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Edited by John Mikler and Karsten Ronit

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John Mikler and Karsten Ronit

To study the role of MNCs and their different actions in markets and politics, we need to understand how they are intrinsically entangled with various other public and private actors. We also need to draw on different literatures. Indeed, there is no single tradition that embraces all the different pathways of influence they are engaged in, and which are considered in this book. We scrutinize the various relevant research traditions, identify shortcomings and assets, and integrate them into a holistic analytical approach. We take an interest in examining and explaining why certain types of actions tend to be preferred, mindful of the broader context in which they arise. This introductory therefore establishes the basis for a better understanding of the limits and prospects of the power of MNCs in global politics.

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Christian May

The ability to shape transnational operations has often been used as an indicator for the corporate power of MNCs. As a consequence, MNCs are able to use this structural power to influence politics on a global scale. Although expanding, MNCs from emerging economies are less integrated in international capital relations and global value chains, which leads to the first impression that these corporations have less ‘global ambitions’. However, on closer inspection, it is the particular relationship between MNCs and home states that shapes the internationalizing efforts by emerging economies’ MNCs. This political aspect is often overlooked and hence, the transnational effect of MNCs from emerging economies is understated. MNCs from emerging economies influence global politics not only through their business activities but also through strategic engagement with the state at various levels and stages. The chapter looks at the corporate sector in Brazil and India in order to shed light on this particular mode of internationalization.

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Linda Weiss and Elizabeth Thurbon

The concept of infrastructural power is arguably one of the most useful in the social sciences. It has helped both to illuminate the extraordinary capacity, reach, and impact of the modern state vis-à-vis its pre-industrial predecessor, and to cast light on why some modern states appear more able than others to execute their decisions and pursue their ambitions. Although sometimes mischaracterised as a ‘weak’ state, the capacity of the state centered on Washington to penetrate social space and implement its decisions, both at home and abroad, has long been recognized. But under what conditions might its infrastructural power diminish? Arguably, US economic power is now stronger than ever, ostensibly bolstered by being home to the world’s most globalised and most profitable companies. However, while globalised production has strengthened US corporations - especially those rich in intellectual property - its contradictory consequences for the state’s infrastructural power deserve close examination. This chapter takes a first step in that direction by appraising the extent to which the state’s domestic capacities have been weakened by Washington’s internationalisation of intellectual property rights. It also offers a reconceptualisation of US power.

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Christian Hendriksen

This chapter examines the role of MNCs in the environmental regulation of international shipping. Building on empirical material for a case study of the International Maritime Organization (IMO), the chapter explains how MNCs in the shipping industry use different pathways enabled by the regulatory system and industry structure of the maritime industry. While MNCs use both states and business associations to gain access or influence the IMO, the dynamics of influence shift when MNCs participate directly in the regulatory process as firms have to conform to IMO-wide norms in order to maintain legitimacy as political actors. The case of the IMO adds to the discussion on the role of MNCs in international hard-law regulation and raises dilemmas about the acceptable extent of industry power in intergovernmental organizations.

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Kate Macdonald

The social and environmental impacts of global business activity are now regulated by a bewildering array of standard-setting schemes. These include well known consumer labels such as Fairtrade, Rainforest Alliance and the Forest Stewardship Council, alongside multi-stakeholder roundtables and working-groups promoting sustainable production standards. While these schemes have often been lauded as innovative regulatory tools for promoting global sustainability norms, others have perceived them as tools of global corporate power -reproducing the structural power of business in global markets and commodity producing nations, while operating discursively to insulate companies from societal pressure for stronger regulation. Drawing on empirical analysis of several prominent private sustainability standard-setting schemes across a range of sectors, this chapter theorizes and illustrates the multiple, interacting pathways of global corporate influence exercised through these new forms of global governance, and the contested political processes through which corporate power is both asserted and resisted at global and local scales.

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Karsten Ronit

Individual MNCs represent specific corporate interests but they engage in various forms of collective action through business associations. They also join a small group of large and encompassing associations tasked with the representation of the global business community in a range of policy fields and before many different intergovernmental organizations. Typically, MNCs join global business associations via national business associations that exist in many countries and, in this way, they have various opportunities to influence the work of the global bodies. This is the traditional and dominant model than has existed for more than a century. In some cases, however, they join the global associations through a direct-firm-membership format, and this offers stronger opportunities for influence. This practice is more recent and today some of the global associations experiment with various forms of direct membership for single corporations.

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Lian Sinclair

Multinational mining corporations pursue their interests through social and political strategies across political scales. This chapter analyses how they have responded to social conflict and challenges to their legitimacy from people affected by mining and civil society actors. Using Rio Tinto’s ex-Kelian gold mine in Indonesia as a case study, I show how issues that began as local concerns ‘jumped scales’ when activists created alliances with national and international NGOs. In response to this and other similar cases, Rio Tinto helped establish a network of international business associations and governance standards which emphasize consultation, sustainability and stakeholder participation. Participatory mechanisms, including corporate social responsibility, community development programs and consultative committees based on international standards attempt to contain and re-localize conflict with affected communities. Together, global self-governance networks and participatory mechanisms reconstitute the legitimacy and power of mining corporations to determine their own regulatory and operating environments.

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Ainsley Elbra, John Mikler and Hannah Murphy-Gregory

The Big Four professional services firms - PwC, Deloitte, KPMG and EY - are MNCs that exist to promote, sanction, and regularise the behaviour and practices of other MNCs. They act as reputational intermediaries that embody and enact informal industry norms and practices, and in so doing they potentially govern both other MNCs and governments. Sometimes they even seek to govern on behalf of them. Whether advising or acting as private governors, their services are neither purely technical nor neutral because as they serve the interests of MNCs, they also construct and enhance their legitimacy and discursive power. This chapter looks at their role in both facilitating, and discursively defending, global corporate tax avoidance, a major issue in recent years as MNCs use their ability to operate across multiple jurisdictions to take advantage of opportunities to reduce or eliminate their taxation obligations.

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John Mikler and Karsten Ronit

MNCs must be active in many contexts. As such, a variety of economic, social and political factors enable and constrain their behavior. Although MNCs are powerful players, they do not find themselves in situations where they can freely choose one strategy or another, so any kind of strategy building must take into account the institutional environments in which they find themselves embedded. Of course, these conditions vary from case to case, as is shown in each of the chapters where both certain pathways and environments, and the links between them, are explored. Therefore, multiple pathways of influence characterize MNCs engagement in global politics.