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This research paper first reviews debates that stress the contrasting interpretations of globalization existing at the social, political, and economic levels. Globalization is defined in terms of the combined processes of acceleration of time and compression of social space. The development of transnational corporations (TNCs) since the 1960s reveals that these organizations, that operate globally and do not necessarily identify with a particular country, play an increasingly important role in the global economy, politics, and society. This research paper reviews the primary interpretations of the position and role of TNCs under globalization.
- Definitions and the Debates
- The Origins of the Term Globalization and Debates in the Late Twentieth Century
- Globalization and TNCs
Definitions and the Debates
The concept of globalization has been employed to define processes at the social, political, and economic levels. Socially, it has been interpreted as a complex phenomenon that molds distant groups into unified networks, allows enhanced communication, promotes the exchange of ideas and experiences, fosters understanding and bringing people closer together (Croucher, 2004; Hopper, 2007; Jagdish, 2004). It has also been viewed as an entity that increases interdependence, mutual exchange awareness, and respect and fortifies society’s cohesiveness (Friedman, 2005; Guillen, 2001). Globalization’s greater circulation of capital, labor, and products has been heralded as one of the primary conditions for social growth (Wolf, 2004). These positive views have been countered by interpretations that analyze globalization as a phenomenon that engenders the exploitation and oppression of local groups and cultures, eliminates differences, represses identity, and instigates radical resistance and opposition (Barber, 1995; Giddens, 2000; Hosseini, 2009; Ritzer, 2008). It has been further regarded as a process that enhances the centrifugal power of capitalism, dismembers communities, and undermines the stability of society (Amoore, 2005; Harvey, 2006; Giddens, 2000).
Politically, globalization has been analyzed as a deterrent to unilateralism and a tool to enhance cooperation among people and nations. While the United States remains the ‘benign hegemon’ of the world, the working of the global system is based on, and nurtures, a greater participation of all people in governance (Friedman, 2000). This view is opposed by concerns about the reduced power of the nation-state and the limited ability of people to be represented in political debates and decision making. The crisis of political representation (the declining connection between the rulers and the ruled), and the growing inability of democratic political institutions to control the actions of global corporations and actors have often been mentioned among the most distinctive outcomes of globalization (Boggs, 2000; Wettstein, 2009).
Economically, globalization has been described as a condition for growth and a tool for the elimination of socioeconomic inequality. Because of globalization, income is now distributed more justly and the idea that one or few nations can dominate other nations is considered obsolete. The emergence of a global ruling class, it is argued, promotes just development (Becker and Sklar, 1999; Firebaugh and Goesling, 2004). Opponents of globalization have indicated that globalization is a class project that increases the exploitation of the lower classes and the global South (Harvey, 2005, 2010; Robinson, 2004). It has been also defined as the outcome of the growth of monopoly capital that engenders crises and stagnation (Bellamy Foster and McChesney, 2012). Others contend that the growth of transnational corporations (TNCs) and the declining power of political and economic institutions (i.e., the nation-state, unions, and social movements) resulted in the concentration of wealth in the hands to the top 1% of the world population and the worsening of the socioeconomic conditions of the rest of society (Milanovic, 2011; Stiglitz, 2003; Volscho and Kelly, 2012).
While contrasting interpretations characterize the debate on globalization, there is convergence on the definition of this phenomenon. It refers to the acceleration of the time and the compression of space within which social relations take place (Harvey, 2010; Bonanno and Cavalcanti, 2011). In other words, globalization means that the social world is ‘smaller’ and people ‘move about it in a much faster way than before.’ Viewed as the acceleration of social time and the compression of the social space, globalization does not appear to be a novel process. In effect, these have been constant characteristics of the development of capitalism. As indicated by classical social theorists – such as Karl Marx and Max Weber – the advent of capitalism mandates a constant acceleration of time and compression of space. The novel dimension of current globalization is that time acceleration and the compression of space occur in a quantitatively and qualitatively enhanced manner than in the past (Robinson, 2004).
