Blog Assignment 4: What is the relation between economy and globalization? - MENGRU LI

Summary

Regarding the 5 questions raised in this article: (1) the scale and geographical distribution of TNCs in the global economy; (2) why and how corporations engage in transnational activities; (3) the geographical embeddedness of transnational corporations; (4) the ‘webs of enterprise’ manifested in transnational production networks; (5) the power relationships between TNCs and other actors in the global economy. 

Global companies come in different forms and sizes, from global companies to multinational corporations operating only in a few countries, but they operate in different political, social, and cultural environments. The activities of multinational corporations are usually measured by statistical data on foreign direct investment, which has grown at an accelerated rate over the past two decades, surpassing world trade growth and becoming a major force in global economic integration. Although foreign direct investment in developing countries is increasing, it is still relatively small, mostly concentrated in a very small number of countries, while the vast majority of foreign direct investment flows to developed countries. The diversity of multinational corporations in the global economy is constantly increasing, with the majority coming from developed economies. The author believes that the motives for multinational corporations are complex and depend on specific circumstances. Although there are various reasons, they can be summarized into two categories: market-oriented investment and asset oriented investment. The author points out that although the global economy is affected by the expansion of multinational corporations, local and geographical factors still fundamentally influence corporate behavior. Multinational corporations are generated through complex embedding processes, in which local cognitive, cultural, social, political, and economic characteristics play a leading role, making them carriers of these characteristics. Even in the context of globalization, multinational corporations from different countries still retain their unique culture, and the initial domestic structure has a lasting imprint on corporate decision-making. Empirical research shows that the core characteristics of companies headquartered in different countries have almost no convergence. There are inherent barriers between social production systems, and different institutional practices are difficult to converge, and the initial state has a profound impact on the system. Diversity remains the norm, and the development of multinational corporations in the global economy is closely related to their specific environment. The article emphasizes the crucial role of multinational corporations in global production, distribution, and consumption networks, emphasizing their complexity, dynamism, and regionalism. Organizational and geographical configurations vary depending on history, culture, administrative heritage, and industry environment. Despite the trend of globalization, multinational corporations have diverse networks that require complex coordination and control. Geographical allocation is not only limited by market size and technology, but also influenced by international regulatory agencies and technical standards. The article highlights that multinational corporations are the main shapers of the global economy, while emphasizing the tense relationships with other stakeholders.

Interesting point

The relationship between the embeddedness of multinational corporations and geographical conditions mentioned in the article is easily acceptable. In the process of multinational corporations arising through a complex embedding process, local cognitive, cultural, social, political, and economic characteristics of a country play a dominant role and influence each other. I believe that this embeddedness is not only applicable to multinational corporations, but also to various aspects such as culture and artistic creation.

discussion

Why do many companies choose to establish strategic alliances with their competitors in the expansion model of multinational corporations, regardless of the risk of their core technologies being taken away by competitors?