An analysis of Pankaj Ghemawat s

Distance Still Matters the Hard Reality

of Global Expansion First Edition.
Edition Alessandro Giuduci
Visit to download the full and correct content document:
https://textbookfull.com/product/an-analysis-of-pankaj-ghemawat-s-distance-still-matt
ers-the-hard-reality-of-global-expansion-first-edition-edition-alessandro-giuduci/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...

Eurocentrism and the Politics of Global History First

Edition Alessandro Stanziani

https://textbookfull.com/product/eurocentrism-and-the-politics-
of-global-history-first-edition-alessandro-stanziani/

Do Parties Still Represent An Analysis of the

Representativeness of Political Parties in Western
Democracies 1st Edition Knut Heidar (Editor)

https://textbookfull.com/product/do-parties-still-represent-an-
analysis-of-the-representativeness-of-political-parties-in-
western-democracies-1st-edition-knut-heidar-editor/

Economic Philosophies: Liberalism, Nationalism,

Socialism: Do They Still Matter? Alessandro Roselli

https://textbookfull.com/product/economic-philosophies-
liberalism-nationalism-socialism-do-they-still-matter-alessandro-
roselli/

The War That Forged a Nation Why the Civil War Still
Matters 1st Edition James M. Mcpherson

https://textbookfull.com/product/the-war-that-forged-a-nation-
why-the-civil-war-still-matters-1st-edition-james-m-mcpherson/
Hrafnkel or the ambiguities : hard cases, hard choices
First Edition Miller

https://textbookfull.com/product/hrafnkel-or-the-ambiguities-
hard-cases-hard-choices-first-edition-miller/

A History Of Global Capitalism Feuding Elites And

Imperial Expansion Sambit Bhattacharyya

https://textbookfull.com/product/a-history-of-global-capitalism-
feuding-elites-and-imperial-expansion-sambit-bhattacharyya/

An Analysis of Frantz Fanon s 1st Edition Riley Quinn

https://textbookfull.com/product/an-analysis-of-frantz-
fanon-s-1st-edition-riley-quinn/

Myth and Reality in the U S Immigration Debate First

Edition. Edition Greg Prieto

https://textbookfull.com/product/myth-and-reality-in-the-u-s-
immigration-debate-first-edition-edition-greg-prieto/

An Analysis of C Wright Mills s The Sociological

Imagination 1st Edition Ismael Puga

https://textbookfull.com/product/an-analysis-of-c-wright-mills-s-
the-sociological-imagination-1st-edition-ismael-puga/
 An Analysis of

Pankaj Ghemawat’s
Distance Still Matters:
The Hard Reality
of Global Expansion

Alessandro Giudici
with
Marianna Rolbina
Published by Macat International Ltd
24:13 Coda Centre, 189 Munster Road, London SW6 6AW.

Distributed exclusively by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
711 Third Avenue, New York, NY 10017, USA

Routledge is an imprint of the Taylor & Francis Group, an informa business

Copyright © 2018 by Macat International Ltd

Macat International has asserted its right under the Copyright, Designs and Patents Act
1988 to be identified as the copyright holder of this work.

The print publication is protected by copyright. Prior to any prohibited reproduction, storage in
a retrieval system, distribution or transmission in any form or by any means, electronic, me-
chanical, recording or otherwise, permission should be obtained from the publisher or where
applicable a license permitting restricted copying in the United Kingdom should be obtained
from the Copyright Licensing Agency Ltd, Barnard’s Inn, 86 Fetter Lane, London EC4A 1EN, UK.

The ePublication is protected by copyright and must not be copied, reproduced, transferred,
distributed, leased, licensed or publicly performed or used in any way except as specifically
permitted in writing by the publishers, as allowed under the terms and conditions under which
it was purchased, or as strictly permitted by applicable copyright law. Any unauthorised distri-
bution or use of this text may be a direct infringement of the authors and the publishers’ rights
and those responsible may be liable in law accordingly.

www.macat.com
info@macat.com

Cataloguing in Publication Data

A catalogue record for this book is available from the British Library.
Library of Congress Cataloguing-in-Publication Data is available upon request.
Cover illustration: David Newton

ISBN 978-1-912453-45-0 (hardback)

ISBN 978-1-912453-00-9 (paperback)
ISBN 978-1-912453-15-3 (e-book)

Notice
The information in this book is designed to orientate readers of the work under analysis,
to elucidate and contextualise its key ideas and themes, and to aid in the development
of critical thinking skills. It is not meant to be used, nor should it be used, as a
substitute for original thinking or in place of original writing or research. References and
notes are provided for informational purposes and their presence does not constitute
endorsement of the information or opinions therein. This book is presented solely for
educational purposes. It is sold on the understanding that the publisher is not engaged
to provide any scholarly advice. The publisher has made every effort to ensure that
this book is accurate and up-to-date, but makes no warranties or representations with
regard to the completeness or reliability of the information it contains. The information
and the opinions provided herein are not guaranteed or warranted to produce particular
results and may not be suitable for students of every ability. The publisher shall not be
liable for any loss, damage or disruption arising from any errors or omissions, or from
the use of this book, including, but not limited to, special, incidental, consequential or
other damages caused, or alleged to have been caused, directly or indirectly, by the
information contained within.
CONTENTS

WAYS IN TO THE TEXT

Who Is Pankaj Ghemawat? 9
What Does “Distance Still Matters” Say? 10
Why Does “Distance Still Matters” Matter? 12

SECTION 1: INFLUENCES
Module 1:The Author and the Historical Context 15
Module 2: Academic Contextt 20
Module 3:The Problem
m 25
Module 4:The Author’s Contribution 31

SECTION 2: IDEAS
Module 5: Main Ideas 37
Module 6: Secondary Ideas 42
Module 7: Achievementt 47
Module 8: Place in the Author’s Work 52

SECTION 3: IMPACT
Module 9:The First Responses 58
Module 10:The Evolving Debate 63
Module 11: Impact and Influence Today 68
Module 12:Where Next? 73

Glossary of Terms 79
People Mentioned in the Text 85
Works Cited 92
THE MACAT LIBRARY
The Macat Library is a series of unique academic explorations of
seminal works in the humanities and social sciences – books and
papers that have had a significant and widely recognised impact on
their disciplines. It has been created to serve as much more than just a
summary of what lies between the covers of a great book. It illuminates
and explores the influences on, ideas of, and impact of that book. Our
goal is to offer a learning resource that encourages critical thinking and
fosters a better, deeper understanding of important ideas.
Each publication is divided into three Sections: Influences, Ideas, and
Impact. Each Section has four Modules. These explore every important
facet of the work, and the responses to it.
This Section-Module structure makes a Macat Library book easy to
use, but it has another important feature. Because each Macat book is
written to the same format, it is possible (and encouraged!) to cross-
reference multiple Macat books along the same lines of inquiry or
research. This allows the reader to open up interesting interdisciplinary
pathways.
To further aid your reading, lists of glossary terms and people
mentioned are included at the end of this book (these are indicated by
an asterisk [*] throughout) – as well as a list of works cited.

Macat has worked with the University of Cambridge to identify the

elements of critical thinking and understand the ways in which six
different skills combine to enable effective thinking.
Three allow us to fully understand a problem; three more give us
the tools to solve it. Together, these six skills make up the
PACIER model of critical thinking. They are:

ANALYSIS – understanding how an argument is built

EVALUATION – exploring the strengths and weaknesses of an argument
INTERPRETATION – understanding issues of meaning
CREATIVE THINKING – coming up with new ideas and fresh connections
PROBLEM-SOLVING – producing strong solutions
REASONING – creating strong arguments

To find out more, visit WWW.MACAT.COM.

CRITICAL THINKING AND “DISTANCE STILL MATTERS”

Primary critical thinking skill: EVALUATION

Secondary critical thinking skill: PROBLEM SOLVING
A core objective of Pankaj Ghemawat’s work is to present a critical approach to
the accepted view of globalization.The prevailing opinion in the business
world at the time of publication was that globalization was a positive force,
bringing new opportunities to companies expanding globally. Evaluating this
worldview against real cases of failed expansion attempts, Ghemawat points out
that the dominant view of globalization does not allow us to understand the
reason for these failures. He argues that an overlooked factor, distance between
countries, creates additional risks and costs for companies when they enter a
foreign market. Ghemawat cautions against over-optimism, and calls for a more
holistic picture of globalization.
Ghemawat builds this argument by outlining an important practical
problem: he points out that the existing analytical tools that managers use do
not allow them to see the potential problems that their international expansion
may face. He cites a case of how using a popular analysis tool, Country
Portfolio Analysis, focuses managers’ attention only on potential profits,
overlooking costs. After highlighting this problem, he proposes a solution: the
CAGE Distance Framework, an analytical tool that takes distance between
countries into account, providing managers with the opportunity to see the
potential pitfalls of their expansion, and uncover new opportunities where the
balance between benefits and risks is better.This approach to identifying
problems and providing solutions not only makes the article very vivid, but also
demonstrates that using the critical thinking skill of problem solving may lead
to novel solutions that improve existing business practices.
ABOUT THE AUTHOR OF THE ORIGINAL WORK
Pankaj Ghemawat is a renowned scholar of globalization who, at 23,
became the youngest person ever to be appointed a full professor at
Harvard Business School. Currently, he holds professorial positions at
Stern School of Business at New York University and IESE Business
School in Spain.

