For the past few decades it is clear that multinational corporations have truly evolved into something much greater than an economic actor. In her article Big Business and the State, Susan Strange argues how MNCs plays a central and not a peripheral role in the International Political Economy. Similarly, Peter Evans in his article The Eclipse of the State suggests that dominance of private power has caused an institutional shift that questions the capacity of states to exert their authority as MNCs have become stateless. These arguments presented by Strange, Evans and various other scholars suggest that MNCs have developed into an entity beyond the capacity of the state.

However, despite the amount of influence and power an MNC has, some MNCs (depending on the nature of its business) are not immune to the constantly changing expectations of social standards. Private politics is the method in which activist groups and NGOs push corporations to conform to these standards. Although ‘social standards’ are very broad, some of the main focuses include the effect on the environment, employment malpractices (in every step of the production process), animal welfare, and safety. The ultimate goal for activist groups is to get corporations to change its practices to follow the demands that are set by the social standard. Some of the methods activists use in order to achieve their goals include forming unions to organize a strike, boycotting a firm’s products, leveraging capital markets, and more recently, using social media to expose a firm’s malpractice to the public which could intensify the first three methods.

In most cases, private politics is an effective way to keep MNCs in check and keep them accountable for their actions. It is effective because it can greatly impact a firm’s operations and its profitability, which are extremely important especially for its shareholders. An example of this can be seen with the case of McDonald’s and the obesity epidemic in the US. Many Americans blamed fast food chains such as McDonald’s to be the primary cause of obesity in the US as it perpetuates unhealthy eating habits. The documentary film Super Size Me gave the public a closer look at McDonald’s’ contribution to the issue and its increasingly influential role in the lives of American consumers. In response to the issue, McDonald’s decided to diversify its menu to more healthy options such as salads and apple slices, and as a result, McDonald’s even became the biggest purchaser of apples in the US consequently after the change.

Private politics is not necessarily an entirely negative thing for corporations as it could also prove to be beneficial in the long run. Another example for this would be with the automotive industry and the constant pressure from activists to reduce carbon emissions which was further worsened with the Volkswagen emission scandal. Private politics in this case pushed automakers to become more innovative and create sustainable options for vehicles. This is evident today where electric cars have become the new trend in the automotive industry. Overall, private politics can be beneficial for both the firm and the consumer as it forces MNCs to be accountable and it also helps them to innovate in the process of conforming to social norms.

References:
Diermeier, D., & Policy Research Initiative (Canada). (2009). Governing the global economy: The role of private politics. Ottawa, Ont.: Policy Research Initiative.

Evans, P. (1997). The Eclipse of the State? Reflections on Stateness in an Era of Globalization. World Politics,50(01), 62-87. doi:10.1017/s0043887100014726

Strange, S. (1993). Big Business and the State. Multinationals in the Global Political Economy,101-107. doi:10.1007/978-1-349-22973-4_6

Fiji Water is more than just the trendy artesian water it wants consumers to believe it is. Around since 1996 and now part of The Wonderful Company (makers of POM Wonderful, Wonderful Pistachios, amongst other “wonderful” products), Fiji Water has carried a pristine bottled water reputation, more expensive than other bottled waters. Mostly under the radar when it comes to news about MNCs, Fiji Water received great publicity and fanfare after this year’s Golden Globe Awards in January sparked a viral moment thanks to the “Fiji Water girl”. The model, hired to showcase Fiji Water on the red carpet, appeared to photobomb numerous celebrity photos leading to plenty of internet reactions and what one marketing group estimated a total of $12 million in brand exposure. As mentioned in my previous blog, MNCs love this kind of viral  attention – it’s free marketing for them. Of course, this kind of press can also serve as a useful distraction from an MNCs shadier practices.

In this case, Fiji Water ought to be examined in how it practices business in Fiji. For years, the company bottled water in/from Fiji employing Fijians. However, in 2010 after the Fijian government enacted tax hikes on MNCs extracting water in Fiji, the company threatened to leave for New Zealand. This is a classic move MNCs make. Fundamental in the difference between MNCs and states as actors in the international political economy is the relative mobility MNCs enjoy. That is, if they dislike the policies in a host or home state, they can move. States cannot move. Somewhat surprisingly, Fiji Water acquiesced and remained operating in Fiji despite the tax hike. However, that is not the full story. Fiji Water has also been accused of being complicit in a strict and repressive military government in power in Fiji while also restricting local access to its water source leaving Fijians to drink dirty water.

