The influence of multinational enterprises on politics in emerging countries

Hausarbeit, 2018

8 Seiten, Note: 1,3



1. Introduction

2. Definitions
2.1 Multinational enterprises
2.2 Emerging markets
2.3 Ethnographic field
2.4 Foreign direct investments

3. Theoretical framework

4. Emerging countries

5. Ethnographic field
5.1 Theoretical construction
5.2 Field of research

6. Conclusion

1. Introduction

In times of changing world orders, new actors, and new technologies every aspect in research changes. Fields like environment, development, politics have changed and must deal with obstacles at a global scale. This vary also took place in Ethnography. The first records about Ethnography were found in the antiquity and since then, there is a constant ongoing change. Especially with the beginning of the European colonisation in the 16th Century, Ethnography's importance grew a lot. After that, Ethnography lost distinction because of the publishing of Bronislaw Malinowski's diaries. In this he described his depression und his anger against the inhabitants of the Trobriand-Islands. He was one of the founding fathers of field research.1

However, nowadays Ethnography gains again more popularity due to ongoing globalisation and with its possible emerging hazards. Over this period, it has evolved. Finn Stepputat and Jessica Larsen with their working paper: "Global political ethnography: A methodological approach to studying global policy regimes" try to bring Ethnography at the next level. They want to contribute to the emerging cross-disciplinary methods. Their focus is on academic fields, in which ethnographic studies of politics are rising on importance.2 My term paper will approach global political ethnography. To show these facts, my goal will be to construct a research problem, define a research question, sketch a theoretical framework and construct the ethnographic field which shall be explored to answer the question.

Therefor my term paper is subdivided in six Parts. The first part is the introduction in which I'm giving a slight overview. In the second part I'm adding a few definitions for the most important aspects in this term paper. These are: Multinational enterprises, emerging markets, ethnographic field and foreign direct investments. In the third part I'm constructing the theoretical framework and how the qualitative information are collected and analysed. In the fourth part I'm giving an overvi ew about emerging countries. In the fifth part I'm presenting the ethnographic field which should be researched and what it constitutes.

My research question is: How much influence do multinational enterprises have on politics in emerging countries? The reason why this subject was chosen is because I think that there are just a few studies about it. Especially the economic impact of multinational enterprises on emerging countries is well researched but not the political impacts on the host nation.

2. Definitions

In this part of the term paper is presenting the most important definitions. It is very important to make sure, which definitions were used.

2.1 Multinational enterprises

An enterprise operating in different countries but managed and led from its home-country. Generally, any enterprise or group that derives a quarter of its profit from orders outside of its home country is being called a multinational corporation.3 Hereinafter multinational enterprises will be called MNEs.

2.2 Emerging markets

"Summing up, there is no clear definition of an emerging market economy. The focus, however, is generally on the country's level of development and the speed of growth both illustrated by economic indicators such as GDP per capita and GDP growth rate. In addition, emerging markets are found practically all over the world, and have different economic setups dependent on their economic structures, resource endowments and socio-political history. A similarity among them however, is the perceived role of the state versus the market in these countries, either in the form of its overbearingness, or nonexistence"4

2.3 Ethnographic field

"Ethnographic field work is the primary methodology employed by anthropologists, although other disciplines such as cultural studies and sociology may also employ ethnographic methods. Ethnography involves immersion in the daily lives of a particular community of people for an extended period of time for the purpose of collecting various types of data about that community."5

2.4 Foreign direct investments

"Foreign direct investment (FDI) is an investment in a business by an investor from another country for which the foreign investor has control over the company purchased. The Organization of Economic Cooperation and Development (OECD) defines control as owning 10% or more of the business.

Businesses that make foreign direct investments are often called multinational corporations (MNCs) or multinational enterprises (MNEs)."6

3. Theoretical framework

As mentioned in the introduction this term paper is about how much influence multinational enterprises have on emerging countries. There are different goals which determine the acting of MNEs or governments. This is very important to understand because the relation between multinational companies and governments is based on it. MNEs are micro-efficiency-driven which means they always want to increase their profit, whereas governments are driven by macro-efficiency or distributional objectives of government. These different goals often lead to conflicts between those two actors. There exist three sequential component which determine the cooperation between governments and MNEs. The first component is to differ between home and host country. MNEs often have a clear defined nationality with a heavy connection to their home base. In their home countries they often enjoy a special treatment called Firm Specific Advantages (FSAs). Specifically, that means that they have more advantages in their home countries than in host countries. That's because the MNEs provide a lot of workplaces and pay usually huge amounts of taxes. In this term paper the most important subjects are taxation, competition policy, negotiation over natural-resources, development of technology and provision of infrastructure.7