Ghemawat’s work has inspired an array of recent research. Recognizing

his contribution, The Economistt included Ghemawat in its 2008 guide to
the greatest management thinkers of all time.

ABOUT THE AUTHORS OF THE ANALYSIS

Alessandro Giudici is Lecturer in Strategy at Cass Business School,
City, University of London. His research focuses on how organizations
can support innovation dispersed across international contexts. His work
has been published in outlets such as the Academy of Management Journal,
Strategic Organization, Long Range Planning, and Business History.

Marianna Rolbina is a PhD candidate at Cass Business School, City,

University of London. Her research is in management and strategy, with
a particular focus on cultural industries.

ABOUT MACAT
GREAT WORKS FOR CRITICAL THINKING
Macat is focused on making the ideas of the world’s great thinkers
accessible and comprehensible to everybody, everywhere, in ways that
promote the development of enhanced critical thinking skills.
It works with leading academics from the world’s top universities to
produce new analyses that focus on the ideas and the impact of the most
influential works ever written across a wide variety of academic disciplines.
Each of the works that sit at the heart of its growing library is an enduring
example of great thinking. But by setting them in context – and looking
at the influences that shaped their authors, as well as the responses they
provoked – Macat encourages readers to look at these classics and
game-changers with fresh eyes. Readers learn to think, engage and
challenge their ideas, rather than simply accepting them.
 ‘Macat offers an amazing first-of-its-kind tool for
interdisciplinary learning and research. Its focus on works
that transformed their disciplines and its rigorous approach,
drawing on the world’s leading experts and educational institutions,
opens up a world-class education to anyone.’
Andreas Schleicher
Director for Education and Skills, Organisation for Economic
Co-operation and Development

‘Macat is taking on some of the major challenges in university

education … They have drawn together a strong team of active
academics who are producing teaching materials that are
novel in the breadth of their approach.’
Prof Lord Broers,
former Vice-Chancellor of the University of Cambridge

‘The Macat vision is exceptionally exciting. It focuses

upon new modes of learning which analyse and explain seminal texts
which have profoundly influenced world thinking and so social and
economic development. It promotes the kind of critical thinking
which is essential for any society and economy.
This is the learning of the future.’
Rt Hon Charles Clarke, former UK Secretary of State for Education

‘The Macat analyses provide immediate access to the critical

conversation surrounding the books that have shaped their
respective discipline, which will make them an invaluable resource
to all of those, students and teachers, working in the field.’
Professor William Tronzo, University of California at San Diego
WAYS IN TO THE TEXT
KEY POINTS
• Pankaj Ghemawat is an Indian-American management
thinker who has made major contributions to the research
of globalization.*
• “Distance Still Matters” makes the argument that firms
must look beyond countries’ sales potential, at the impact
that physical distance can have.
• “Distance Still Matters” provides a novel and useful
analytical framework to assess the risks of doing business
internationally.

Who Is Pankaj Ghemawat?

Pankaj Ghemawat is an influential scholar of globalization. His interest
in the topic is fueled by his international background. Born in India in
1959, he went to the United States to study at Harvard University at
the age of 16. After graduation, he worked in the United Kingdom
for the renowned consulting firm McKinsey & Company. Continuing
on this international path, Ghemawat now holds professorial positions
at both New York University’s Stern School of Business and IESE
Business School in Spain.
Ghemawat’s work focuses on the problems businesses experience
when expanding globally. He challenges the widely held view that
globalization is a universal, positive force, pointing out the multifaceted

9
Macat Analysis of Pankaj Ghemawat’s “Distance Still Matters”

nature of this phenomenon. The increase in foreign direct

investment* at the end of the 20th century led both practitioners and
academics to look at the prospects of globalization over-optimistically.
Ghemawat argues against such simplification, pointing out risks and
costs associated with international expansion. Apart from his scholarly
work, Ghemawat also collaborates with DHL* on its annual Global
Connectedness Index.* He himself developed the index to inform
management practitioners of international trends, beginning in 2011.
Harvard Business Review’sThinkers50* ranked Ghemawat among
the top twenty most influential management thinkers worldwide, for
his contribution to the theory of multinational enterprise, as well as his
impact on practitioners and policy makers. The Economistt included
him in its 2008 guide to the greatest management thinkers, the
youngest “guru” to be included in this prestigious ranking.

What Does “Distance Still Matters” Say?

“Distance Still Matters,” published in 2001, was a milestone in
Ghemawat’s academic career, and is one of the most important articles
ever to be published in the field of international management. It
uncovers a key reason why companies expanding internationally may
fail, even when they choose to enter the markets that seem most
profitable. The most significant reason, Ghemawat argues, is the fact
that traditional tools, such as Country Portfolio Analysis,* focus only
on the potential benefits of expansion, and disregard possible
hindrances firms may face when entering foreign markets. In the
author’s view, traditional analysis methods lead managers to overlook
the impact of international distance. Ghemawat sees this notion as
more than simply a physical distance between two countries and
presents distance as a multifaceted concept incorporating differences
between countries in cultural, administrative, geographic, and
economic spheres.

10
 Ways In to the Text

The main focus and key contribution of “Distance Still Matters”

is a new tool—the CAGE Distance Framework—that allows
managers to account for risks associated with cultural, administrative,
geographic, and economic distance between countries when
considering international expansion. The framework includes the
attributes that constitute each dimension of distance, as well as a list of
industries that are affected by distance when expanding internationally.
In “Distance Still Matters,” Ghemawat systematically explains his
novel understanding of distance. He provides examples of each
dimension of this notion and explains how they impact different
industries, highlighting which industries are more or less sensitive to
each type of distance. For example, cultural dimension of distance
includes norms, language and traditions, and strongly affects exports of
cultural products such as television, as well as food exports.
Administrative differences such as political hostility and different
monetary systems affect firms exploiting natural resources. Geographic
distance that incorporates the differences in countries’ size and
location creates difficulties for companies dealing with financial and
other services where connectivity is important. Finally, economic
distance that refers to differences in income and available resources,
may impact firms demand for whose products varies with income
level, such as the automotive industry. He also evaluates two
compelling cases, which demonstrate that disregarding the challenges
posed by international distance may lead to a failed expansion, while
accounting for them may highlight opportunities that were previously
overlooked.
The CAGE Distance Framework retains its relevance today, since
international distance is an ever more important part of business, and
companies must consider it when expanding internationally. The
usefulness of the framework has been confirmed by its practical
application, for example in adjusting companies’ risk assessments and
Net Present Value* calculations.1 Furthermore, “Distance Still

11
Macat Analysis of Pankaj Ghemawat’s “Distance Still Matters”

Matters” has gained wide acceptance in academic circles, with over

500 citations on Thomson Reuters ISI Web of Science2 and 1800
Google Scholar citations to date.3 Furthermore, in the years since the
article’s publication, many scholars, such as Oscar Martín Martín* and
Rian Drogendijk,* have expanded on the concept of distance by
developing scales to measure its dimensions.

Why Does “Distance Still Matters” Matter?

The theory of multinational enterprise is a vast academic field that
started with Peter Buckley* and Mark Casson’s* seminal work The
Future of the Multinational Enterprise, and has continued developing
since. “Distance Still Matters” was a major contribution to this debate.
It is written in a vivid style characteristic of Harvard Business Review
publications, which makes it easily understandable to non-experts. It
uses a variety of real life cases and lay language to transmit its key
points. Thus, the article is a good entry point for students of other
disciplines into scholarly writing on international business and the
theory of multinational enterprise. The article, while short, gives a
comprehensive account of related issues that are still very relevant for
practitioners and policy makers and constitutes a research agenda for
international business scholars.
For a modern reader used to instant communication and easy
transportation,“Distance Still Matters” serves as a useful reminder that
the world is not fully globalized, and understanding the differences
between countries is crucial when companies consider global
expansion. These differences play a significant role in determining
companies’ success or failure in entering foreign markets. Furthermore,
they can help us understand why certain groups of countries trade
with each other more or less intensively—the phenomenon known as
regionalization dynamics*—as the DHL Global Connectedness
Index shows.