These kinds of business practices are absolutely not limited to Fiji Water. Exploitation and authoritarianism tolerance in the developing world by MNCs marketing primarily to the developed world is commonplace. While regulatory work ought to be done on international business practices, prospects of that actually happening look bleak with the capitalist, neoliberal system in place. We as individuals certainly have more power than we think to affect systems-change, but that still requires mass mobilization. In the meantime, conscious consumerism is important to recognize the MNCs practicing shady business. When considering sharing the viral Fiji Water girl moment with our networks, we ought to think twice.

Watershed moments like the Cambridge Analytica scandal have strongly impacted public perception of personal data, drawing attention to the degree of unregulated power multinational tech giants like Facebook possess. Unlike more conventional MNC’s, technology giants like Facebook and Uber have prided themselves in resisting regulation, arguing that the slow, constrictive and often outdated regulatory frameworks cannot apply to such rapid technological innovation. As market preferences change, Facebook has continuously expanded its user base, purchasing WhatsApp and Instagram and dominating the market with more than 2.3 billion active users. However, the Facebook revenue model, which relies heavily on user data and preferences used in the companies advertising platform, has been continuously bogged down by controversy. As consumers continue to engage with such platforms and consume more information than ever before, misinformation, manipulative algorithms, and a lack of policing have become primary propellants behind calls for regulation. There is no doubt that regulation must exist in some form, and it seems that the time of MNC’s like Facebook operating largely unhindered by regulatory frameworks is over. Platforms tend to be heavily monetized through advertisement, and corporate dynamics are virtually unavoidable. Content has become increasingly targeted, and with that, comes the added issue of agenda pushing and content designed to be misleading and divisive. The use of big data to absorb and process a large amount of personal data revealed by our preferences and usage of such platforms also makes targeting and influencing views a natural process; a process that has already drawn significant criticism through scandals like Cambridge Analytics and the Brexit scandal; both of which involved manipulating Facebook user data.

By holding such platforms unaccountable, we as consumers support the notion of markets being able to regulate frameworks when interacting with personal data in an ethical manner and there is a clear indication that profit-driven incentives have overtaken any semblance of responsibility and accountability. Mark Zuckerberg recently called for the “stricter regulation of harmful content, election integrity, privacy and data portability” online, and it seems with this, will likely come a new wave of social responsibility initiatives from technology companies like Facebook. The EU and the United States have long deliberated on ways to mitigate and address this issue. In the age of rapid technological innovation, it seems that many of the companies that would seemingly be at the forefront of corporate social responsibility have instead, long benefited from a severe lack of accountability. The destructive capability of the misuse of data, as seen in recent controversies surrounding Facebook, can and should be likened to controversies that arise from more conventional MNC’s like Royal Dutch Shell and Nestle; corporate social responsibility must be binding to all sectors, and it seems that long needed reform may soon be on its way.

Works Cited:

Afoko, Carys. “Government Can’t Regulate Facebook – It’s up to All of Us | Carys Afoko.” The Guardian, Guardian News and Media, 1 Apr. 2019, www.theguardian.com/commentisfree/2019/apr/01/government-regulate-facebook-mark-zuckerberg-social-media.

“Mark Zuckerberg Says He Wants More Regulation for Facebook.” The Economist, The Economist Newspaper, 4 Apr. 2019, www.economist.com/business/2019/04/06/mark-zuckerberg-says-he-wants-more-regulation-for-facebook.

Wattles, Jackie, and Donie O’Sullivan. “Facebook’s Mark Zuckerberg Calls for More Regulation of the Internet.” CNN, Cable News Network, 30 Mar. 2019, www.cnn.com/2019/03/30/tech/facebook-mark-zuckerberg-regulation/index.html.

