Blog Assignment 4 - Economic Globalization / Minjeong Lee

1. Summary

 Transnational corporation(TNC) is contributed to economic globalization. We live in a world of transnational corporations that have a lot of impact on the whole world, regardless of nationality. Therefore, it is very important to know the nature and influence of TNC in the process of economic globalization. 

 What we have to discuss is:  (1) the scale and geographical distribution of TNCs in the global economy; (2) why and how corporations engage in transnational activities; (3) the geographical embeddedness of TNCs; (4) the ‘webs of enterprise’ manifested in transnational production networks; (5) the power relationships between TNCs and other actors in the global economy. 

(1) The scale and geographical distribution of TNCs in the global economy

 By the end of the 19th century, no one had been involved in manufacturing and production outside the country. But in 1914, just before World War I, a significant number of manufacturing firm in the United States, the United Kingdom, and the European continent have gradually became transnational. For the last 50 years, the number of TNC has increased geometrically. The most comprehensive definition of TNC is 'Companies with the power to coordinate and control businesses in more than one country'. Currently, about 61,000 TNCs are estimated to be producing international products from more than 900,000 foreign subsidiaries. It accounts for about one-tenth of the world's gross domestic product, accounting for one-third of the world's exports.

(2) Why and how corporations engage in transnational activities

 From a market-oriented perspective, it is possible that a company has already reached saturation in a country's domestic market. Therefore, to increase profitability, the market must be able to extend beyond its own territory.

 Asset-oriented investment stems from the fact that assets (resources) required by an entity to produce and sell products and services also need to be used in the present state because they are highly unequal geographical distribution. However, advances in transportation and communication technologies and production process technologies have made companies more able to access other unequal resources of a broader geographical size. In particular, the importance of human capital has become very important, and the value of highly skilled workers located in quality communities has greatly increased.

(3) The geographical embeddedness of TNCs

 Places and geography are still fundamentally important in the way companies produce and operate. All businesses produce their goods through a complex process in which a country's cognitive,  social, cultural, political and economic characteristics dominate. So TNC interact with the local characteristics of the nation and the community.

(4) The ‘webs of enterprise’ manifested in transnational production networks

 It is not enough to regard companies as free, clearly bounded entities in some ways. Conversely, all businesses are composed of very complex and dynamic forms. So as a business in general, TNC can be considered as dense networks at the heart of the relationship. But because of the geographical nature of the different political, cultural and social environments, TNC is far more difficult to coordinate and control than the general firms limited to a single national space, which means they need a more sophisticated organizational structure.

(5) The power relationships between TNCs and other actors in the global economy

 Inevitably this creates tensions between TNC and other significant actors in the global economy: states, local communities, labor, consumers, and civil society organizations.International regulators such as the WTO, which is part of the global government, have a huge impact on the transnational production network.

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2. New/Interesting things I learned

  In the modern world, the influence of TNCs is powerful. Companies such as Microsoft and Apple have had tremendous global influence and are perhaps more powerful than countries. It is interesting that for the first time in the 15th century, a multinational company appeared. I think it has played a pioneering role in the discussion of transnational discussions since then. Also, as each country has a variety of preferences and different cultures and languages, TNCs cannot maintain the same strategy globally and will have to consider their respective cultural differences.

3. Discussion Point

 In a rapidly changing society, TNC have too much uncertainty and instability. There is no such thing as absolute strength, and it is uncertain that the company that met with the unexpected crisis could be the number one again. What can solve the instability of TNC?