12
 Ways In to the Text

The relevance of the ideas expressed in “Distance Still Matters” has

increased in recent years, with major sociopolitical and economic
events such as the Global Financial Crisis* and Brexit* raising
concerns over the future of globalization. The previous, over-
optimistic stance has given way to cautions that the world is becoming
ever more fragmented, with some practitioners,4 as well as scholars
such as Alan Rugman,* even fearing the end of globalization.5
However, as Ghemawat himself remarked in later works, both stances
are exaggerated. “Distance Still Matters” provides a balanced view of
global expansion, not denying the benefits a company may gain from
becoming multinational, but at the same time calling for a careful
analysis and consideration of all factors, both positive and negative,
that may affect business. Adopting this point of view may help readers
to think critically about globalization dynamics and consider how the
distance between countries impacts international business.

NOTES
1 Robert M. Salomon, Global Vision: How Companies Can Overcome the
Pitfalls of Globalization (New York: Palgrave Macmillan, 2016).
2 Search term “Distance Still Matters,” Web of Science, accessed October
20, 2017.
https://apps.webofknowledge.com/full_record.do?product=WOS&search_
mode=GeneralSearch&qid=3&SID=C6yvoy6nVHcouLE5d7K
&page=1&doc=1&cacheurlFromRightClick=no.
3 Search term “Distance Still Matters.” Google Scholar, accessed
October 20, 2017. https://scholar.google.com/scholar?hl=ru&as_
sdt=0,5&q=distance+still+matters.
4 Ceri Parker, “The end of globalization? Davos disagrees,” World Economic
Forum, January 20, 2017, accessed November 20, 2017. https://www.
weforum.org/agenda/2017/01/the-end-of-globalization-davos-disagrees/.
5 Alan Rugman, The End of Globalization (Random House Business Books,
2012), accessed November 25, 2017. https://www.penguin.co.uk/
books/1046014/the-end-of-globalization/.

13
 SECTION 1
INFLUENCES
MODULE 1
THE AUTHOR AND THE
HISTORICAL CONTEXT
KEY POINTS
• Ghemawat’s work is part of a debate about the role and
prospects of globalization sparked by the increase in direct
foreign investment.
• “Distance Still Matters” challenges the traditional view by
pointing out that globalization is hindered by the distance
between countries.
• Ghemawat’s life and work experiences in India, Europe,
and America influenced his rejection of the idea of a “flat”
globalized world.

Why Read This Text?

Pankaj Ghemawat’s “Distance Still Matters” is a seminal work in the
fields of international management and theory of multinational
enterprise. Its key contribution is its discussion of cultural,
administrative, geographic, and economic distance between countries
as the main cause of additional costs, obstacles, and risks that companies
face when expanding into new foreign markets.
In this work, the author calls into question simplicity and over-
optimism regarding globalization. Ghemawat critiques traditional
analytical tools, such as Country Portfolio Analysis, that focus solely
on the potential benefits companies stand to gain from a particular
foreign market. Instead, Ghemawat proposes a new tool—the CAGE
Distance Framework—that incorporates the impact of distance and its
potential negative effects on expanding firms.

15
Macat Analysis of Pankaj Ghemawat’s “Distance Still Matters”

[Pankaj Ghemawat] is one of the younger

“representatives of the Indian gurus of management—
men who straddle cultures, American, European and
Asian, and throw new light on corporate behaviour, and
particularly its global aspect.
”
“Guru: Pankaj Ghemawat,” The Economist

“Distance Still Matters” was published in 2001, in the wake of a

sharp rise in foreign direct investments across the world,1 and the
resulting enthusiasm about the prospects of globalization among
business practitioners and media. The article aimed to provide a more
balanced view of the phenomenon. Gemawhat’s approach highlights
the risks associated with global expansion as particularly relevant in
the light of recent political, economic, and social events affecting
globalization such as the Global Financial Crisis, or independence
movements in Europe (for instance, in Scotland and Catalonia).

Author’s Life
Pankaj Ghemawat was born in Jodhpur, India in 1959. From a young
age, he experienced academic success. At fifteen, he graduated from
secondary school and prepared for college. He first enrolled in an
Indian university, but then transferred to Harvard University at the age
of sixteen. At nineteen, he was accepted into Harvard’s PhD program
in Business Economics, which he finished three years later.
Upon completing his doctorate, Ghemawat spent one year in
London. There, he worked for the consulting firm McKinsey &
Company, before returning to Harvard to launch his academic career.
Ghemawat joined the faculty at the Harvard Business School in
1983,2 at the unusually young age of 23, and in 1991 he became the
youngest person in the university’s history to be appointed a full

16
 Section 1: Influences; Module 1: The Author and the Historical Context

professor.3 Since then, Ghemawat has written numerous journal

articles, case studies and books on international business.
The emphasis on distance typical of Ghemawat’s work is rooted in
his wide international work experience in India, the US, and Europe.
In 2008, he joined the prestigious IESE Business School in Spain.
Currently, he holds professorial positions there and at NYU’s Stern
School of Business.
Ghemawat’s affiliations with these two influential business schools
have generated reciprocal benefits in terms of his reputation and the
dissemination of his ideas. He has developed a confident stage persona
by participating in many public and media talks around the world.
Leveraging the two schools’ publication resources, Ghemawat has
released several books in recent years. These include Strategy and the
Business Landscape in 2009; World 3.0: Global Prosperity and How to
Achieve Itt in 2011; and his latest book, The Laws of Globalization and
Business Applicationss in 2016.

Author’s Background
With “Distance Still Matters,” Ghemawat contributed to the debate
on globalization which was prominent at the turn of the 21st century,
thanks in particular to popular confidence in modern technological
advancements. At the time, globalization was widely seen as a pervasive
and unstoppable trend “by which the peoples of the world [would be]
incorporated into a single world society,”4 with technological
advancement as its most powerful engine. A sharp decline in transport
and communication costs and the growing adoption of the internet
and e-commerce were pushing entrepreneurs and managers to
internationalize.5 The collective rhetoric shaped by media, consultants,
and academics suggested that countries, markets, and cultures were
becoming closer than ever before. Companies and consumers also
shared the perception that markets were becoming more homogeneous
and borders blurred.

17
Macat Analysis of Pankaj Ghemawat’s “Distance Still Matters”

Within this intellectual environment, Ghemawat argued that the

seemingly never-ending opportunities created by globalization were
being over-emphasized. He highlighted how prior analyses generally
highlighted the positive aspects of international expansion but
downplayed and substantially underestimated the real costs of doing
business internationally. In his view, recognizing that countries and
markets differ in terms of cultural, administrative, geographic, and
economic attributes was still crucial in internationalizing business
successfully.
In Ghemawat’s view, “strategies that presume complete global
integration tend to place far too much emphasis on international
standardization and scalar expansion.”6 This stance stood in sharp
contrast to mainstream voices of the time, such as that of Thomas
Friedman,* who consistently supported a strictly positive
characterization of globalization processes. Ghemawat argued, and
indeed demonstrated, that in fact considerable cross-country barriers
remained. Ghemawat’s work is especially relevant today, due to an
anti-globalization backlash that is making multinationals reconsider
their business strategies and is raising concerns that “the biggest
business idea of the past three decades is in deep trouble.”7

NOTES
1 Angus Maddison, Monitoring the World Economy: 1820–1992 2 (Paris:
Development Centre of the Organization for Economic Cooperation and
Development, 1995).
2 “Pankaj Ghemawat,” The Economist, August 7, 2009, accessed November
13, 2017. http://www.economist.com/node/14201826.
3 “About Pankaj Ghemawat,” Ghemawat.com, accessed November 13, 2017.
https://www.ghemawat.com/about.
4 Martin Albrow, and Elizabeth King, eds, Globalization, Knowledge and
Societyy (London: Sage, 1990), 8.
5 Thomas Friedman, The World Is Flat: The Globalized World in the Twenty-
First Centuryy (London: Penguin, 2007).

18
 Section 1: Influences; Module 1: The Author and the Historical Context

6 Martha Lagace, “Businesses Beware: The World Is Not Flat,” Working

Knowledge, October 15, 2007, accessed November 13, 2017, http://
hbswk.hbs.edu/item/5719.html.
7 “The retreat of the global company,” The Economist, January 28, 2017,
accessed November 13, 2017, https://www.economist.com/news/
briefing/21715653-biggest-business-idea-past-three-decades-deep-trouble-
retreat-global.