The United States is the world’s largest multinational company with the largest number, largest scale, highest output value, the strongest capital, the most advanced technology, and the strongest influence. In recent years, US multinationals account for at least one-third of the world’s top 500 companies. In the process of promoting economic globalization, American multinational corporations have also promoted the democratic expansion and export of the United States from both the main and the objective aspects. It is an important participant and promoter of the United States to seek global hegemony strategy through democratic export. Robert Gilpin, a famous American scholar and founder of international political economy, believes that the international status and nuclear superiority of multinational corporations and the US dollar constitute the three cornerstones of the United States seeking global hegemony since the end of the Second World War. Multinational corporations have played the following roles in the US democratic export strategy: Multinational corporations are an important promoter of the internationalization of American ideology in the context of economic globalization. Western countries such as the United States regard globalization as not only the globalization of the economy, but also the internationalization of bourgeois ideology. Former US President Bill Clinton once made it clear that international interdependence in the context of globalization is not only a threat to the values ​​of the United States and Americans. On the contrary, the influence of American values ​​such as freedom, self-determination and market economy has been continuously strengthened. Transnationalization is a concentrated expression of the level of globalization. The “global expansion of US multinationals has led to the global expansion of the US democratic system”. Multinational corporations have become a “quasi-political institution” in the third wave of democratization promoted by Western countries. By controlling information and communication, they exercise enormous power over the location and personnel, promote democracy and expand US capital. The influence of doctrine played an important role in promoting action, exacerbating the complexity of democratic politics in the context of globalization.Multinational corporations are the new carrier for the United States to promote democratic export strategies and public diplomacy. The famous international relations scholar Carl Dojic pointed out: “Public diplomacy is the eternal theme of modern diplomatic thoughts, while multinational corporations shoulder the heavy responsibility of spreading the values ​​and ideas of a country to the world, and cannot be ignored in the process of realizing national interests. The role of “.” In the US public diplomacy and the promotion of democratic export strategy, the government, non-governmental organizations, multinational corporations, individuals and other multi-actors have assumed their respective roles, and multinational corporations have become one of the multiple roles of public diplomacy. An important new carrier has a new function of “corporate diplomacy.” Former Spanish diplomat Sean Rodin pointed out that diplomacy is a form of “new diplomacy” implemented by “postmodern countries” in the context of globalization. The role of transnational corporations is no longer just about pursuing commercial interests, but also becoming active in the diplomatic field. Diplomacy has become one of its important functions. The core purpose of multinational corporations to participate in public diplomacy and promote democracy is to win the company’s power and social legitimacy in the era of globalization. In the process, the company seeks to represent a certain concept, country and its related values, and strives to actively adjust the company’s value. Adapt to social values ​​and better expand relationships with other stakeholders. Multinational corporations have played a public diplomacy role in three aspects: political mobilization, agenda shaping, and information communication.

reference:

David L.Richards，“Money Witha Mean Streak`?”International Studies Quartcrly(2001)219-239.

nited Nations Confcrenccon Tradcand Development,WorldInvestment Report 2002,New York and Geneva,2002

On April 3, 2019, Australia passed a legislation that “threatens huge fines for social media companies and jail for their executives if they fail to rapidly remove ‘abhorrent violent material’ from their platforms” (Cave, 2019). This came after a gunman distributed a hate-filled manifesto online and then used Facebook to livestream the massacre of fifty people at two mosques in Christchurch, New Zealand on March 15, 2019. The tech and media industry opposes this legislation, claiming that (1) this can lead to the censorship of legitimate speech; (2) damage Australia’s relations with other countries because it would require surveillance of all users around the world; and (3) does not address the Islamophobic motivations of the terrorist attack.

Social media companies are currently at the forefront at the issue of the spread of hate and misinformation through the internet. They present an interesting challenge in regards to culpability whenever something bad happens that involves people using it as a platform to spread hate and violence. Are social media companies responsible for how people use their platforms? To what extent? Who polices the internet? How does one effectively police the internet, when it transcends national borders? How are states involved in all of this? In an increasingly globalized world, this is an issue that must be addressed.

Sometimes, I like to think of social media platforms as like knives: they were not intended to cause harm, but there’s no avoiding the fact that it can be used in that way. Knife companies are not held responsible for murders committed by its products, therefore social media companies should not be held responsible by states for any harm that came about because its users decided to use the platform in a harmful manner. The onus to use social media responsibly is on its users. However, the nature of social media means it can facilitate a large amount of harm with little effort. With one click of a button, it can spread a lot of hate to a lot of people in a short amount of time. So, here, the knife metaphor isn’t sufficient anymore. After all, it is hard to take away an idea once it’s in someone’s head, and the spread of ideas is social media’s bread and butter. In this case, some sort of regulation is probably needed. Social media companies definitely need to be involved in this regulation, but how about states? Social media transcends national boundaries: how is social media regulated between states? What if one state wants to pass a law regarding social media that may have implications beyond its boundaries (like Australia)? This sounds a lot like concerns about MNCs and FDIs. Here, I think IGOs and NGOs would be useful. An organization can draft a set of principles or guidelines that can codify the responsibilities of a social media company, and give social media companies the opportunity to agree to these guidelines. It can give them something to strive for, something to improve on. It may not solve all problems, but it can give companies a direction and go from there.

