The rise of the global corporation

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The!Rise!of!the!Global!Corporation!
Deane!Neubauer!
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Part%One:%The%historic%rise%of%the%global%corporation—three%periods.%
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As!indicated!throughout!this!text,!global!corporations!are!inseparable!from!the!more!
general!phenomenon!of!globalization!itself.!It!follows!that!how!one!identifies!globalization!
serves!to!“locate”!global!corporations,!both!in!the!complex!interactive!pattern!defined!by!
globalization!and!within!given!historical!periods.!This!chapter!situates!the!global!
corporation!in!three!broad!historical!periods,!of!which!the!last!two!have!become!the!most!
relevant.!
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The!approach!to!the!study!of!globalization!sometimes!termed!“historical!globalization”!
locates!the!phenomenon!itself!in!early!patterns!of!trade!and!exchange!(Bentley,!J.!2003;!
Gills,!2006;!Moore!and!Lewis!2000.)!In!early!historical!periods!as!both!cities!and!countries!
extended!their!reach!beyond!their!own!borders,!this!view!holds,!a!form!of!globalization!was!
initiated!which!then!followed!complex!patterns!of!interactive!engagements!organized!
through!trade!and!directly!influenced!by!the!emergent!and!subsequently!dominant!
technologies,!especially!in!shipping!and!navigation!(Harvey,!1990).!!As!Moore!and!Lewis!
contend,!the!entities!operating!within!this!environment!were!functionally!and!

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organizationally!not!so!very!different!from!contemporary!organizations,!being!possessed!of!
“head!offices,!foreign!branch!plants,!corporate!hierarchies,!extraterritorial!business!law,!and!
even!a!bit!of!foreign!direct!investment!and!value-added!activity!(Moore!and!Lewis,!2000;!
31-32).!
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The!vast!heterogeneity!of!this!long!period,!however,!leads!a!majority!of!scholars!to!situate!
the!direct!antecedents!of!the!contemporary!global!corporation!within!the!dynamics!of!a!two!
plus-centuries!long!duration!spanning!the!period!prior!to!the!end!of!WW!II!in!which!the!
modern!nation!state!system!emerged!in!ways!that!allowed!invention!and!social!organization!
to!combine!that!vastly!increased!world!capital!and!the!wealth!of!nation!states.!!Coupled!with!
an!extraordinary!rise!in!global!population!that!attended!the!industrial!revolution,!the!
societies!that!arose!would!invent!new!ways!to!organize!the!world!itself!through!colonialism!
and!imperialism!that!vastly!attenuated!their!interactions!between!peoples,!states!and!
regions!such!that!a!clearly!differentiated!era!of!global!interaction!can!be!said!to!exist!
(Harvey,!1990).!!Many!of!the!characteristics!of!the!global!corporation!that!we!examine!
directly!in!this!chapter!date!from!this!period!(e.g.!patterns!of!equity!ownership,!corporate!
ownership!and!management!of!subsidiaries,!the!relationship!of!“central”!organizational!
functions!to!supply!and!distribution!chains,!etc.)!as!attributes!of!corporate!structures!in!the!
most!prosperous!and!globally-engaged!nations!(largely!through!colonial!and!imperialist!
relationships).!
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As!the!world!emerged!from!the!vast!destructions!of!WWII,!economic!recovery!and!
expansion!were!led!overwhelming!by!American!corporations!which!for!a!period!from!the!
end!of!the!war!until!the!re-entry!of!Japanese!and!European!corporations!onto!the!global!
scene!essentially!stood!for!what!by!then!had!come!by!then!to!be!viewed!as!multinational!
corporations!(MNCs)!(Barnet!and!Muller,!1974).!!This!period!from!the!end!of!WWII!to!the!
present!can!be!viewed,!therefore,!as!a!third!and!distinct!period!in!the!transformation!of!the!
global!corporation.!As!the!next!parts!of!this!chapter!detail,!the!transformations!of!the!global!
corporation!occurring!within!this!third!period!have!been!far!reaching!and!distinctive,!!
reflecting!changes!taking!place!within!the!broader!structural!dimensions!of!globalization!
itself!and!at!the!same!time!significantly!contributing!to!those!continuing!changes.!
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Part%Two:%How%do%global%corporations%function?%What%constitutes%a%global%
corporation?%
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The!contemporary!global!corporation!is!simultaneously!and!commonly!referred!to!either!as!
a!multinational!corporation!(MNC),!a!transnational!corporation!(TNC),!an!international!
company,!or!a!global!company.!While!much!of!the!remainder!of!this!chapter!will!serve!to!
clarify!some!of!these!distinctions,!those!offered!by!Iwan!(2012)!are!practically!useful.!!
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• International!companies!are!importers!and!exporters,!typically!without!investment!
outside!of!their!home!country;!

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• 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!develop!(R&D)!and!marketing!powers!to!each!individual!foreign!
market.!!
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More!formally!the!transnational!corporation!has!been!defined!by!the!United!Nations!Centre!
on!Transnational!Corporations!(UNCTC)!as!an!“enterprise!that!engages!in!activities!which!
add!value!(manufacturing,!extraction,!services,!marketing,!etc)!in!more!than!one!country!
(UCTC,!1991).”!This!chapter!will!employ!the!term!“global!corporation”!to!refer!to!all!of!these!
types,!seeking!within!specific!contexts!to!be!clear!about!which!usage!most!applies.!As!many!
of!the!citations!employed!below!indicate,!however,!these!distinctions!are!often!not!
employed!within!the!literature.!
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An!understanding!of!how!global!corporations!operate!within!contemporary!globalization!
requires!a!brief!recounting!of!some!of!the!major!changes!that!have!taken!place!over!the!
almost!seventy!years!since!the!end!of!WWII.!As!indicated!above,!US!corporations!operating!
internationally!had!enormous!advantages!in!the!immediate!post-war!period!as!they—

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virtually!alone!in!the!world—emerged!from!the!war!with!their!productive,!organization!and!
distributional!capacities!intact.!!What!would!take!shape!as!the!beginning!of!contemporary!
globalization,!however,!dates!from!the!economic!recovery!of!capital!structures!in!Japan!and!
Europe!and!the!re-entry!into!global!markets!of!their!national!corporations.!By!1974!Barnet!
and!Muller!in!a!path-breaking!volume!could!both!define!the!MNC!as!a!major!economic!
global!actor!and!begin!an!effective!description!of!how!this!particular!corporate!form!was!
coming!to!dominate!various!aspects!of!global!production!and!exchange!(Barnet!and!Muller,!
1974).!!!A!considerable!amount!of!other!scholarly!work!documents!various!“waves”!of!
global!corporate!development!through!the!subsequent!six!decades!to!the!present."
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The!overall!structure!of!this!system!would!stay!in!place!and!continue!to!develop!throughout!
the!1970s!and!1980’s—a!period!that!stands!chronologically!just!prior!to!three!fundamental!
innovations!that!have!substantially!changed!the!character!of!the!global!corporation:!the!
advent!and!impact!of!digitalization!and!instantaneous!global!communications;!the!
structural!transformation!of!global!commerce!from!producer-driven!commodity!chains!to!
buyer-driven;!and!the!increasing!role!performed!through!the!global!system!by!financial!
elements!and!the!emergence!of!the!global!financial!firm.!(The!post-war!period!can!be!
delineated!in!a!number!of!ways.!Geriffe!for!example!emphasizes!three!structural!periods:!
Investment-based!globalization!(1950-1970);!Trade-based!globalization!(1970-1995);!
Digital!globalization!(1995!onwards.)!Within!this!analysis!the!nature!of!the!global!
corporation!changes!accordingly,!being!driven!in!each!case!by!its!evolving!purposes!and!by!
its!extended!reach!and!abilities!(Geriffe!2001:!1616-18).!!Another!method!of!projecting!this!

