FUTURE OF THE TRANSNATIONAL

1
CHAPTER 8

• FUTURE OF THE TRANSNATIONAL
• AN EVOLVING GLOBAL ROLE

2
KEY QUESTIONS

• Why the Growing Discontent with MNEs?
• What is the Challenge facing MNEs?
• What are the 4 MNE postures regarding
  developing-world needs?
• - The Exploitive MNE
• - The Transactional MNE
• - The Responsive MNE
• - The Transformative MNE

3
GROWING DISCONTENT WITH MNEs

• Globalization continued exploitation by MNEs
• WTO Seattle Meeting 1999
• Stiglitz, Globalization and Its Discontents
• - First World Hegemony
• - MNEs Monopoly Behaviors
• Worldwide Poverty Numbers Increasing

4
THE CHALLENGE

• Time to think outside the box!
• 50 years/2.3 trillion in foreign aid Failed!
• India and China reducing poverty via the power
  of the marketplace
• DFI flows into developing countries (250 billion
  in 2000) is 4X that of development aid
• Are MNEs ready to lead in solving problems that
  are feeding the roots of anti-globalization?

5
THE EXPLOITIVE MNE

• MNEs utilize Market Imperfections
• - Friedmans Free Market admonition
• The ubiquity of the Sweatshop
• Cleansing via Outsourcing doesnt work
• Relocation as one-upsmanship
• Ineffectiveness of supranational agencies leads
  to emergence of rabid NGOs

6
THE TRANSACTIONAL MNE

• Modern residual of the Exploitive MNE
• MNEs need be compliant and non-oppressive
• MNEs need expanded sensitivity to be properly
  responsive in emerging markets
• Labor provides an exploitive opportunity but
  labor laws, etc. need to be respected
• Defensible behaviors Motivation To protect
  markets in developed countries?
• - Example NGOs/NIKE/Boycotts

7
THE RESPONSIVE MNE

• Sustainable strategy/long-term view
  pro-activity
• MNE makes conscious commitment to contribute
• Prahalad, The Fortune at the Bottom of the
  Pryamid, - deliberate down-looking for profit
• MNEs make positive impact on employees lives
• - The Starbucks CAFE program
• - Sharing the wealth down thru the VA chain
• Subscribing to the UNs Global Compact

8
THE TRANSFORMATIONAL MNE

• Challenged by the need to eliminate root causes
• Committed to directing company resources to
  remedy problems in developing countries
• Ability to pay is likely not a criterion
• MNEs set new standards on occupational issues
• Contributions go beyond direct stakeholders to
  broader societal contexts
• MNEs partner now with NGOs for complementarities
  and effectiveness