I. Transnational Corporations: Nature and Origin
1, the nature of multinational corporations
Multinational corporations were first proposed by ensor in April, 1960, at the anniversary meeting of the founding of the School of Industrial Economics of Carnegie University of Technology. Subsequently, names such as "multinational company", "international company" and "Cosmos company" often appeared in newspapers and periodicals in western countries. Until 1974, the United Nations Economic and Social Council made a resolution to uniformly use the name "TNCS". Although the name is unified, there are different opinions on the definition and nature of transnational corporations. Because most people are concerned about distinguishing the different characteristics of multinational companies and domestic companies. These differences reflect different analytical purposes or academic ideas.
1) structure is the most common standard to identify multinational companies. The most commonly used structural variables are industrial and commercial activities in many countries. 1983, the United Nations Center for Transnational Corporations published the Third Survey of Developing Transnational Corporations in the World. Accordingly, the standards of multinational corporations are as follows: first, business entities have been established in two or more countries, regardless of the legal form and field of their operations; Second, such enterprises make business decisions under a central decision-making system, and the policies formulated are similar, which may reflect the strategic objectives of multinational enterprises; Third, such entities are related to each other through equity or other means, so that one or several of them may exert significant influence on other entities, share resources and information with other entities, and bear responsibilities at the same time.
Another stricter structural standard emphasizes the region and scale of multinational companies' operations abroad, that is, companies in a country must be established at least abroad, operate six or more industrial and commercial subsidiaries, with sales exceeding US$ 6,543.8 billion and holding no less than 25% of foreign subsidiaries.
There are other structural standards. For example, some people think that it is the ownership structure rather than the management structure that plays a decisive role. As long as the ownership of a company is owned by many people of different nationalities, then the company is a multinational company, or as long as the top management of the company comes from many countries, not mainly from the home country, then the company is a multinational company.
2) The second confirmation standard is business. According to this standard, if most or a considerable part of a company's resources or all its business in a country are used for foreign business, that is, its foreign business plays a decisive role in the company, then the company is a multinational company. Generally speaking, its foreign business accounts for at least 25%, including the proportion of overseas investment in the total investment, the proportion of overseas employees in the total number of employees, and the proportion of output value, total sales volume and total profit of foreign business in the total sales volume and total profit.
3) Other researchers also use behavioral standards. According to this standard, if a company plans and conducts activities from a global perspective, emphasizing global profits rather than domestic profits, then it can be considered as a multinational company.
From the perspective of international politics, transnational corporations can be understood as large industrial and commercial enterprises that directly own or control overseas subsidiaries, which are not completely controlled by the decisions of the parent company, but must respond to them. The influence scope of the parent company's decision does not conform to national boundaries.
2. The emergence and development of transnational corporations.
The emergence of multinational corporations can be traced back to the19th century, but the prosperity of multinational corporations in the modern sense should be said to have developed in the 1950s and 1960s.
The initial multinational companies came with the industrialization process of early industrialized countries, but the British "family capitalism" was difficult to provide corresponding organizational resources for the emergence of multinational companies.
With the rise of the second industrial revolution, the United States produced "management capitalism", from which professional managers replaced family members as managers in charge of the company's business decision-making power, and administrative structure replaced kinship structure. The rise of management capitalism makes organizational innovation break through the limitations of family management, which makes it possible for industrial companies to develop into large multinational companies. It is precisely because of the development of organizational innovation, science and technology and management technology that social wealth has increased rapidly, and the resulting huge surplus capital has created the need to expand outward, which has deepened the mainstream of capital internationalization from the international circulation process to the international production process. However, limited by the overall level of world industrialization and the ability of foreign direct investment at that time, although multinational corporations have begun to take shape, they are still in the stage of formation and development.
After World War II, especially in 1950s and 1960s, it was a climax of the development of multinational corporations. After the war, industrial companies in Britain and continental Europe launched a powerful "management revolution", which widely adopted the advanced organizational structure and management technology of American companies, thus promoting the unprecedented rapid development of multinational companies. From the post-war to the 1980s, the development of multinational corporations has been the coexistence of Europe and America. With the rapid rise of Japan after 1970s, the United States, Japan and the European Union (EU) formed a tripartite confrontation in 1980s. Foreign direct investment in these countries has the following characteristics:
First of all, the development of its multinational companies is closely related to government behavior.
Secondly, for multinational companies, the basic motivation of their transnational operation is business orientation and the purpose is to pursue profits.
Another important sign of the development of multinational corporations after World War II is the rise and development of multinational corporations in developing countries. The foreign direct investment of these countries and regions began in the 1960s and entered a period of rapid growth in the late 1980s, thus breaking the long-standing monopoly of developed countries on international investment and transnational operations. At present, multinational companies from developing countries are mostly concentrated in newly industrialized countries and regions in Asia.
