Lecture 3 Flashcards
What views do New Zealanders have on the TPPA?
Gives more power and influence to MNC
PHARMAC which is publicly owned, will be overpowered in international courts by MNC
Fonterra interested in benefits of Internal trade agreements, as they Export milk, and makes us more competitive
What is the Rise of the MNC? (When did FDI become a thing?)
Private ownership of assets in other countries, and strengthened by property rights (in law)
1.Early Quasi -MNCs
Many trace the first MNEs to the British East India Company.
Prior to this was Assyria 4000BP, where early writing reveals embryonic MNE’s
(MNE = Enterprises. Corporations have rights to assess in law, where enterprises are just engaged in business activities, buying or selling products or services at a price)
What is the East India Company?
Private company granted a Royal Charter by Queen Elizabeth in 1600
Controlled trade between Britain and the Indian subcontinent (and elsewhere)
(richer, like china, than many other economies)
Traded in cotton, silk, indigo dye, salt, saltpetre, tea and opium
From mid 1700s the company came to rule large areas of india with its own private armies (to protect trade routes) (shows MNCs and military routes are closely tied(even invasion of Iraq))
What is Assur?
Fortified city at the intersection of important long-distance trade routes (European–> Asia)
Tin, probably imported from Afghanistan was wrapped in textiles and sent on donkeys 1200km to Anatolian city of Kanesh
In Kanesh 20,000 cay tablets with texts in Assyrian Cuneiform -85% are of an economic nature
The lower city of Kanesh was largely inhabited by international business people, especially Assyrians from Ashur
evidence that economic assurance had been exerted quite some time ago
What is the Right Climate for MNCs?
150 years ago
The emergence of corporate personality and limited liability
A world of independent states
Capitalists (strength of private property rights, in comparison to centrally owned assets of communism)
High Speed Communication (steam ships, rail road, internet)
What is corporate personality?
Corporations given same legal rights as a person
Risky that managers would be held responsible, and hence would limit/stifle their innovation
This lead to increasing the risk taking behaviour and in turn increase the innovation, by decoupling the person who controls the corporation and the corporation itself
What is limited liability?
If a corporation did something which was disputed(give improper safety safety gear to employee and they lost they arm) you take the corporation to court, not the person who owns the corporation.
What was Wars role in the emergence of MNCs?
War was a Catalyst in the emergence of MNCs
Pre WWI there was no need for mass co-ordination necessary to Win
WWII- Big Changes - Both wars brought centrally controlled, and ability to organise an entire countries resources efficiently and effectively in order to defend became very important (now Human resources became a science, and “strategy” became a business word instead of a war term)
The Marshal Plan :
What is problematic about ownership control and accountability of corporate behaviour?
The principal-agent problem
Liability for corporate behaviour (MNCs) is legally decoupled from managers behaviour
What are externalities? why are they important?
A cost or benefit for someone (or an organisation) which did not agree to the action that caused the cost or benefit
MNC are constrained by laws, which may be different in different countries or ‘differently’ enforced