19
MODULE 2
ACADEMIC CONTEXT
KEY POINTS
• “Distance Still Matters” builds on the “theory of the
multinational enterprise,” exploring the existence and
nature of multinational enterprises.
• Ghemawat draws heavily on evidence within that literature
to discuss the different dimensions of distance.
• By elaborating on the concept of distance, Ghemawat
expanded on the work of Sumantra Ghoshal* on cross-
border management.*

The Work In Its Context

In his PhD dissertation, Ghemawat argued against Thomas Friedman’s
thesis of a “flat,” homogenous world. Ghemawat called this view
“globaloney”* and suggested that companies should pay careful
attention to regional differences when devising their global strategies.
Most of Ghemawat’s later work investigates the challenges of designing
successful regional strategies.
Ghemawat’s thinking in “Distance Still Matters” built on Peter
Buckley and Mark Casson’s “theory of the multinational enterprise.”
This body of work explored why multinational enterprises exist as
organizational forms. The theory suggests that firms expand abroad in
an attempt to make use of the arbitrage* opportunities presented by
imperfect markets, for instance when having own operations* in a
foreign country decreases the costs of international transactions. If
markets are perfect, meaning there is no opportunity for firms to
influence the price of their products abroad, there are no incentives to

20
 Section 1: Influences; Module 2: Academic Context

“of Essentially,
distance.
”
international management is management

Srilata Zaheer* et al., Distance without Direction

expand internationally, and firms will remain within national

boundaries.
Drawing on his international work experience, Ghemawat
scrutinized the dominant view at the end of the 20th century that
globalization offered endless opportunities. Condensing years of
academic research and presenting his thoughts in lay language,
“Distance Still Matters” intervened in the debate to argue that this
position overstated the size of opportunities and underestimated “the
costs of doing business internationally.”1 Using a rich variety of
examples and case-study evidence, Ghemawat demonstrated
systematically that the cultural, administrative, geographic, and
economic distance across countries and between markets could still be
decisive for international business success.

Overview of the Field

One of the major building blocks for Ghemawat’s work was the
theory of multinational enterprise, a research stream initiated by
Buckley and Casson’s seminal book The Future of the Multinational
Enterprise. This work tied together different aspects of multinational
operations to explain the existence of multinational enterprises and
the contingencies that govern their expansion. It considered different
types of international transactions, such as knowledge transfer, research
and development costs, or tax liabilities, to point out that a firm
expands internationally only if the benefits outweigh the costs. The
academic discussion on globalization that Buckley and Casson
provoked reached its peak in the early 2000s, when dozens of books
and papers on the subject were published annually.2

21
Macat Analysis of Pankaj Ghemawat’s “Distance Still Matters”

The prevailing view at the time took globalization largely for

granted, seeing it as an unstoppable force that would eventually lead to
a uniform world. Supporters of this viewpoint, such as Thomas
Friedman or Jeffrey Frankel,* tended to overlook national borders as a
factor that might affect firms’ international expansion. Frankel asserted
that removal of financial control leads to integration and leveling of
financial markets and elimination of country premiums.*3 Essentially,
he suggested that without additional taxation and controls that
discriminate firms by country of residence, the world would become a
unified economy where expanding internationally would be no more
risky than expanding within a home country.
However, some counter-evidence suggested that this view
oversimplified the complex issue of globalization. Increasingly,
research on knowledge transfer* pointed out that distance was a
barrier to knowledge spillovers.*4 This means that the further apart
two entities are, the more difficult it is for innovations in one to lead to
innovations in another, slowing down the overall growth in
productivity due to new technologies.
Furthermore, evidence on global trade suggested that the world
was much less homogenous than the dominant view supposed. John
Helliwel* observed that provinces of the same state trade with each
other more intensively than with neighboring countries, even when
the physical distance is the same, suggesting that national borders are
not obsolete and have a significant role in global trade.5 Ghemawat
drew heavily on this contrary evidence to formulate his idea of
semiglobalization,* which holds that there is an imperfect alignment
of national markets, and different dimensions of distance can inhibit
firms’ global expansion.

Academic Influences
In “Distance Still Matters,” Ghemawat develops his ideas on
globalization with a business audience in mind—in particular,

22
 Section 1: Influences; Module 2: Academic Context

managers, directors, and consultants. His work lies at the intersection

of research on economic and international strategy and focuses on
potential problems businesses encounter when expanding
internationally. Ghemawat points out that, although modern
technologies have increased levels of global connectedness, cross-
country “distances” are still relevant to international business, and their
associated costs and challenges are often underestimated.
Ghemawat developed this perspective by building on the so-called
“theory of the multinational enterprise.” This theory, introduced by
Peter Buckley and Mark Casson, explains that companies expand
abroad in order to make use of opportunities created by market
imperfections in cases when the benefits of expansion, such as reduced
tax burdens, efficient knowledge transfer, or cheaper production,
outweigh the costs.6 Ghemawat also drew from Sumantra Ghoshal’s
work on how firms achieve various objectives in their global strategy
despite international differences.7 He was influenced by C.K.
Prahalad* and Stuart Hart’s* work on how businesses can deliver
value to poorer customers,8 as well as Jeffrey Frankel and Andrew
Rose’s* scholarship on how different attributes of distance impact
international trade.9
Ghemawat showed how international differences, explored by
Frankel, Rose, and Ghoshal, act as a hindrance to exploiting the
benefits of international expansion that were postulated by Buckley
and Casson, but also uncover new opportunities to create value, as
suggested by Prahalad and Hart. Ghemawat suggested that existing
frameworks were overly positive in judging international business
opportunities, ignoring the costs associated with important aspects
such as cultural, administrative, geographic, and economic differences
across countries and between markets.

23
Macat Analysis of Pankaj Ghemawat’s “Distance Still Matters”

NOTES
1 Pankaj Ghemawat, “Distance Still Matters: The Hard Reality of Global
Expansion,” Harvard Business Review, September, 2001, 138.
2 Search term “Globalization,” Google NGram, accessed October 20, 2017.
https://books.google.com/ngrams/graph?content=globalization&year_
start=1800&year_end=2.000&corpus=15&smoothing=3&share=&direct_
url=t1%3B,globalization%3B,c0.
3 Jeffrey. A. Frankel, “Measuring international capital mobility: a review,”
American Economic Review w 82 (1992): 197-202.
4 Wolfgang Keller, “Geographic Localization of International Technology
Diffusion,” Working Paper No. 750, National Bureau of Economic Research,
2000.
5 John F. Helliwell, How Much Do National Borders Matter?
? (Washington, DC:
Brookings Institution Press, 1998).
6 Peter J. Buckley and Mark Casson, The Future of the Multinational Enterprise
(London: Macmillan, 1976).
7 Sumantra Ghoshal, “Global strategy: An organizing framework,” Strategic
management Journall 8 (1987): 425-440.
8 Coimbatore K. Prahalad, and Stuart L. Hart, “The Fortune at the Bottom of
the Pyramid,” strategy+business 26 (2002), accessed October 20, 2017,
https://www.strategy-business.com/article/11518?gko=9a4ba.
9 Jeffrey Frankel and Andrew Rose, “An Estimate of the Effects of Common
Currencies on Trade and Income,” The Quarterly Journal of Economics 117
(2002): 437-466, doi: 10.1162/003355302753650292. Ghemawat cites
an earlier, unpublished version of this article.

24
MODULE 3
THE PROBLEM
KEY POINTS
• “Distance Still Matters” focuses on how global expansion
is impacted by cultural, political, administrative,
geographic, and economic distance.
• Adding to our understanding of international differences,
Ghemawat introduced the concept of distance between
countries as the key factor.
• Ghemawat contributed to the theory of the multinational
enterprise by laying the foundations for research into the
actual state of globalization.

Core Question
In “Distance Still Matters,” Pankaj Ghemawat addresses the question
of why many companies struggle when pursuing global expansion.
He sought to explain why companies “become so dazzled by the
sheer size of untapped markets that they lose sight of the vast
difficulties of pioneering new, often very different territories.”1 His
analysis revolves around the concept of “distance,” which
encompasses cultural, political, administrative, geographic, and
economic differences between countries. The concept of distance is
then used to develop a novel analytic framework—the CAGE
Distance Framework—that can assist managers in assessing such
differences and their effects.
The ideas that Ghemawat presents in the article are part of his
broader research agenda on what he calls “semiglobalization”—a
condition “in which the barriers to market integration at borders are
high, but not high enough to insulate countries completely from each

25
Macat Analysis of Pankaj Ghemawat’s “Distance Still Matters”

[Ghemawat] refutes the idea that there is a single

“global economy...Instead, he argues, on the basis of
various economic measures and indicators, nations are
much more disconnected than we imagine. Regional
differences exist and matter.
”
Harvard Business Review’s Thinkers50

other.”2 In “Distance Still Matters” he explains how certain types of

distance contribute to creating barriers to market integration. He
supports his argument with evidence from a study published by
economists Jeffrey Frankel and Andrew Rose, who estimated the
extent to which international trade was influenced by different types
of distance.3
Ghemawat’s main insight is that “strategies that presume complete
global integration tend to place far too much emphasis on international
standardization and scalar expansion.”4 This built on other articles in
which he pointed out how, for decades, Coca-Cola pursued a
strategy based on significant standardization with the tagline “think
global, act global,” yet it ran into serious trouble at the end of the
1990s, mostly due to the Asian currency crisis.*5

The Participants
At the time when “Distance Still Matters” was published, the
dominant view in the field was that globalization was an unstoppable
force that would eventually diminish the differences between
countries and create a perfectly globalized world. In contrast to
mainstream thinking, Ghemawat argued that location and cross-
country distance were still extremely critical for success in doing
business internationally. He observed that most firms dangerously
underestimated the real costs involved.