References

Cave, Damien. (2019, April 3). Australia Passes Law to Punish Social Media Companies for Violent Posts. The New York Times. Retrieved from https://www.nytimes.com/2019/04/03/world/australia/social-media-law.html.

Corporate Social Responsibility has come a long way. Gerard Costa writes on Forbes that, for multinational corporations (MNCs), there is no other option but corporate social responsibility (CSR). He describes a manager of a major consumer goods MNC talking to a group of future graduates who claims that “CSR is our only strategy” (2019). The manager is appealing to the relatively high social awareness of these future workers. These future workers are more conscious of social issues such as human rights, labour rights, and climate change that previous generations. Indeed, one study notes that younger workers favour companies that incorporates CSR into their business strategy, perhaps due to increased volunteering among younger people for extra credit and to improve their resumes (McGlone et al., 2011).

Organizations that take part in the socialization of the next generation through volunteerism play roles in the increasing acceptable of CSR as a norm within the business community. This shift in the expected corporate norms by the next generation of workers, Generation Z (born in the mid-1990s, the latest generation to enter the workforce) gives MNCs incentives to incorporate CSR into their business strategy from the educated labour side of the workforce. Costa’s article mention “purpose brands”: brands that tell clients that they fulfill a social purpose (2019). If a company disingenuously cultivates this brand without fulfilling the social purpose, and people find out about it, there will be consequences: Workers who thought they were doing good by working for a company that they thought had a good human rights record will feel betrayed and lied to. In addition, consumers, especially “belief-driven buyers” who are loyal to brands that stand for something, do not like it when they find out that companies that they thought to be socially responsible are taking part in human rights abuses. In other words, bluewashing is not sustainable in the long run—looking like socially responsible companies without actually being one are only temporary solutions, given the prevalence of media and the speed of information.

MNCs need to have good CSR strategies that conform to the new emerging culture within the business community, or else fall behind and be damned by bad PR.

References

Costa, Gerard. (2019, March 13). Corporate Social Responsibility, Purpose Brands And Gen-Z. Forbes. Retrieved from https://www.forbes.com/sites/esade/2019/03/13/csr-purpose-brands-and-gen-z/#409049215849.

McGlone, T., Spain, J., & McGlone, V. (2011). Corporate Social Responsibility and the Millennials. Journal of Education for Business, 86(4), 195–200.

In this world where we see MNCs as “Social Actors” there has been a growing need for Corporate Social Responsibility as they are not just economic actors but also “bear a responsibility” to social stakeholders (Hofferberth, 2011). However, in modern times more often than not it seems to be uses as a marketing strategy for greater commercial profit from the poor sucker consumers trying to do the right thing. This was best seen in the VW scandal.

In 2015 Volkswagen was caught up in an emission scandal that shocked the world not only because an MNC did something they shouldn’t have but due to the blatant violation of the tenants of Corporate Social Responsibility. The company had pledged under CSR to “go Green” to save the world selling cars under the disguise of being the designer of cheap environmentally friendly diesel engines. However, the company deliberately set out to circumvent emissions control with the aim of giving the company an unfair advantage over its competitors that made it the world’s number one car maker at the expense of the environment. It wasn’t just a single engineer who made this decision but everyone from the CEO down knew what was happening. The head of CSR instead of challenging the fake “cheat devices” turned a blind eye to the issue. The command chain that led to the development of certain lines of software that could put an engine into to test mode and then return it to “dirty mode” is on record, all the testing that was done is documented. Consumers on finding out not just the lie but the extent to which VW went to hide the lie shocked a massive worldwide recall and a massive hit to VW share. However, the reality was that VW, while definitely taking a hit, was still ok as people showcased that while the environment is important, a reliable fast car is more what they want. VW is still the number one world’s largest car manufacturer in 2018 regardless of the scandal and their head of CSR remains in his position. More work needs to be done to ensure CSR is taken seriously as while we claim in theory that CSR is the right solution for companies, the reality remains that until a regulatory body of CSR is established companies will always put CSR second to economic profit.

Citation:

Matthias Hofferberth et. al. (2011) “Multinational Enterprises as “Social Actors”—Constructivist Explanations for Corporate Social Responsibility” Global Society 25, 2: 205-226

Theo Legett (2018). How VW covered up their scandal. BBC News.

