Course : X0504-Dynamics of State Interaction and

Multinational Corporations in Globalization Era

Year : 2014

MNC IN GLOBALIZATION ERA:

Session 1-2
 Outline
• Introduction
• What is Globalization
• MNC as an actor in international relations
• The importance of MNC
• Discussion
• Q&A

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 Introduction
• The progress of international politics in after 9/11 attack and
global financial crises are reshaping the new face of
international relations.
• Issue shifting from high politics issue (security and military)
to low politics issue (trade, economy, human rights and
environment)
• The raise of non-state actors.

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 What is Globalization
• Globalization is the phenomena of increasing of interaction among
society in the world regardless the nationality. World will be more
borderless.

• There are three school of thoughts in defining globalization (Held, 2005)

1. Hyper-globalizers : sees globalization as an emerging single market and
global competition. Creating mutual advantages
2. Sceptic view: sees globalization as expansion of internationalization to be
more intense as before but not erodes the souvereignty
3. Transformationalist: sees globalization as a drive for change in social,
political, and economic formation of society and governance in the
modern world.

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 MNC at Glance

MNC and CSR: Shell in Nigeria

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 Statistics on MNC
• How many MNCs?
– 1900: 3,000
– 1970: 7,000
– 1990: 63,000-65,000
• With 850,000 foreign affiliates
• Together they employ 90 million people
– 3% world’s workforce but
– 20% world’s non-agricultural workforce
• Fortune 500 alone – employed 47 million people in 2000
• In developing countries MNC employ about 30-36 million
people

Source: Global Inc: An Atlas of the Multinational Corporation, p. 2

 World’s Largest Economy

Countries
Corporations
 MNC in IR (Local level)

• Multi-National Company has shifted its traditional role to

more advance playing in international politics.
• Previously, discussion of the MNC has been limited in the
study of international business as a business entity to expand
internationally through foreign direct investment (FDI)
(traditional role of the MNC).
• The explanation is not enough to understand the actions of
MNCs and the increasing number of MNCs operating in many
countries.
• The existence of the MNC can be described as a double-edged
sword.
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 MNC in IR (Local level)

• MNC may contribute as development partner for the state

(state)
• On the other hand, MNC also has potential as opposed to the
reduction of power, or set the state in public policy-making
that give advantage to MNC.

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 MNC in IR (Global and
Regional level)

• Several stakeholders, including the state, academia, and civil

society, are calling for MNC regulated and controlled activity
through a mechanism of multilateral agreement.
• Gerber and Jensen (2000) stated that the absence of strong
international regulations and inconsistency of national
legislation causing the task of regulating the MNC becomes
difficult.

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 Trivia: Some Key Concepts

• Foreign Direct Investment

• Corporate Social Responsibility
• Transfer Technology
• Host Country-Home Country

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 Conclusion

• Studying the context of globalization and the role of MNCs

means to reinforce the position of MNC in shaping the
structure, the interaction between actors, and create a result of
interaction of diverse and complex.
• MNCs also need to be understood in the context of relations
with countries, groups of countries, international
organizations, non-governmental organizations, individuals,
universities, and fellow multinationals themselves.

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 Reference (from textbook)
• Tirta Mursitama and Dini Adiba, Diktat Pembelajaran Bisnis
Internasional: Globalisasi dan Signifikansi Peran Perusahaan
Multinasional, Bina Nusantara University, 2013
• David N.Balaam. dan Michael Veseth, Introduction to
International Political Economy , Prentice Hall. 1996

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 THANK YOU

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