It is amazing how much change a decade makes when it comes to the rise and fall of global corporations. In 1989, the Japanese ruled BUSINESS WEEK's Global 1000 list of the largest companies by market capitalization. Seven of the Top 10 corporations were Japanese, led by Nippon Telegraph & Telephone and the Industrial Bank of Japan. In 1999, not a single Japanese company made it into the Top 10. What happened in the interim?
The Internet. Internet-related companies have pushed into the BUSINESS WEEK 1000 list in an amazing way. Microsoft, with a market cap of $407 billion--yes, nearly half a trillion dollars--joined by IBM, Intel, Cisco, and AT&T took the honors this year. General Electric Co. and Wal-Mart Stores Inc. had their businesses transformed by the Net and made it to the top, too. U.S. companies saw their stock prices rise some 39% in 12 months and they now account for 57% of the world's publicly invested capital. A decade ago, it was Japanese banks, including Sumitomo Bank, Fuji Bank, and Dai-Ichi Kangyo Bank that accounted for a similar percentage of global capital.
Of course, the strong dollar partly explains the change in the Global 1000. Europe's poor economic performance and the surprising weakness of the new euro haven't helped. Japan's ongoing recession, which finally shows signs of bottoming out, hurt the prospects of many once-strong companies.
But it is technology that is clearly driving change. Of the top 50 companies on our list, 19 are directly tied to the Internet or benefit from it. Finland's cell-phone maker Nokia, with a market capitalization of $87 billion, jumped from No. 87 in 1998 to 38 this year. The less successful L.M. Ericsson, with a market cap of $53 billion, dropped to 77 from 60. British Telecommunications PLC went from 40 to 26 and Deutsche Telekom rose from 32 to 23 in the rankings. Together, Continental and British companies total 314 in the list this year, down 36 from 1998. Japanese companies recovered somewhat and took 135 spots, up from 116 last year.
There are many lessons to be learned from this extraordinary switch in the fortunes of so many global corporations, but one may be the most important: In an era of fast-paced technological change, no company in the world can afford to be smug or arrogant for any moment in time. The competition is utterly relentless.