At the spatial level, the establishment of capitalism meant that the feudal regional space was reorganized in favor of the creation of a greater (national) capitalist space and its political representation of the nation-state. Marx (Marx and Engels 1998 : pp. 39–41), for instance, underscores the historical importance of the creation of a ‘national space’ in which interdependent markets, business organizations, and labor networks are established, organized, and controlled and where commodity production and consumption are organized and executed more efficiently and rapidly. At the level of time, the increased velocity of the turnover time of capital and overall efficiency in the capitalist structure of accumulation were paramount for economic growth. Nation-states employed their powers to establish, organize, and control national markets and to assist their bourgeoisies in expanding the scope and size of the economy. Simultaneously, bourgeoisies expanded their space of action, and organized and controlled the forces of production contained within it, and, most importantly, the use of labor. Marx saw homogenization and standardization of production processes and their organization under national laws, interests, policies, and practices, via the state to be primary objectives of the capitalist class. Weber (1963: pp. 166–68) viewed the standardization of time and space as a new moral dimension that propelled the growth of capitalism.
Yet, classical social theorists recognized that capitalism was never exclusively domestic and that, in fact, it is global in nature. In the case of Marx, he stressed emphatically that capitalism’s dynamic nature generates business activities far beyond the nation-state’s organized and increasingly homogenous spatial dimension. He argued that capital mobility, under modern industry, transcends the nation and with that the regulatory and controlling dimensions through which the nation-state embeds the economy culturally and institutionally. Marx held that capitalism’s tendency to expand would lead to a global capitalist system. It must create and recreate new spaces to continue the search for profit. The bourgeoisie’s need to reshape space to fit the requirements of capital accumulation, organize its factors of production and, above all, to reproduce and control labor was, for Marx, a fundamental component of capitalism. Capital accumulation requires economic and political concentrations that are manifested through the organization and regulation of the use of the forces of production. Simultaneously, the regulation of the forces of production requires the existence of forms of social interdependence – such as that between capitalists and workers – that are codified in the spatial and temporal conditions associated with the nation. As these conditions are eroded and capital mobility transcends the nation-state, established forms of interdependence are destroyed displaying the contradictory and unsustainable dimension of capitalism.
The Origins of the Term Globalization and Debates in the Late Twentieth Century
Despite these classical insights into the development of a global economy and society, the term globalization was rarely used for most of the twentieth century. In effect, its origins and first use are not very clear. There are unconfirmed claims that references to global socioeconomic processes were made in the first portion of the twentieth century. However, it was only in 1951 that the Merriam-Webster dictionary of the English language officially acknowledged the word globalization. In academic circles, the term gained some recognition in the 1970s through some publications that discussed the growth of multinational corporations (MNCs) (Barnet and Muller, 1976; Hymer, 1971). In 1972, the political scientist Fuad Ajami employed the term globalization to stress the characteristics of the expansion of corporations at the global level. In the early 1980s, Theodore Levitt published the article ‘The Globalization of Markets’ in the Harvard Business Review (Levitt, 1983). Disregarding classical debates, Levitt argued that the world entered a new era in which national differences in consumer preferences had become largely irrelevant. Changes at the technological and social levels allowed corporations to market their products worldwide in ways that were impossible before. The essence of Levitt’s argument was that a set of new and qualitatively different factors enhanced the ability of companies to conduct business globally. After this and similar works published in the 1980s, the term globalization gained worldwide popularity.
As the debate evolved in the 1980s and 1990s, it was characterized by three camps. The first referred to the once dominant Modernization School. Its key argument of the world development is characterized by the independent and autonomous growth of nations (Parsons, 1971; Rostow, 1960). Such views were criticized for blaming poor countries for their conditions, justifying the unequal redistribution of resources and power, disregarding the relationship between development and underdevelopment, and, ultimately, ignoring the historical conditions that shape development. In its ahistorical formulation of growth, modernization theory proposed a view in which each country would develop by adopting the culture and institutions of the United States. This process of cultural and economic modernization or Americanization (Parsons, 1971) would be reached through stages that would be achieved according to each country’s own ability to mobilize the necessary resources to grow (Rostow, 1960).
