What is the relation between economics and globalization?

 #1

    The author start by saying the purpose of the article is to provide more depiction and explanation of the nature and significance of the transnational corporation(TNC), and to provide a theoretical basis for understanding what it is. The author focuses on following five related issues.

    First, the scale and geographical distribution of transnational corporations. The author mentions the chartered trading companies such as the East India Company and the Hudson's Bay Company, saying they played an important role in the evolution of interconnected political economy. Plus, the World War I brought transnationalization of the US, Uk, and some continental European manufacturing companies. Then he defines TNC as 'a firm which has the power to coordinate and control operations in more than one country, even if it does not own them'. Also, TNCs could be regarded as 'global' corporations in terms of their geographical extent. There are various shapes and sizes of TNCs, but what they have in common, is that they operate in different political, social and cultural environments. The author also mentions that most of the world's TNCs originate from the developed countries. However, diversity of TNCs in the global economy is increasing even though proposition is small. 

    Second, Why (and how) firms 'transnationalize'. In the motivations perspective, there are various reasons for TNC activity, but the author divides them into mainly two reasons which are market-oriented investment and asset-oriented investment. The market-oriented investment could be chosen when a firm reach saturation point in its domestic market. Both size and characteristics of the market influence the locational decisions of TNCs. On the other hand, asset-oriented investment could be chosen mainly because of geographical unevenness of the market. The author provides an example of natural resource industry and cheap labour. Next, in the modes perspective, there are two major ways in which firms develop transnational activities: Greenfield investment and engagement with other firms such as merger, acquisition, or some form of strategic collaboration. Greenfield investment means building whole new facilities which could be risky. Therefore, firms prefer to establish an engagement with an overseas location. The author then explains the sequence of the development of TNCs.

    Third, geography matters: the embedded ness of transnational corporations. The author expresses the importance of place and geography in the ways that firms are produced and in how they behave. TNCs are produced through process of embedding with various characteristics of the national home base. Thus , TNCs interact with the countries or communities. The author explains various forms of firms in different countries, saying there is no convergence of business-organizational forms towards a single 'placeless' type. Then he talks about firms' practices. Each corporate has it's own culture, however, interconnectedness of the contemporary global economy influences the way business organization are configured. With the examples of South Korea and Japan, under pressure of global economy, they had to modify some of their practices. 

    Fourth, 'webs of enterprise': transnational production networks. The author gives three influences of how TNCs's internal networks are configured. First, the firm's specific history. Second, firm's cultural and administrative heritage. Last, the nature and complexity of the industry environment. 

    Finally, the power relationship between TNCs and other actors in the global economy. The author argues the basis of TNCs' power lies in their potential ability to take advantage of geographical differences in the availability and cost of resources. However, this does not mean that TNCs always have the advantage. International regulatory bodies, such as the WTO and International institutions who establish technical standards play a significant role. Also, TNCs are in complex situation with states because while states are territorially fixed and bounded geographically, TNCs' territories are flexible. In addition, labour can be the reason for the complex situation. 

    The author come to the finish with saying that while recognizing the power and influence of the TNCs, we need to avoid the view that TNCs are always prevail. 

#2 

    It was very interesting to learn deeply about the transnational corporation. Especially, why and how these firms transnationalize and geographic matters were helpful for me to understand TNCs. I agree to the author's opinion that the TNC is not always prevail. For example, in global music streaming industry, 'Apple Music' and 'Spotify' are the two biggest companies. Since 2016, Apple Music jumped into the Korean market and lots of people and journalists predicted that the advent of Apple Music will change the Korean music streaming market. However, Apple Music is having hard time catching Korean users. There are several reasons for that, but the main reason was that Apple Music didn't have many Korean songs. According to this article, Apple Music had trouble with state and other institutions.

#3

    Some people argue that these transnational corporations from Western permeate into our daily life and they infuse western hegemony. What do you think of it? My opinion is that it is somewhat reasonable point, however nowadays, political correctness has become very important issue. Because of that, TNCs are careful to avoid those issues. Therefore, I disagree to the argument above, but I thought this could be a good topic to discuss during class.