Though MNC’s are a uniquely American creation, most countries now have their own variations of corporations. While the US government does not directly coordinate with its MNCs, other countries such as Japan have used institutional tools and laws to grow their MNCs and prevent inward FDI.

After the Second World War, the United States under the General Douglas MacArthur began the occupation and reconstruction of Japan. One of the main tasks was breaking up the former imperial family conglomerates , or Zaibatsu. Zaibatsu were family owned conglomerates that dominated the Japanese marketplace. Born out of the desire to not rely on foreign firms to transport their military, the Japanese monarch offered favorable contracts to local firms that grew into the Zaibatsu firms. For example, as Miyashita and Russell explain, Zaibatsu firms held enough power to force then Prime Minister Kato to drastically cut the military budget, which costs the armed forces of three army divisions. Seeing the Zaibatsu as the main factor of Japan’s militaristic government, the US occupying forces chose to break up the firms and nationalize their assets into the contemporary keiretsu.

The keiretsu business model is an association of companies formed around a central bank, stockholders, and a central trading company. Japanese firms use the keiretsu business model to skirt anti-trust laws and change how MNCs interact with each other. US MNC’s will only work together and share resources during strategic alliances to maintain their respective independence. However, the keiretsu model promote resource sharing, with firms looking out for each other , instead of competing with each other to allow simultaneous expansion into the global market.

Theorist have called the rise of Japanese a miracle, theorist Chalmers Johnson has called it less so. The idea of a miracle can be attributed to the notion of orientalism, and the fascination of unprecedented growth in the Asian continent. What Johnson attributes the rise of the Japanese firm to the MITI , or Ministry of International Trade and Industry. What MITI did was use targeted public policy that selected vulnerable global markets. Using previously purchased licensing agreements and shared resources, Japanese firms have created a competitive advantage not relying on natural resources, but cheap high-quality goods that rival there US counterparts. In summary, the Japanese miracle is actually one of targeted public policy. Through a centralized bureaucracy, Japanese firms share resources and look out for each other to target vulnerable markets and create a competitive advantage. By restricting inward FDI, MITI also allowed the growth of their MNCs to go unchallenged, while simultaneously pushing into global markets.

Owen Tsang

Sources:

Miyashita, K., & Russell, D. (1994). Keiretsu: Inside the Hidden Japanese Conglomerates.

In the 1970’s, Chevrolet released an advertisement of the integral nature Chevrolet has on the American way of life. The phrase “baseball, hotdogs, apple pie, Chevrolet” implies that Chevrolet is as uniquely American as the aforementioned commodities. By extension this advertisement shows how MNC’s are a uniquely American invention. After the Second World War, the United States was put in a unique position to establish the post-war order. Through the Bretton Woods System, the United States avoided creating an international regime of investment policy. In doing so, the growth of the US MNC largely went unchecked, particularly during the Marshall Plan and European reconstruction.

As Gilpin argues, MNCSs and the US government do not exclusively cooperate together. However, MNC’s are subject to favorable public policy and regulations. This is because MNC’s and the US government operate on a mutually beneficial relationship. The spread of US MNC’s is the spread of American capitalism and ideology. In doing so, the US consumer culture expands further into foreign countries, able to do so by the lack of international investment policy.

One US based theory on the spread of US consumerism the Product Cycle Model by Raymond Vernon. The PCM follows the birth , growth , maturation, and decline of the product. With the example of the TV, RCA held the monopoly on the TV market. Utilizing patented proprietary technology, RCA was able to fend off competition to grow and mature their product in the domestic market and expand into the foreign markets. Yet , the TV as a product is still in high demand in the USA. The difference is in that Japanese and Korean brands now control a larger chunk of the market. What this shows is that consumerism is more embedded into the American social fabric than specific MNCs. Given the lack of coordination between MNC’s and government, it shows how government prefers to have inward FDI’s and market competition based on the principles of liberal capitalism. Therefore, it can be said that MNC’s re bi-products take advantage of the consumerist nature of the US social fabric. However, the relationship is not reciprocal, where consumers prefer market diversity instead of a single , monopoly-based choice. This desire for diversity is what Japanese MNC’s take advantage of in their initial investments into US markets in the 1970’s.

Owen Tsang

Sources:

Crawford , R. (2019 , January 22). Week 4 US Power and Multinational Corporations. University of British Columbia, Vancouver BC. Retrieved March 4th , 2019 , from https://blogs.ubc.ca/a12012/files/2019/02/POLI-37A-Week-4.pdf

Gilpin , R. (1975). Corporate Expansionism and American Heremony. In R. Gilpin , US Power and the Multinational Corporation. Retrieved February 2019

Spero , J., & Hart , J. (1997). The Mulitnational Corporation and the Issue of Management. The Politics of International Economic Relations, 110-112.