Objections raised by Marxian structuralists were particularly strong. This camp consisted of two major subgroups. The first included the world system school led by Immanuel Wallerstein (1974; 1980; 2005) while the second referred to the regulationist school (Aglietta, 1979; Lipietz, 1987, 1992). The world system school borrowed from the Longue Duree School (The Longue Duree group refers to that group of scholars that were originally associated with the French journal Annales d’histoirie economique et sociale. First popularized in the 1930s and 1940 by the work of Marc Bloch and Lucien Febvre, and later in the post–World War II decades by that of Fernand Braudel, this group’s historiography was centered on the importance of the evolution of long-term historical conditions (from this the name Longue Duree or long term) and the view that contemporary socioeconomic phenomena find their roots and explanations in established historical trends. Wallesterin, along with other important representatives of the world system school such as Giovanni Arrighi, was associated with the Braudel Center at the State University of New York, Binghamton.) and emphasized the long-term evolution of social relations. For Wallerstein, development could be understood only by analyzing the emergence of capitalism in Europe and its evolution. This evolution, he contended, culminated in a ‘world system’ in which all nations were connected together in patterns of growth but also underdevelopment. Rejecting the assumption that the growth of each nation evolves following indigenously based stages and strategies of development, world system theorists demonstrated that the development of advanced societies (core countries) was the result of processes of underdevelopment of countries in the periphery (underdeveloped countries) and semiperiphery (less developed countries). Under world capitalism, the socioeconomic growth of core nations was the direct outcome of concomitant processes of underdevelopment of countries of the world periphery and semiperiphery.
At this stage of the debate, the contribution of world system theory was relevant for at least two reasons. First, it proposed a view in which the global system was understood as a process that initiated with the growth of capitalism. Accordingly, and following Marx’s classical analysis, world system theorists rejected the thesis that attributed the genesis of globalization to recent events and insisted on the long-term dimension of the phenomenon. Second, world system theory reaffirmed the centrality of the nation-state in contemporary capitalism. While they stressed the historical nature of the nation-state – the nation-state is only one of the historical forms of the state – they also viewed the world system as a system among nations, an international system. In this respect, world system theorists remained skeptical of statements that associated globalization with the crisis of the nation-state.
World system theorists’ skepticism about the novelty represented by globalization remained. And statements about this concept’s inadequacy were re-proposed periodically. Wallerstein (2000), for instance, has frequently and overtly argued that globalization is not a new phenomenon. Christopher Chase-Dunn (1998) contended that “Most discussions of globalization assume that, however defined, it is a fairly recent phenomenon.[I]f we take a long-term view of the structural constants, cyclical processes, and secular trends that have operated in the Europe-centered system for several centuries we can understand that there have been no recent major transformations in the developmental logic of the world-system” (Chase-Dunn, 1998: ix).
Exemplifying the reaction to this position, Robinson (2004) argues that there are quantitative and qualitative differences between globalization and previous periods of capitalist development. Accordingly, it is misleading to argue that globalization is simply the continuation of trends established in the past. From a quantitative point of view, Robinson maintains that trade is much larger under globalization than in other historical periods and this is the case also for the scale of capital flows, and the level of information and communication technology. He also stresses the differences associated with the global presence of TNCs and a transnational labor force. Qualitatively, Robinson underscores that globalization “has entailed the fragmentation and decentralization of complex production chains and the worldwide dispersal and functional integration of the different segments of these chains . In this way globalization is unifying the world into a single mode of production and a single global system and bringing about the integration of different countries and regions into a new global economy” (2004: p. 15). He concludes that because of these changes the nation-state has lost the central role that it played for most of the twentieth century.
Members of the regulationist school maintained that each era of capitalism was defined by a ‘regime of accumulation’ and a ‘mode of regulation.’ The concept of regime of accumulation refers to the system of wage relations that defines a particular era of capitalism. Mode of regulation indicates the social norms that govern each regime of accumulation. In the 1980s, regulationists concentrated their efforts on the analysis of the end of Fordism and the emergence of a new and post-Fordism regime of accumulation. At the time, post-Fordism was used widely to refer to conditions that latter would be associated with globalization.
