Global corporations are inseparable to

the phenomenon of globalization.

* Early historical period – globalization

followed complex patterns of interactive
engagements organized through trade and
directly influenced by the emergent and
dominant technologies especially in
shipping and navigation (Harvey, 1990).
 The History of
Global
Corporations

 Colonialism and Imperialism

 Post
World War II era where it was
dominated by American
Corporations
 There-entry of Japanese and European
Corporations back to world market

 Thecontemporary global corporation is

simultaneously and commonly referred to as
multinational corporation (MNC) or
transnational corporation (TNC).

 They are either an international company or

a global company
 International companies are importers
and exporters, typically without investment
outside of their home country.

 Multinational companies have investment

in other countries, but do not have
coordinated product offerings in each
country. They are more focused on adapting
their products and services to each individual
local market.
 Global companies have invested in and
are present in many countries. They
typically market their products and services
to each individual local market.

 Transnational companies are more

complex organizations which have invested
in foreign operations, have a central
corporate facility but give decision making,
research and
development, and marketing powers to each
 individual foreign market.

TNC – Transnational Corporation: An

enterprise that engages in activities which
add value (manufacturing, extracting,
services, marketing) in more than one
country (UNCTC, 1991).

These types of corporations are called under

the generic name of GLOBAL
CORPORATIONS.

Foreign Direct Investment (FDI) is

 construed to be one of the major elements of
the global economic development.

1960-principal turning point for FDI as the major

driver of extended global corporate
development.

1985-1990 – it grew at an average rate of 30%

a year.

Due to an increase in FDI, some 20,000 new

corporate alliances were formed in the period
of 1996-1998 (Gilpin, 2000).
3 FUNDAMENTAL INNOVATIONS:

 The advent and impact of digitalization and

instantaneous global communications.
 The structural transformation of global
commerce from producer-driven commodity
chains to buyer-driven.
 The increasing role performed through the global
system by financial elements and the emergence
of global financial firm.
3 STRUCTURAL PERIODS:

 Investment-based Globalization

(1950-1970)  Trade-based Globalization

(1970-1995)  Digital Globalization

(1995-onwards)
 Investment-based Globalization (1950-1970)
- dominated by producer-driven commodity or
value chains & tended to be dominated by firms
with large amounts of concentrated capital on
large-scale or capital-intensive manufacturing or
extractive industries.
- transformation in the dominant manufacturing
firms of older developed companies to a more fully
extended & integrated organizational forms to a
more authentically global firms which required
extensive corporate integration of their activities
throughout the world.
 Trade-based Globalization (1970-1995) - the
more buyer-driven a country is, the more nodes
exist within their networks and the greater either
their interdependence on other actors or their
imperative to establish extensions of supply,
finance and others.

 DigitalGlobalization (1995-onwards) - Global

corporate structures & operations can be viewed
within the ever-changing digital environment as
framed by the constant need to develop & adapt.
- Symbolic Capital – evident in the increasing value
& importance placed on the branding created &
owned by the GCs.
- Brand Finance – a discipline that ranks
corporations in global league tables on the brand
value parallel to their ranking by various entities in
terms of their aggregate revenue, earnings, etc.

 Digital Globalization (1995-onwards)

DIGITALIZATION is transforming the classic value
chain of manufacturing focused on innovation in
which:
 - Product design & innovation are replaced with
driving innovation through digital product design -
Labour intensive manufacturing is replaced by
digitizing the factory shop floor
- Supply chain management is replaced by
globalizing through digital supply chain management
- Marketing sales & service is replaced by digital
customization
(Capgemini, 2012)

 Digital Globalization (1995-onwards)

DIGITALIZATION leads to:

 - producer-driven streams have progressively
integrated their corporate structures to reduce
effects of time & distance for services such as
design, finance, accounting, advertising, brand
development, legal services, inventory control, etc.
- buyer-driven streams become digital with
companies‟ specialization in Internet retailing of
goods & services continuing to gain market share
over fixed in place marketing and selling.

 Digital Globalization (1995-onwards)

DIGITALIZATION leads to the Quick Response

(QR) Management System
- the dominant system operates within & between
global corporate structures with 3 steps:

1. Retailers adopt integrated electronic point of

sale technologies which allow for instantaneous
communications between sales, reordering &
production units, and delivery control.

 Digital Globalization (1995-onwards)

2. Firms redesigned internal management

practices for faster turnaround of merchandise and
allow for more effective inventory control.
 3. Retailers and manufacturers establish an
integrated supply chain with joint product
development planning & inventory control.

(Cammet, 2006)

• Interlocks that exist in the “network of corporate

control”

• Vitali,
Glattfelder, and Battison (2011) – made a
study and findings showed that a very highly
concentrated structure of ownership and
interlocks and a network structure dominated by
a very dense core remained in the hands of the
firms within the core itself.

Brazil, India, and

China
 Have become the most dynamic sector
of the global corporate growth.

 Represented in part by their significant

 FDI over the past three decades.

 The importance of global corporations in

Brazil, India, and China to the current and
projected global economy is singular

 With forty percent of the world population,

BRICS economies represent a primary
force in both global production and
consumption.

 TheBRICS were unaffected by the US

and European Markets in 2007.
 Inrelation to China, some globalist views it as
having connection with the old socialist order
since many of China‟s global corporation are
owned and controlled by the state
(„state-owned corporations‟). They are, in a
way financed by the state, and are also, in a
way, “endorsed” by the state to its ready
buyers.

 The BRICS economies is the new face of the

global corporate reality as their strong domestic
markets and their ability to gain capital from
within their host countries.
 NEMS – Non-equity modes of production.

 Have become an increasingly important form

of global corporation within the emerging
economies.

 Represent an increasingly vast network of

 relationships in which global production chains
are assembled through
 contract manufacturing,
 services outsourcing,
 contract farming,
 franchising,
 licensing, and
 management contracts.
* Viewed as „externalization‟ for corporation which gains
access to benefits within global value chains without direct
investment of comparable amounts of capital albeit at the
cost of relinquishing elements of control & at reduced
profit levels.
1. Those that have arisen as a result of growing
national power of the host country responding to
the need to aggregate & deploy national capital to
provide the bases for economic development. 2.
Those that have focused on replicating major
consumer pathways in both developed and
developing markets.
3. The NEMs which works through contract & other
relationships with developed market firms by
gaining access to & exploitation of superior
innovative technology.
 Lessened regulation by governments.

 The requirement of the so called corporate

social responsibility (CSR).

 Check and balances provided by NGOs.

 Needfor regulation of the global financial

market.
 After
World War II, global corporations were
viewed as agents of desired economic
development.

 FDIs were in demand throughout the world.

 Bythe end of the 1960‟s onward, global

corporations were viewed as gaining their
economic prominence through a variety of
socially destructive means.
 Globalcorporations are viewed as agents
of a system that on balance was resulting
to  greater global wealth inequality, 
income inequality,
 lack of effective worker protection,
 environmental degradation,
 producing natural cultures of
corruption through corporate collusion,
 and in some instances, threatened
national sovereignty.
Global corporations are now
very powerful that they can
create a financial crisis if they
want to.
 Global inequality

 Thesystematic stability and viability of the

global financial system

 Climate issues
 The likelihood that continued global
interdependence will produce outcomes
favourable for the world as a whole will
depend in large part on the willingness of
global corporations to embrace the
importance of these global goods and
their responsibilities for them.