The rise of the global corporation

Question 1

Part One: The Historic Rise of Global Corporations—Three Periods

Answer 1

• Global corporations are closely tied to globalization, evolving within historical periods.
• Historical globalization, dating back to early trade patterns, involved interactive engagements driven by technologies like shipping and navigation.
• The direct antecedents of contemporary global corporations are traced to the period before WWII when the modern nation-state system emerged, leading to colonialism and imperialism.
• Post-WWII, American corporations played a significant role in economic recovery and expansion, defining a distinct third period in the transformation of global corporations.

Question 2

Part Two: How Do Global Corporations Function? What Constitutes a Global Corporation?

Answer 2

• Contemporary global corporations are referred to as multinational (MNC), transnational (TNC), international, or global companies.
• International companies are importers/exporters; Multinational companies invest abroad without coordinated product offerings; Global companies are present in many countries, marketing locally; Transnational companies decentralize decision-making to foreign markets.
• The term “global corporation” is used broadly to encompass these types.
• Changes in global corporations over almost 70 years include the rise of Japanese and European corporations, digitalization, a shift from producer-driven to buyer-driven commodity chains, and the growing role of financial elements.
• Foreign Direct Investment (FDI) played a crucial role, with periods of intense FDI transforming the global corporate landscape.
• The investment-based period saw producer-driven commodity chains dominated by large capital firms, influenced by “fordist” management principles.
• The emergence of Japan challenged traditional U.S. business models, leading to a reinvention of American industrial models.
• Gereffi’s argument distinguishes global corporations in producer-driven or buyer-driven commodity chains, impacting their networks and interdependence.

Note: The provided summary aims to capture key points in a concise manner, and specific details may be further explored in the original text if needed.

Question 3

Digital Transformation and Global Corporations:

Answer 3

• Digitalization has reshaped global corporations, embedding them in complex information structures with instantaneous communication.
• Commodity chains exist within the ever-changing digital environment, emphasizing adaptability.
• Digital technology has “dis-placed” certain service activities into a global, 24/7 environment, maximizing corporate goals.
• Symbolic capital, represented by corporate brands, gains importance in the global marketplace, impacting how corporations are perceived.
• Brand Finance ranks corporations based on the value of their brand, with technology brands dominating in 2012.
• Digitalization affects the entire structure of global corporations, transforming both producer-driven and buyer-driven value streams.
• For producer-driven streams, digitalization integrates corporate structures, reducing the impact of time and distance.
• Buyer-driven streams increasingly focus on Internet retailing, with the apparel industry witnessing a fundamental digital transformation.
• Quick Response (QR) management systems illustrate the integration of electronic point of sale technologies in buyer-driven value streams.

Question 4

Assessing the Impact and Concentration of Global Corporations:

Answer 4

• Global corporations collectively constitute a complex system or network that interacts to shape the global economic system.
• Various indicators, such as the number of subsidiaries, revenues, and interlocking directorates, reveal a concentration of corporate influence.
• The growth of the Global 100 and Global 500 firms underscores their increasing share of global GDP.
• Different perspectives on assessing the size of global corporations, including comparisons with GDP, reveal the complexity of this analysis.
• The concept of a “network of corporate control” highlights the highly concentrated ownership structure among global corporations.
• A group of 147 corporations in the core of the network controls approximately 40% of the economic value of transnational corporations (TNCs).
• Global corporations play an essential role in the economy, with their activities determining economic outcomes on a fundamental level.
• The financial crisis of 2006-07 demonstrated how global financial firms, through novel financial instruments, impacted the global economy significantly.

Note: This summary aims to distill the key points from the provided text. More details and nuances can be explored in the original text if needed.

Question 5

Part Three: Changes in Global Corporate Development
1. Growth of Developing Economies:

Answer 5

• Developing economies, especially BRICS (Brazil, Russia, India, China, South Africa), have become dynamic in global corporate growth.
  
  • Significant foreign direct investment (FDI) flows into developing countries, indicating the rapidity of capital movement.

Question 6

Part Three: Changes in Global Corporate Development
2. Trajectory of Emerging Market Corporations:

Answer 6

• Global corporations from emerging economies are growing in size, activity, and global rankings.
  
  • The Fortune Global 500 lists an increase in the number of corporations from emerging markets, reflecting their expanding influence.
  • These corporations actively participate in global mergers and acquisitions (M&A), contributing to corporate concentration.

Question 7

Part Three: Changes in Global Corporate Development
3. Changing Capital Flows:

Answer 7

South-South and South-North flows.
- China and India play a crucial role in South-North capital flows, making substantial investments and acquisitions in developed countries.
- The economic slowdown post-2007 had a lesser impact on many developing economies, highlighting their importance as a new source of global capital.

Question 8

Part Three: Changes in Global Corporate Development
4. The Rise of BRICS:

Answer 8

• BRICS, with 40% of the world’s population, represent a major force in global production and consumption.
  
  • Predictions indicate substantial growth in the middle-class consumer base in China and India.
  • Global corporations in BRICS countries have increased their presence, contributing to a near doubling of their share of world trade by 2050.

Question 9

Part Three: Changes in Global Corporate Development
5. Emerging Market Global Corporations:

Answer 9

• Notable global corporations from emerging economies include Basic Element (Russia), Bharat Forge (India), BYD Company (China), CEMEX (Mexico), and others.
  
  • The Boston Consulting Group highlights the global significance of these corporations based on their market share and industry dominance.

Question 10

Part Three: Changes in Global Corporate Development
6. State-Owned Global Corporations:

Answer 10

• State-owned corporations, especially in China, play a significant role in the global corporate landscape.
  
  • Concerns about unfair advantages, lack of economic efficiency, and potential market distortion arise regarding state-owned global corporations.
  • The OECD emphasizes the need for governance guidelines to balance state ownership responsibilities without undue political interference.