According to the regulationists, Fordism indicated the ‘regulated capitalism’ that characterized most of the twentieth century. Introduced by the Italian philosopher Antonio Gramsci (1971) to define the advanced Taylorist capitalism of the 1930s, it was re-proposed by the regulationists to refer to the combination of Keynesian political economy and state intervention at the social level that characterized the development of advanced Western societies in the post–World War II decades. The crisis of Fordism, they contended, was the result of the so-called rigidities of this regime of accumulation. Also theorized from a number of different perspectives (see O’Connor, 1974; Habermas, 1975), the concept of rigidities referred primarily to the fiscal and ideological dimensions of Fordism. At the fiscal level, the cost of maintaining state intervention became too high. The combination of an increased demand for state-sponsored services and the world economic crisis of the early 1970s prevented many nation-states from continuing their support of corporate activities at previous levels. State attempts to increase tax and introduce more regulations motivated corporations to export profit and bypass state requests. The result was a fiscal crisis of the nation-state. Simultaneously and at the ideological level, the inability of nation-states to address many of the existing social issues discredited the political elites and their ideologies. This legitimation crisis engendered widespread calls for changes in the administration of society and the economy. The regulationists viewed these changes as indications of the emergence of a new global regime that they called post-Fordism.
Postmodernity was the third major camp that characterized the debate on development and globalization in the 1980s and 1990s. Dwelling on poststructuralist contributions (Foucault, 1969, 1975; Derrida, 1978), postmodern theorists (e.g., Baudrillard, 1983, Laclau and Mouffe, 1985, 1987) argued that the issue of global development could not be adequately addressed employing ‘grand narratives.’ By grand narratives, they referred to holistic explanations that could be applied across time and space. In their critique, they maintained that the complexity of human existence could not be explained by modern theories and their assumption of universalism. Similarly, development could not be understood by using these modern theories. Denouncing the oppressive character of grand narratives, postmodernists maintained that the elimination of class inequality would not necessarily address other forms of oppression such as gender, race, and ethnic dominations. Furthermore, liberation strategies that spoke for the disenfranchised often silenced the very voices they claimed to support. In contemporary society, theories of development and liberation were transformed in theories of oppression. Their critique of left leaning and socialist theories was often more strident than those coming from the far right. Their argument centered on the historical failure of socialist projects and the ‘exclusion’ and ‘oppression’ of many groups that these theories and practices engendered. The global society, they contended, requires the acknowledgment of the existence of a plurality of voices and patterns of action as repression emerges from all sides of the political spectrum.
Globalization and TNCs
In the first two decades of the twenty-first century, the debate on globalization expanded significantly and included contributions on the growth of TNCs. In these contributions, TNCs are defined as enterprises that operate globally and have virtually severed connections with their home nation-states. They act disregarding the interests and well-being of their home countries and governments. They are different from MNCs that are enterprises that operate in more than one country through branches and subsidiaries. Their national origins are known and recognized as they are identified with, and claim membership in, a particular nation-state. They also differ from domestic corporations – enterprises that operate predominantly within one single nation. In relevant literature, the difference between MNCs and transnational or global corporations is often downplayed. In effect, the two terms are often used interchangeably. Simultaneously, it has been underscored that many MNCs have evolved into TNCs in recent decades.
The transformation of MNCs into TNCs has been associated with the growth and crisis of Fordism. During the Fordist twentieth century, MNCs strengthened the mother–daughter industrial system (Dunning, 1993). In this system, a mother company with headquarters and operations in the metropolitan homeland opened daughter subsidiaries overseas. These subsidiaries were directly controlled by, and managed from, the home headquarters and, therefore, operated with a highly restricted autonomy. As the twentieth century unfolded, MNCs expanded counting on the active military, political, and economic assistance of their home nation-states. Additionally, MNC’s ownership and management, while including an international presence, remained largely in the hands of citizens of the company’s home country, a situation that further legitimized the intervention of home governments in host countries. In return, host countries benefited from the repatriation of profit and the associated tax revenue, domestic investment and the creation of local jobs that contributed to social stability and economic growth.
