Document Type

Dissertation

Date of Award

1977

Keywords

International business enterprises, Industrial policy

Degree Name

Doctor of Philosophy (PhD)

Department

Political Science

First Advisor

Richard H. Dekmeijan

Second Advisor

Dennis L. Thompson

Third Advisor

Mary T. Hanna

Abstract

During the early 1970s, the multinational corporations suddenly became a major issue of public concern. Among the reasons were the inflationary spiral and the dramatic rise in oil prices after the Arab oil embargo of Fall 1973.

While to the public the companies were a novel topic, to the economists they were not; much scholarly and semi-scholarly work had been done on the various aspects of multinational corporations. However it is significant that most of the literature on the subject is the work of specialists who by training are either economists or business executives. Too often they lack a critical attitude and tend to look at their subject from the narrow point of view provided by their discipline. It is significant that few non-economists were interested in multinational corporations until very recently. As far as the discipline of political science is concerned, the political problems that are generated by multinational company operations constitute a new field of inquiry. This new concern is regarded as a most welcome development. In view of the massive impacts that multinational companies have had on society in a global sense, the study of these enterprises should be conducted along interdisciplinary lines. In order to be able to scrutinize the multidimensionals’ influence, it is necessary to bring to bear several of the disciplines of social science and not only those of economics and business. The present inquiry is meant to be an attempt to study multinationals from an interdisciplinary point of view, although the economic and political dimensions are given special emphasis and prominence due to the nature of the subject matter.

This study seeks to accomplish several tasks. Firstly, it attempts in a limited way to integrate the disparate writings on the multinational corporations. It does not try to deal with every aspect of multinational company operations, but only in a select number of major areas which are thought to have political importance. Second, and main aim of this inquiry is to explore the evolving relationships between the multinational corporations and nation states. Here emerges the basic theme that runs through this study: the interaction between multinational corporations which seek profits and the nation states which maximize political power. The third aim of this study is to explore the operations of the multinational corporations in the developing countries, particularly as they relate to politically important problems. Given the limitations of data on the Third World, most of the case studies are drawn from the Middle East and a few Asian states.

The study is divided into four parts. Part One examines the anatomy of multinational corporations. Here an attempt is made to establish a working definition of the multinational corporation by examining the diverse and often contradictory definitions offered by many authors. Next, we try to establish the basic forces which motivate the expansion of international enterprises and establish some criteria of measuring their sizes and function. Another section of our inquiry deals with the structural characteristics of the multinationals and the management processes that are utilized in different organizational settings. The final chapter of Part One is devoted to a study of the planning process in multinational corporations, including the identification of long-range and short-range corporate strategies for investment and production.

The main concern of Part Two is an examination of the dynamics of nation states. This includes an analysis of the nation state and the force of nationalism. The concept of sovereignty is explicated as it relates to national power and national decision making. It is recognized that nation states are motivated by considerations of power and not by the profit motive of the multinationals. Consequently a brief effort is made to establish the elements of national power as these contribute to the behavior of national political elites in dealing with the multinational corporations. Because of their centrality to the decision making process, particularly in the developing countries, national elites are given special importance in our analysis. In this connection the processes of national level planning and policy making are examined.

Part Three is devoted to several key areas in which the multinational and nation states interact. The first area of interaction is political and it focuses on elite attitudes and the exercise of political power, as these relate to the multinational corporations. The next area of interaction is multinational investments in foreign countries. The impacts of investments are analyzed as well as their social and political implications. A most fruitful area of nation state–multinational cooperation is found to be in joint ventures. The advantages and disadvantages of joint ventures are outlined and relevant examples are presented from Middle Eastern countries, particularly Iran. Two other areas of interaction, technology transfer and managerial skill transfer, have been less profitable for the developing countries. The final chapter of Part Three is devoted to the critical issue of labor recruited by the multinational enterprises. The critical and social problems arising from the confrontation between host country labor unions and multinationals are analyzed in detail.

In recent years multinational companies have come under heavy criticism. Part Four deals with both specific and general criticisms that have been leveled against the multinational companies. Two types of criticism—reformist and radical—are considered. The reformist critics attempt to advance incremental solutions to reform the multinational corporations and resolve their confrontation with the nation states. The radical critics consist of Marxists who regard the multinationals as one of the main causes of world economic and political disorder. The final chapter is devoted to analyzing the proposals that have been advanced to regulate the operations of the multinationals through the use of a number of devices including United Nations agencies, new supranational organizations, codes of conduct, and other types of cooperative frameworks.

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