BLOG: What Unilever's move tells us about the economy Wednesday, 21 March 2018
In recent days, ‘the media’ have made a lot of fuss about Unilever’s headquarter move to Rotterdam. Don’t get me wrong -I have nothing against Unilever- but I feel most journalists and politicians are overestimating the impact this move will have. Let me give you a brief overview of some of the reasons for this.
1. Unilever’s supply chain doesn’t change.
First things first: most things don’t change when Unilever moves it headquarters. In fact, they already have a headquarter in Rotterdam, they will just stop using the one they had in London. Most importantly however, Unilever’s business doesn’t change. They will still make mass consumer products, produce or procure them all over the world, and sell them to markets across the world. Thus, your washing detergent will still be made in Romania and sold in Germany. The headquarter choice has nothing to do with this and will not have any tangible impact on your grocery shopping.
2. The move will not create any jobs.
At best, some jobs (in the hundreds) will be moved from London to Rotterdam. Unilever employs some 169.000 people across the world (Statista, 2016) so moving a few hundred doesn’t have a major impact on anything. In fact, Unilever promises the British that they will compensate this loss by moving some other departments to the UK. Business groups and staff are in principle not affected, nor is the dual listing on stock exchanges. So the move will not generate (m)any jobs. We should also remember that most people are not employed by big Multi-National Corporations (MNCs) to begin with, but rather by small and medium sized enterprises or the semi-public government organizations. In that kind of world, whatever Unilever does with its headquarter is not particularly relevant for our economy.
3. We make money through (digital) innovation from small companies
Finally, we should start thinking a little different about our earning potential. The ‘service’ sector already comprises the majority of GDP in most countries – including more developing countries. Furthermore, most people work in the service sector. But most people don’t know that, which means that we overestimate the impact of manufacturing firms on our economy to begin with. What we find in our research and when we talk to companies is that big firms often struggle to collaborate with small specialists and start-ups, in particular those with advanced digital technologies. These companies need to move and act quickly, are connected through personal relations and not contracts, and need to be financed beforehand. Big firms with lengthy procurement processes and complex contractual/legal terminology will find it difficult to connect with such companies. However, this is exactly how we can create new value, new jobs, and a new economy.
In conclusion, while it is certainly interesting that Unilever decides to ‘move’ to Rotterdam, let’s not overestimate the impact this will have –on anything. Unilever does not change its business, does not create or move jobs, and is not as important for our economy to begin with.
Robert Suurmond is a PhD candidate at the Department of Technology and Operations Management. His research focusses on how innovation is achieved in the context of supply (network) collaborations, for both products and services. For example, how do buyer-supplier-customer service triads form and function? Or what is the effect of supplier involvement in new product development? Furthermore, Robert is well-equiped in both qualitative and quantitative research methodology. He is the co-developer of a free and simple tool for meta-analysis Meta-Essentials.
Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s top 10 business schools. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who can become a force for positive change by carrying their innovative mindset into a sustainable future. Our first-class range of bachelor, master, MBA, PhD and executive programmes encourage them to become critical, creative, caring and collaborative thinkers and doers. Study information and activities for future students, executives and alumni are also organised from the RSM office in Chengdu, China. www.rsm.nl
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