The beneficial association between MNCs and the United States and other major nation-states reached a point of crisis in the late 1960s and 1970s. As the United States was increasingly asked to assist and protect MNCs, the search for more lucrative markets – including commodity and financial markets – and new cost-saving operations pushed MNCs to repatriate profits at an increasingly lower rate. While foreign direct investment (FDI) increased, this move signified less revenue for the home state and the concomitant escalation of fiscal pressure. In the United States, the declining rate of repatriation of profit exacerbated the fiscal crisis of the American state. The success of the postwar Fordist system mandated an expanded welfare state and social services that were supported through state expenditures and taxation. Corporations contributed to Fordism by maintaining high wages and salaries that sustained mass consumption and provided popular legitimacy to it. Internationally, the American government’s actions to maintain the Pax Americana also became increasingly costly monetarily as well as politically. The Vietnam War crisis symbolized the high monetary and political costs associated with US control of the world economy and politics.
Responding to this new domestic and, and above all, international economic situation, first the United States, and later European, corporations expanded their foreign affiliates and FDI. Some developing countries counteracted through the expropriation of corporate assets and the implementation of import substitution strategies that favored local companies. Fueled by the negative economic consequences of the oil crisis, the loss of legitimacy of the modernization project and a move to the political left by many governments, more host countries overtly antagonized MNCs’ presence on their territories. In order to overcome what they perceived as mounting adverse conditions, MNCs adopted novel means to reignite profitability. They began to decouple their presence overseas with the interests of the home countries. They began global searches for convenient production sites featuring favorable political contexts, support for deregulation, privatization of once publically controlled enterprises and resources, and open markets. They searched for locations in which national and regional governments adopting neoliberal policies allowed the creation of production networks that transcended the classical mother–daughter system. In essence, the corporate response to the crisis of Fordism consisted in the ‘transnationalization’ of their operations. Decentralization of production, the creation of production and distribution networks, and the global mobility of profit and investment defined the new TNCs (Robinson, 2004; Bonanno and Constance, 2008).
TNCs’ moves were entwined with changes in the posture of many nation-states – and primarily the United States – that embraced neoliberal ideology and policies. Framed as an effective manner to attract fleeing corporate investment, nation-states adopted globally oriented macro-organizational strategies that shifted emphasis away from socially oriented goals (i.e., social stability, equitable socioeconomic growth, and welfare spending) to profit enhancing objectives. In this context, the allocation of FDI became increasingly linked to the ‘regulatory and policy instruments’ employed by nation-states and the existence of supportive economic policies. This trend was a common feature of national economic policies worldwide during the final years of the twentieth century. The neoliberal deregulation of markers eroded the long-standing association between corporations and home countries as TNCs began to look for the maximization of profit at the global level, paid increasingly less attention to the home country’s domestic problems, and lack of corporate accountability emerged as a new ‘social problem.’ TNCs increase in FDI, for instance, while creating fresh opportunities for corporate profit, was one of the factors behind the deindustrialization process and the loss of many well-paid and stable jobs in many home countries.