26
 Section 1: Influences; Module 3: The Problem

Ghemawat systematized the concept of distance and pointed out

its different dimensions, building on prior research about the notion of
international differences. In a 1994 article, “The Effect of National
Culture on the Choice Between Licensing and Direct Foreign
Investment,” Scott Shane* found that cultural differences in trust
guide the choice of foreign investment modes. Companies from
countries with high trust tend to prefer licensing, while low trust
country firms favor direct investment.6 Similarly, Bruce Kogut* and
Harbir Singh* had pointed out that cultural differences drive the
choice of international entry strategies* as early as 1988.7
Management gurus such as Geert Hofstede* and Michael Porter*
also had observed that countries differ from each other culturally in
terms of the values people hold,8 and economically in terms of
propensity to innovate and employee mobility.9 Such differences need
to be taken into account by companies when moving from one
country to another in order to avoid conflicts with the local consumers
and execute their strategies successfully. In their seminal work
Managing Across Borders, published in 1989, Christopher A. Bartlett*
and Sumantra Ghoshal had expanded on the idea of glocalization,*
noting that companies can choose to adapt to local requirements to
varying degrees to better leverage the head company’s and foreign
subsidiaries’ competences.

The Contemporary Debate

Ghemawat’s theoretical connections to the wider academic debate on
globalization can be traced in a related article published in the Journal
of International Business Studiess in 2003, “Semiglobalization and
International Business Strategy.”10 Here, Ghemawat frames his
research as a way to advance one specific postulate of Buckley’s and
Casson’s “theory of the multinational enterprise,” that “firms [seek
to] maximize profit in a world of imperfect markets.”11 More
specifically, Ghemawat observes that work building on this early

27
Macat Analysis of Pankaj Ghemawat’s “Distance Still Matters”

insight has focused mainly on the same sources of market imperfection,

such as “business/usage-specificity of key activities, resources,
competencies, capabilities, knowledge, and so on, or their firm-
specificity in the sense of being collectively held by the firm’s
managerial hierarchy or employee pool and inalienable from it.”12
Ghemawat’s main point is that previous frameworks have
overlooked the possibility that key activities—such as production
processes or knowledge transfer procedures—and resources—such as
human capital or physical resources—that allow companies to create
value are location-specific and cannot be found or created elsewhere.
This means that firms tend to overestimate the expected benefits of
globalized markets and substantially underestimate the costs.
Taken together, Ghemawat’s two articles have sparked over a
decade of research to determine the real development of the
globalization processes. Dovev Lavie* and Stewart R. Miller* directly
incorporated Ghemawat’s notion of distance into an empirical study
of alliance portfolio internationalization* in 2008, finding that as the
distance between partners in an international alliance increases, firm
performance decreases, then rises, and finally drops again.13 More
recently, Ilgaz Arikan* and Oded Shenkar* provided empirical
support for Ghemawat’s ideas: having analyzed data on international
alliances, they showed that administrative distance in the form of
animosity between countries is negatively associated with the number
of alliances companies form between these countries.14 In contrast, in
a 2016 article, Alain Verbeke* and Christian Geisler Asmussen*
employed the notion of distance to develop theory. They argued that
region should be treated as a distinct unit of analysis, as the
interconnectedness between different dimensions of distance leads to a
sharp increase in the compound distance on regional borders, rather
than a gradual increase from one country to another. 15

28
Another random document with
no related content on Scribd:
unsaleable, save at a loss. At the time I saw the manufacture,
Persian opium of the best quality was selling in London at sixteen
shillings a pound.
Large quantities of opium are consumed in the country. Almost
three-fourths of the aged, of both sexes, are in the habit of taking
from half a grain upwards, three times a day. And I am unable to
state that the moderate use of opium by the aged or those travelling
is attended with any ill effects. Of course the abuse of opium is well
known for its terrible results.
The “teriakdan,” or opium pill-box, is in as common use in Persia
as the snuff-box was in England. The pills are usually about one
grain in weight, and mostly contain spices to the extent of one half.
But I have occasionally seen pills of five grains in weight of purest
opium—indeed, one of my patients, who was an opium-eater, used
to take seven such pills in the twenty-four hours!
The Prince-Governor kindly placed at my disposal the rooms in the
town that had been previously occupied by Dr. Pollak, the king’s
physician, as a dispensary, and I saw many patients among the very
poor there; but as these rooms were over the public prison, of course
no respectable people, particularly women, would come. So after
some months I engaged rooms looking into the great bazaar over
the door of the principal caravanserai, the caravanserai Mokhliss.
Here for two tomans (eighteen shillings) a month I had three
handsome rooms, a servant’s room, and a kitchen; and three times a
week I saw patients. As a rule the attendance was gratuitous, though
some few of the wealthier paid a fee.
A curious instance of Persian would-be smartness was shown
here. A baker in the neighbourhood had suffered from cataract, and
had come to me for relief. I had been happily successful, and to my
satisfaction had restored sight to both eyes. For this I was rewarded
with the sum of four pounds, and as the man was a thriving
tradesman and well to do, I thought him the obliged party; but he
regretted the four pounds.
One day, as I was sitting in the dispensary surrounded by a crowd
of sick and their friends and relatives, a melancholy procession
entered the room. The baker, with a rag of a different colour over
each eye, and a huge white bandage round his head, was led, or
rather supported, into the apartment; and on my expressing
astonishment, his relatives informed me that his sight was quite gone
through my unfortunate treatment; and that he had come to get his
four pounds back, and any compensation for the loss of his eyes that
I might be pleased to make would be thankfully accepted.
“Ah, sahib, dear sahib, I am now stone blind,” he said.
Here with extended arms he advanced to my table, and the
assembled crowd shook their heads. I had some difficulty in getting
him to remove his many bandages; but on looking at his eyes I saw
that his vision, as I had supposed, was extremely good. I naturally
was very angry, for, letting the ingratitude of the man alone, I did not
care to be robbed of the credit of a cure in so public a manner. I did
not take long to decide what to do. Among some antiquated
instruments that had accumulated in the dispensary was a large
amputating knife in a leather box. I got this box from the cupboard
and placed it before me. Taking my seat, with the man on the other
side of my table, I addressed him:—
“Of course, if I have deprived you of your sight, it is only fair that I
should remunerate you and return you the money you have paid
me.”
A beatific smile spread over his face.
“Ah, sahib, I know you are a great and generous sahib. I am sure
you would not wrong a poor Mussulman. Oh, sahib, I want nothing
but justice.”
“And what, my friend, do you consider justice?”
“Oh, sahib, doctor sahib, if you would refund the four pounds that I
paid you, and give me, say forty pounds, even less, for my eyes, I
should pray for you—yes, I and my family, we should all pray for
you.”
Here the supporters and family chimed in, “Yes, yes, he has
spoken well,” and the crowd of interested patients and their friends
whispered approbation.
 I noticed, too, that my servant seemed trying to attract my
attention, and to dissuade me from a course he thought just,
perhaps, but too generous.
“Yes,” said I, “this is what ought to be done, there is no denying it,
in the case you describe. But”—and here I began to shout—“but
what should be done to the man who comes here with a lie in his
mouth? Know you, bystanders, that this man is a liar; he sees
perfectly!”
Here the patient shook off his supporters, and grasped my table,
turning pale.
“Ah,” I shouted, “you dog, I will enlighten your eyes,” and, opening
suddenly the morocco case, I produced the huge glittering old
amputating knife, and brandished it in his face. Without a word he
nimbly turned and fled down my staircase, pursued by my servants,
the two sentries, and the more active of my patients’ friends.
“Stop, thief!” I shouted from my open window; “stop, thief!”
This resounded along the crowded bazaar. Every idler took up the
cry; every hand and every stick was turned on the flying man. In an
instant he was secured, his clothes torn to rags by the seething mob
in the bazaar.
I shouted to him from the open window, and sarcastically asked
him if he was blind or not.
“Oh, sahib, sahib, through your kindness I see, indeed I do.”
But I was not satisfied with this, and sent him, under guard of my
servant and the two sentries, to the high priest, who registered his
confession of attempted imposture, and drew up a procès verbal, to
which he affixed his seal. It is an ill wind that blows no one any good,
and the matter was for several days the talk of the town, and
increased my practice for the time.
When I say that the high priest “affixed his seal,” I may explain that
sealing is always used in lieu of signing. When a Persian writes a
letter, he affixes his seal by dipping his finger against the sponge-like
ball of silk, that is full of Indian ink, in his inkstand, and, rubbing a
small quantity upon the seal, gives a lick with his tongue to the paper
to render it moist and supple, waves it in the air to get rid of excess
of moisture, breathes on his seal, and presses it firmly against the
paper held over the forefinger of the left hand, which acts as a pad.
A very clear impression is thus produced.
Merchants and officials generally have several seals, one for
familiar communications, having simply the man’s name, as “Hassan
son of Houssein;” the next perhaps for sealing cheques or receipts;
and a third for official documents, of larger size, with all his titles on
it. He may even have several other secret or private seals. They are
generally beautifully cut on agate or cornelian. Teheran produces the
best seal-cutters, and the price for engraving is from one farthing to
one pound a letter. Common seals are cut on brass or silver. The
rich Turks of Stamboul have their seals cut in Teheran.
A curious story is told among Persians of the wisdom of a certain
cazi or magistrate. The story is a well-known one. A woman was
claimed by two men as wife; one a peasant, the other a mirza or
scribe. The two men each swore to the truth of his claim. The woman
was silent. The cazi, failing to get any corroborative evidence,
ordered the woman to remain for a time with his own wives, and next
day handed her over to the mirza, ordering the peasant to be
severely beaten. Then the woman broke silence for the first time,
and praised the just judge. The lookers-on applauded the justice of
the cazi, but failed to see the grounds for the verdict.
Said the cazi: “I told her to milk a cow, and she could not. I knew
then she could be no peasant’s wife. Then handing her my writing-
case, I told her to put it in order. She took the little silver spoon, and
replenished my inkstand with water. Only the wife of a man who
could write could have done this correctly. Hence my verdict.”
 CHAPTER XVII.
ISPAHAN.

