The Power Play Tactics of Trans-National Corporations

The 21st century version of colonialism.

Readership: All
Theme: Political Shenanigans
Length: 1,500 words
Reading Time: 5 minutes

Introduction

In Mandated Agricultural Failures (2022-7-11), I mentioned how international corporations colonize emerging economies through economic entrepreneurship and political alliances, not done by force of arms, but through the lure of $$$ and “modernization”.

In this post, I’ve copied an excerpt from a Pakistani conference paper published in 2014 [1] that reveals how trans-national corporations lure developing countries into opening their hatches to allow a hegemonic, and in some cases, a dominating foreign influence.  The next post will describe the catch.

I’ve taken the liberty to enhance the English and add relevant images to improve the overall delivery and readability.

[Begin excerpt.]

Drivers of Trans-National Corporation Power Plays

By coopting the core competencies in developing countries, Trans-National Corporations (TNCs) attempt to dominate these economies with a monopolistic bent of mind, the regimentation of law, and a tactful use of patriotism, with a masterly adaptation of localization as a tool.  These corporations thereby push these countries to the edge of chaos through exploration and exploitation, and by seeking to establish their own favorable set of rules, in order to capitalize the developing countries’ weaknesses and deficiencies, with wise use of their global value chains.  Meanwhile, TNCs are capable of presenting scenes of prosperity, success, and positive influence in these areas.

An analysis of global governance and the American empire has been beautifully described by Barnett and Duvall [2] as having a taxonomy of power encompassing four concepts: compulsory, institutional, structural, and productive.

“Compulsory power exists in the direct control of one actor over the conditions of existence and/or the actions of another.  Institutional power exists in actors’ indirect control over the conditions of action of socially distant others.  Structural power operates as the constitutive relations of a direct and specific-hence, mutually constituting-kind.  Productive power works through diffuse constitutive relations to produce the situated social capacities of actors.”

Barnett and Duvall (2005) [2]

Power Play Tactics of TNCs

The study of transnational corporations (TNCs) is multifaceted so it is quite appropriate here to pinpoint some of their bright and dark aspects for the purpose of deeper clarity and for establishing the focus of study.

The 3GW Nurek hydropower plant in Tajikistan is the biggest hydroelectric power facility in Central Asia.
Image Source: AKI Press: World Bank approves $65 million grant for rehabilitation of Nurek hydropower plant (2021-12-23)

10 Bright Aspects of TNCs

1. Foreign Direct Investment (FDI)

Trans-national corporations are always welcomed by the developing countries to expand their operations in their economies and areas of jurisdiction.  The reason for welcoming the TNCs to an economy is the inflow of Foreign Direct Investment (FDI), which usually gives a quantum boost to the economic activity of the recipient economic system.  FDI is a process which enables the host country to do business for the home country.  In the modern era of globalization, the competitiveness is playing a vital role in the economies of scale from individual to business to nation-states.  Although the economics of competitiveness may contain its own drawbacks and benefits, nevertheless, it has succeeded in drawing capital from the first world to the third world, thereby elevating the economic baselines of developing economies.

2. Creating Opportunities for Employment

Employment generation is the next blessing which the host countries obtain from FDI.  The task of providing a source of income and earning potential to the common man is one of the toughest challenges before the policy makers of every developing country.  It requires certain ingredients like vision, missions, leadership, capital, technology, knowledge, skills, human capital development, and most importantly, a lively economic market in which can be sold the products of the employed people.  TNCs provide a sufficient answer to all these questions, and therefore their arrival to an economy is considered as a blessing.

3. Accelerated Economic Activities

These nation-states observe an accelerated economic activity once the TNCs start their operations in their system.  The capital boost in the economic system, along with the increased number of employed people, results in increased spending, savings, and investments of the individuals.

4. Promoting a Sense of Well-Being among Individuals

The increased employment rate in the host country also brings about a positive change in the lifestyle of the individual.  Following the fulfillment of their existential needs, individuals begin to consider how to improve their quality of life. This shift in perspective encourages them to set out on the path of achieving their goals while maintaining a positive outlook on their newly discovered path of prosperity, good fortune, and career advancement. All of these indicators of personal wellbeing give rise to optimism and point in the direction of a greater sense of significance and purpose in life.