Compared with western developed countries, most of the transnational operations of developing countries are small in scale and weak in strength, and only a few countries rank among the giant companies. Moreover, most of them use geography and blood relationship to implement regional management strategy, which has obvious local and limited characteristics.
In 1990s, the development of multinational corporations reached a new peak and became the core organizer of international economic activities. Multinational companies are increasingly showing the characteristics of internationalization of production, diversification of management, internalization of transactions and globalization of decision-making. Today, transnational corporations not only affect the world economic structure, but also affect the world political structure to a considerable extent, leading to the international trend of "power redistribution".
Second, transnational corporations in economic globalization
With the rapid development of economic globalization, multinational corporations are playing an increasingly important role in economic life. As the carrier of international direct capital flow, the rise of transnational corporations is the expression of economic globalization, and it also expands the content and scope of globalization. Multinational companies are the driving force for the government to sign agreements to promote globalization.
1, economic globalization has created a generation of multinational companies.
1) Globalization has promoted the development of multinational corporations.
2) Globalization highlights the advantages of multinational corporations. Because multinational companies can use all kinds of tangible and intangible resources in a wider range, they can transplant their own advantages more effectively and combine them with the location resources of some immovable specific regions. Globalization has lowered the barriers for countries to obtain goods, capital and services. At the same time, advanced communication technology makes it more convenient for multinational companies to manage subsidiaries, greatly reducing costs and highlighting their advantages. Greatly promoted the emergence of multinational companies. With the advent of globalization, developing countries have begun to welcome the arrival of multinational corporations.
3) Globalization has caused the adjustment of the business strategy of multinational corporations. Its main idea is to use globalization and trade liberalization to strengthen the division of products and industries among subsidiaries. In the past, the relatively independent pattern between them was evolving into an integrated international production system.
2. Multinational companies change the direction of economic globalization.
1) has changed the content of economic relations between countries and deepened the international division of labor. International division of labor is the division of value chain, and the whole value chain is controlled by mastering some key links across companies. Intra-multinational trade accounts for one-third of the global trade volume, a large number of technologies flow within multinational companies, and their share in the world production field is expanding.
2) The development of multinational companies makes the global market not only include the traditional product and technology market, but also extend to the service field.
3) Great changes have taken place in the way of resource allocation around the world. The allocation of resources within a country is realized in the domestic market, and the role of multinational companies is becoming more and more important. The rise of multinational companies makes it difficult for the country to manage multinational companies and become an important negotiator of the country. Because the internal logistics price of multinational companies is not determined by the market, the efficiency of the government is greatly weakened.
Three. Transnational corporations and nation-states
Transnational corporations are complex in nature. More and more multinational companies are becoming "unidentified" or "supranational" multinational companies, which at least profoundly changes people's views on sovereign nation-states.
Multinational companies pursue "the new logic of global market". Multinational companies only pay attention to the differences in the rate of return on resources and factors in different countries and regions, and the influence of different economic and government systems on the flow of resources, so as to ensure the maximization of enterprise interests. Obviously, transnational corporations dilute national boundaries and blur the concept of national interests.
There are all kinds of frictions and conflicts between transnational corporations and nation-states. As the disseminators of industrial development model, transnational corporations often affect the normal implementation of industrial and economic policies of host countries and home countries (mainly host countries) in order to realize profits and markets, and even extend their tentacles to areas other than cultural, social, political and other economic activities, thus being regarded as a challenge to the sovereignty of nation-States.
This challenge usually takes the following forms:
First, limit and weaken the ability of the government.
This mainly refers to:
-restricting and weakening the government's ability to regulate and control economic development.
-Restrict and weaken the government's ability to protect its economic competitiveness and merge outstanding national enterprises.
-Restrict and weaken the government's ability to manage and protect foreign trade.
Second, intensify the contradiction between the host country and the home country.
Transnational corporations threaten to block the inflow of capital and technology, forcing the host government to create convenience for their local activities, and sometimes relying on the support of the home government to resist or resist the intervention and restrictions of the host country on their activities. The economic confrontation between countries seems to have been replaced by the confrontation between countries and multinational corporations.
On the other hand, the contradictions and conflicts between the host country and multinational corporations will often intensify the confrontation between the host country and the home country for the benefit of their own enterprises. This kind of confrontation exists not only between developed countries and developing host countries, but also between developed countries.
Third, the political activities carried out by multinational corporations are even more erosion of sovereign countries.
Nowadays, the incidents of multinational companies buying or coercing government officials are rarely disclosed, but the activities outside the hospital aimed at obtaining investment convenience are intensifying. The main ways are as follows:
-Cooperation between multinational corporations and industry special interest groups.
-Formal or informal alliances between multinational companies and governments.
-Establish contacts with bilateral or multilateral organizations in the fields of science and technology, economy, finance and law.
Through the above channels, transnational corporations directly or indirectly play the role of decision makers or influencers of national policies.