Cost of living—Servants—Our expenses—Price of provisions—Bargains—Crying

off—Trade credits—Merchants—Civil suits—Bribery—Shopkeepers—
Handicrafts—Damascening—Shoemakers—Other trades—Bankers—An
Ispahani’s estimate of the honesty of his fellow-townsmen.

The cost of living in Persia is very low; and to give an insight into
the actual expense of housekeeping, I may say that on about five
hundred pounds a year I was able to live in Ispahan, keeping—

Kerans.
A cook 50 a month.
A tableman 40 ”
An assistant ditto 25 ”
A farrash 25 ”
A platewasher 20 ”
A boy 15 ”
A head groom 30 ”
A second ditto 20 ”
A woman laundress 25 ”
An assistant ditto 15 ”
About £10, or 265 kerans.

These servants all clothed themselves, and were not fed by me,
save in sharing the remnants of the meals.
About fourteen pounds of tobacco was expended in my house, at
a cost of eight kerans, each month.
A substantial breakfast of three or four courses was served at
twelve, tea and a snack being taken on waking. And a solid meal of
four courses and a dessert was taken at eight as dinner. Tea and
cakes at four, previous to the daily ride.
The bill for messing myself, my wife, two children, and our English
nurse, together with our horse-keep for five horses, our house rent
being included, and the servants’ pay, was about thirty-five pounds a
month. Of course our English nurse’s wages were not included in
this, nor our bill for European wines and tinned provisions. These
latter were, however, quite needless, save when travelling, when it is
difficult to obtain supplies, or anything but the roughest food. I found
the cost of living[16] pretty much the same in Ispahan, Teheran, and
Shiraz. At Hamadan and Kermanshah prices used to be much less,
but are now, I think, nearly the same.
As I previously stated, no European goes himself to the bazaar. To
conclude a bargain with any Persian shopkeeper great haggling and
waste of time is required; and so high are their ideas of the wealth of
the Europeans, that it would be hopeless to attempt to deal with
them personally. Honesty cannot be expected in the Ispahani or
Teherani, but the Shirazi may be pretty fairly relied upon.
A peculiar custom is in force in Ispahan, which is possibly legal by
the religious law. A man comes to a merchant and makes a bargain.
In the morning he makes “Dubbeh,” i. e. repents of his bargain,
calmly stating, “Makhmūn shūd um” (“I have been deceived”). And
now the bargain is off! This is frequently done either to lower the
price a little, or, when the article is a fluctuating one, such as opium,
to take advantage of a rise or fall in the market. For this reason it is,
that all contracts have to be in writing, and generally something is
paid on account to bind the slippery Ispahani.
The difference between wholesale and retail is very great, the
retailer not taking generally a profit of less than twenty per cent. The
usual rate of interest in the bazaar is twelve per cent. per annum, i.
e. one per cent. per mensem, simple interest. Most, in fact nearly all,
mercantile transactions are on credit, discount for cash or a cash
price being the exception. In fact, so common is credit that the price
of a thing is quoted at so many months. Thus, in the case of loaf-
sugar, it may be, say a toman (seven and sixpence) a maund of
fourteen pounds and four months’ credit, or, when very cheap,
eighteen months’ credit. The price would be quoted as either four or
eighteen, meaning the amount of credit allowed, the actual price
being the same. Most of the wholesale trade is done through
brokers, who act as commercial travellers, and solicit orders on
commission, which they generally manage to extract from both buyer
and seller. Among the brokers a few honest men may be found, but
they are rare exceptions.
The tager, or merchant class, are generally the most bigoted and
penurious of the Persian race. Only on retiring from business do they
dare to launch out into ostentation; for the mere suspicion of wealth
in Persia exposes them to the exactions of those in power.
All disputes among merchants are settled by the mushtaheds, or
teachers of religious law. No court fees are paid openly, but heavy
bribes are often administered. Most questions are submitted by
mutual consent to arbitration, and a mejlis (council of merchants)
appointed by the disputants generally meet at the house of some
mūlla, or religious personage. These, acting as assessors, settle the
matter to the satisfaction of both parties. A definite judgment is
seldom given for either plaintiff or defendant. A compromise is nearly
always suggested and carried out. Cases of flagrant miscarriage of
justice are not frequent. When they do occur, the merchants
generally decline to resort to the court of the particular judge until he
reconsiders the unsatisfactory decision, or by petition to the capital
they effect his removal if obdurate. As both sides bribe, as a matter
of course the judgments are generally fair, always specious. These
bribes are termed “rūshwah” (manure).
 THREE SHOPS IN THE BAZAAR.

(From a Native Drawing.)

The bazaaz, or shopkeeper, is the class next below the merchant.

