1. SUMMARY
INTRODUCTION
A key player in the global economy is a multinational corporation. This part focuses on five related issues:
(1) the scale and geographical distribution of TNCs in the global economy;
(2) why and how corporations engage in transnational activities;
(3) the geographical embeddedness of transnational corporations;
(4) the ‘webs of enterprise’ manifested in transnational production networks;
(5) the power relationships between TNCs and other actors in the global economy.
THE SCALE AND GEOGRAPHICAL DISTRIBUTION OF TRANSNATIONAL CORPORATIONS
Companies operating outside their home country are increasingly creating interconnected economies. The East India Company and the Hudson Bay Company, which have emerged in Europe since the 15th century, are the ancestors of today's trade services.
The most comprehensive definition of a modern TNC, and the one that underpins the discussion in this chapter, is ‘a firm which has the power to coordinate and control operations in more than one country, even if it
does not own them’. Unfortunately, it is a definition that is impossible to quantify in aggregate terms because it involves a number of qualitative attributes concerned with the complex relationships
between, and within, firms operating across national boundaries, for which no comprehensive data are available.
These are what have come to be called global corporations, the allegedly ‘placeless’ giants whose operations span the globe and which owe no allegiance to any particular country or community. What they all have in common is that they operate in different political, social and cultural environments.
WHY (AND HOW) FIRMS ‘TRANSNATIONALIZE’
-MARKET-ORIENTED INVESTMENT
Increasing profitability may well depend on being able to expand its market beyond its home territory. Both for political, as well as cultural reasons, it may be desirable for a TNC to appear to be strongly
embedded in a local market. In other words, both the size and the particular characteristics of markets continue to influence the locational decisions of TNCs.
-ASSET-ORIENTED INVESTMENT
The geographical unevenness of markets is one major set of reasons why firms engage in transnational investment.This is most notably the situation in the case of human resources or assets: the skills and knowledge embodied in people in specific local settings, with their particular assemblages of social and cultural institutions and practices. Such assets are, again, very unevenly distributed geographically.
-Modes
There are two major ways in which firms develop transnational activities: one is through what is known as ‘greenfield’ investment; the other is through engagement with other firms, through either merger and acquisition or some form of strategic collaboration.
GEOGRAPHY MATTERS: THE EMBEDDEDNESS OF TRANSNATIONAL CORPORATIONS
All business firms, including the most geographically extensive TNCs, are ‘produced’ through an intricate process of embedding in which the cognitive, cultural, social, political and economic characteristics of the national home base play a dominant part. Forms of economic coordination and governance cannot easily be transferred from one society to another, for they are embedded in social systems of production distinctive to their particular society.
‘WEBS OF ENTERPRISE’: TRANSNATIONAL PRODUCTION NETWORKS
TNCs, like firms in general, can best be considered as ‘a dense network at the centre of a web of relationships’. The geographical extent of such transnational production networks is highly variable. In fact, few such
networks can be described as being truly ‘global’. The country-specifi c level, where linguistic and cultural differences play a major role in the demands for goods and services. Transnational corporations are, without doubt, one – arguably the most important – of the primary shapers of the contemporary global economy.
The basis of TNCs’ power lies in their potential ability to take advantage of geographical differences in the availability and cost of resources and in state policies and to switch and re-switch operations between locations. Among the multiplicity of regulatory institutions, and allowing for the proliferation of international and sub-national bodies, the national state remains especially important.
2&3. INTERESTING POIINT&DISCUSSION
Even franchise companies can see that a huge number of companies are becoming multinational corporations. The most important thing in the globalization of a company is its own competitiveness. However, since corporations are globalized, they can not completely eliminate the regulations of each country. In the case of the Korean film industry, regulations have been released in order to obtain copyright rights. However, since Korean movies have their own competitiveness, they have survived as a genre. We have nationally regulated to grow the film industry.
A key player in the global economy is a multinational corporation. This part focuses on five related issues:
(1) the scale and geographical distribution of TNCs in the global economy;
(2) why and how corporations engage in transnational activities;
(3) the geographical embeddedness of transnational corporations;
(4) the ‘webs of enterprise’ manifested in transnational production networks;
(5) the power relationships between TNCs and other actors in the global economy.
THE SCALE AND GEOGRAPHICAL DISTRIBUTION OF TRANSNATIONAL CORPORATIONS
Companies operating outside their home country are increasingly creating interconnected economies. The East India Company and the Hudson Bay Company, which have emerged in Europe since the 15th century, are the ancestors of today's trade services.
The most comprehensive definition of a modern TNC, and the one that underpins the discussion in this chapter, is ‘a firm which has the power to coordinate and control operations in more than one country, even if it
does not own them’. Unfortunately, it is a definition that is impossible to quantify in aggregate terms because it involves a number of qualitative attributes concerned with the complex relationships
between, and within, firms operating across national boundaries, for which no comprehensive data are available.
These are what have come to be called global corporations, the allegedly ‘placeless’ giants whose operations span the globe and which owe no allegiance to any particular country or community. What they all have in common is that they operate in different political, social and cultural environments.
WHY (AND HOW) FIRMS ‘TRANSNATIONALIZE’
-MARKET-ORIENTED INVESTMENT
Increasing profitability may well depend on being able to expand its market beyond its home territory. Both for political, as well as cultural reasons, it may be desirable for a TNC to appear to be strongly
embedded in a local market. In other words, both the size and the particular characteristics of markets continue to influence the locational decisions of TNCs.
-ASSET-ORIENTED INVESTMENT
The geographical unevenness of markets is one major set of reasons why firms engage in transnational investment.This is most notably the situation in the case of human resources or assets: the skills and knowledge embodied in people in specific local settings, with their particular assemblages of social and cultural institutions and practices. Such assets are, again, very unevenly distributed geographically.
-Modes
There are two major ways in which firms develop transnational activities: one is through what is known as ‘greenfield’ investment; the other is through engagement with other firms, through either merger and acquisition or some form of strategic collaboration.
GEOGRAPHY MATTERS: THE EMBEDDEDNESS OF TRANSNATIONAL CORPORATIONS
All business firms, including the most geographically extensive TNCs, are ‘produced’ through an intricate process of embedding in which the cognitive, cultural, social, political and economic characteristics of the national home base play a dominant part. Forms of economic coordination and governance cannot easily be transferred from one society to another, for they are embedded in social systems of production distinctive to their particular society.
‘WEBS OF ENTERPRISE’: TRANSNATIONAL PRODUCTION NETWORKS
TNCs, like firms in general, can best be considered as ‘a dense network at the centre of a web of relationships’. The geographical extent of such transnational production networks is highly variable. In fact, few such
networks can be described as being truly ‘global’. The country-specifi c level, where linguistic and cultural differences play a major role in the demands for goods and services. Transnational corporations are, without doubt, one – arguably the most important – of the primary shapers of the contemporary global economy.
The basis of TNCs’ power lies in their potential ability to take advantage of geographical differences in the availability and cost of resources and in state policies and to switch and re-switch operations between locations. Among the multiplicity of regulatory institutions, and allowing for the proliferation of international and sub-national bodies, the national state remains especially important.
2&3. INTERESTING POIINT&DISCUSSION
Even franchise companies can see that a huge number of companies are becoming multinational corporations. The most important thing in the globalization of a company is its own competitiveness. However, since corporations are globalized, they can not completely eliminate the regulations of each country. In the case of the Korean film industry, regulations have been released in order to obtain copyright rights. However, since Korean movies have their own competitiveness, they have survived as a genre. We have nationally regulated to grow the film industry.
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