What is the relation between economy and globalization? / JeongYoon Oh

 Summary

 From 50 years ago until now, the TNC(the transnational corporation) in the global economy has increased dramatically. To define a modern TNC, it is “a firm which has the power to coordinate and control operations in more than one country, even if it does not own them”. In fact, the TNC has a wide variety of sizes, from operating in dozens of countries to only one or two.

The TNC activities can be summarized into two categories: market-oriented investment and asset-oriented investment.

There are also two main ways for companies to develop transnational activities. First, through 'greenfield' investment and second, involvement with other companies, such as mergers and acquisitions. There is another way to start working with one or more other companies.

Every business enterprise consists of a very complex and dynamic network. These networks are geographically more extensive and controlled by transnational enterprises, mainly. Therefore, the TNC can be well regarded as a ‘close network at the center of the web of the relationship’.

The organizational and geographical environments in which TNC internal networks are formed and how they connect to suppliers and customers arise from the following mutual influences:

• the firm’s specific history, including characteristics derived from its country of origin;

• its cultural and administrative heritage in the form of accepted practices built up over a period of time, producing a particular ‘strategic pre-disposition’;

• the nature and complexity of the industry environment(s) in which the firm operates, including the nature of competition, technology, regulatory structures and so on.

The characteristic of the TNC is that there are different political, cultural and social environments when conducted in different countries. So control is much more difficult than companies limited to one national space. This is why sophisticated organizational structures are needed. They must deal with the facilities they acquired, and the structure may not be suitable at any time. For this reason, TNC constantly undergoes restructuring, reorganization, and rationalization of management. That's why the TNC network can always change constantly.

 

Interesting point

 The most interesting part is that the territory of the TNC is fluid and flexible. While most countries have territories set by their borders, TNCs are global companies, so parts of different countries may be integrated into a single production network. Although TNC is a global company, I thought it would be maintained in one country, but it was amazing to know that it was not. In addition, it is said that the state regulates the TNC, and I wonder how it will be regulated if it is integrated into more than two national networks.

 

Discussion

 The TNC is regulated within the country's basic political structure. TNCs and states constantly engage in complex negotiations. Each state has considerable authority over the TNC, including controlling access to territory and making operational rules. Other states, such as the EU, even work together to increase power. So the state is not helpless in front of global companies.

I would like to have a debate with the pros and cons of state involvement in the TNC. I'd like to hear various opinions about whether that action violates the freedom of the TNC or is a natural regulation.