Multinational Corporations (MNCs)

Multinational corporations fascinate many international political economy scholars. Scholars disagree about their significance and their impact but continue to analyze their dynamic evolution in the global economy. Multinational corporations are private firms that operate in multiple countries. Their primary motivation is economic profit. They may engage in investment, sales, production, services, extractive processes, or any combination of these. Multinational corporations’ activities propel economic globalization. They may invest, set up shop, or even buy existing domestic firms as the multinational expands. This entry addresses first the broad views about multinational corporations and then the corporations’ motivations to go abroad. The entry continues with a historical overview and concludes with controversies surrounding multinational corporations.

Multinational corporations are incorporated in a home country and are chartered according to the home country's laws and regulations. Analysts have debated the extent to which home country regulations shape multinational corporations’ outward conduct. Some argue that such regulations make a major difference in corporations’ behavior and standards abroad. Others see multinational corporations as footloose harbingers of global capitalism with no particular state-based allegiances. Realist scholars, who emphasize the supremacy of state power, emphasize corporations’ subordination to state laws, jurisdiction, and policies. They tend to cite instances in which the state took actions against the wishes of particular corporate interests—for example, favoring national security over economic considerations. Other analysts suggest that corporations can be more powerful than states and that states may be actually in retreat in the face of rapid economic integration and globalization. These analysts note the increase in the size and role of the private sector at the expense of the public sector. Beginning in the 1980s, many states delegated an ever-greater range of once publicly supported activities to private actors. Private companies have come to run schools, jails, hospitals, municipal water systems, and have even provided security in conflict zones.