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growth!is!to!examine!the!sources!and!levels!of!Foreign!Direct!Investment!(FDI)!most!of!
which!was!of!corporate!origin.!As!Hedley!indicates,!in!1900!only!European!corporations!
were!major!investors,!to!be!joined!by!some!American!firms!in!the!1930s.!!Citing!UN!data!he!
dates!1960!as!the!major!turning!point!for!FDI!as!the!major!driver!of!extended!global!
corporate!development.!In!each!subsequent!decade!until!the!turn!of!the!century,!FDI!would!
triple!(Hedley!1999).!
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Throughout!these!periods!economists,!other!scholars!and!government!actors!at!both!the!
national!and!transnational!level!tended!to!“frame”!the!progressive!growth!of!the!global!
corporate!structure!(again,!referred!to!almost!indiscriminately!as!either!MNC’s!or!TNC’s)!
through!efforts!to!define,!measure!and!assess!the!extent!and!consequences!of!foreign!direct!
investment,!defined!initially!and!primarily!as!the!entry!of!private!capital!from!a!source!
external!to!a!country!into!a!receiving!country.!Usually!referred!to!in!terms!of!“out-ward”!and!
“in-ward”!flows,!supplies!of!FDI!were!viewed!as!the!major!elements!of!global!economic!
development,!and!during!various!policy!periods!as!“essential”!for!the!development!of!what!
was!then!viewed!as!the!“third”!world,!even!if!in!reality!the!vast!majority!of!FDI!into!the!
1990s!was!between!countries!of!the!“developed”!world—primarily!North!America,!Europe!
and!Japan.!!Since!1964!the!United!Nations!Conference!on!Trade!and!Development!
(UNCTAD)!has!focused!on!the!various!roles!that!FDI!plays!in!the!development!process!and!
has!maintained!an!extensive!policy!library!of!global!FDI!statistics!as!well!as!the!dense!
structure!of!regulation!that!frame!global!corporate!cross-border!engagements!(Fredriksson!
2003).!!Periods!of!intense!FDI!changed!the!global!corporate!landscape.!During!the!period!

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1985-1990!FDI!grew!at!an"average"rate"of"30%"a"year.!One!result,!unsurprisingly,!was!the!
landscape!of!corporate!units!and!their!relationship!to!each!other.!DeAnne!Julius!indicates!
that!the!expansion!of!FDI,!inter-corporate!alliances,!and!intra-firm!trade!during!this!period!
reached!a!level!at!which!“a!qualitatively!different!set!of!linkages”!was!created!among!
advanced!economies!(Julius!1990).!!It!was!estimated!that!some!20,000!new!corporate!
alliances!were!formed!just!in!the!period!1996-1998!(Gilpin,!2000:!170).!
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The!investment-based!period!was!dominated!by!producer-driven!commodity!or!value!
chains,!which!in!turn!tended!to!be!dominated!by!firms!characterized!by!large!amounts!of!
concentrated!capital!focused!on!large-scale!or!capital-intensive!manufacturing!or!extractive!
industries.!!The!organization!of!the!dominant!global!firms!during!this!period!was!powerfully!
influenced!by!the!transformation!within!national!economies!of!the!older!manufacturing!
companies!wrought!by!what!was!viewed!as!the!progressive!“de-industrialization”!of!these!
economies!through!wide-scale!off-shoring!of!labor!applications!and!its!related!costs.!(See!
for!example!Bluestone!and!Harrison,!1984.)!!This!progressive!shift!in!the!siting!of!
manufacture!transformed!the!dominant!manufacturing!firms!of!these!older!developed!!
companies!into!more!fully!extended!and!integrated!organizational!forms!that!moved!many!
such!firms!from!a!self-conscious!understanding!of!themselves!as!“national!firms!operating!
internationally”!into!more!authentically!global!firms!that!required!extensive!corporate!
integration!of!their!activities!throughout!the!world.!!!
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Many!corporate!structures,!especially!those!in!the!United!States,!operating!within!the!frame!
of!the!producer-driven!commodity!chain!had!been!organized!by!what!came!to!be!recognized!
as!“fordist”!management!principles.!U.S.!firms!in!particular!had!sought!to!transport!these!
models!abroad!to!their!international!manufacturing!holdings.!!The!emergence!of!Japan!as!a!
major!producer!nation,!especially!of!automobiles!and!consumer!electronics!from!the!1970’s!
on,!brought!onto!the!scene!new!models!of!effective!production!focused!especially!on!quality!
and!regimes!of!flexible!production—a!move!that!was!echoed!within!European!firms!
rejoining!the!global!commodity!chains.!!These!activities!were!experienced!by!U.S.!firms!as!
unwelcome!challenges!to!their!previously!virtually!unchallenged!positions!on!product!
design,!production!efficiency,!and!quality—and!ultimately!on!the!ability!of!these!corporate!
structures!to!maintain!their!accustomed!returns!on!investment.!!The!result!was!a!
progressive!“re-inventing”!of!the!American!business!model,!especially!the!industrial!
model—a!challenge!that!would!dominate!the!curricula!of!U.S.!business!schools!for!over!two!
decades!(Risi!2005)!and!which!is!also!continuously!associated!with!the!global!value!shift!
from!manufacturing!capital!to!finance!and!human!capital!in!progressively!networking!
societies!(Castells,!2009).!
!
Gereffi!has!argued!persuasively!that!“how!global!corporations”!work!is!largely!determined!
by!whether!they!are!situated!in!producer-driven!or!buyer-driven!commodity!chains.!The!
following!figure!drawn!from!his!work!on!U.S.!firms!suggests!indirectly!that!the!more!buyer-
driven!they!are,!the!more!nodes!exist!within!their!networks!and!the!greater!either!their!

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inter-dependence!on!other!actors!or!their!imperative!to!establish!extensions!(by!whatever!
ownership!or!contract!means)!of!supply,!finance,!etc.!!
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FIGURE!ONE!ABOUT!HERE!
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The!degree!to!which!these!generalizations!were!apt!has!intensified!with!each!extension!of!
digital!reach!throughout!the!world.!Commodity!chains!now!need!to!be!conceptualized!as!
existing!within!extraordinarily!complex!information!structures!in!which!communications!
are!virtually!instantaneous!and!appear!to!grow!exponentially.!Global!corporate!structures!
and!operations!can!be!viewed!within!the!constantly!changing!digital!environment!as!
framed!by!the!constant!need!to!develop!and!adapt.!Equally,!one!can!envision!corporate!
activity!has!being!propelled!into!extensive!communication!environments!in!which!the!
dynamics!of!competition!frame!much!of!their!behavior!and!make!activities!such!as!the!
ability!to!establish,!maintain!and!extend!corporate!brands!an!intrinsic!element!of!global!
capital—literally!the!point!at!which!material!capital!(that!required!to!produce,!deliver!and!
make!a!product!or!service!known)!becomes!inseparable!from!symbolic!capital!(Reich,!
1990,!2010).!For!a!wide!variety!of!so-called!service!activities!that!had!previously!been!
deemed!“in-place”!e.g.!many!aspects!of!medical!care,!soft-war!design,!etc.!and!thereby!
bound!by!time!and!space,!current!digital!technology!has!worked!to!“dis-place”!into!a!digital!
global!world!that!makes!possible!the!maximization!of!various!corporate!goals,!such!as!24/7!
activity!on!common!tasks!through!linked!global!sites,!the!targeting!of!optimal!cost!labor!
markets,!etc.!!(Gautam!and!Batra,!2011).!!!

