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.
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.
ReplyDeleteThank 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
DeleteHuman 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.
ReplyDeleteAnd 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
DeleteGood 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.
ReplyDeleteif 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
Totally agree with your points which you highlighted here
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