SOCIOLOGY OF
GLOBALIZATION (4)
ECONOMIC
GLOBALIZATION: COORPORATION
By : Peter Dicken
There’s a stereotype that many people believe, which that In this era people
are leaving in the world where global corporation is increasing, and it’s not
only in one’s country but also across the national boundaries, weakening the autonomy
and independence of a nation. But this stereotype is not true at all. In this
chapter the writer are going to summarize why the stereotype above are
misleading and trying to explain it in different chapter that contains of the scale and
geographical distribution of TNC’s in the global economy ; why and how
corporations engage in transnational activities ; the geographical embeddedness
of transnational corporations ; the ‘webs of enterprise’ manifested in
transnational production network ; the power relationships between TNC’s and
other actors in the global economy.
1. The Scale and Geographical Distribution of Transnational Corporations
In the 1914, many United States, United Kingdom
, and some European manufacturing company become highly transnationalized. From
that the past 50 years the number of TNC’s in the world economy has grown fast.
TNC itself stands for transnational corporation, which in the modern world
sometimes defined as ‘a firm which has the power to coordinate and control
operations in more than one country, even if it does not own them’. But this
data is hard to measure as it is involves a number of qualitative attributes. In
aggregate terms, TNC activity is measured using statistics on FDI (foreign
direct investment). The difference between ‘direct’ investment and ‘foreign’
investment is that ‘direct’ investment is an investment by one firm in another
with the intentions of gaining control over that firm’s. meanwhile ‘foreign’
direct investment is a direct investment that happens across the nation.
Why and how firms ‘transnationalize’
The motivations of firm to extend their
business reach can be categorized by 2 type which is ;
a.
Market-oriented
Investment :
The
reason why there are business firm to broad their market is because of the
market potential. The business firm might didn’t do well in their own country
(domestically) thus why they try to open their business across the national
border in order to get more potential consumers.
b.
Asset-oriented
Investment :
The geographical
unevenness of market is one of the main reason why business firm need to do a
transnational investment. And the second reason is the fact that they need to produce
and sell their products but the service merit is also unevenly distributed thus
why they have to do transnational investment.
There are 2 way a firm can develop its transnational activities, which
is by a ‘greenfield’ investment which is building a whole new facilities and
the other one is through engagement with other firm through merger acquisition
or some form of strategic collaboration.
2.
Geography
Matters; The Embeddedness of Transnational Corporations
Every business firm are produced with a very
complicated process of infusing the cognitive, cultural, social, politic and
economic characteristics of the national home base play a dominant part. Despite
the unquestioned geographical change of the world economy, pushed by the widen
activities of transnational corporations, we are still not witnessing the
merging of business-organizational forms towards a single ‘placeless’ type.
3.
‘Webs
of Enterprise’ : Transnational Production Networks
All business firms are formed with a highly
complex and dynamic networks of production, distribution and consumption and
coordinated mainly by a transnational corporation, therefore, like firms in
general, can be considered as ‘a dense network at the center of a web of
relationship’. But TNC are more difficult to coordinate and control than firms that
activities focused on a single national space. TNC required more up-to-date organizational
architecture. Many elements has been participating in the TNC’s organizational
architecture such as developments in transportation and communications
technologies, as well as in production process technology in order for TNC to be
able to differentiate it’s function well.
Transnational production networks organized the
regional scale (mainly Europe, North America and East Asia). TNC’s power are
based on their potential ability to take advantage of geographical differences
in the availability and cost of resources and in state policies and to switch
and re-switch operations between location. But there’s also a negative side of
this power, as it’s often caused some very shaky generalizations.