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!
The!status!of!symbolic!capital!within!the!global!marketplace!is!evident!in!the!increasing!
value!and!importance!being!placed!on!the!branding!created!and!owned!by!global!
corporations.!In!a!world!of!continuous!and!instantaneous!communications,!corporate!
brands!come!to!symbolize!the!entire!range!of!corporate!activity!to!the!extent!that!
individuals!who!know!virtually!nothing!else!about!a!corporation!but!its!brand!come!to!
interpret!its!status!in!the!world!and!the!value!of!its!products!and!services!through!the!
brand.!!Known!as!“Brand!Finance,”!a!new!discipline!now!ranks!corporations!in!global!
league!tables!on!the!value!of!their!brand,!in!a!manner!parallel!to!their!ranking!by!various!
entities!in!terms!of!their!aggregate!revenue,!earnings,!etc.!!(Brand-Finance,!Global!500!
2012).!!In!this!regard,!for!instance,!technology!brands!had!become!the!most!valuable!
global!corporate!brands!in!2012!with!Apple!lauded!for!having!“leapfrogged”!Google!for!
the!honor!of!placement!at!#!1!with!a!brand!finance!valuation!of!US$70.6!billion,!whereas!
another!success!story,!Amazon,!saw!its!brand!finance!value!rise!by!61%!over!the!
previous!year.!!
!
Digitalization!has!affected!the!entire!structure!of!how!global!corporations!operate.!
Producer!driven!steams!have!progressively!integrated!their!corporate!structures!to!
reduce!the!effects!of!time!and!distance,!especially!for!services!performed!within!
corporate!structures!such!as!design,!finance!and!accounting,!advertising!and!brand!
development,!legal!services,!inventory!control!etc.!!These!extensive!capabilities!of!
control!and!management!at!a!distance!blend!many!of!the!differentiated!aspects!of!

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product!and!service!based!firms.!Digitalization!is!transforming!the!classic!value!chain!of!
manufacturing!focused!on!innovation!in!which:!
• Product!design!and!innovation!is!replaced!with!driving!innovation!through!
digital!product!design!
• Labor!intense!manufacturing!is!replaced!by!digitizing!the!factory!shop-floor!
• Supply!chain!management!is!replaced!by!globalizing!through!digital!supply!
chain!management!
• Marketing!sales!and!service!is!replaced!by!digital!customization.!(Capgemini,!
2012).!
!
Buyer-driven!value!streams!have!increasingly!become!digital!with!companies!
specialization!in!Internet!retailing!of!goods!and!services!continuing!to!gain!market!share!
over!fixed!in-place!marketing!and!selling.!!The!past!three!decades!have!borne!witness!to!
a!fundamental!transformation!of!the!apparel!industry!in!which!not!only!has!apparel!
manufacture!moved!out!of!the!older!industrial!economies!(which!are!still!its!biggest!
markets),!but!have!also!become!fundamentally!driven!by!digital!operations!from!design,!
to!ordering,!to!factory!processing,!to!inventory!control,!delivery!and!perhaps!most!
importantly!branding,!marketing!and!advertising.!Commonly!known!as!the!Quick!
Response!(QR)!management!system!the!dominant!system!operates!within!and!between!
global!corporate!structures!consisting!of!three!steps!wherein!retailers!adopt!integrated!
electronic!point!of!sale!technologies,!which!allow!for!instantaneous!communications!
between!sales,!reordering!and!production!units,!and!delivery!control.!In!a!second!

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process!firms!have!redesigned!internal!management!practices!that!allow!for!faster!
turnaround!of!merchandise!and!allow!for!more!effective!inventory!control.!In!the!third!
stage,!retailers!and!manufacturers!establish!an!integrated!supply!chain!“with!joint!
product!development!planning!and!inventory!control!(Cammett,!2006:!32).!!
!
Another,!somewhat!different!approach!to!the!question!of!what!global!corporations!do!
and!how!they!function!is!to!view!them!as!a!complex!collective!activity,!constituting!
either!a!“global!system”!of!corporations!or!a!network!of!global!corporations!that!as!a!
structure!interacts!in!complex!ways,!doing!much!to!constitute!the!global!economic!
system!as!a!result.!In!this!regard,!for!example,!Kentor!examined!the!critical!period!from!
1968!to!1998!in!which!global!corporations!were!developing!much!of!the!structure!
replicated!in!current!operations.!His!goal!was!to!empirically!examine!the!“economic!and!
spatial!expansion!of!transnational!corporate!networks!overtime,!in!terms!of!both!
individual!countries!and!the!global!network!as!a!whole”!by!charting!the!shifting!linkages!
of!the!globe’s!100!largest!transnational!manufacturing!corporations!(Kentor!2005).!In!
terms!of!both!growth!and!concentration!the!results!were!startling.!Whereby!these!
largest!industrial!corporations!owned!1288!subsidiaries!in!1962,!by!1998!the!top!100!
industrial!corporations!owned!nearly!10,000!subsidiaries!(Kentor!2005:!266).!Varieties!
of!subsequent!research!replicate!the!essential!findings!using!other!methodologies!and!
indicators.!!The!Global!100!firms,!a!listing!that!includes!all!sectors!of!the!global!economy,!
grew!from!a!.09!share!of!global!GDP!in!1983!to!.13!in!1998.!Expanding!the!sample!

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somewhat,!the!revenues!of!the!Global!500!grew!from.15!to!.28!of!GDP!between!1983-
1998!(Kentor,!2005).!!!
!!
Another!indicator!of!concentration!estimates!that!in!2009!that!of!the!world’s!largest!
economic!entities!44!are!corporations;!if!one!examines!the!top!150!units!the!percentage!
that!are!corporations!rises!to!59%.!The!44!corporations!in!the!top!100!in!2009!
generated!revenues!of!US$6.4!Trillion!equivalent!to!11%!of!GDP!(Global!Trends!2013).!!
Such!questions!about!the!relative!size!of!global!corporations!and!their!impacts!on!the!
world!economy!figure!strongly!in!making!an!assessment!about!their!relative!“net!value”!
or!“worth”!to!the!world.!It!is!useful!to!note!that!like!so!many!issues!having!to!deal!with!
the!vast!complexities!of!global!corporate!structure,!how!one!chooses!to!look!at!the!data!
does!much!to!determine!what!one!actually!sees.!The!data!citied!above,!for!example,!
which!compare!corporate!sales!with!GDP!has!become!one!of!the!most!common!ways!of!
seeking!to!assay!the!relative!size!of!global!corporations,!and!from!that!to!infer!their!
relative!influence.!Perhaps!the!most!common!citation!is!to!the!work!of!Anderson!and!
Cavanagh!who!in!2000!determined!that!of!the!world’s!largest!100!economic!units!51!
were!corporations.!(Anderson!and!Cavanagh!2000).!De!Grauwe!and!Camerman!(2003),!
however,!argue!that!corporate!sales!and!GDPs!are!not!in!fact!directly!or!usefully!
comparable.!GDP!is!calculated!as!the!sum!of!all!values!added!by!each!producer,!not!the!
sum!total!of!all!the!sales!of!all!producers.!Calculating!in!this!manner,!they!contend,!
results!in!significant!amounts!of!double!counting!and!would!create!much!higher!GDP!
figures.!While!agreeing!that!global!corporations!are!vast!in!size,!no!reason!exists!to!

