freedom to world markets we ensure that the age of globalisation will be remembered as another turn in the history of servitude".

The exaggerated sense of a world economy out of control is encouraging the view that capitalism's problems stem from excess, from growing too fast and that it needs to be pulled back. With governments announcing action plans involving some extension of international regulation, control and containment, the instinct for restraint in business and finance is likely to be reinforced. A possible real danger in the major economies is that the hype about a global crisis will strengthen the impulse of business and political leaders to downplay the international economy's potential for growth. The mentality that both inflates the difficulties and then reacts by saying 'hold back' could be a bigger threat to economic and social progress than an economic crisis and the fall-out from financial disarray.

Guest professors from different countries and continents are invited to give us their views on these issues. The wide variety of countries, cultures and religions represented by our international students, who come from over 20 different countries, provides a timely and unique opportunity to investigate the impact of contrasting cultural-religious value systems on international business. Our goal is that students participating in the ISSS will be offered, and be able to develop through the exchange of perspectives and experiences, detailed knowledge and understanding of the complex and interwoven challenges facing economies and firms in the new millennium. In addition, the growing importance of religious values and their economic implications will be examined in multicultural classes and they will develop the students' cross-cultural abilities to prevent Huntington's "clash of civilizations".