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What Are the Sources and Limits of Mnc Power

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What are the sources and limits of MNC power?
Multinational Corporations in a Global Economy
IR 120 - 201136597 - Catharina Knobloch

1. Introduction

As MNCs are getting increasingly important as actors in political bargaining, the purpose of this essay is to provide a (more or less) detailed overview over the sources and limits of the power of multinational corporations (MNCs).
In the first section, I am going to lead into this topic by giving some definitions. In addition to that, I am also going to explain the role of MNCs in the international governance based on the typology of regime types. Then I am going to examine the most important sources and forms of business power, before taking into account the limits and the vulnerability of MNC power.

2. Definitions

First, the term of the “multinational corporation” is difficult to be generalised due to extensive variations among the current examples (corporations are of different size, age, nationality industry, pursuing distinct decision-making processes and strategy-setting patterns, etc.) In order to define it more precisely, a multinational corporation is a firm, which owns assets and controls activities in different countries. As a consequence, the corporation needs at least one subsidiary in a non-domestic country to be classified as an MNC (just foreign trade is not sufficient). Some examples of these include Shell, General Motors, IBM or BP that operates in more than 100 countries. There are four categories of multinational corporations: (1) a multinational, decentralized corporation with strong home country presence, (2) a global, centralized corporation that acquires cost advantage through centralized production wherever cheaper resources are available, (3) an international company that builds on the parent corporation's technology or R&D, or (4) a transnational enterprise combining the...

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