14
conclude!that!they!are!“bigger!than!nations,”!nor!that!their!size!relative!to!nations!has!
increased.!A!related!issue!that!often!figures!within!policy!debates!carries!the!
presumption!that!the!arena!of!all!global!corporations!is!effectively!represented!by!their!
most!well-known,!larger!exemplars,!no!mattered!how!size!is!measured!relative!to!nation!
states.!To!clarify!the!extent!of!global!corporation!activities!Stopford!points!out!that!by!
1998!cross-border!economic!activity!had!become!so!commonplace!that!fully!45,000!
firms!could!be!categorized!as!such,!most!of!which!operated!with!fewer!than!250!
employees,!and!with!many!service!companies!operating!in!as!many!as!15!countries!with!
100!or!less!employees!(Stopford,!1998:!2).!
!
Another!approach!to!estimating!the!concentration!of!global!corporations!has!been!to!
examine!the!inter-locks!that!exist!between!their!boards!of!directors,!often!referred!to!as!
“the!network!of!corporate!control.”!Utilizing!a!vast!data!set!and!complex!network!
models!and!analyses,!Vitali,!Glattfelder!and!Battiston!(2011)!sought!to!move!beyond!
well-known!correlates!of!the!concentrations!of!existing!wealth!and!income,!and!explore!
the!actual!degree!to!which!interlocking!membership!results!in!control!of!global!
corporations.!Employing!a!very!large!data!set!of!43060!TNC’s!their!analysis!indicated!a!
network!of!all!ownership!“originating!from!and!pointing!to!TNCs”!with!the!resulting!
network!pointing!to!600,508!nodes!and!1,006,987!ownership!ties.!(2011:!2)!Their!
findings!revealed!a!very!highly!concentrated!structure!of!ownership!and!interlocks!and!a!
network!structure!dominated!by!a!very!dense!core!in!which!3/4s!of!the!ownership!of!
firms!in!the!core!remained!in!the!hands!of!firms!within!the!core!itself.!As!they!conclude:!

15
“This!is!a!tightly-knit!group!of!corporations!that!cumulatively!hold!the!majority!shares!of!
each!other.”!Framed!another!way,!approximately!40%!of!the!control!over!the!economic!
value!of!TNC’s!in"the"world!is!“held!via!ownership!relations!by!a!group!of!147!TNCs!in!the!
core!which!has!almost!full!control!over!itself.”!(Vitali,!Glattfelder!and!Brattison!2011:!4)!
!
When!one!attempts!to!assess!the!overall!role!of!global!corporations,!it!is!clear!that!they!!
constitute!such!an!essential!part!of!the!economy!that!their!various!and!multiple!
activities!in!fundamental!ways!determine!what!that!economy!is!going!to!be.!This!
property!was!amply!demonstrated!in!the!financial!crisis!of!2006-07!that!was!triggered!
by!events!that!would!merely!two!decades!earlier!have!been!regarded!largely!as!
phenomena!internal!to!the!US!economy!and!one!from!which!the!“rest”!of!the!world!
might!arguably!have!distanced!itself.!!That,!however,!is!all!too!obviously!not!what!
happened—in!large!part!because!global!financial!firms,!among!them!leading!US!firms,!
had!created!a!variety!of!financial!instruments!organized!around!US!real-estate!values!to!
be!traded!within!a!global!market!as!hedgeable!securities.!As!the!International!Monetary!
Fund!has!concluded!in!a!recent!report!on!the!financial!crisis!of!2007!and!beyond,!the!
prosperity!of!the!preceding!two!decades!owed!much!within!the!US!economy!to!total!
credit!market!borrowing!that!grew!from!approximately!160%!of!GDP!in!1980!to!350%!
in!2008.!This!increasing!debt!structure!focused!on!the!one!hand!at!the!household!level!
where!borrowing!roughly!doubled!from!45%!of!GDP!in!1984!to!97%!in!2008!and!on!the!
other!on!financial!sector!debt!which!grew!from!19%!of!GDP!in!1964!to!approximately!
115%!in!2008!(IMF!2012).!

16
!
However,!numerous!commentators!agree!than!had!this!debt!not!been!securitized!
through!novel!and!widely!traded!instruments!in!the!period!prior!to!2008,!the!extent!of!
the!global!crisis!may!have!been!substantially!mitigated.!(Harvey,!2009.!Steglitz!2010),!
However!one!interprets!the!actual!playing!out!of!the!financial!crisis!and!estimates!of!its!
potential!severity,!it!is!clear!that!global!financial!firms!and!the!24/7!trading!markets!
they!have!created!constitute!a!new!form!of!global!corporation!whose!activities!are!
capable!of!impacting!the!global!economy!in!powerful!and!novel!ways.!
%
Part%Three:%%What%is%different%about%this%phase%of%global%corporate%development?%
The!so-called!“developing!economies”,!and!especially!those!of!Brazil,!India!and!China—
the!so-called!BRICS!economies,!have!become!the!most!dynamic!sector!of!global!
corporate!growth,!represented!in!part!by!their!significant!FDI!over!the!three!decades.!
While!still!less!than!FDI!flows!between!developed!countries,!as!Table!1-1!demonstrates!!
the!rapidity!of!capital!flows!to!developing!countries.!
!
Table!1-1!About!here!
!
The!relative!size,!growth!and!range!of!activity!of!global!corporations!from!the!emerging!
economies!suggest!that!they!are!on!a!trajectory!that!will!soon!situate!them!firmly!within!
those!of!the!historically!more!developed!economies.!!The!number!of!global!corporations!
from!the!emerging!market!economies!listed!in!the!Fortune!Global!!500,!which!ranks!