He obtains everything on credit, and has frequently no capital of his
own. As a rule he has two prices, one for cash, the other for credit.
To his credit customers he gives the worst of his merchandise, and
tries to defraud them in the weight. The cash customers, whom he is
very desirous of retaining, he treats better.
The “kossib,” or handicraftsman, is, as a rule, an honest man.
Healthy competition is kept up by the various trades being located
together, but this is merely by force of custom, and is not
compulsory. Thus, all the coppersmiths work in one bazaar, and the
noise caused by their hammering is deafening.
All of the wares made by natives are of the most solid and
substantial kind; cooking pots, always of solid copper, last for
generations, and when eventually worn out, are sold as old copper,
at half the price of new ones. The silversmiths also usually work in
the same neighbourhood; some among them are very skilful, but the
coarse work required by the villagers tends to lower the tone of the
articles turned out. Thin plates of silver hammered into patterns of
raised flowers and arabesque work are in great request as mirror
frames; the sheet of silver is backed with pitch and hammered; the
effect is good. Silver articles are made which are afterwards
chiselled in high relief in patterns similar to the Scinde work. Armlets
to hold talismans (telism) are in great demand; they are called bazū-
band, and are made of gold, silver, or damascened steel, often inlaid
with gold.
The “pūlad,” or damascened steel, is beautifully veined, and much
of it is ornamented with work à jour and inlaid with gold. But the
almost prohibitive prices asked for this pūlad work and the constant
demand for export render it very expensive.
The classes of shoemakers are many: the kafsh-dooz, or slipper-
maker, as we should term him, makes the coloured leather, or
shagreen slippers worn by the women; these only just reach the
commencement of the heel, and when new are very elegant. They
are shod with iron heels, which is a separate trade of itself. The
orussee-dooz, or men’s shoemaker, is another trade. The chekme-
dooz, or riding-boot-maker, a third; these boots are always made
loose enough to kick off, and are practically better for long journeys
on horseback than European boots. There is also the ghēva-dooz,
who makes the ghēva or cotton shoe, by sewing together the knitted
cotton top, or “jurab”—literally sock, made by the village women—to
the sole, which is made by another trade, and formed of rags sewn
together and tipped with horn. These ghēvas are light and cool, and
very good for walking in; they are usually worn only in summer, and
on the naked foot; they are unsurpassable in the foothold their broad
soft sole gives for mountain climbing. When dirty they are whitened
with pipeclay. The price is from two kerans to five kerans for an
ordinary pair; it is possible to give a pound for an elaborate or
embroidered pair.
The zangal, or leggings, are made of leather, and cover the space
between the knee and ankle; they are affected by tribesmen,
grooms, and muleteers as being cheaper than boots and as useful.
They are often elaborately ornamented with embroidered leather.
They are worn with ghēvas, sandals, or coarse shoes. The “terkesh-
dooz,” or harness-maker, is the seller and maker of leather goods,
such as holsters, harness, saddlery, etc.
 The attār, or apothecary, sells all the drugs in use in the country,
and most of the drysaltery, also tea.
The aleph sells grain, grass, and cut straw, also clover which is
dried in ropes, wood, and charcoal.
The bakkal, or general dealer, sells groceries, dried fruits, and all
that is sold by the oilman in England. Some of the goods sold by the
aleph, who generally only sells wholesale, are retailed by the bakkal
to the little people.
The dyer in Persia drives a roaring trade, as the cotton cloth,
shirting, or longcloth, as the case may be, is often bought and
afterwards dyed. The dyer, or rangraz, may always be known by his
arms, which are stained a deep blue, or other colour, generally blue,
as indigo is most used; all the shulwar (trousers) of the men and
veils of the women, and most of the shirts of the lower orders, being
dyed fast by indigo. The Persians dislike dyes that are not fast, as
the aniline, and prefer the old ones, such as madder and indigo.
The tailor (“khyat”) in all cases makes up the materials of his
clients, and ready-made clothing, or “slops,” are unknown. The tailor
always cuts out the coat in presence of the customer. The price for
making a coat is about one toman, or two or three kerans for a day’s
work by a master tailor. The seamstress is glad to take a less figure,
and goes out to work for half a keran a day and her breakfast. All
sewing is invariably done with silk, which is sold by weight.
The ūtūkash, or ironer, is employed to ornamentally iron the
dresses of the lower orders that are made of coloured calico or
longcloth. This he does by ironing a pattern upon them with the
edges of his iron, generally a box-iron filled with charcoal; often,
however, merely a heated rod. He irons upon a large jar, which he
holds between his knees. He also marks the stuffs that are to be
quilted for under-garments.
The shops of the potter are frequent. Pans for charcoal, jars for
the storing of grain, are made of sun-dried clay, while a variety of
burnt-clay articles are exposed for sale; cheap kalian and chibouque
heads, flower-pots of blue, green, and purple glaze, tiles, kūmrahs or
jars for wine, water, or vinegar, goglets, pans, and drinking-vessels
innumerable for holding water; these are porous, and keep it cool.
This ware is pale greenish yellow, and very fragile; the best is made
at Kashan. Other non-porous and stronger vessels are made of red
clay, and are glazed of various colours. A black clay is frequently
employed, and decorated with silvery lines; the effect of this is good.
The art of making pottery with a reflet métallique is now lost in
Persia. The wall tiles now so much valued in Europe are seldom
seen in sitû. Clever imitations are made in Ispahan, but the art of
making the metallic (reflet) lustre is gone. Most of the bricks that are
not protected, by the fact of being in shrines, have been already
stolen, and fear of the consequences of detection is all that protects
the rest. All is fish that comes to the net, and the local magnates
would sell the big monolith of Yezd marble, which covers the grave of
Hafiz, for a price.
The caravanserais in the principal towns are surrounded by
hoojrahs or offices; these are protected by an orussee or glass
window or by wooden shutters. In these hoojrahs the merchant
transacts his business, and in the inner room or umbar, which is
approached by a low, heavy door from the outer office, is his strong
box and the more valuable of his merchandise.
The banker in Persia is looked on simply as a small tradesman—in
fact, the business of the serof is despised; as being a usurer on the
sly, he cannot be a good Mussulman, to whom usury is forbidden.
His office is often merely a stall in the bazaar, at which are exposed
old bracelets, gold, silver, and copper coin, and jewels always full of
flaws. His principal profit consists in the remittance of moneys from
town to town, and the buying and selling of bills on India and
London. A few bankers have offices in the caravanserais, and are in
the position of merchants, but there are no mahogany counters, no
rows of clerks; a couple of scribes and a black slave often comprise
the whole staff, but the bankers manage to do all that is needful with
this small assistance. Gold, until recently, was seldom seen, and as
everything was paid in kerans and half-kerans, counting was very
tedious—bad kerans common. The usual way was to count a small
amount, such as ten tomans in kerans, and then weigh heaps of ten
tomans each. Some of the bankers are very reliable, and have
accumulated considerable wealth. Hadji Mirza Kerim of Shiraz is one
of these, and he is one of the few instances of a banker thoroughly
respected as a good Mussulman by his fellow-townsmen, and as a
good man by Europeans and Persians. The Ispahani is so well
known for trickery that Hadji Mahommed Saduk, the Crœsus of
Shiraz, a native of Ispahan, but trading and residing in Shiraz,
informed me himself “that a merchant in Ispahan to live must cheat,
and to thrive must steal.”
 CHAPTER XVIII.
ISPAHAN.

Daily round—The river—Calico rinsers—Worn-out mules and horses—Mode of

treating the printed calico—Imitations of marks on T-cloths—Rise of the
waters of the Zend-a-Rūd—Pul-i-Kojū—Char Bagh—Plane-trees—The
college—Silver doors—Tiled halls and mosque—Pulpit—Boorio—Hassir—
Sleepers in the mosque—Cells of the students—Ispahan priests—Telegraph-
office—Tanks—Causeways—Gate of royal garden—Governor’s garden—
Courtiers and hangers-on—Prisoners—Priests—The Imām-i-Juma—My
dispensary—Ruined bazaar—A day in the town—Bazaar breakfasts—Calico-
printing—Painters—The maker of antiquities—Jade teapot—Visit to the
Baabis—Hakim-bashi—Horse-market—The “Dar”—Executions—Ordinary—
Blowing from guns—A girl trampled to death—Dying twice—Blowing from a
mortar—Wholesale walling up alive—A narrow escape from, and horrible
miscarriage in carrying it out—Burning alive—Crucifixions—Severity: its
results.

In my early days I was in the habit of riding over from Julfa to the
town of Ispahan daily; twenty-five minutes’ smart trotting brought me
to my dispensary. During the summer the river was easily fordable,
large banks of gravel being visible; these were occupied by the
“rinsers of printed calicoes;” while the sun was out, for about half a
mile the gravel banks were covered with long strips of printed calico
placed closely together; at dawn the rinsers came down from the
bazaars with many donkey-loads of dyed cotton cloths; the beasts
used for the carriage were the lame, the halt, and the blind of the
asses and mules of Ispahan. As the last use a horse is put to in
Persia is to be a miller’s pack-horse, so this work seemed to be the
end of the donkeys and mules.
Along the edges of the channels between the gravel banks stood
rows of old millstones; in front of each stone was a rinser up to his
knees in the river. Taking a piece of dyed cloth half wrung out, which
had been thoroughly soaked in water, in his hands—and the pieces
were at times twenty yards long—he proceeded to thwack the roll of
cloth against the stone with his whole strength, keeping time to a
loud song until he was out of breath. As these men worked in rows,
and the cloths were full of water, the noise and splashing were
something tremendous. The work was heavy in the extreme, and as
they can only get to the river when low, some seven months in the
year, the pay is good.
As each piece had the water thus thoroughly beaten out of it, a
boy on the bank seized it and proceeded to spread it on the gravel,
fixing the edges and corners with a stone; his duty was never to let
the wrung cloth get dry, which he managed to do by constantly
dashing water over the out-spread rows of dyed cloths with a pan.
Often the process has to be repeated several times, as the cloths
are sent down from the printers in the various stages. Above each
furiously beating rinser rose a cloud of variously coloured spray
which gradually became colourless; in every direction the sheets of
water thrown by the boys glittered in the strong sun, and the loud
choruses of the half-naked rinsers, and the barking of their watch-
dogs—for each batch had their dogs—made a cheerful and exciting
scene.
Of course the calico, cotton-cloth, or T-cloth, as it is variously
termed, had to be strong and good to stand such a process; and the
adulterator had little chance with the wily calico-printer, who always
weighed his cloth prior to purchasing, washed and dried it, and then
weighed it again; the consequence is that, save of the best quality,
little cotton-cloth is sold in Ispahan. Certain brands well known for
their genuineness command a high figure, such as that of the Ace of
Spades, though they are soon closely imitated by unscrupulous
makers. However, the calico-printer is generally quite a match for the
adulterator.
Many of the rinsers make little hovels of brushwood and earth, and
live altogether on the banks of gravel, and in February, when the
waters suddenly rise, the scene is exciting as they collect their traps
at the last moment, and a few seconds after, their huts are swept
away—banks, huts, and millstones disappearing, and a furiously
rushing river of muddy water taking their place. This yearly
occurrence of the rise of the waters happens on the melting of the
snows on the mountains. The Ispahan river (Zend-a-Rūd) usually
presents the appearance near the town of a number of chains of
pools of water united by a central brook just occupying the middle of
a wide but dried watercourse, having a hardly perceptible stream,
and as clear as crystal. No sooner, however, do the spring rains
commence than the stream becomes muddy, or at all events
discoloured; and when the “sale ab,” or rise of the waters, comes,
the dams that have been placed to regulate the amount of water
taken off by the various canals for supplying the town and irrigation
—some of which are very old and really important works—are
carried away, the river is seen to rise many feet an hour; at times
even a large wave appears, and trees torn up by their roots come
rapidly down in large numbers. The huge bridges are crowded by a
shouting and excited populace, the banks and all coigns of vantage
are thronged, and for a couple of days all Ispahan enjoys the sight.
Then the river sinks, the stream becomes clear, and a broad and
swift river is seen till May, when it gradually sinks to its normal
summer insignificance, most of its waters being taken off for
irrigation and the supply of the town.
 THE PUL-I-KOJŪ.