Question 11

Part Three: Changes in Global Corporate Development
7. Non-Equity Modes of Production (NEMS):

Answer 11

• NEMS, such as contract manufacturing, services outsourcing, and franchising, have become increasingly important in global corporations.
  
  • NEMS allow corporations to participate in global value chains without substantial capital investment, contributing to their growth and flexibility.
  • The growth of NEMS outpaces that of traditional equity-based global corporations in various industries.

Question 12

Part Three: Changes in Global Corporate Development
8. Three Types of Emerging Economy Global Corporations:

Answer 12

• Corporations in emerging economies can be categorized into three types: those driven by national power, those replicating consumer pathways, and those thriving on non-equity relationships.
  
  • China’s energy and industrial material firms focus on internal market growth and offshore resource investment.
  • Corporations like Hyundai replicate consumer pathways globally.
  • NEMS, relying on externalized relationships, rapidly increase in size and influence by preserving capital and equity positions.

Question 13

Part Three: Changes in Global Corporate Development
9. Relationship between Foxconn and Apple:

Answer 13

• The partnership between China’s Foxconn and Apple exemplifies the success of non-equity relationships.
  
  • Foxconn’s adaptability, combined with Apple’s innovative technology, contributed to Apple becoming the world’s highest-valued firm in 2012.
  • However, criticisms of Foxconn’s labor practices have raised ethical concerns for both companies.

In summary, the changing landscape of global corporate development involves the dynamic growth of emerging economies, the rise of state-owned corporations, the increasing importance of non-equity modes of production, and diverse types of corporations shaping the global economic system.

Question 14

Part Four: The Changing Regulatory Environment for Global Corporations

1. Regulatory Influence on Global Corporations:

Answer 14

• The operations of global corporations are significantly influenced by the regulatory environments in which they operate.
  
  • Much of this regulation is linked to global trade structures, such as the General Agreement in Trade and Services, and bilateral trade agreements.
  • The rise of China has led to increased bi-lateral trade agreements, reshaping global trade dynamics.

Question 15

Part Four: The Changing Regulatory Environment for Global Corporations

2. Conflicting Regulatory Thrusts:

Answer 15

• Over the past four decades, two conflicting regulatory thrusts have emerged.
  
  • The first is a progressive movement at international and national levels toward liberalization, reducing barriers to global investment and trade.
  • The second is the result of national regulatory changes, often targeted at specific industries or investment patterns.
  • UNCTAD reports indicate both favorable and less favorable changes to foreign direct investment (FDI) regulations, with a general trend toward lessened regulation.

Question 16

Part Four: The Changing Regulatory Environment for Global Corporations

3. Corporate Social Responsibility (CSR):

Answer 16

• The concept of corporate social responsibility (CSR) has gained prominence as a self-regulatory approach to make global corporations more accountable.
  
  • CSR involves a wide range of proposed governance structures, including rules, norms, codes of conduct, and standards developed by the global NGO community.
  • Empirical studies suggest that CSR efforts result in positive outcomes for corporate stakeholders, primarily shareholders.
  • Despite some advocating for a win-win scenario, there are debates about the effectiveness of CSR, with some arguing that external pressures, such as from NGOs and consumers, drive corporate behavior more than voluntary adoption of CSR codes.

Question 17

Part Four: The Changing Regulatory Environment for Global Corporations

4. Financial Market Regulation:

Answer 17

• In the aftermath of the 2007 financial crisis, there is a growing call for greater regulation of global financial markets.
  
  • Economists like Joseph Stiglitz argue for the need for global financial regulation to address trading risks and prevent global economic crises.

Question 18

Part Five: The Normative Case for Global Corporations

1. Historical Evolution of the Normative Case:

Answer 18

• The normative case for global corporations has evolved since the early 1970s and is closely linked to broader discourses on globalization.
  
  • Initially seen as agents of economic development, global corporations later faced criticism for socially destructive practices.

Question 19

Part Five: The Normative Case for Global Corporations

2. Critiques of Global Corporations:

Answer 19

• Post-colonial critiques focused on the role of multinational corporations in perpetuating global wealth and income inequality, lack of worker protection, environmental degradation, and threats to national sovereignty.
  
  • The 2007 financial crisis highlighted concerns that global corporations, operating beyond effective governmental control, could concentrate wealth and power to the extent of causing a global crisis.

Question 20

Part Five: The Normative Case for Global Corporations

3. Global Inequality and Income Disparities:

Answer 20

• The normative balance of development driven by global corporations appears to contribute to increasing global wealth and income inequality.
  
  • Data on global inequality show disparities both between and within countries, with economic growth often accompanied by growing inequality.

Question 21

Part Five: The Normative Case for Global Corporations

4. Role of Global Corporations in Wealth Distribution:

Answer 21

• Global corporations stand at the center of structures that establish and distribute global wealth.
  
  • Challenges to the role of the state in wealth redistribution have been observed, with political forces seeking to protect corporate and individual wealth from taxation.

Question 22

Part Five: The Normative Case for Global Corporations

5. Normative Projections and CSR:

Answer 22

• Normative projections envision a coordinated world economy where corporate networks and a redistributive state cooperate for enhanced social integration.
  
  • The CSR movement aims to align transnational corporations with the global goals of societal integration, social responsibility, and support for public goods.

Question 23

Part Five: The Normative Case for Global Corporations

6. Global Goods and Corporate Responsibilities:

Answer 23

• The normative case for global corporations is closely tied to global goods, including addressing global inequality, ensuring financial system stability, and addressing climate issues.
  
  • The willingness of global corporations to embrace responsibility for these global goods will play a crucial role in shaping positive outcomes for the world as a whole.