17
corporations!by!revenue,!rose!from!47!firms!in!2005!to!95!in!2010.!These!companies!
have!also!become!active!in!the!broad!pattern!of!global!mergers!and!acquisitions!(M&A),!
a!primary!vehicle!by!which!corporate!concentration!takes!place.!To!cite!Ahern:!!“In!2010!
these!companies!accounted!for!2,447!acquisitions,!or!22%!of!global!M&A!transactions,!
which!is!up!from!661!acquisitions,!or!9%!of!total!M&A!acquisitions,!in!2001.!Of!the!
11,113!M&A!deals!announced!in!2010,!5,623!(50%)!involved!merging!market!
companies,!either!as!buyers!or!as!take-over!targets!of!MNCs!in!advanced!countries”!
(Ahern!2011:!23).!The!fact!that!the!global!economic!slowdown!resulting!from!the!
financial!crisis!of!2007!has!had!a!lesser!impact!on!many!developing!economies,!
especially!the!BRICS,!indicates!the!extent!to!which!they!have!become!a!new!and!
important!source!of!capital!within!the!global!system.!
!
Capital!flows!in!general!over!the!past!decade!and!a!half!have!begun!to!change!from!the!
dominant!North-North/North-South!dynamic!to!one!in!which!South-South!and!South-
North!capital!flows!are!significant!(Rajan!2010)!with!most!of!the!South-North!capital!
flows!coming!from!China!and!India.!Examples!include!China’s!Lenovo!corporation’s!
purchase!of!IBM’s!!PC!business!and!India’s!investment!in!various!historically!British!
firms!including!Jaguar!Land!Rover!(Economist,!2011).!Increased!North-South!
investments!during!this!period!allowed!global!North!corporations!to!rebound!quickly!
from!their!profit!losses!and!restore!income!growth.!The!relative!robust!nature!of!the!
emerging!economies!has!continued!to!attract!FDI!and!to!create!conditions!leading!to!the!
rapid!expansion!of!their!nationally!based!global!corporations!(UNCTAD,!2011:!26).!

18
China!is!the!largest!developing!country!outward!investor!with!estimated!holdings!in!
2009!of!approximately!US$1!Trillion!(OECD!2010).!The!differential!impact!of!such!
emergent!global!dynamics!has!moved!some!observers!to!suggest!that!our!previous!
distinctions!between!global!North!and!South!are!no!longer!adequate!to!suggest!the!
overall!dynamics!of!growth!and!inactions!within!the!global!system.!Wolfsensohn,!for!
example,!has!suggested!a!characterization!that!he!terms!“!a!four-speed!world”!that!
differentiates!countries!as!Affluent,!Converging,!Struggling!and!Poor,!with!the!BRICS!
dominating!the!growth!of!the!convergent!group!(Wolfsensohn!2007).!!!
!
The!importance!of!global!corporations!in!Brazil,!India!and!China!to!the!current!and!
projected!global!economy!is!singlular.!With!40%!of!the!world’s!population!the!BRICS!
represent!a!primary!force!in!both!global!production!and!consumption.!Hawksworth!and!
Cookson!predict!that!“middle!class”!consumers!in!China!and!India!will!grow!from!some!
1.8!billion!in!2010!to!3.2!billion!in!2020!and!4.9!billion!by!2030!(2008).!The!relative!
import!of!their!global!corporate!cultures!can!be!gauged!in!part!by!the!fact!that!in!2012!
global!corporations!in!China!made!up!73!of!the!largest!in!the!Fortune!500!list!(CNN!
Money!2012),!and!whereas!Brazil!and!India!with!8!apiece!currently!account!for!a!small!
share!of!such!corporations,!emergent!market!countries!are!projected!to!account!for!a!
near!doubling!of!their!share!of!world!trade!over!the!next!40!years,!reaching!nearly!70%!
by!2050!(Ahern,!2011).!In!1998!only!one!of!the!top!100!global!corporations!was!located!
outside!the!US,!Europe!or!Japan!(Oatley!2008).!
!

19
Rising!global!corporations!in!the!BRICS!are!joined!by!emergent!large!companies!in!other!
developing!economies!throughout!the!world!such!as!Malaysia,!Mexico,!Russia,!Turkey,!
and!Vietnam.!!The!following!list!suggests!some!exemplary!cases!employing!2009!data:!
Emerging%Market%Global%Corporations:%
• Basic!Element!(Russia)!is!a!world!leader!in!alumnia!production!
• Bharat!Forge!(India)!is!one!of!the!world’s!largest!forging!companies!
• BYD!Company!(China)!is!the!world’s!largest!manufacturer!of!nickel-cadmium!
batteries!
• CEMEX!(Mexico)!has!developed!into!one!of!the!world’s!largest!cement!producers!
• China!International!Marine!Containers!Group!(China)!is!the!world’s!largest!
manufacturer!of!shipping!containers!
• Cosco!Group!(China)!is!one!of!the!largest!shipping!companies!in!the!world!
• Embraer!(Brazil)!has!surpassed!Canada’s!Bombardier!as!the!market!leader!in!
regional!jets!
• Galanz!Group!(China)!has!a!45%!share!of!the!European!and!a!25%!share!of!the!US!
microwave!market!
• Hisense!(China)!is!the!number!one!supplier!of!flat-panel!TVs!to!France!
• Johnson!Electric!(China)!is!the!world’s!leading!manufacturer!of!small!electric!
motors!
• Nemak!(Mexico)!is!one!of!the!world’s!leading!suppliers!of!cylinder!head!and!block!
casings!for!the!automotive!industry!
• Sistema!(Russia)!is!a!conglomerate!with!a!focus!on!telecommunications!

20
• Tata!Chemicals!(India)!is!an!inorganic-chemicals!producer!with!a!significant!
global!market!share!of!soda!ash!
• Techtronic!Industries!Company!is!the!number!one!supplier!of!power!tools!to!
Home!Depot!
• Wipro!(India)!is!the!world’s!largest!third-party!engineering!services!company.!
(The!Boston!Consulting!Group!2009)!
While!BRICS!are!host!countries!to!the!largest!number!of!global!corporations!among!
developing!countries,!these!corporations!are!also!distributed!across!other!market!areas!
with!Mexico,!Russia,!the!United!Arab!Emirates,!Turkey,!and!Thailand!next!in!order!of!
frequency!(Adhern!2011).!!In!2009!China!became!the!leading!trade!partner!of!Brazil,!India!
and!South!Africa,!and!Tata!of!India!became!the!most!active!investor!in!sub-Saharan!Africa.!
OECD!data!indicate!that!over!40%!of!researchers!are!now!in!Asia.!The!OECD!has!examined!
the!growth!of!developing!economies!in!terms!of!their!share!of!the!global!economy!in!
purchasing!power!party!terms.!Based!on!this!analysis!in!2000!the!non-OECD!member!
countries!share!of!Global!GDP!was!40%;!in!2010!it!was!51%;!and!in!2030!it!will!be!57%!
(OECD!2010).!However,!even!with!the!relatively!enormous!growth!of!the!emerging!
economies,!the!enormous!population!size!of!their!largest!dilutes!the!per!capita!effect!of!
growth.!Dadush!and!Shaw!project!that!in!2050!China!will!have!the!largest!economy!overall,!
but!its!per!capita!income!will!be!only!37%!that!of!the!US;!India!as!the!third!largest!economy!
with!have!per!capital!income!of!just!11%.!(Dadush!and!Shaw,!2011:!30)!
!

