As a busi­ness stu­dent, the term “Multi-National Cor­po­ra­tion” has been thrown around in my under­grad career, with­out much thought on my end to their impli­ca­tions and role in soci­ety. I have always accepted them as a norm in busi­ness, my thoughts some­times inter­jected with sto­ries of MNCs over­tak­ing small and medium busi­nesses, or caus­ing polit­i­cal tur­moil (i.e. Shell in Nigeria).

How­ever, it took a course to change my entire per­spec­tive, approach and the way I viewed MNCs as well as the longest paper I have writ­ten in my under­grad life — 2,500 words. But before I divulge into my find­ings, I must say that tak­ing poli sci courses on top of my com­merce courses has been one of my best aca­d­e­mic deci­sions in UBC. Poli sci courses have given me a phe­nom­e­nal bal­ance of the­ory and the prac­ti­cal­ism of eco­nom­ics courses and I only wish I could take more!

So, in light of fin­ish­ing my marathon paper, I thought it would only be fit to share a sum­ma­rized ver­sion of my research and thoughts around this area (Source — Myself, 2010):

The first real­iza­tion I had on MNCs, was the fact that their pres­ence (aside from pro­duc­tion, resource allo­ca­tion and eco­nomic impacts) has re-defined what it means to have a firm-government rela­tion­ship. The con­ven­tional “obso­lesc­ing” bar­gain­ing model for depict­ing MNC-State rela­tions is now obso­lete (Rama­nurti, 2001). Instead, mar­ket and non-market strate­giz­ing is an iter­a­tive process of resource allo­ca­tion that responds dynam­i­cally to chang­ing con­di­tions, juris­dic­tion and level of gov­ern­ment inter­ven­tion (Win­dor, 2007). Real­ity is, the suc­cess of many MNCs depends on the mar­ket per­for­mance that is tied inher­ently to rela­tion­ships with local and host gov­ern­ments. MNCs and gov­ern­ments are con­stantly in this sym­bi­otic rela­tion­ship in which the future seems to be dom­i­nated with a push and pull of poli­cies and com­pro­mise. (Model of coope­ti­tion — coop­er­a­tion and competition)

The sec­ond real­iza­tion that I had was one sur­round­ing the def­i­n­i­tion of sov­er­eignty. It wasn’t till a year ago that I learnt of the 1648 treaty of West­phalia ( yes, I know I was a lit­tle slow to catch on..) which marked the birth of the mod­ern state and the end of uni­ver­sal medieval­ism. Since, the mod­ern state has become geo­graph­i­cal con­structs of which polit­i­cal author­ity is defined and based upon geo­graph­i­cal perime­ters (Ander­son, 1986).

What really fas­ci­nated me was the fact that it never crossed my mind until now that MNCs could be (per­haps?) the dawn of a new def­i­n­i­tion of sov­er­eignty. This is because MNCs by the very nature of their oper­a­tions have placed a new spin on the con­cept of sov­er­eignty with their trans­fer of resources, capa­bil­ity, knowl­edge and power within and amongst dif­fer­ent firms as the pri­mary con­cerns. The issue here is that although an MNC is incor­po­rated under local law of a host coun­try, indi­cat­ing that it is sub­ject to the same respon­si­bil­i­ties as a national firm, its sub­sidiaries and affil­i­ates in other ter­ri­to­ries con­tains ele­ments of a “dou­ble per­son­al­ity” (Ver­non, 1971). MNCs have a respon­si­bil­ity to the sov­er­eign that sanc­tions its exis­tence, but as an inter­na­tional unit, each affil­i­ate may have con­flicts of inter­est than of its host country’s.

This means that in regards to inter­nal sov­er­eignty, the emer­gence of MNCs have placed con­strains of auton­omy and con­trol on the imple­men­ta­tion of inter­nal sov­er­eignty. How­ever, in terms of exter­nal sov­er­eignty it has forced gov­ern­ments to recon­sider its con­struct of mutu­ally exclu­sive bor­ders, ter­ri­tory and geo­graph­i­cally based polit­i­cal and eco­nomic gov­er­nance (Kobrin, 1998). Hence the emer­gence of free trade agree­ments (NAFTA, ASEAN…) , bor­der agree­ments, etc.

Now there’s the excit­ing part, what if the increas­ing glob­al­iza­tion, need for FDI and growth of MNCs are bring­ing upon soci­ety a new def­i­n­i­tion of what it means to be part of a state and cul­ture on an eco­nomic and polit­i­cal level? We’ve already seen the rise of third kid cul­ture kids ( myself included) and the bleed­ing of world cul­ture and lan­guages into each other. Every 14 days a lan­guage dies. By 2100, more than half of the more than 7,000 lan­guages spo­ken on Earth—many of them not yet recorded—may dis­ap­pear (National Geo­graphic, 2010).

I really won­der the cor­re­la­tion between MNC growth, glob­al­iza­tion and cul­tures. I guess time will tell. Until then, I leave you with a thought by Susan Strange.

A meta­mor­pho­sis is occur­ring with struc­tural change in the world econ­omy with the state becom­ing, once more as in the past, just one source of author­ity among sev­eral, with lim­ited pow­ers and resources (Strange, 1996).