Multinational Corporations and Democracy (original) (raw)
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Human Relations, 2018
This article looks at core arguments in International Business, Organization Studies and surrounding academic fields that focus on the study of politicization and political contests in and around multinational corporations (MNCs). Two evident streams of debate are identified. Equally evident is that these streams hardly connect. One stream is mainly interested in studying politicization from the outside while the other is mainly interested in politicization from within. As a way of connecting both streams, we introduce the circuits of power framework. Next we introduce the contributions of our Special Issue, followed by concluding comments which distinguishes five emergent themes. First, we show how the application of the circuits of power framework sheds new light on the study of political contests of MNCs. Second, we highlight that the role of nation states has not lost its significance as, for example, political CSR approaches would have us believe. Third, dominant ideologies play an important role in establishing and controlling circuits of power in and around MNCs. Fourth, it is vital to take labour issues into account in this field of study. Fifth, there is increasing evidence that asymmetric and hierarchical forms of organizing do not disappear in new MNC network-forms.
A public choice model of the role of multinational firms in international relations
The North American Journal of Economics and Finance, 2003
Multinational firms play a crucial role in the transmission of international policies across sovereign states. The present paper models the international policy equilibrium when conflict arises between two states, in which one state wishes to modify the policy choices of another state, and both the governments and their policy choices are subject to a self-interest maximization process on the part of voters, firms and government agents. Multinational firms are able to engage in lobbying activity in both their home countries and host countries in order to maximize firm-level profits. The analysis examines cases of both democratic and autocratic host countries.
THE IMPACT OF GLOBALIZATION ON DEMOCRATIC POLITICAL SYSTEM: A CRITIQUE
This paper seeks to explore some important aspects regarding the mutual interaction between globalization and democracy. Does globalization affect democracy? How globalization affect democracy? What are the various views about the effects of globalization on democracy? What are the future scenarios for democratic governance in this globalizing world? However, this study will not focus on effects of democracy on globalization process. Understanding Globalization: Globalization is a complex process affecting our daily lives in many ways. However, defining globalization remains one of the most challenging tasks for modern scholars. The challenge mainly arises due to widest spectrum of disciplines and discourse that the phenomenon of globalization tends to cover. And most of the definitions are limited to one or other disciplinary area covering some aspects of this process and leaving out some. Any study of globalization must understand beforehand that the process of globalization pervades into almost every sphere of human activity and touches every aspect of human experience (for example; social, cultural, political, spiritual, technological etc.). Thereby an all-encompassing definition of globalization becomes difficult. Some of the definitions given to globalization are as below:
How Do Different Types of FDI Affect Democracy ?
2015
How does Foreign Direct Investment (FDI) affect political institutions within host countries? Theory suggests two contrasting effects. If FDI as an aggregate of Mergers & Acquisition (M&A) and greenfield investments leads to economic growth and socio-economic development in the host country, then this could provide opportunity for growth and maintenance of democratic institutions within the host country. This is the modernization effect. Alternatively, Multinational Corporations (MNC) when engaging in FDI could benefit from weak market regulations and could exacerbate the democratic institutions in host countries. This is the internalization effect. This paper uses time-series cross national data from 155 countries between the years 1970 and 2013 to explore the relationship between FDI, M&A, greenfield investments and democracy. Overall, the findings show that an increase in FDI leads to a decline in democratic institutions. However, when analyzing M&A and greenfield investments, th...
Economic Globalization and Democracy: An Empirical Analysis
British Journal of Political Science, 2003
The theoretical literature presents conflicting expectations about the effect of globalization on national democratic governance. One view expects globalization to enhance democracy; a second argues the opposite; a third argues globalization does not necessarily affect democracy. Progress in explaining how globalization affects democracy requires confronting these theoretical positions with data. We assess empirically the effects of globalization on the level of democracy from 1970 to 1996 for 127 countries in a pooled time-series cross-sectional statistical model. The effects of four national aspects of globalization on democracy are examined: trade openness, foreign direct investment inflows, portfolio investment inflows, and the spread of democratic ideas across countries. We find that trade openness and portfolio investment inflows negatively affect democracy. The effect of trade openness is constant over time while the negative effect of portfolio investment strengthens. Foreign direct investment inflows positively affect democracy, but the effect weakens over time. The spread of democratic ideas promotes democracy persistently over time. These patterns are robust across samples, various model specifications, alternative measures of democracy, and several statistical estimators. We conclude with a discussion of policy implications.
Political Institutional Change, Obsolescing Legitimacy, and Multinational Corporations
Management International Review, 2012
This paper studies the practice of integration of influential host country actors to a multinational corporation as a strategy to decrease problems of legitimacy to the foreign firm before the host country's society. By developing the concept of obsolescing legitimacy, we argue that this strategy provides legitimacy to the foreign firm only in the absence of institutional changes in the host country. Once these changes take place, an alliance by the multinational to an elite or a political system no longer ruling the host country will become a liability and will generate problems of legitimacy for the multinational.