In pertinent debates, the relationship of TNCs and the nation-state is discussed in contrasting terms. Extreme readings of this process (see Ohmae, 1995) portray TNCs as entities that have cut their ‘home nation’ attachments and operate as almost exclusively stateless global actors. Because of TNCs’ power and ability to freely move about the globe, Ohmae and likeminded scholars argue that the nation-state has lost most, if not all, of its ability to control and regulate economic and social matters as it did in previous eras of capitalism. Framed as the ability of TNCs to ‘bypass’ state requirements, the crisis of the state has been identified as one of the most distinctive features of globalization (e.g., Ohmae, 1995; Constance and Heffernan, 1991). Reacting against this position, some authors, such as Arrighi (2005, 1998), Chase-Dunn (1998), and Hirst and Thompson (1996), contend that the nation-state continues to remain the centerpiece of capitalist development and an entity needed by corporations operating domestically and abroad. Corporations, therefore, maintain their links with nation-states even though conflict and divergence of interests may arise. According to this view, capitalism continues to be characterized by international social relations or relations among nations. It remains centered on the evolution of the nation-state and its capacity to forge a more or less unified national identity and culture while promoting and controlling the flows of resources and processes necessary for the development of the economy domestically and internationally. For Paul Hirst and Graham Thompson (1996), for instance, true TNCs do not exist so the purported socioeconomic changes that resulted in the creation of TNCs are unsubstantiated. They maintain that most corporations are still national as they are still connected to their countries of origin in significant ways regardless of their international activities. Additionally, data do not indicate the existence of trends toward the emergence of truly global corporations. In effect the examination of FDI reveals that it is generated by companies located in North America, Europe, or Japan. Hirst and Thompson further maintain that while the postwar system that regulated capitalism has exhausted its role, a new system of regulation has been set in place. This new mechanism allows the three superpowers (the United States, the European Union, and Japan) to govern the world and ensure adequate levels of socioeconomic stability.
According to other scholars (Dicken, 1998; Harvey, 2010, 2005; Robinson, 2004; Sklair, 2001), the recent evolution of the economy and society has brought about a qualitatively different set of conditions for the accumulation of capital of which the growth of TNCs is among the most relevant. The distancing between TNCs and their home nation-states alters the historically built connection between these two entities. Corporations increasingly bypass home state requirements and requests while they strategically forge associations with other nation-states and regional or continental groups of nation-states (Bonanno and Constance, 2008). Because of these changes, the modus operandi of TNCs is different from the historical role played by MNCs throughout most of the twentieth century. These scholars also stress that TNCs play an active role in the underdevelopment of many less advanced regions and nations of the world. The soaring corporate power, they argue, has negative consequences for the economy and society as economic inequality increases and the unchecked actions of corporations are destabilizing (Krugman, 2007). They identify TNCs as active contributors to the mechanisms that allow the transfer of wealth from periphery to core countries. Furthermore, they question these corporations’ social and political practices. TNCs have been often identified as ‘undesirable citizens’ that contaminate the democratic institutions and political climates of host countries and engender unwanted social consequences such as environmental pollution, labor exploitation, political violence, physical abuse, and death. They contend that the power of TNCs reduces the level of democracy and prevents national and regional constituencies from participating in decision making processes (i.e., Boggs, 2000).
Scholars who support neoliberal positions express much more sympathetic views of the TNCs’ actions. They maintain that those who oppose corporate actions and presence in less developed regions do not recognize the benefits that expanded business opportunities generate for these societies and the fact that they would suffer many more negative economic consequences in the absence of corporate investment and business activities. Because of their visibility, TNCs obey the law in much greater extent than smaller companies. However, also because of their visibility, they are often attacked by a variety of opponents, including unsympathetic nation-states. Advocates of this position hold that TNCs, to defend themselves, are sometimes forced to take actions that cause negative social and political consequences in the host country. However, they also argue that the claim that TNCs coerce nation-states to accommodate their interests through the use of illegal means is ‘greatly exaggerated.’ They contend that TNCs generate far more positive socioeconomic consequences to the communities where they operate than the negative outcomes often reported in scientific and popular venues (Rubner, 1990; Firebaugh and Goesling, 2004).
According to these accounts, the economic decline of the United States and the concomitant growth of Europe and Japan, as new world powers experienced since the 1960s, affected the regulation and coordination of world affairs based on the nation-state system. In this context, corporations could no longer depend on the United States to maintain global order and on nation-states’ actions to support corporate interests domestically and internationally. The global development of anticorporate sentiments in advanced countries produced a public mood of indifference to the adverse treatments and conditions that corporations experience abroad. This situation affected advanced countries’ governments that grew increasingly unwilling to intervene. Additionally, the growth of anticorporate movements – such as the environmental and labor movements – placed public opinion in direct opposition to corporate interests. Some of the consequences of this situation are that TNCs’ objectives are, now more than ever, diverging from those of nation-states. Because of this emerging hostility, TNCs are often forced to operate to counter nation-states’ behaviors that are damaging to their interests. This posture does not only pertain to the company itself, but also to the behavior of managers.
