Multinational corporations (MNCs) play a significant role in our economic world. Accounting for approximately one third of total world trade and including around 80 million people outside their home bases in complex supply and dependency networks, they seize seemingly endless economic power what has given way to strong opposition and causes fear amongst ordinary people who feel at the mercy of their power.
In my paper I will try to clarify the relationship between MNCs and nation states and therefore answer the question what kind of forces drive MNCs, which objectives they have and which measures they take to reach their individual aims.
The paper will start with the definition of MNCs (chapter 2) and their emergence. I will then refer theories of MNC evolution that are closely linked to Foreign Direct Investment (FDI) and patterns of labour division (chapter 3 and 4). The following chapter shall explore the power relationship between nation states and MNCs in general (chapter 5). The example of oil extraction through Royal Dutch Shell in the Nigeria's delta region will further illustrate the interdependencies especially many resource rich but underdeveloped or developing countries face and identify the sources of friction between government, state, peoples, NGOs and MNCs. The findings will be summarized and an outlook on possible future developments will be given in the last chapter (or Chapter 6).
Table of Contents
- 1 Introduction: The perception of multinational corporations
- 2 Definition and distinction of the term "Multinational Corporation"
- 3 The Emergence of Multinational Corporations
- 3.1 The Role of Foreign Direct Investment
- 3.2 Internationalisation Reasons
- 3.2.1 Dunning's OLI-Framework
- 3.2.2 "Newer" International Division of Labour
- 4 Organisational forms of Multinational Corporations
- 5 Power Relationship: Nation State vs. Multinational Corporation
- 5.1 Bargaining Power
- 5.2 Raw oil extraction in Nigeria: Oil MNC and the role of the state
- 6 Summary: Multinational Corporations and the global economy
Objectives and Key Themes
This paper aims to clarify the relationship between multinational corporations (MNCs) and nation-states, exploring the driving forces behind MNCs, their objectives, and the measures they employ to achieve their goals. The analysis will trace the emergence of MNCs, examining relevant theories of evolution and patterns of labor division. The power dynamics between nation-states and MNCs will also be investigated.
- Definition and distinctions of MNCs
- The emergence and evolution of MNCs
- The role of Foreign Direct Investment (FDI)
- Power relationships between MNCs and nation-states
- Case study: Oil extraction in Nigeria
Chapter Summaries
1 Introduction: The perception of multinational corporations: This introductory chapter establishes the significant role of multinational corporations (MNCs) in the global economy, highlighting their substantial economic power and the resulting public concerns and opposition. It outlines the paper's objective: to analyze the relationship between MNCs and nation-states by examining the forces that drive MNCs, their objectives, and their strategies. The chapter previews the structure of the paper, indicating the subsequent exploration of MNC definitions, emergence, power dynamics with nation-states, and a case study of oil extraction in Nigeria.
2 Definition and distinction of the term "Multinational Corporation": This chapter delves into the nuanced definitions of "multinational corporation" (MNC) and "transnational corporation" (TNC), highlighting the subtle yet important distinctions between the two terms based on varying perspectives within scientific disciplines. It explores how differing interpretations of "multi-" versus "transnational" relate to the scope of internationalization and the concepts of home country identification and the role of Foreign Direct Investment (FDI) in shaping the defining characteristics of each corporate structure. The chapter ultimately examines various viewpoints of MNCs from the perspectives of international business and sociology, presenting a range of definitions from classical interpretations to the impact of the United Nations' efforts to mitigate the negative connotations associated with the term "MNC".
3 The Emergence of Multinational Corporations: This chapter traces the historical evolution of multinational corporations, beginning with early examples like the East India Company and highlighting the shift in dominance from trading companies to US firms after World War II under the Bretton Woods system. It lays the groundwork for exploring the influence of factors like Foreign Direct Investment (FDI) and international labor division patterns on the development and growth of MNCs. The chapter sets the stage for a deeper investigation of the underlying forces that shaped the emergence and subsequent rise of MNCs to their current global prominence. The significance of this chapter lies in establishing the historical context necessary to understand the contemporary landscape of multinational corporate activity and its complexities.
Keywords
Multinational Corporations (MNCs), Transnational Corporations (TNCs), Foreign Direct Investment (FDI), Internationalization, Nation-State, Power Relationships, Bargaining Power, Oil Extraction, Nigeria, Global Economy, International Division of Labour, Dunning's OLI-Framework.
Frequently Asked Questions: A Comprehensive Language Preview on Multinational Corporations
What is the purpose of this document?
This document provides a comprehensive overview of multinational corporations (MNCs), including their definition, emergence, organizational structures, power dynamics with nation-states, and their impact on the global economy. It serves as a preview, offering a table of contents, objectives, key themes, chapter summaries, and keywords.
What topics are covered in this preview?
The preview covers a range of topics related to multinational corporations, including: the definition and distinction between MNCs and TNCs; the historical emergence of MNCs, focusing on the role of foreign direct investment (FDI) and evolving international labor divisions; the organizational structures of MNCs; the power dynamics and bargaining power between MNCs and nation-states; and a case study on oil extraction in Nigeria. It also includes an introduction outlining the significance of MNCs in the global economy and a concluding summary.
What are the key themes explored in the document?
Key themes include the definition and distinctions of MNCs; the emergence and evolution of MNCs, including the role of FDI; the power relationships between MNCs and nation-states; and a case study analyzing oil extraction in Nigeria to illustrate these power dynamics. The document also explores different theoretical frameworks, such as Dunning's OLI framework, to explain internationalization strategies.
What is Dunning's OLI Framework and how is it relevant?
Dunning's OLI framework is a theoretical model used to understand why firms engage in foreign direct investment (FDI). It considers Ownership advantages (O), Location advantages (L), and Internalization advantages (I) as key determinants of a firm's decision to invest internationally. This framework is relevant in understanding the motivations behind the emergence and growth of multinational corporations.
What is the significance of the Nigeria oil extraction case study?
The case study on oil extraction in Nigeria serves as a practical illustration of the power dynamics between multinational corporations and nation-states. It demonstrates how MNCs can exert significant influence on national economies and policies, and highlights the complexities of managing these relationships.
What are the key differences between Multinational Corporations (MNCs) and Transnational Corporations (TNCs)?
The preview highlights the nuanced distinctions between MNCs and TNCs. While both operate internationally, the differences lie in their degree of integration and the level of decentralization in their operations. The terms are often used interchangeably, but the preview explores varying perspectives on their definitions and the implications of these differences.
What is the role of Foreign Direct Investment (FDI) in the emergence of MNCs?
Foreign Direct Investment (FDI) plays a crucial role in the emergence and growth of MNCs. The preview examines how FDI has facilitated the expansion of MNCs into new markets and the establishment of foreign subsidiaries, ultimately shaping their evolution and global presence.
What is the overall conclusion of the preview?
The preview concludes with a summary highlighting the significant role of multinational corporations in the global economy and the complex interplay between these corporations and nation-states. It underscores the need for further understanding of these power dynamics and their implications for national economies and global development.
- Quote paper
- Eva Lena Richter (Author), 2014, The Emergence of the Multinational Corporation, Munich, GRIN Verlag, https://www.grin.com/document/387936
