Multi-National Corporations as International Political Actors

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  • 0:01 Multinational…
  • 1:24 Role in Globalization
  • 4:18 Self-Interested Actors
  • 5:43 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Multinational corporations are serious players on the world stage. In fact, they are often more influential than many states. In this lesson, you'll learn about multinational corporations and their role in international relations. A short quiz follows.

Multinational Corporation Defined

Connor is the chief-executive officer of BigCorp International, a large multinational company. A multinational corporation (MNC) is a business that operates and conducts business activities in more than one country. Sometimes the term multinational enterprise (MNE) is used, as not all international businesses are corporations. While you may think MNCs are a new creation, we can trace them back at least to the British East India Company formed in 1600, which was shortly followed by the formation of the Dutch East India Company formed in 1602. Let's take a closer look at Connor's company.

BigCorp International is a multinational conglomerate, which consists of a number of different companies engaged in different types of businesses that are owned or controlled by one company. BigCorp International is headquartered in New York. The company owns several different subsidiaries that are involved in defense contracting, aviation, construction, shipping, software and financial services. It has offices and plants on all continents except Antarctica and employs over 100,000 employees in about a dozen countries around the world. BigCorp's annual revenue exceeds the gross domestic product of many small countries.

Role in Globalization

Multinational corporations are major players on the world stage. They play a major role in the globalization process, which is the integration of communication systems, transportation systems, ideas, cultures and economies into one world system. Let's take a quick look at how Connor's company helps facilitate globalization.

BigCorp engages in international trade. It receives imported goods from around the world to produce the goods and services that it exports around the world. This requires a sophisticated and integrated communication and transportation network, which helps expand the global economy. This trade also facilitates the spread of BigCorp's American culture across the globe as foreign consumers are exposed to services, products and ideas that come from the United States. For example, BigCorp owns a media company that broadcasts American news and entertainment around the world.

BigCorp utilizes an international labor force, which continues a trend towards a globalized workforce. For example, prior to becoming the company's CEO, Connor served in the company's foreign subsidiaries in Europe and Asia. His company routinely sends their American employees to foreign locations and brings key employees abroad to work at the company's headquarters in New York. The HR department seeks to fill its vacancies with the best candidates drawn from a global labor pool.

BigCorp invests internationally in new and developing foreign markets through foreign direct investment, which is when a company purchases a controlling interest in a business in a foreign country. The foreign company, and its local market, gets much needed investment capital, and BigCorp gets a foothold in a new and emerging market. In fact, direct foreign investments are an important tool that can help less developed countries develop their economies and increase the economic prosperity for their populations.

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