Political Globalization.

 


Political Globalization.


In the context of globalization, political globalization emerges as a key aspect, encompassing the intricate interconnection of political systems and the influence exerted by international institutions on domestic policies. Within this complex landscape, Multinational Corporations (MNCs) assume a central role, both influencing and being influenced by global political dynamics (Barney, 1991).

 

Lobbying and advocacy constitute primary mechanisms through which MNCs actively participate in political globalization. By seeking to influence government policies and regulations, MNCs align these frameworks with their business interests. For instance, a global pharmaceutical company might engage in lobbying efforts to streamline drug approval processes, demonstrating the significant impact MNCs can have on domestic policies and industries (Harvey, 2002).

 

Trade agreements and alliances form another avenue for MNCs to contribute to political globalization. These agreements, transcending national borders, involve negotiations between governments, international organizations, and corporate entities. Notable examples include MNCs playing pivotal roles in shaping agreements such as NAFTA, fostering cross-border trade and investment (Bartlett & Ghoshal, 1990).

 

The embrace of Global Corporate Social Responsibility (CSR) represents a substantial dimension of MNCs' political engagement on a global scale. Recognizing the importance of aligning operations with social and environmental concerns, MNCs extend their commitment beyond individual countries' legal requirements. A multinational technology company, for instance, may implement CSR initiatives addressing global issues like climate change and human rights (Gospel, 1992).

 

Political globalization is further evidenced in MNCs' strategic tax planning and offshore operations. Leveraging differences in tax policies across countries, MNCs optimize their financial structures. An illustration of this is a global tech giant establishing subsidiaries in countries with favorable tax environments to minimize overall tax liabilities (Hofstede, 1980).

 

The economic influence of MNCs extends to their impact on national economies, acting as significant contributors to employment, GDP, and technological advancements. However, this influence can spark political debates and policy considerations. For example, a multinational automotive company's decision to relocate facilities may prompt governments to intervene and negotiate to mitigate potential negative effects (Hofstede, 1993).

 

Despite the strategic advantages of political globalization, MNCs grapple with challenges and ethical considerations. Issues like exploitation of lax regulations, tax avoidance, and disregard for local labor laws can lead to controversies. Striking a balance between economic pursuits and ethical corporate citizenship becomes imperative for MNCs operating on a global scale (Bartlett & Ghoshal, 1990).

 

In conclusion, political globalization unfolds as a multifaceted landscape where MNCs wield significant influence and, in turn, are shaped by global political forces. From lobbying and trade agreements to global CSR initiatives, tax planning, and economic impact on national economies, MNCs navigate a complex interplay between business and politics. The ethical dimension underscores the need for responsible corporate conduct in a world where the actions of Multinational Corporations reverberate far beyond individual borders. As political dynamics evolve, the role of MNCs in political globalization remains a dynamic and influential force in the global business arena.

 

References:

 

  • ·     Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120

  •       Harvey, M., & Novicevic, M. (2002). The role of political competence in global assignments of expatriate managers. Journal of International Management, 8(4), 76–88.

  •      Bartlett, C. A., & Ghoshal, S. (1990). Matrix management: Not a structure, a frame of mind. Harvard Business Review, July–August, 138–145.

  •     Gospel, H. F. (1992). Markets, Firms, and the Management of Labour. Cambridge: Cambridge University Press.

  •  Hofstede, G. (1980). Culture’s Consequences: International Differences in Work-related Values. Beverly Hills, CA: Sage.

  •  Hofstede, G. (1993). Cultural constraints in management theories. Academy of Management Executive, 7(1), 81–94.


Comments

  1. Dilshad Banu MohideenDecember 12, 2023 at 6:45 AM

    Hi Bhagya, this is a less addressed topic and I'm glad that you had touched upon this topic. The positivity that I see for HRM is Political globalization facilitates the movement of employees across borders, creating opportunities for international assignments and career development. However, HRM needs to address concerns such as relocation logistics, immigration compliance, and cultural adaptation support.

    ReplyDelete
    Replies
    1. Bhagya MadhubhashiniDecember 12, 2023 at 9:34 AM

      Thank you so much for the compliment and yes The role of political globalization on this point is forcing governments to adopt global institutions. So it makes governments more accountable in the global area and forcing them to pay attention to protect human rights. I hope I have covered every single point in my blog

      Delete
  2. Heshana Amandi MaddumageDecember 20, 2023 at 7:34 AM

    Human Resource Management (HRM) operates within the sphere of political globalization, adapting to diverse political systems and regulations worldwide. It navigates varying governmental policies and cultural influences, impacting HR practices, employment laws, and workforce management strategies on a global scale.

    ReplyDelete
    Replies
    1. Bhagya MadhubhashiniDecember 20, 2023 at 9:23 AM

      And also this political globalization process by which businesses or other organizations develop international influence or start operating on an international scale. More simply, globalization refers to an open flow of information, technology, and goods among countries and consumers

      Delete
  3. Chaminda SenadeeraDecember 20, 2023 at 8:13 AM

    Good to see you have highlighted how MACRO factors effecting to HRM in your article. as you highlighted the activities MNC's operations in other countries has to adapt with their HR Policies. as an example if you wanted to resign from a MNC like HP, DELL, CISCO or Microsoft there is no notice period, just after handing over the resignation letter you have to keep your laptop, handover the office ID and leave. even if they wanted to down size the operations they can remove whoever they want paying the VRS based on their calculation. so there is no voice of labor union and all.
    if you take the Free Trade Zone concepts also which is similar to the points you have highlighted. where the Tax structure and labor rules also differentiate from the standard structure of a country

    ReplyDelete
    Replies
    1. Bhagya MadhubhashiniDecember 20, 2023 at 9:24 AM

      Totally agree with your points which you highlighted here

      Delete

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