Book Review:There is plenty of food for thought in Pankaj Ghemawat's sceptical look at globalisation, writes Tony Jackson.

In the competing hubbub of books on management, there is a general tendency to shout too loud: read my book and it will transform your company. Ignore it and you will fail.

Pankaj Ghemawat, a professor at Harvard Business School and IESE in Barcelona, has come up with a subtle variant. His book Redefining Global Strategy is about managing globalisation. But his main premise is that globalisation is not as important as you might think. The world is only semi-globalised, and will remain so for decades.

Consider, he says, that of all capital investment by corporations worldwide, only 10 per takes place outside the home country. Consider, too, that a smaller proportion of the world's population are long-term immigrants today than in 1900.

Within that, Ghemawat proposes two main theses. First, distance still matters a lot. Among US corporations with only one overseas operation, there is a 60 per cent chance it will be in Canada. Similarly, of Wal-Mart's nine foreign operations in 2004, only four were profitable - Canada, Mexico, Puerto Rico and the UK. Each of those four is closer to the company's Arkansas headquarters than the other five.

Other distances matter too - cultural, administrative and geographic. Ghemawat proposes a simple sum. In assessing the attractiveness of a foreign market, take its size and divide it by the distance, however defined.

His second thesis is slightly more intricate. A quarter of a century ago, management gurus preached the globalisation of markets. Everything would be standardised, and everyone would eat, drink and wear the same things.

That notion has now given way to the globalisation of production. Before, multinationals had only to decide how far to adapt and how far to aggregate. Now they also have to decide how far to arbitrage (note the three As - Ghemawat is fond of acronyms).

In simple terms, adaptation means changing the product by market. In the white goods industry, British ovens are bigger than German since the British eat turkey for Christmas and the Germans geese. German ovens don't need to be self-cleaning since they cook at lower temperatures than the French. Indians, by and large, don't use ovens at all.

Aggregation, by contrast, is a matter of standardising worldwide. This can go badly wrong. In the late 1990s, Ford largely destroyed its European operations by banging them together with its US business. Today, by contrast, a Ford executive is quoted as saying the biggest single barrier to globalisation in autos is the low cost of petrol in the US. So long as that is true, American cars will be bigger and more powerful than elsewhere and a standard model will not do.

Positioning yourself along the adaptation-aggregation axis is something of an art, as Ghemawat discusses in detail. But the shift to global production brings in the added dimension of arbitrage - the exploitation of cost differences in goods and services between countries.

Take Wal-Mart again. Its overseas stores produce profits of about $3bn. But the savings on the goods it sources from China, both directly and indirectly, are estimated to be worth several times that. So buying from China and selling in the US is more economically important to Wal-Mart than selling goods overseas.

But arbitrage, too, has all kinds of associated risks associatedwith it.. There is no space here to explain why. This is, after all, a textbook for senior managers - as befits the authors professional credentials - and some of its arguments are a little detailed for the general reader.

A final word, though, on the initial thesis. As Ghemawat says, plenty of people will argue that while globalisation may not be complete yet, it will be shortly. Why might that not be true?

First, he argues, the experience of the inter-war years, when globalisation went into reverse, might suggest that deep economic integration is at odds with national sovereignty. If so, setbacks are always on the cards.

Plenty of other things might get in the way, from global warming or avian flu to a global liquidity crisis.

•  Redefining Global Strategyby Pankaj Ghemawat Harvard Business School Press;€29.95 (€21)