21
State-owned!corporations,!which!may!be!defined!as!“enterprises!comprising!parent!
enterprises!and!their!foreign!affiliates!in!which!the!government!has!a!controlling!interest!
(full,!majority,!or!significant!minority),!whether!or!not!listed!on!a!stock!exchange”!are!
playing!a!significant!role!in!these!emergent!economies.!(UNCTAD,!2011:!28).!“State-owned”!
may!include!both!national!and!sub-national!governments!such!as!regions,!provinces!and!
cities.!UNCTAD!in!2010!identified!at!least!650!State-owned!global!corporations!with!more!
than!8,500!affiliates!operating!around!the!world!of!which!345!(52.8%)!are!in!developing!
countries!and!235!(36%)!in!Asia.!State-owned!corporations!differ!remarkably!in!structure!
and!function!by!country.!Overall!China!has!the!largest!number!of!such!corporations!that!are!
completely!sole-funded—some!154,000!in!2008.!Of!these!only!a!small!percentage!attains!
the!status!of!global!corporations!(UNCTAD,!2011:!30-31).!In!many!other!countries!it!is!more!
common!to!have!a!majority!of!state!funded!global!corporations!having!less!than!sole!state!
ownership.!!
!
The!entry!of!such!corporations!into!the!global!corporate!world!has!created!a!variety!of!
concerns,!many!of!them!focused!on!China.!Concerns!take!different!forms.!Some!view!such!
firms!as!unwelcome!market!competitors!willing!to!employ!their!potential!and!actual!
enormous!capital!resources!to!create!dominant!stakes!in!various!national!industries,!
especially!those!involving!the!extraction!and!organization!of!natural!resources.!!In!such!
cases!the!“full!weight”!of!state!ownership!is!seen!to!give!such!corporations!unfair!
competitive!advantages.!Another!characterization!of!China’s!state-owned!global!
corporations!views!them!as!legacy!institutions!(‘relics”)!of!China’s!state!socialist!system!that!

22
perpetuates!in!its!revised!neo-capitalist!form!institutions!that!lack!the!essential!features!of!
economic!efficiency!and!competitive!discipline!that!the!global!corporate!structure!
promotes—they!are!in!effect!subsidized!by!the!whole!of!the!Chinese!state!in!all!their!
inefficiencies,!and!this!property!gives!them!un!unwarranted!market!advantage!within!global!
competition,!being!“shielded”!as!it!were!from!true!market!discipline.!(Woetzel,!2008.!!
Greenacre,!2012).!!
!
Another!view!characterizes!these!firms!as!a!“new!face”!of!global!corporate!reality!as!their!
strong!domestic!markets!and!abilities!to!gain!capital!from!within!their!host!countries!
contribute!to!an!overall!expansion!of!global!corporate!reach,!especially!when!viewed!in!the!
context!of!their!likelihood!to!invest!in!South-South!ventures!and!their!propensity!to!invest!
in!so-called!Greenfield"ventures!(that!form!of!FDI!in!which!the!parent!firm!starts!a!new!
venture!in!a!foreign!country!by!creating!new!operational!facilities!from!the!ground!up.)!Yet!
other!concerns!focus!on!national!security!issues!(the!ability!of!such!corporations!to!
privilege!their!host!country!for!national!security!reasons)!and!issues!of!transparency!and!
corruption.!(UNCTAD,!2011:!xiii)!In!a!recent!effort!to!develop!guidelines!for!governance!
within!state!owned!enterprises!OECD!has!framed!the!issue!as!“finding!a!balance!between!
the!state’s!responsibility!actually!for!actively!exercising!its!ownership!functions!such!as!
nomination!and!election!of!the!board,!while!at!the!same!time!refraining!from!imposing!
undue!political!interference!in!the!management!of!the!company.”!This!report!also!
emphasizes!the!need!to!ensure!a!level!playing!field!on!which!private!companies!can!

23
complete!successfully!with!state-owned!enterprises!while!not!distorting!competition!by!the!
use!of!state!regulatory!or!supervisory!powers!(OECD!2005).!
!
Non-equity!modes!of!production!(NEMS)!have!become!an!increasingly!important!form!of!
global!corporations!within!the!emerging!economies.!The!traditional!mode!of!organization!
for!global!firms!in!these!economies!was!through!FDI,!which!manifested!itself!though!equity!
holdings!and!created!structures!by!which!parent!firms!owned!and!directly!managed!their!
subsidiaries—!an!organization!form!known!as!internalization!because!control!and!risk!
reside!with!the!parent,!as!do!the!vast!majority!of!revenues!and!profits.!However,!throughout!
the!latter!20th!century!period!of!vertical!integration!of!global!value!chains!by!advanced!
economy!global!corporations,!the!“seeds”!of!non-equity!relations!had!been!well!established.!
“…how!and!whether!firms!can!capture!value!depends!in!part!on!the!generation!and!
retention!of!competencies!(that!is,!resources)!that!are!difficult!for!competitors!to!replicate.!
In!practice,!even!the!most!vertically!integrated!firms!rarely!internalize!all!the!technological!
and!management!capabilities!that!are!required!to!bring!a!product!to!market…If!an!input,!
even!an!important!one,!is!required!frequently,!then!it!will!likely!be!acquired!externally”!
(Gereffi,!Humphrey!and!Sturgeon,!2005).!
!
NEMS!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.!NEMS!are!viewed!as!
externalization!for!the!corporation,!which!gains!access!to!benefits!within!global!value!chains!

24
without!the!direct!investment!of!comparable!amounts!of!capital,!albeit!at!the!cost!of!
relinquishing!elements!of!control!and!at!reduced!profit!levels.!NEMS!constitute!a!significant!
portion!of!global!corporate!activity!within!emerging!economies.!Total!sales!through!such!
arrangements!in!2010!is!estimated!to!have!reached!$2!trillion;!contract!manufacturing!and!
services!outsourcing!approximated!$1.1-1.3!trillion,!franchising!$330-350!billion,!licensing!
$340-360!billion,!with!management!and!contracts!around!$100!billion.!Collectively!NEMS!
employ!between!14-16!million!workers.!In!some!countries!they!account!for!up!to!15%!of!
GDP!and!in!some!industries,!they!account!for!70-80%!of!exports!(UNCTAD,!2011:!123).!!
!
The!relative!importance!of!NEMS!to!both!the!global!economy!and!the!structure!and!
governance!of!global!corporations!in!the!future!is!suggested!by!how!NEM!growth!has!
outpaced!that!of!base!industry!growth!in!electronics,!pharmaceuticals,!footwear,!retail,!toys!
and!garments:!in!electronics!the!ratio!is!6:1!and!that!of!garments!1:1.!Referencing!contract!
manufacturing!as!an!estimated!share!of!the!cost!of!goods!sold,!toys!and!sporting!goods!led!
at!90%!followed!by!consumer!electronics!80%,!automotive!60-70%,!generic!
pharmaceuticals!40%!and!branded!pharmaceuticals!20%.!(UNCTAD,!2011:!134).!!In!short!
such!arrangements!are!growing!at!rates!substantially!in!excess!of!the!industries!within!
which!they!exist.!!Overall!this!implies!that!in!emerging!economies!many!firms!specializing!in!
these!relationships!will!themselves!become!very!large!firms!employing!many!thousands!of!
workers!with!hundreds!of!billions!dollars!of!annual!revenue![such!as!Foxconn/Hon!Hai!
(China)!with!$59.3!billion!in!sales!and!611,000!employees,!Flexronics!(Singapore:!$30.9!
billion,!160,000!employees),!LG!Chem!(Rep.!of!Korea:!$13.1!billion!and!8!thousand!