Image Source: Vienam+: Vietnam draws over 10.8 billion USD of FDI in four months (2022-4-28)

5. Corporate Social Responsibility Initiatives

The employment of a large work-force itself becomes a challenge for the TNCs, as it entails the issues of diversity, ethnicity, work-group politics, labor unions, etc.  As a proactive stance to these issues and to establish their positive image in the eyes of the world, TNCs deploy their corporate social responsibility (CSR) initiatives.  These initiatives ensure certain measures necessary for the well-being of the employees working for them.  Such initiatives may include the interventions related to working environment, safety, health, family welfare, education, etc.  CSR initiatives help the TNCs not only to brand themselves as employer of choice in the job market, but also as humanitarian organizations in the public opinion.

6. Overflows at Intra, Inter, and Extra-Industrial Levels

The high-tech products, systems, and mechanisms of TNCs are in such great demand that there is a constant deficiency in production. To meet these demands, manufacturing operations are subcontracted to local companies. As a result, the knowledge and practices of TNCs can be learned and capitalized upon by the emerging economies. All these overflows at intra, inter, and extra-industrial levels not only give ample opportunities for sophisticated knowledge and technologies to flourish, but it also delivers a positive impact on the advancement of technology and learning within the host country.

7. Addition of New Colors to the Local Culture

Besides bringing in FDI and employment opportunities, transnational organizations also add new colors to the culture of the host country.  Like in Pakistan, it has become part of the culture to serve guests carbonated soft-drinks – a western beverage which otherwise has no connection to the local culture.  Similarly, many other western products enhance the local lifestyle in beneficial ways, and western machinery and technology facilitate many tasks of daily living.  Thus, the presence of international mega-projects of TNCs opens up new horizons of forming an advanced, hybrid culture by blending the international and local ingredients.

8. Promotion of Sports and Entertainment Activities

Besides the assimilation of the TNCs products in the host country’s culture, industry, and social rituals, they also promote themselves through sponsoring sports and entertainment activities.  Today, no sports or entertainment event can be organized without a corporate sponsorship.  Even the social profiling of the event is underwritten with the endorsement of the corporate sponsors of that event.  On the other hand, the branding exercise being conducted throughout the event is also considered as a highly effective tool for advertising the TNC and expanding its corporate culture as well.

Image Source: Cricket Pakistan: PCB announces main sponsor for Pakistan team (2020-7-16)

9. Clientele to Local Media

The majority of the promotional and branding activities of TNCs are usually done using the highly effective tool of advertisement.  Here, TNCs require the media to broadcast their message to the target audience, and the feedback is measured through sales reports.  The TNCs have a better capacity to pay for advertising and media in comparison to their local counterparts which are subcontracted to design rigorous and culturally relevant promotions.  Whether or not these promotions are effective for the TNCs, they are always beneficial for the local media companies.

10. TNCs as Development Partners of the Nation-State

All this development requires uplifting the social, economic, and environmental aspects of an existing system so that its effects on humans living in that system become more positive than before.  The large scale stimulation of a system is a highly challenging task in itself as it involves a lot of delicate parameters.  It therefore requires local partners to perform it successfully.

Former South African President Nelson Mandela expressed the importance of partnership between government and business in the following words:

“Development can no longer be regarded as the responsibility of the government alone.  It requires … partnership … There are many ways in which the special skills and know-how of the business community can help to achieve development objectives.”

Dunning [3] also denoted that TNCs are capable of effecting the government‘s objectives and the ease or difficulty with which the government can implement the policies necessary to reach those targets.  The development activities can be performed more effectively if the government and the TNCs join hands together.

[End of excerpt.]

The 10 Dark Aspects of Trans-National Corporations will be covered in the next post.

Sources and References

1. Asghar, Ali. “Power Play of Transnational Organizations in Emerging Political Economies.” SSRN Electronic Journal, (2014) 1345-1349.  doi:10.2139/SSRN.2432811.
2. Barnett, M., Duvall, R., “Power in international politics,” International Organization, 59:1 (2005) 39-75.
3. Dunning, J. H., Lundan, S. M., Multinational enterprises and the global economy: Edward Elgar Publishing (2008).

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