A FIRST LOOK AT A MODERN PHENOMENON

The modern multinational corporation (MNC) is an economic, political, environmental, and cultural force that is unavoidable in today's globalized world. MNCs have an impact on the lives of billions of people every day – often in complex and imperceptible ways. The importance of large MNCs is illustrated in this chapter using data measuring the economic magnitude of these firms. In this context, the leading explanations for why some firms have grown so large are summarized. However, it is important to recognize that the scope of MNCs extends beyond the economic realm. Within the nations in which they operate, large corporations exert political influence to obtain subsidies, reduce their tax burdens, and shape regulations. What especially differentiates the modern MNC from earlier large firms is its great mobility to seek low-cost inputs to production. This transnational mobility implies that firms may be able to set nations against one another in an effort to obtain a favorable regulatory environment. Even further, recent international trade agreements may enable corporations to circumvent national sovereignty entirely.

The second section of this chapter describes the general economic significance of MNCs in today's world, and the final section addresses their political influence as well as their environmental and social impacts and responsibilities. The chapter ends with some observations on the requirements for bringing the goals of MNCs more closely into line with long-range social goals based on the interests of all stakeholders.