Global Business Environments

Global business environments encompass internal and external stakeholders that affect the operations of multinational companies (hereafter referred to as “multinationals”). Multinationals are firms that make investments to produce and/or market products and services in foreign countries.

Several theorists such as Jagdish Bhagwati and Steven Hymer have identified the reasons for the rise of multinationals and the benefits and costs that they bring to global environments. Generally, the theories of multinationals have identified multinationals as possessing intangible assets, including brand names, investments in research and development, ability to engage in financial arbitrage, managerial expertise, and control over logistics and distribution channels; these intangible assets, theorists have argued, give multinationals advantages over local companies' knowledge of local markets and conditions. Theories of multinationals can focus on either internal or external stakeholders in the global environment. For example, theories dealing with market imperfections, internalization, and strategic management delineate the interests of internal stakeholders, specifically multinationals' owners and managers. A second set of theories dealing with manufacturing processes, oligopolistic markets, political economy, international relations, dependent development, and global networks specify multinationals' abilities to affect labor, governments, states, societies, and the world. As argued in Multinational Corporations in Political Environments: Ethics, Values and Strategies, the second set of theories has portrayed multinationals as catalysts or change agents: Theorists have assumed that because of their control over intangible assets, powerful multinationals bring about major changes, beneficial to some stakeholders but detrimental to others in global environments. In this entry, we do not deal with the net benefits or losses of globalization and global production, but rather review the effects that global production through multinationals have on various stakeholders in global environments.