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).
