In today’s globalized and digitally enabled economy, cultural ties powerfully bind people and communities across geographic distances.
In fact, culture is a strong determinant of who does business with whom, lubricating the wheels of international trade, investment, and consumerism much more than is commonly recognized, asserts Joel Kotkin, a geographer and author, in The New World Order, a paper for the Legatum Institute.
Kotkin suggests that culture is the coalescing force behind three massive, globe-spanning “tribes” that now dominate the world’s trade and cultural flows. These three tribes have come to define the real power alignments of the new world order, argues Kotkin, and they will increasingly shape commerce and consumer life in coming decades as their numbers and affluence expand. They are:
- The Sinosphere
- The Indian sphere
- The Anglosphere
Each of these tribes is changing in important ways, and new global tribes will emerge in the decades ahead. For example, a Vietnamese sphere of influence is rising, encompassing a stronger Vietnam and its scattered diaspora.
For businesses, understanding these cultural spheres of influence—whose perspectives, tastes, and creative momentum will increasingly influence consumer and business decision- making—offers a valuable framework for competing in a globalized world.
THE THREE TRIBES
Culture unites people around the world—determining who does business with whom—even more than geography or economic status, Kotkin writes. “A Taiwanese technologist who works in Chengdu while tapping his network across east Asia, America, and Europe does so largely as a Chinese. An Indian trader in Hong Kong does business with others of his ‘tribe’ in Africa, Great Britain, and the former Soviet republics in east Asia.”
Driven by globalization and digital communications, three vast yet cohesive cultural tribes now underpin the world economy, and together the three tribes account for nearly half of global GDP.
- The Sinosphere. The Chinese sphere of influence includes nearly 1.4 billion people. Its geography extends beyond East and Southeast Asia to large pools of ethnic Chinese in places such as the US, Russia, France, and Brazil, and is spreading into World 3 as the PRC invests heavily there.
- The Indian sphere. The Indian sphere numbers about 1.25 billion, including a diaspora of some 40 million ethnic Indians who retain close familial ties to the homeland.
- The Anglosphere. With 400 million members in its “core”countries (not counting millions more English speakers around the world), the Anglosphere remains first among the world’s ethnic networks in key respects—e.g., language, culture, and technology. “Core” Anglosphere countries are: US, UK, Canada, Ireland, Australia, and New Zealand.
3 BUSINESS IMPLICATIONS
- Cultural affinity matters in business: it reduces transaction costs by fostering trust and stimulating communication. This is strikingly illuminated in the FDI and trade flows identified by Kotkin, which show a strong bias toward other countries in the same cultural sphere—as well as in the data in the “Kinship Counts” sidebar (page 2), which illustrate the degree to which a common language and history boost trade. Companies could look for ways to take advantage of these insights, for instance, by staffing their transnational teams in ways that allow cultural affinities to bloom (while still, of course, prioritizing competence), or by using linguistic and historical patterns to help evaluate the pros and cons of expansion into new markets.
- For smart companies, transnational cultural ties can also shape marketing strategies by clarifying consumers’ priorities and relationships. While global businesses routinely include cultural norms in their analysis of consumer markets, the “three tribes” paradigm offers a fresh framework for understanding the global social fabric behind local consumer decisions.
- However, cultural ties shouldn’t be overplayed. Merit still matters more in hiring, and geography exerts a strong pull on trade, business practices and regulation, and consumer decision-making. Cultural ties should be analyzed as a complement, not replacement, for crucial factors like these.