The Santa Clara County vs. Southern Pacific Railroad (1886) Supreme Court case in the United States established the legal personhood of corporations and paved the way for a friendly environment in which MNCs emerged over the next century plus. That has led to a United States where corporations have great influence in society and face little accountability – only buoyed by another Supreme Court case, Citizens United vs. F.E.C. (2010) which allowed for virtually limitless corporation spending in elections based on the freedoms they enjoy as “people”.

This offers much to discuss, but I want to focus on another element of corporate personhood. That is, the tendency by MNCs displayed en masse to attempt to “humanize” themselves. This tendency is further perpetuated by the Internet age where social media and popularity of “viral” videos permeate society. Examples of MNCs operating in this field can be observed in how MNCs choose to participate in holidays like the very recent April Fool’s Day and in the way their social media presence has developed and evolved. Each year, countless MNCs engage in April Fool’s gags often involving the unveiling of a fake new product and marketing campaign to come with it. The real marketing comes from the viral potential of these pranks that garners attention and – as the MNCs hope – good will from the public. While these attempts often backfire, it is clear the idea behind participating in April Fool’s Day is a bid to foster a more personal relationship between company and consumer. The same can be said when considering how MNCs have trended in their social media presence. Especially on Twitter, there has been a trend for MNCs with an account to adopt a humanized persona when tweeting. Rather than using “we”, the first-person “I” is being used more often as accounts attempt to strike a similar tone to individual Twitter users. Wendy’s and Netflix consistently achieve viral moments through this new approach to MNC social media presence.

While these accounts are certainly amusing at times, it is important to understand the real intention behind them. As we know, MNCs bottom line is about profit – and how to maximize it. This approach to marketing is an attempt to blur the lines between company and consumer. If we see Wendy’s as the funny and relatable Twitter account rather than the huge fast food corporation it really is (and all the unseemly activities that come with that distinction), we are likely more inclined to frequent Wendy’s. We should thus view these tactics with skepticism and consider how appropriate engaging with MNCs online is when it is clear the sole purpose is to get us to spend more money and continue to act as loyal consumers.

The issue I want to address comes in the recommendations made in the State of the Union address delivered by President of the European Commission Jean Claude Juncker addressing the need for an increase in FDI into Africa. The reason for this analysis is to understand the motivations behind EU sudden interest in providing more FDI leading to viewing Africa as a mutual business partner in light of the signing of a new deal between the two unions of the EU and AU. (Stopford, 1998).

Juncker calls Africa, Europe’s twin continent and discusses the need to invest in a mutual partnership (Juncker, 2018). He states that Africa is no longer a continent just meant to be looked at through the prism of development aid but now as a mutual business partner. It is worth noting that during the early twentieth century most of Africa had been colonized by Europe draining it of its resources and primary raw materials and was effectively used as a pawn by the European Nations in their quest for dominance. A century later, Africa once again seems to be used as a pawn to satisfy the European agenda to act as a “global player” under the disguise of mutual economic growth (Juncker, 2018). The timing also seems very suspicious that Europe has decided on “more private investment and trade with the African Union” (Juncker, 2018) as between 2000 and 2017 China has been loaning Africa nearly $143 billion dollars in loans to various governments which many scholars speculate as debt traps used by China to exert dominance over a region (CARI, 2018).

The pros to such a suggestion would be creating jobs within the African Union leading to less migration to Europe in the hope for employment. The standard of living in Africa could improve based of the increase in investment in development projects.  There would also be an increase in GDP per capita and the spending power of African nations. Europe could also challenge China by making Africa self-sustainable and providing them with the wherewithal to pay off the outstanding and ever increased loans, freeing them from the immediate threat of external influence.

The cons to such a mutual partnership is the lack of mutual respect between the nations. It is plausible that Europe could be using this deal to get a foothold into Africa and control over its decisions regarding Foreign Direct Investment as well as a governing authority on “sovereign decisions” (Juncker, 2018). The statements used by Juncker do not specify who would be receiving this funding and how it would be distributed within the African Nations. Who would benefit more and who would get less? There is also the possibility for repercussions to nations who do not sign on as seen in the previous AU-EU deal where Kenya refused to sign and was subject to heavy import tariffs.

In conclusion, is the purpose of this FDI meant to purely altruistic or is the true purpose supposed to be vested in self-interest? Am I being too skeptical in not buying into Junker’s “brother country” mentality when it comes to EU- AU relations?

Citations:

• Cini, M. (2016). European union politics. Oxford University Press.
• Jean Claude Junker (2018). State of the Union 2018: The hour of European sovereignty.
• John Stopford (1999) “Multinational Corporations,” Foreign Policy, 113