A simple definition of a multinational enterprise (MNE) or multinational company (MNC) is a company that has production operations in more than one country.
Assignment: Multinationals—Good or Bad?
A simple definition of a multinational enterprise (MNE) or multinational company (MNC) is a company that has production operations in more than one country. Virtually any large company you think of is a multinational enterprise. Banks, pharmaceuticals, social media companies, restaurant chains, semi-conductor firms, automobile manufacturers, accounting companies all tend to be MNEs. You might think that large utility companies are not MNEs and, indeed, some are not—for example, Pacific Gas and Electric, PG&E, is a huge utility that operates only in California. But others, such as Duke Energy, not only operate in the United States (for Duke Energy, in the Southeast and the Midwest) but also in other nations (Canada for Duke Energy). Indeed, many Non-Government Organizations (NGOs) such as Greenpeace or Doctors Without Borders operate in many different nations and so they, too, should be considered MNEs. Accordingly, when you start your career, it is likely you will be working for an MNE.
If (or perhaps when!) you work for a MNE, you may (or perhaps will!) hear severe criticisms directed toward your company. Indeed, you may already have heard some of these negative comments or perhaps have made them yourself. I think this is a topic and issues you need to think about and resolve. So, let’s start with some “neutral” videos, that is, videos that present both pros and cons of MNEs. This first video presents some definitions and a discussion of MNEs. At the end, the narrator talks about employees owing more allegiance to their MNE employer, but I think this comment is extremely dated. This concern/observation reached its high-level mark in the 1980s after which it has been dismissed, so I am a bit surprised that it was mentioned in this video which was taped in 2012. Anyway, here you go:
This next clip is not particularly high-tech, but nonetheless it is a good video for discussing the pros and cons of MNEs. First, however, because it uses non-standard terms, let me define some of them: Trans National Company ( TNC) is another term for a multinational enterprise. LIDC refers to extremely low-income nations. AC/MEDC means advanced countries/medium economically developed nations, in other words, the developed (United States for example) and the emerging nations (Brazil for example). The Primark example refers to a horrific collapse of building in Bangladesh that killed over 1,100 people. The building was not owned by Primark, an Irish fast fashion retailer, but was owned by a subcontractor who ordered the employees to return to work after large cracks were found in the walls.
The last of the “neutral, pro-and-con” videos is the most neutral video on MNEs I have seen. It also has a very nice set of lists of pros and countervailing cons. I agree with the narrator that you might want to pay close attention to the pro list and the con list.
There are a LOT of videos that criticize MNEs. However, most of them are long and, as you can probably tell by the videos I have assigned, I don’t want to require you to watch videos that approach an hour in length. So here are some shorter videos that present criticisms of MNEs. First is a video that says MNEs use transfer pricing to avoid paying taxes. Of course, this is one of the points in the previous video:
The next video focuses on extreme poverty. I like this video because I think global poverty is an issue that you need to think about as you start your career. Why? Because as an educated person and a potential MNE employee, I think the criticisms offered here about the effects on low-skilled, low-income foreign workers deserve your thought and response. However, one extremely weak point in the video that does not need your thought (or, in truth, anyone’s thought) is the extended discussion of micro credit. Most economists, me included, scoff at this idea because the empirical work investigating its effect generally concludes that micro credit has extremely micro effects on the economy. In other words, although micro credit makes some people a little better off and others worse off, the overall effect seems negligible and the entire idea seems to be dying out. The rest of the video brings up points that you may agree with, disagree with, or simply perhaps need to think about.
Some observers assert that MNES adversely affect local culture. Well, the video below may help you decide whether things do go better with Coke:
Finding a video that pointed out positive aspects about MNEs is difficult. I expect that is because people satisfied with the status quo are unlikely to spend the time to create videos in favor of the status quo. However, after diligent searching … yep, I found one. So definitely do not assume or believe that because there are many more videos criticizing MNEs than praising them that MNEs are necessarily evil. Virtually everything has positives and negatives and you must weigh one against the other to decide if it is on net positive or negative. Anyway, here is the video I found:
Finally, I think seeing data and analysis about the importance and role played by MNEs in the global economy could play an important role in your analysis. In my experience and opinion, watching videos with data is not satisfactory because the data generally “disappear” from view too quickly to fully absorb them. This means I looked for a written report and I was successful: Here is a link to an OECD (Organisation for Economic Co-operation and Development) paper that has data and some analysis of MNE’s roles in the global economy:
www.oecd.org/industry/ind/MNEs-in-the-global-economy-policy-note.pdf
The videos above will give you an introduction to some of the controversies swirling around multinational enterprises. There are more, so I want you to go beyond this introduction to explore these issues by watching other videos and/or reading other analyses. Then I want you to write a 2 to 3 page essay with two parts/topics:
· Start by summarizing some of the issues and debates surrounding multinational enterprises. Ideally, I want you to include more issues than the videos above cover. Equally ideally, I want a (short) paragraph about each topic you choose to discuss. In this paragraph I want your opinion about the validity of each issue. References are necessary and can be put on a third page but do not blithely copy from your reference material. This is plagiarism and, as I said on the syllabus, is cause for an F on the assignment and possibly the class and, depending on how extensive it is, a major violation of the UF Honor Code that I will take to the Dean of Students office.
· Then I want you to conclude with your overall opinion about multinational enterprises: Are they good or bad? Be sure to both be explicit about what you are using to measure good and bad against and DEFINITELY present your reason(s).
I do not think there is a correct answer to the question about which side has a stronger case. So, as I explained in the syllabus, I will grade the papers on the quality of their arguments and presentation and their writing (grammar, punctuation, clarity, and so forth). I urge you to reread the section in the syllabus that talks about the assignment and grammar. Why? Because it really is impossible for me to over-emphasize the role played by good writing. The ability to write well will prove a valuable asset throughout your business career. Consequently, I strongly recommend that you start on this assignment early and spend time writing, proof-reading, and rewriting so that you an submit the best possible analysis of the issues you are writing about.
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