Multinational Corporations

Transnational Corporations as Political Actors

The aforementioned functional definition nevertheless conceals the political autonomy and power that corporate actors have assumed in the contemporary political economy. The political role of the corporation has returned as a debated and contested subject of scholarly inquiry since the 1990s, when the political and economic transformations ensuing from the processes of globalization became associated with the declining power of states and the concomitant rise of nonstate actors. In this context, transnational corporations have been conceptualized not only as the main agents of globalization but also, according to some commentators, as the main beneficiaries if not the prime causes of the transformation of the state. The discussion is further polarized by a debate between scholars who argue that TNCs have become the “new sovereigns” or the “new rulers of the world” and those who contend that, despite their global reach and power, corporations are still constrained and dependent upon the economic policies and legal frameworks laid out by states.

In conjunction with these theoretical divisions, which largely fall within unresolved discussions over the nature and facets of globalization, the most recent studies on the new political activities of TNCs have attempted to shed new light on the changed role of corporations in international affairs. A. Claire Cutler, Virginia Haufler, and Tony Porter (1999) were the first to elaborate upon the concept of private authority to delineate the types of rule-making and standard-setting emerging from formal or informal, loose or highly institutionalized forms of cooperation among firms and business associations. While the existence and forms of privately wielded authority remain cardinal to understanding how TNCs can and do exercise autonomous influence alongside the state, current empirical and conceptual studies have drawn attention to the new political actions of TNCs through self-certification schemes, quasiregulation, public-private partnerships and multistakeholder initiatives and have brought to the fore the merits and tensions arising from the new public role of corporate actors. Liberals and social constructivists, on the one hand, have recognized these developments as necessary complements to increase the efficiency of global public provisioning; on the other hand, critical scholars have openly condemned these new forms of governance, pointing to the inherent incongruence between the pursuit of commercial interests and the public good. Despite the emergence of a growing literature on the incorporation of TNCs and postulations about the influence of TNCs within global governance, the question of the dimensions of corporate power has been largely peripheral. This marginalization can be attributed to the state centrism that still characterizes the field of international studies as well as to the difficulties and controversies that arise in attempting to prove the exercise of power and to correlate power with identifiable outcomes.

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