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The Effect of Multinational Corporations (MNCs) on Developing Nations Essays

Assignment id 1006942
Discipline Self Improvement
Assignment type Essay
Words 2489
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Multinational enterprises back to the era of merchant-adventurers, when the Dutch East India Company and the Massachusetts Bay Company traversed the entire world to extract resources and agricultural goods out of colonies (Gilpin 278-79). While modern multinational corporations (MNCs) don't control the armies and territories their colonial counterparts did, they are nonetheless highly powerful actors in today's increasingly globalized world. Gilpin discussed the MNC's development through the lenses of a number of business economic theories. Using Raymond Vernon's Product Cycle Theory, the international growth of American companies until the 1960s has been shown as a means of preempting overseas competition and preserving monopoly rankings, which was possible afterward due to the riches and technology gaps that existed between the united states and the rest of the world (282-83). Following the closing of these gaps, Dunning and the Reading School's Eclectic Theory explained the next stage of the MNC's development as propelled by the excellent leaps made in communication and technology, which made internationalized management both possible and viable (283). Michael Porter's Strategy Theory, meanwhile, asserted that the MNC is now in the era of strategic management, wherein activities and capabilities spanning borders allow it to "tap into the value chain" in the most advantageous positions (285-85). Gilpin made an interesting point, but that MNCs are oftentimes the result of market imperfections and unique company conditions. In many instances, the decision to expand a firm's operations in another country was a way of circumventing protectionist measures and trade barriers, or simply to curry favor with governments, as practiced by IBM (280...

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