Reading Assignment 4: economic globalization——LI LINLIN

 （1）The chapter challenges the perception of global corporations as 'placeless' giants, emphasizing the diversity in size and operations among top transnational corporations . Foreign Direct Investment is identified as a key metric for TNC activity, surpassing world trade growth and highlighting their increasing global influence. Motivations for TNCs expanding beyond their home countries are explored, encompassing market-oriented investment and asset-renting. The chapter aims to provide a nuanced understanding of TNCs' role in economic globalization, addressing their scale, distribution, geographical embeddedness, transnational production networks, and power dynamics in the global landscape.

 The historical evolution of companies with international interests, from chartered trading companies to modern transnational corporations , has seen exponential growth in the past 50 years. Around 61,000 TNCs, contributing one-tenth of the world GDP and one-third of global exports, operate internationally, with a significant impact from the top 100 corporations. Market-oriented and asset-oriented motives drive transnational investment, with TNCs expanding markets for profitability and accessing geographically distributed assets, including skilled human resources. While factors like cheap labor still play a role, the emphasis has shifted to skilled and motivated workers, influencing TNC decisions in regions like East Asia and emerging markets in Eastern and Central Europe.

 Firms globally expand through 'greenfield' investment, creating new facilities, or engaging in mergers, acquisitions, and strategic collaborations. Greenfield investment, less common due to risks, adds to productive stock, while mergers and acquisitions, favored by US and UK firms, drive foreign direct investment growth. Strategic alliances, focusing on specific issues, involve formal agreements among firms, forming complex networks in sectors like automobiles and semiconductors. This 'collective competition' represents a new dimension of economic power. The enduring significance of place challenges the notion of 'placeless' transnational corporations, emphasizing their deep connection to home base characteristics. Empirical evidence contradicts expectations of TNC convergence, showcasing unique organizational differences influenced by national institutions and distinct home characteristics.

 Transnational corporations ace the challenge of managing complex facilities and networks developed over time, requiring continuous restructuring and rationalization. Changes in a firm's geographical configuration are influenced by decisions on in-house production versus outsourcing to suppliers. The dynamics of TNC networks involve tensions with stakeholders, such as governments and labor. The "make or buy" decision is crucial for TNCs striving to enhance efficiency and profitability in a competitive landscape. The geographical extent of transnational production networks varies, with regional dimensions becoming more prominent. Regional strategies offer efficiency advantages while responding to organizational barriers, as seen in the EU, NAFTA, and other regional networks in Europe, North America, and East Asia. TNCs navigate supply-side and demand-side forces, leading to intricate regional structures in response to market dynamics. 

    Cultural differences impact global integration and local responsiveness in the EU. Despite lacking a formal political framework like the EU or NAFTA, East Asia exhibits robust regional production networks led by Japanese firms, with other Asian players also organizing networks regionally. Transnational corporations significantly shape the global economy, growing in diversity rather than uniformity. The complex and dynamic organization and geography of TNCs and their networks create tensions with states, communities, labor, and civil society. TNC power stems from exploiting geographical differences and state policies but is subject to multi-scalar regulatory systems, including international bodies like the WTO and national states. The relationship between TNCs and states involves continuous negotiation within a complex regulatory landscape. 

    The article challenges the expectation of uniform business models for transnational corporations emphasizing the role of deeply embedded cultural institutions in shaping diverse social systems of production. The persistence of distinct initial states in societies hinders convergence among TNCs, showcasing continued diversity. TNCs, functioning as complex networks, exhibit varied organizational structures influenced by historical roots, cultural practices, and industry environments. The challenge of managing complex facilities and networks requires continuous restructuring for TNCs, influenced by decisions on in-house production versus outsourcing. Cultural differences impact global integration and local responsiveness, creating tensions with states, communities, labor, and civil society. TNCs engage in intricate negotiations with states, challenging assumptions of their absolute power in the dynamic global landscape.

（2） Interesting point: The article mentions that most strategic alliances are between fiercely competitive companies. Many companies are forming not just single alliances, but networks of alliances in which the relationships between partner companies are increasingly multilateral, in effect creating "new constellations" of economic power and adding a new component - "collective competition" - to the economic landscape. Not only the semiconductor and other technology companies mentioned in the article, but also many airlines have formed their own alliances, such as the establishment of alliance points card, so that passengers are more inclined to choose their own alliance airlines. The influence of teamwork is also often shown in business competition.

（3） Questions:At present, multinational companies are still often subject to restrictions by the governments of both countries. But perhaps in the future, in order to promote more convenient exchanges between countries, will there be a special area of multinational enterprises under the jurisdiction of non-government in the world, where enterprises are not subject to the jurisdiction of the government? For example, in China, there are some special economic zones, which have different policies from the rest of the region, and have greater autonomy and flexibility in economic trade.