Because the power expansion of transnational corporations has caused shocks and challenges to the nation-state, the nation-state has to make reciprocal responses to transnational corporations and their activities, mainly the policy changes to transnational corporations and their foreign direct investment.
Because developed countries are both home countries and recipient countries. Generally speaking, developed countries adopt an active and open attitude towards multinational companies. In promoting domestic capital export, developed countries not only give positive encouragement to multinational companies in fiscal, taxation and financial policies, but also safeguard the rights and interests of domestic multinational companies in terms of investment access, national treatment and profit repatriation by concluding bilateral investment protection agreements with host countries. In the management of foreign direct investment, indirect policies are adopted to manage and coordinate the activities of transnational corporations.
Generally speaking, the relationship between developing countries and transnational corporations is still at arm's length, because developing countries, as host countries, need technology, capital and management experience brought by transnational corporations on the one hand, and strongly feel the side effects of transnational corporations on their domestic economic and social life on the other. Resisting and limiting these negative effects has become the basis of some developing host countries' policies towards transnational corporations. Different from developed countries, many developing countries still take direct measures to restrict or control transnational corporations. The policies of newly industrialized countries are more similar to those of developed countries.
It is precisely because of the popularity of similar policies that in the past 20 years, the direct investment of multinational corporations in developing countries has appeared in the form of joint ventures and non-equity on the one hand, which of course reflects some concessions made by multinational corporations to the sovereignty of the host country, but on the other hand, this concession has also led to some negative consequences for the host country's economy.
The contradiction between multinational corporations and the sovereignty of the host country is a prominent feature of today's era, but it does not mean that the powerful power of multinational corporations will replace the loss of national sovereignty and even all national sovereignty, but will urge countries to handle their internal affairs more responsibly at a higher level, so that national sovereignty will transcend the original national boundaries in the process of economic globalization and become a force for countries to handle economic affairs voluntarily, harmoniously and cooperatively.
The key issue here lies in how we view and understand national sovereignty. Now, the meaning of national sovereignty is gradually changing. In fact, national sovereignty should be a double-edged sword, so should the influence of multinational corporations on national sovereignty.
Judging from the development of the current international situation, almost all the profound changes in the world at present involve changes in the concept of national sovereignty. National sovereignty is so severely challenged, mainly due to the following reasons:
1) countries are increasingly interdependent;
2) The potential benefits of international division of labor and cooperation are increasing;
3) Reinterpretation of some values in the world;
4) After the Cold War, the pattern of "one superpower and many powers" appeared, and the functions of international organizations such as the World Trade Organization were strengthened.
Of course, the above reasons can only be said to be "relative" and "elastic" to national sovereignty, and it is impossible to make national sovereignty insignificant in the next few decades, and then the role of the state will gradually decline. On the contrary, with the increasing interdependence between countries, the sovereignty of nation-states will be maintained and strengthened in a more flexible and elastic way. Therefore, multinational companies will operate in a highly restrictive international political environment and an increasingly fierce international competition environment.
Multinational companies will be subject to various constraints in their future international business activities, which can be analyzed from the external environment and their own operations.
Judging from the international environment in which multinational companies are located, only under the premise of realizing their own interests, at least long-term interests, can countries transfer some rights to some international organizations to avoid some possible violations of national sovereignty. Moreover, the consciousness of national sovereignty can only be revealed in the process of communication with other countries. The higher the degree of interdependence between countries, the stronger the sense of national sovereignty and the willingness to take measures to this end. From now on and in the foreseeable future, it is impossible for the world government to let the nation-state die out.
From the perspective of its own operation, multinational companies are faced with an international space with limited resources and market. In order to seek and even compete for a larger share of resources, investment markets and commodity markets, they must obtain it through fierce competition. In international business activities, multinational companies can only operate under various constraints, and cannot do whatever they want. More often, they can only operate within the framework of the host country's sovereignty constraints.
If we only infer from experience, it may be correct to regard multinational corporations as an important force to weaken or even destroy the sovereignty of nation-States. Because it wants to remove all barriers that hinder its global operation in order to maximize profits, especially national borders. But in fact, almost no multinational company is truly stateless. At present, national and ethnic factors are still very important, because monopoly power is one of the main conditions for the success of multinational companies. Although in quite a few cases, the interests of transnational corporations and the policy objectives of nation-states often conflict, it is undeniable that there is still complementarity between them, especially for the home country.
It can be seen that the role of the nation-state will still have a significant impact on the activities of multinational companies for a long time to come. The influence of multinational corporations is also mixed.
Conclusion: As long as the concept of nation-state does not disappear, it is impossible for foreign capital to completely dominate the domestic market, and conflicts and contradictions between national sovereignty and multinational companies that ignore national boundaries will still exist. However, just as competitors form strategic alliances based on the consideration of integration strategy, under the premise of integration, the existence of interests between the state and multinational companies makes it possible to solve this contradiction and conflict.
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