25
employees),!or!Hyndai!Mobis!(Rep.!of!Korea:!$11.2!billion,!6,000!employees)—2009!data.!
UNCTAD].!Many!others,!especially!those!within!less!intensive!value!chains,!will!remain!
relatively!small!even!as!their!industry!sectors!grow.!These!data!suggest!that!global!
corporations!are!choosing!to!do!substantial!amounts!of!their!business!through!non-equity!
relationships,!trading!off!elements!of!risk,!control,!profit!and!in!some!cases!innovation!in!
exchange!for!engagement!in!inter-corporate!arrangements!that!preserve!their!own!capital!
and!equity!positions.!!
!
In!summary,!global!corporations!within!the!emerging!economies!appear!to!be!of!three!
general!types:!those!that!have!arisen!as!a!result!of!growing!national!power!of!the!host!
country,!responding!(as!in!China!and!India)!to!the!need!to!aggregate!and!deploy!national!
capital!to!provide!the!bases!for!economic!development.!Whether!initially!capitalized!with!
FDI!or!state!funds,!such!firms,!such!as!many!China!energy!and!industrial!material!firms,!
have!increasingly!turned!to!supplying!their!own!rapidly!growing!internal!markets!while!
investing!heavily!in!off-shore!material!resources!(often!in!Australia!and!Africa).!!!A!second!
type!of!global!firm!has!focused!on!replicating!major!consumer!pathways!in!both!developed!
and!developing!markets.!The!Korean!automotive!firm,!Hyundai!is!a!case!in!point.!!In!2011!it!
achieved!a!Fortune!Global!500!rank!of!55,!up!from!78!in!the!previous!year.!With!80,000!core!
employees,!it!produces!to!a!global!market!with!significant!market!penetration!on!all!
continents.!NEMs!represent!a!third!type!in!which!working!through!contract!and!other!
relationships!with!developed!market!firms!has!been!the!basis!for!their!rapid!increase!in!size!
and!influence,!which!in!turn!has!empowered!the!firms!to!establish!other!complex!linkages!

26
beyond!core!contract!markets!to!build!competitive!advantage!in!both!global!and!domestic!
markets,!usually!by!gaining!access!to!and!exploitation!of!superior!innovative!technology.!
The!relationship!between!China’s!Foxconn!and!Apple!is!a!well-known!case!in!point!as!the!
combination!of!Apple’s!own!innovative!technological!capacities!and!Foxconn’s!abilities!to!
adapt!production!changes!relatively!quickly!and!with!acknowledged!high!quality!elevated!
Apple!into!the!world’s!highest!valued!firm!in!2012.!(Albeit!with!considerable!costs,!as!the!
repeated!criticisms!of!Foxconn’s!labor!practices!have!become!an!issue!of!global!import!for!
both!companies).!
%
Part%Four:%The%Relevance%of%the%Changing%Regulatory%Environment%to%the%Structure%
and%Operation%of%Global%Corporations%
What!a!global!corporation!“does”—how!it!operates!within!its!host!environment!and!
throughout!the!multitude!of!regions!and!countries!in!which!it!has!operations—is!to!a!
significant!degree!a!result!of!the!various!regulatory!environments!that!frame!its!operations!
and!impinge!on!it.!!Because!so!much!this!activity!is!ultimately!defined!and!enumerated!as!
“trade,”!a!significant!amount!of!this!regulation!emerges!from!the!global!structures!that!have!
arisen!to!regulate!global!trade!at!all!levels.!Within!the!past!decade!regulation!has!either!
followed!the!path!created!by!macro!trade!structures!such!as!the!General!Agreement!in!
Trade!and!Services,!in!which!the!major!change!to!the!previously!prevailing!General!
Agreement!on!Trade!and!Tariffs,!was!to!include!services!(including!financial!services)!as!a!
trade!category.!During!the!same!period,!portions!of!the!world—most!specifically!Asia—have!
experienced!a!significant!growth!in!bi-lateral!trade!agreements!as!the!rise!of!China!as!a!

27
major!producer!of!both!finished!products!and!pre-finished!components!has!brought!nations!
together!to!negotiate!their!relative!place!within!emergent!value!chains!(Naya!and!Plummer!
2005).!!
!
Viewed!across!the!past!four!decades,!the!“regulatory!dynamic”!as!it!affects!global!
corporations!has!manifested!itself!into!two!conflicting!thrusts.!!One!has!been!the!
progressive!and!steady!regulatory!movement!at!both!international!and!national!levels!of!
liberalization,!resulting!in!part!in!the!transformation!of!investment!codes,!trade!rules!and!
operating!rules!to!reduce!barriers!to!global!investment!and!trade.!(Steger!and!Roy!2010).!
Embodied!within!neoliberal!beliefs!and!policies,!this!thrust!toward!liberalization!has!
accounted!for!regulatory!environments!distinctly!favorable!to!global!corporate!investment!
and!value!chain!developments!across!the!spectrum!of!goods!and!services.!!The!other!thrust!
has!resulted!from!national!regulatory!changes!targeted!usually!at!specific!industries!or!
investment!patterns.!In!2010!UNCTAD!catalogued!such!regulations!for!both!developed!and!
developing!countries!with!respect!to!their!effect!on!FDI,!finding!that!74!favorable!changes!
facilitating!entry!and!establishment,!and!the!operation!of!capital!(49!of!which!were!in!
developing!countries)!and!49!less!favorable!to!FDI!(with!34!of!these!from!developing!
countries).!!If!one!looks!at!national!regulatory!changes!by!industry!with!respect!to!their!
relative!liberalization!or!restrictive!nature,!with!the!exceptions!of!Agribusiness!and!
Extractive!Industries!the!significant!majority!of!changes!has!been!in!the!direction!of!
lessened!regulation.!(UNCTAD-WIR!2011:!5).!!
!

28
A!third!source!of!regulatory!effort!has!been!the!significant!rise!over!the!past!decade!and!a!
half!of!corporate!social!responsibility!(CSR)!as!a!self-regulatory!pattern!that!has!been!
brought!to!global!corporations!in!an!effort!to!render!them!more!accountable!across!the!
range!of!their!many!and!varied!stakeholders.!Resulting!in!large!part!from!the!cumulative!
effect!of!more!than!three!decades!of!intense!critique!of!global!corporate!behavior!and!its!
varied!negative!consequences,!CSR!represents!a!wide!ranging!set!of!proposed!governance!
structures,!including!rules,!norms,!codes!of!conduct!and!standards!developed!largely!by!the!
global!NGO!community.!(Levy!and!Kaplan,!2007).!!Various!empirical!studies!over!this!period!
have!sought!to!evaluate!efforts!taken!by!global!corporations!to!develop!greater!degrees!of!
responsibility!over!global!supply!chains,!particularly!where!deficiencies,!often!with!respect!
to!occupational!health!and!safety,!have!been!highlighted!in!mass!media!and!as!thus!pose!
threats!to!end!products!or!corporate!brands!(Kolk!and!van!Tulder!2005).!!Such!studies!also!
indicate!some!positive!support!for!the!claim!that!CSR!results!in!outcomes!that!benefit!
corporate!stakeholders,!albeit!primarily!shareholders.!!Even!while!some!proponents!of!CSR!
argue!that!the!adoption!by!and!adherence!to!the!kinds!of!codes!proposed!by!CSR!create!a!
climate!of!win-win!for!both!the!corporations!and!their!critics!(and!therefore!should!
rationally!impel!them!toward!the!embrace!of!such!codes),!this!view!is!often!contested!by!
those!on!the!corporate!side!more!sensitive!perhaps!to!their!political!character.!Utting!cites!a!
telling!case!of!a!former!executive!of!a!large!oil!company!remarking!at!a!U.N.!sponsored!CSR!
workshop!“that!if!the!win-win!argument!were!so!compelling!‘then!we!wouldn’t!be!sitting!
around!this!table.’”!The!executive!went!on!to!remind!those!present!that!it!had!been!“NGO!