During the “sale ab” the great sight is at the Pul-i-Kojū, Bridge of
Kojū. This handsome structure, crossing the river from one of the
ruined quarters of the town of Ispahan to the palace of Haft Dust, in
which Futteh Ali Shah died, is built of brick with well-made stone
piers, and is of very original construction. As through its arches for
eight months in the year a small stream slowly flows, the huge piers
are separated at the bottom by merely narrow channels; these are
arched over, and a level causeway is the result; over this is built the
second or real bridge, which has rooms on each side of it at each
pier, with open doorways looking towards the waters; there are stairs
and rooms too in the upper piers.
When the rise of the waters takes place, this bridge, rooms,
staircases, and parapets are crowded, also the causeway. Rapidly
the lower arches become filled with the roaring torrent, still more
quickly it rises above them; at length it flows over the causeway of
stone, which at the last moment is left by the crowd, and falls with
tremendous noise into the seething flood the other side; still rising, it
thunders through the large archways, and soon the curious
appearance from the lower side is presented of a regular waterfall
the whole width of the stream, with as many torrents as there are
arches, seething out above this; above all, the double-storied bridge
covered with sightseers shouting, singing, and shrieking, with the
additional possibility of the whole being washed away at any
moment. The upper bridges are often damaged; somewhat of the
beauty of the scene, however, is detracted from by the river at these
times being the colour of café au lait.
In summer, fording the river, I entered the Char Bagh (four
gardens), or in winter approached it by the bridge. There are several
Char Bagh in Ispahan, but the principal one extends for about a mile
on either side of the river in a straight line, the centre of the line
being formed by the bridge, which is quite level—a rare thing in
Persia; and also a rare thing in Persia, it has many large arches; the
parapet is some twelve feet high, and at each pier is a small
chamber having three apertures to the river; above the parapet is
ample room for foot passengers.
The Char Bagh contains a double avenue of magnificent plane-
trees, some of great age—alas! too soon to disappear. As these
gigantic planes decay in the inside, they are felled and become the
perquisite of somebody: at times in great gales they fall with a crash,
the inside being quite gone. Also whenever the Governor wants a big
tree for any purpose he takes one, but nobody plants any new ones.
A high wall bounds the Char Bagh on either side; at intervals are
edifices pierced by gates of from three to four stories, of no
architectural pretensions; they are of brick, ornamented with
barbarous designs on plaster in flaring colours, which time has
happily toned down; these gates lead to what were once lovely fruit
gardens, now mere enclosures sown with grain, grass, etc. The Char
Bagh is some thirty yards or more wide: about half-way up on the
right-hand side is the Mehdresseh, or college, the tiled dome of
which, now fast decaying, is a very ornamental object for miles. The
dome is surmounted by a golden ornament which is stated to be
solid and of pure metal; this, I fancy, is very doubtful. The college is
entered by a high gateway, and here are the celebrated silver doors
—of the genuineness of these there can be no doubt; the centre
plates are very handsomely made, and have been heavily gilt; the
plates are not, however, very thick, and the substance of the doors is
wood under thin silver. The gateway, which is in bad repair, contains
nothing of interest, and is blocked up by fruit-stalls and pipe-sellers.
A rough kind of orchard and a tank occupy the courtyard, a few
pomegranates and roses being the principal shrubs, though there
are some large trees. Several halls for instruction are seen on either
side; these, like the mosque beneath the dome, are lined and roofed
with one sheet of perfect tile-work, green, black, and yellow on a
white ground; the whole interior of the college, too, is tiled. Taken
separately, there is nothing particular about these tiles, but the tout
ensemble is grand and cool in the extreme.
Of course we were not permitted to enter the mosque, as there
were many idlers about, but a good view is got from the entrances
and from the windows below the dome from the roof. The only
furniture is the “mambar,” or pulpit. The floor is covered with coarse
matting, or borio, which is made only in Ispahan; another kind of
matting, which is more expensive, is in use throughout Persia, called
hassir; in the manufacture of this thread is used. The borio is of
reedy grass alone, strong, clean, and inexpensive. Contrary to the
hassir, which is made in strips, the borio is in one piece, and here we
saw pieces twenty yards by ten.
Thus there is nothing in the Persian mosque to distract the mind
from the prayers, the exhortation, or religious meditation, though the
coolness and dim religious gloom of the lofty halls rather incline one
to sleep; in fact, being the hot part of the day, we saw many men
curled up in sleep covered with their camels’ hair abbahs, or cloaks.
The mosques are at night the casual wards of Persia; there sleep
those who have absolutely no home and no business, and entrance
is always free to all comers. The busy use the numerous
caravanserais. There were lofty minarets, from whence is made the
call to prayers, and numerous little cells windowed with the old
elaborate carpentry of the East, and their beautiful tracery often
papered over by the inmate to render his cell warmer in winter; a bit
of matting, a box, and a few books, were the contents of most of
them, in the corner being a small carpet, which formed the place of
honour by day and the bed at night.
The students are all either divinity or law, aged from eighteen
upwards; and an Ispahan lawyer or priest, on finishing his education,
is looked on by Persians as the type of hypocrisy and finesse. Many
of the mūllas (priests) are not, however, bad fellows when one can
break through the crust of apparent moroseness and fanaticism; they
are mostly at heart freethinkers, many Deists, more Atheists, few
being good Mussulmans.
Leaving the college and still proceeding up the Char Bagh, a
building on the right contains the Persian telegraph-office. The office
is for the local traffic, and the Persians have possession, by
convention, of one of the wires of the line; they do their own local
traffic, but the line is kept up by the English staff of the Persian
Telegraph Department.
At intervals in the Char Bagh are large hauz (tanks), most of them
in ruins, but during winter generally full of water; all down the centre
runs a watercourse a yard and a half wide—alas! dry—edged by
huge blocks of hewn stone and bridged at intervals.
On either side of this watercourse is a paved stone causeway ten
feet wide edged by similar hewn stones; along the edges under the
walls is another paved road of less width; between these causeways
are wide beds once covered with flowers and fruit-trees, now only
sown with clover and barley, which in the early spring gives, with the
huge plane-trees, a fine coup d’œil.
The Char Bagh ends in a gateway of more lofty pretensions, but of
the same style of architecture as the buildings on either side. Here,
however, are a few tiles representing scenes in the chase, probably
made during the Afghan occupation.
A wide paved chaussée leads to the gate of the royal garden, now
merely a meadow with trees. At the entrance is the Lion and Sun
daubed in staring colours on a plastered wall, and here, unless
known to the sentries, one is not allowed to pass. My professional
work having made me free of the place, we pass on, and leaving the
Chehel Sitūn, or hall of the forty columns, crowded with the hangers-
on of the minister, who here adjudicates with local grandees on
minor affairs, we come, passing a huge hauz or tank full of clear
water, to a wall in which are two recesses having life-sized portraits
in oil of former Ispahan magnates, evidently good likenesses and not
without merit. On the right is the principal entrance to the quarters of
audience of the minister and various antechambers. We dismount,
pass through a small door, are saluted by the sentry, and enter a
well-kept Persian garden, the paved walks of which are fenced off,
with telegraph wire and painted posts, from the sunken beds.
Here, too, everything is in good repair, for we are now in the outer
courtyard of his Royal Highness the Zil-es-Sultan, Governor of one-
third of Persia, the eldest son of the king, a man of genius, and in
high favour; in fact, at present (1883) the most powerful of his
Majesty’s subjects, if we except the Valliāt, or heir-apparent, a priest-
ridden ascetic of weak intellect, whom the royal policy, which points
to the survival of the fittest, will probably quietly remove, in which
case the Zil-es-Sultan will surely reign. Here all who are expecting
an audience of his Royal Highness or his people, wait; great men
and their servants, merchants, artisans, priests, veiled women,
wrestlers; a few well-dressed servants of the prince swagger about,
while his carpet-spreaders, or farrashes, with long sticks, are present
to keep order or administer the bastinado; a few executioners,
dressed in red, and shunned save by the lowest, skulk in one corner,
while half-a-dozen Jews gesticulate and shake their fists in each
other’s faces in another.
Rooms at the side, open to the air, show mirzas in long cloaks,
busily writing official letters or making out accounts. Close to the
door, which is covered with a curtain, on which is painted a colossal
sentry on guard, stands a sentinel, and here lounges the big
moustached doorkeeper with his huge silver mace.
The farrash-bashi here, too, is waiting a summons, with two
villagers in shirt and drawers of blue cotton, and felt hats: they are
chained, probably on a charge of highway robbery, or a still more
heinous crime in Persia, backwardness with their taxes. They don’t
seem comfortable, for they know that a gesture from his Royal