The view that TNCs are better world citizens than otherwise believed and that they act to defend their legitimate interests in hostile political environments is also shared by scholars who identify with the political left. Gavin Kitching (2001), for instance, articulates a ‘qualified defense’ of TNCs (2001: p. 42) whereby he contends that not only the number of TNCs (or ‘supranationals’ as he calls them) engaged in behavior that causes negative social and economic consequences in host countries is greatly exaggerated, but that this behavior is the result of structural conditions that ultimately dictate TNCs’ actions. Supranationals, he argues, are far better employers than many ‘local’ companies as they provide better wages, working conditions, and obey local laws. One of the reasons for this behavior is that TNCs can afford to be more ‘generous’ than local companies. In effect, the cost of labor in developing regions is very much cheaper than in developed countries that it is still a bargain for TNCs to pay high ‘local’ wages. Also, because TNCs lack local political legitimacy, they need to be on their best behavior and appear as model employers to win over the trust of host governments (Kitching, 2001: p. 43). Yet, it is the absence of a global regulatory entity (i.e., the absence of a global state that would compensate for the declining hegemony and capacity to control world industrial and political relations of the United States) that constitutes the most important structural reason behind the often publicized ‘negative’ corporate behavior. Due to the lack of this global regulatory entity and the consequent political and economic instability and uncertainty, TNCs tend to give preference to short-term goals (profit) over a more balanced and constructive local presence. It is the structural gap between a world economy and the local polity that ultimately affects TNCs’ behavior. Corporations, he concludes, cannot change this situation as it can be altered only at the political level through the creation of a world political system that could regulate the economy and provide the basic conditions for social stability. For Kitching, the spread of TNCs presence worldwide creates new opportunities for developing regions and workers. While jobs may be ‘lost’ in developed regions with the consequent protest by local unions and left-leaning political groups, new jobs are created in less developed regions. He contends that if one job created is equal to one job lost, the fact that jobs reappear in the less developed South is a positive sign in the struggle to reduce socioeconomic inequality worldwide. He dismisses as unsubstantiated the objection that the creation of new jobs in less developed regions often does not translate into the actual lifting of workers out of the subsistence level. He contends that currency instability along with government’s attempts to maintain export competitiveness depress wages and do not eliminate the threat of market withdrawal through plant relocations.
The growing power of TNCs has characterized globalization since its outset and has been a persistent theme in pertinent literature. In current debates, there is consensus that TNCs will continue to be powerful actors in the economy and society. Disagreement, however, exists in regard to (1) the extent to which TNCs have the same level of power that research attributed to them a decade ago and (2) the consequences generated by the application of this power. According to one camp (i.e., Busse, 2004; Macleod and Lewis, 2004), TNCs will continue to be powerful actors and their ability to control nation-states, social groups, and economic policies will continue unabated. A second camp consists of authors who argue that the power of TNCs is not as absolute as some analyses would contend. While TNCs remain powerful actors in the global context, their power is resisted at various levels. Resistance emerges from a number of actors including nation-states, local groups, and social movements. A number of studies have underscored the role that consumers play in shaping TNCs’ actions (Humphery, 1998; Marsden, 2003; Wright and Midderndorf, 2007). It is argued that consumers’ behavior is increasingly affected by social values – such as the protection of the environment; health concerns; the protection of workers and communities in less developed areas; fair processes of trade – rather than price. Accordingly, as consumers’ social consciousness affects demand, it also affects the behavior of corporations and their power. It is further argued that the power of TNCs is also limited by internal organizational constraints and contradictions (Bonanno and Constance, 2008). Because they compete with other corporations and have relatively limited organizational strength given the scope of their actions, TNCs encounter difficulties in exercising power at the global level.
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