29
and!consumer”!pressures!that!were!changing!corporate!behavior!(Utting!2002:!62,!cited!in!
Levy!and!Kaplan,!2007).!!
!
In!recent!work!Lemon!et.!al.!have!proposed!a!set!of!stakeholder!metrics!that!will!permit!
measurement!of!CSR!over!time!and!its!utility!for!multiple!stakeholders,!including!but!not!
limited!to!shareholders!(Lemon,!Roberts,!Raghubir!and!Winer!2011).!Whatever!its!current!
value!across!the!whole!range!of!global!corporate!decision!making!behavior,!it!is!clear!that!as!
a!movement!CSR!has!sufficient!support!both!to!bring!corporate!decision!makers!“to!the!
table”!to!discuss!important!aspects!of!corporate!behavior!and!in!specific!instances!to!create!
a!relevant!regulatory!framework.!!
!
In!the!aftermath!of!the!fiscal!crisis!of!2007!the!need!for!greater!regulation!of!global!financial!
markets!has!become!the!clarion!call!of!many.!The!American!economist!Joseph!Stiglitz!has!
been!persistent!in!his!arguments!that!without!some!form!of!global!financial!regulation!with!
sufficient!reach!and!enforcement!to!deal!with!the!kinds!of!global!trading!risks!present!in!
that!crisis,!that!the!global!economy!stands!without!the!necessary!regulatory!tools!to!deal!
with!the!intense!aggregation!and!profit!seeking!within!global!financial!capital!that!continue!
to!characterize!the!system!(Stiglitz,!2010).!
%
Part%Five:%The%Normative%Case%Re:%Global%Corporations%
At!least!since!the!early!1970’s!the!normative!case!for!global!corporations!has!been!
inseparable!from!the!broader!discourses!and!structures!surrounding!globalization!itself.!!In!

30
the!two!decades!following!WWII!and!in!the!context!of!global!rebuilding!of!manufacturing!
and!trade!capabilities,!they!were!viewed!primarily!as!agents!of!desired!economic!
development,!and!FDI!was!eagerly!sought!after!throughout!the!world.!However,!toward!the!
end!of!the!1960’s!global!corporations!also!came!viewed!as!gaining!their!economic!
prominence!through!a!variety!of!socially!destructive!means.!Much!of!the!post-colonial!
critique!that!came!to!be!framed!in!the!discourse!of!North-South!globalization,!anti-
globalization!movements!and!dependencia,"focused!on!the!role!of!multinational!
corporations!as!agents!of!a!system!that!on!balance!was!resulting!in!greater!global!wealth!
inequality,!income!inequality,!lack!of!effective!worker!protection,!environmental!
degradation,!producing!national!cultures!of!corruption!through!corporate!collusion,!and!in!
some!instances!threatened!national!sovereignty.!!Beyond!these,!within!the!context!of!the!
post-2007!financial!crisis!is!the!threat!that!such!corporate!structures,!operating!in!
important!ways!outside!the!reach!of!effective!governmental!control—national,!regional!or!
global—constitute!an!economic!concentration!of!wealth!and!power!sufficient!to!generate!a!
global!crisis!of!proportions!that!exceed!the!capacity!of!existing!mechanisms!of!governance!
to!remedy!(Stiglitz!2010).!
!
From!many!points!of!view!the!extent!to!which!wealth!and!income!inequality!appear!to!be!
increasing!throughout!the!world!suggests!that!in!some!macro-equation!the!normative!
balance!of!development!within!which!global!corporations!have!been!the!primary!driving!
agents!has!a!powerful!long-term!negative!trending!effect.!!Overall,!the!data!on!global!
inequality!measured!by!income!suggests!(as!it!has!for!the!better!part!of!two!decades)!that!

31
from!top!to!bottom!such!inequality!continues!to!be!widely!distributed!both!between!and!
within!countries:!as!the!richer!countries!grow!farther!apart!from!the!poorer,!so!within!
nations,!among!all!three!developmental!categories—older!developed!countries,!developing!
countries!–including!the!BRICS—and!more!newly!developing!countries!is!continued!
economic!growth!accompanied!by!growing!inequality.!!
!
Ortiz!and!Cummins!make!the!case!clearly!and!powerfully.!Although!using!two!different!
methodologies!to!examine!income!distribution,!each!offers!strikingly!similar!results.!
Overall,!meansured!in!market!exchange!rates,!the!top!quintile!(20%)!controls!more!than!80!
%!of!global!income!contrasted!by!one!percentage!point!for!those!in!the!bottom!quintile.!
While!this!disparity!improves!when!measured!in!PPP!exchange!rates!(67!%!for!the!top!
quintile!to!2.6!%!for!the!bottom),!both!models!reveal!a!world!that!is!deeply!characterized!by!
income!disparities.!Both!of!their!results!also!suggest!that!some!progress!is!taking!place!for!
the!very!poorest;!however,!the!sluggish!pace!of!change!is!clearly!unacceptable.!“Using!the!
rate!of!change!under!the!global!accounting!model!with!market!exchange!rates,!it!took!17!
years!for!the!bottom!billion!to!improve!their!share!of!world!income!by!0.18!percentage!
points,!from!0.77!percent!in!1990!to!0.95!percent!in!2007…At!this!speed,!it!would!take!more!
than!eight!centuries!(855!years!to!be!exact)!for!the!bottom!billion!to!have!ten!percent!of!
global!income.”!P.!19.!
!
Whatever!other!“global!entities”!are!involved!in!this!pattern!of!wealth!creation!and!
distribution,!global!corporations!stand!in!the!center!of!the!structure!that!establishes!and!

32
distributes!global!wealth.!!!The!role!of!the!state!over!the!past!four!or!five!decades!as!a!
vehicle!for!redistribution!has!been!increasingly!challenged!by!political!ideologies!oriented!
around!the!protection!of!society’s!primary!wealth!holders,!a!pattern!evident!in!many!of!the!
current!crises!of!the!Euro!Zone!in!which!powerful!political!forces!seek!to!exempt!both!
corporate!and!individual!wealth!holders!from!patterns!of!taxation!suitable!to!support!the!
“burdens”!of!the!state!through!effective!taxation.!Nollert!provides!a!persuasive!normative!
projection!of!a!transnational!world!of!societal!integration!in!which!one!might!“expect!that!a!
coordinated!world!economy,!where!corporate!networks!and!a!redistributive!state!
cooperate,!could!enhance!social!integration!while!in!a!liberal!world!economy!transnational!
corporate!networks!could!primarily!integrate!production!processes!and!national!elites”!
(Nollert,!2005:!310).!This!outcome!is!a!major!goal!of!the!CSR!movement.!
!
The!normative!case!for!transnational!corporations!is!situated!within!the!ever-dynamic!
context!of!three!complex!interactive!global!patterns!that!continue!to!frame!contemporary!
globalization!and!its!possible!futures:!global!inequality,!the!systematic!stability!and!viability!
of!the!global!financial!system,!and!climate!issues—each!of!these!in!turn!is!related!to!broader!
patterns!of!human!security.!The!likelihood!that!continued!global!interdependence!will!
produce!outcomes!favorable!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.!
!
!

33
!
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