Reading Assignment #4 : What is the relation between economics and globalization ? (Maxime Falconnier)


1. Summarize


In this reading, Peter Dicken provides a nuanced depiction and explanation of the nature and significance of transnational corporations (TNCs) in the processes of economic globalization. TNCs are embedded within highly complex and dynamic webs of enterprise, and the global economy can be pictured as intricately connected localized clusters of activity embedded in various forms of corporate networks that vary greatly in their geographical extent. 


According to Dicken, the power of TNCs lies in their potential ability to take advantage of geographical differences in the availability and cost of resources and in state policies and to switch and re-switch operations between locations. However, all transnational production networks are influenced by, and embedded within, multi-scalar regulatory systems. International regulatory bodies, such as the WTO, are immensely significant in influencing the geography of transnational production networks. International institutions establishing technical standards, likewise, play a highly significant role. 


The national state remains especially important among the multiplicity of regulatory institutions, and TNCs and states are continuously engaged in power dynamics. Transnational production networks organized at the regional scale are evident in most parts of the world, but most especially in the three triad regions of Europe, North America, and East Asia. Despite the geographical transformations of the world economy, we are not witnessing the convergence of business-organizational forms towards a single placeless type. 


For example, the distinctive Japanese business groups (keiretsu) have been at the center of Japanese economic development during the post-World War II period. But the financial crisis in Japan that has persisted since the bursting of the bubble economy at the end of the 1980s has put them under considerable pressure to change at least some of their practices. Similarly, South Korean and other East Asian firms have come under enormous pressure to change some of their business practices in the aftermath of the region's financial crisis of the late 1990s. Among overseas Chinese businesses, the strong basis in family ownership and control is being challenged by both internal and external forces. 


Greater involvement in the global economy is forcing these firms to modify some of their practices. And yet it would be extremely surprising if the distinctive nature of nationally based TNCs were to be replaced by a standardized, homogeneous form. Diversity, not uniformity, therefore, related at least in part to the place-specific contexts in which firms evolve, continues to be the norm. 


In conclusion, Peter Dicken provides a comprehensive understanding of the role of TNCs in shaping the global economy. It highlights the power dynamics between TNCs and other actors in the global economy, the importance of regulatory institutions, and the persistence of distinctive business-organizational forms in different societies. The document emphasizes the need for a nuanced approach to understanding economic globalization and the role of TNCs in it.


2. Interesting aspect 


One interesting aspect highlighted in this reading is the persistence of distinctive business-organizational forms in different societies despite the forces of economic globalization. Peter Dicken argues that, despite the greater involvement of firms in the global economy and the pressures they face to modify their practices, there is a remarkable resilience of diverse business structures associated with specific national contexts. The example of Japanese keiretsu, South Korean firms, and overseas Chinese businesses illustrates how these entities, rooted in specific cultural and historical contexts, face challenges to adapt but also resist complete homogenization. This emphasis on diversity, rather than uniformity, in the organizational forms of transnational corporations adds a layer of complexity to the understanding of economic globalization and suggests that place-specific contexts continue to shape the norms and structures of these entities.


1. Discussion


Why, in the face of global economic pressures, do nationally based transnational corporations resist adopting a standardized, homogeneous form? What factors contribute to the enduring diversity of business-organizational structures across different societies?

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