The multinational corporation, often seen as a primary agent of globalization, is taking on a new form, one that is promising for both business and society. From a business perspective, this new kind of enterprise is best understood as “global” rather than “multinational.”

Businesses are changing in fundamental ways-structurally, operationally, culturally-in response to the imperatives of globalization and new technology. Simply put, the emerging globally integrated enterprise is a company that fashions its strategy, its management, and its operations in pursuit of a new goal: the integration of production and value delivery worldwide.

Until recently, companies generally chose to produce goods close to where they sold them. As a consequence, most foreign investments targeted specific foreign markets. Today, overseas investments continue to be made with a view to gaining access to important sources of foreign demand, but companies are investing more to change the way they supply the entire global market. The global integration of production cuts costs and taps new sources of skills and knowledge.

Heretofore, the corporation was seen as a collection of country-based subsidiaries, business units, or product lines. Now the spread of outsourcing is encouraging companies to view themselves as an array of specialized components: procurement, manufacturing, research, sales, distribution, and so on.

The globally integrated enterprise will require fundamentally different approaches to production, distribution, and work-force deployment. This is already happening. Because new technology and business models are allowing companies to treat their different functions and operations as component pieces, firms can pull those pieces apart and put them back together again in new combinations, based on strategic judgments about which operations the company wants to excel at and which it thinks are best suited to its partners.

The globally integrated enterprise can deliver enormous economic benefits to both developed and developing nations. The integration of the work force in developing countries into global systems of production is already raising living standards, improving working conditions, and creating more jobs in those countries. Small and medium-sized businesses everywhere, particularly, are benefiting: as new services-from back-office administration to sales support-create infrastructures once only affordable to large organizations, these businesses can now participate in the global economy.

But shifting to the model of globally integrated enterprises also presents big challenges for leaders in every sector of society. The very fact that so many more people all over the world are gaining equal access to the production process and the marketplace means much more trade and competition. Although this will create wealth and opportunity, it will also bring disruption and fear. Legitimate concerns about job loss and skill shortages must be addressed in realistic and constructive ways.

The single most important challenge in shifting to globally integrated enterprises-and the consideration driving most business decisions today-will be securing a supply of high-value skills. Nations and companies alike must invest in better basic educational and training programs. New kinds of managerial skills are also needed. Hierarchical, command-and-control approaches simply do not work anymore. They impede information flows inside companies, hampering the fluid and collaborative nature of work today.

A second important step will be the sensible regulation of intellectual property worldwide. On the one hand, piracy deprives individual inventors of their rights and incentives, and it must be curtailed. On the other hand, collaboration between corporations and their partners, suppliers, and customers-a key feature of contemporary innovation and of the integration of technologies and business models-must be encouraged and protected. A balance between these two interests must be struck-and it must be enforced consistently worldwide.

Among the most urgent of the challenges facing emergent global institutions in all spheres of society is global security and order. Without them, nothing is possible. Companies will only invest in global systems of production if they believe that the geopolitical relationships that enable their investments will be stable and lasting.

The alternative to global integration is not appealing. Left unaddressed, discontent with globalization will only grow. People might ultimately choose to elect governments that impose strict regulations on trade or labor, perhaps of a highly protectionist sort. Worse, they might gravitate toward more extreme forms of nationalism, xenophobia, and anti-modernism.