The second component is about the institutional elements which affect the behaviour of MNEs and governments. A MNE with a conventional ethnocentric8 point of view will have a strong focus of FSAs in the home country and just some replications of their production in host countries. That means they are more focused on the home market. Whereas a polycentric MNE disperse their FSAs into various host nation with a huge amount of subsidiary companies. They don't have a close connection to their home country. The last type of a MNE is the geocentric one. This one is a mixture of a polycentric and ethnocentric firm. Depending on the product line and the country manager, they just build up some subsidiary companies. Concerning governments there are differences in foreign direct investments (FDI). Some countries, especially emerging countries get more direct foreign investments than industrialized countries. As a result, a home country with a strong home base of MNEs is a net exporter of foreign direct investments. In contrast to this a typical emerging host nation is a net recipient of foreign direct investments. Relating to the topic of the term paper is shows especially the dependence of a host country, which are often emerging countries, towards multinational companies. With this power, they can determine public policy.9

The third component of the determination of the government-company-relation is the strategic way of working of multinational companies towards national governments. There are two types of acting which MNE's managers use. The first one is endogenous change. In this paradigm the company tries to influence and manipulate the process of government policy for its purposes. With lobbying for example, the MNEs try to support or hinder the outcomes of special laws which they are in favour or not. The second method is to act exogenous. This means to work within the rules set by a government and try to expand them as far as possible. These two kinds of operating with governments give multinational companies the opportunity to interact with home, what often means industrialized countries, and emerging countries in different ways. The desired outcomes from the two types of strategy differ as well. The first outcome are the benefits of integration. This means that it is a very global and competitive approach. The other approach is about the benefits of national responsiveness. In this one, the home country plays a more important role in the concept of a multinational firm.10

This Chapter should give a small overview about the different interests and goals of multinational companies and the governments of developing countries. They can distinguish a lot. Huge MNEs for example have different goals than smaller MNEs such as governments in developing countries have other aims than governments in industrialized countries. But all in all, in every case negotiation and bargaining counts which policy is done.

4. Emerging countries

Under consideration of global political ethnography, the power of multinational companies is especially very interesting in terms of developing countries. During the twentieth century the global business part of the world changed significantly. In the 1970s, huge economic reforms were done in China, continuing with the neoliberal wave that swapped Latin America in the 1980s. From time to time more markets opened their gates for foreign investors and their money. With this development the era of MNEs began. With this, the influence of the multinational companies grew tremendously.

"No matter where one stands on the economic questions, it is clear that foreign -owned corporations in many developing countries are large enough and important enough so that changes in their operations can affect the levels of income, employment, and general standard of living in the entire country either positively or negatively. The MNCs thus command a powerful political lever by means of which they may seek to influence governmental decisions."11

This quote shows how much dependent developing countries are based on economics. As an addition economic dependence goes with political dependence. After a lot of discussions two different opposing theory schools were established. They invented to different theses. The first one is the dependency school. The self-imposed goal of its members is to show how multinational companies intervene in the domestic policy of emerging markets. Their point of view is that MNEs supported local wealthy landowners, monopolists and huge interest groups. This coalition tried to prevent the modernisation and industrialisation of developing countries to defend the existing feudal-mercantile order. They say that MNEs wouldn't cringe from any type of method. They accuse MNEs to establish comprador regimes to disrupt and corrupt social and political movements. If this wasn't bearing fruits, the multination companies had the opportunity to ask the home country for help to use its military, financial and diplomatic power. That's because the home country was interested in a flourishing business as well for having a strong economy in their country. The latest findings of dependency school show, that after developing countries became industrialised they had to find a way to make profit out of it. An alliance of the domestic capitalists, multinational corporations and the state try to benefit from it.12


1 Cf. Prof. Dr. H. : Einführung in die Ethnologie. Zur Krise der ethnografischen Repräsentation. http:// Stand: 27.12.2018.

2 Cf. Finn Stepputat und Jessica Larsen: Global political ethnography. A methodological approach to studying global policy regimes. In: DIIS Working Paper (2015).

3 Cf. Stand: 27.12.2019..

4 Eva Cecilie Knutsen: Multinationals and Emerging Markets. Understanding the Institutional Environment. 28.05.2012 S. 8.

5 Benjamin Olson: What is Ethnographic Fieldwork? - Definition & Methods. Stand: 27.12.2018.

6 Shawn Grimsley: Definition of Foreign Direct Investment. direct-investment-definition-advantages-disadvantages.html.

7 Cf. Alan M. Rugman: Multinational Enterprises and Public Policy. In: Journal of International Business Studies (1998). S. 115-120.

8 believing that the people, customs and traditions of your own race or nationality are better than those of other races.

9 Cf. Alan M. Rugman, Multinational Enterprises and Public Policy. S.120-122.

10 Cf. ib. S. 122-131.

11 H. Jeffrey Leonard: Multinational Corporations and Politics in Developing Countries. In: World Politics 32 (1980), S. 454-483.

12 Cf. ib.

Ende der Leseprobe aus 8 Seiten


The influence of multinational enterprises on politics in emerging countries
Universität der Bundeswehr München, Neubiberg
ISBN (eBook)
Wirtschaft, Ethnographie, Unternehmen, Globale Wirtschaft
Arbeit zitieren
Romaeus Hover (Autor), 2018, The influence of multinational enterprises on politics in emerging countries, München, GRIN Verlag,


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