MULTINATIONAL CORPORATION AS A CATALYST OF NATION BUILDING IN THE THIRD WORLD COUNTRIES.
Chapter one
Introduction
Background of the study.
Multinational corporations (MNCs) have been referred to by a variety of terms over the years, including “transnational enterprise” (corporation) (Poon & Sajarattanochote, 2010, p. 291; UNCTAD, 2002, p. 291), “international corporations” or firms, “global corporations” (Wang and Chen, 2015, p. 78), and “denationalised corporations,” “supranational,” and “cosmocorporations” (Kuşluvan, 1998, p.163).
Despite the many descriptions, researchers generally agree that MNCs have existed for some years, dating back to the 18th century, and that they are businesses that own or own income-generating assets in more than one country.
They include companies with both equity and contractual involvement in more than one countries, as businesses have become more distributed in a globalising world where the tendency and emphasis is on an information and technology-driven society.
A multinational firm is defined broadly as one that involves equity ownership or contractual involvement in more than one countries, such as management contracts, franchising, and leasing agreements (Kuşluvan, 1998, p. 168).
Scholarly discourse on MNCs focuses around a variety of subjects, but the focus of this study is on the consequences of multinational enterprises on host countries’ skill development, as shown in Nigeria.
A typical multinational firm has its headquarters in one country, with other facilities located in the host country. In some areas, a multinational firm is referred to as a multinational enterprise (MNE) or a transnational corporation (TNC) (Tatum, 2010).
They enter host countries in various ways and with diverse tactics. Some start by exporting their items to test the market and see if the existing products can achieve a significant market share. Such enterprises rely heavily on export agents.
These international sale branches or assembly enterprises are developed to reduce transportation costs. Because of tariff barriers and quotas, a firm’s ability to benefit from international exports is limited. The majority of enterprises are encouraged by low pay rates and other environmental conditions.
Over the last three to four decades, the globe has witnessed the rise of an economic phenomenon known as the multinational corporation (MNC). According to Hicks and Gullet (1981), multinational corporations engage in international business by one or more of the following: exporting, licencing, franchising, joint ventures, foreign branches, or wholly owned subsidiaries.
Although the MNC is not new, its relevance, strength, and repercussions have only just become fully understood. Consider the huge influence that large multinational oil companies play in the global economy, particularly in Nigeria. To emphasise this argument, consider what L.A. Amu, a former Managing Director (MD) of NNPC, said about Nigeria’s economy. ”
The Nigeria economy can largely be described as one with a strong petroleum industry superimposed over an undeveloped industrial base” . This is a testament to the positive impact of multinational oil companies in the Nigerian economy. Because without the oil firms, there would have been no oil or petroleum business in the first place.
As Megginson et al. (1988) put it “MNC are more than just giant business firms, for they tend to have social, and even political effects as well as economic ones in their host countries” .
KINARD (1985) disagreed with this viewpoint, claiming that large firms such as MNCs play crucial political and social responsibilities in their communities in addition to economic ones.
For obvious reasons, global company has its own unique characteristics. It involves multiple countries. Consequently, it is influenced by several environmental conditions in these countries. As a result, worldwide company management, or multinational management, is both unique and hard.
To survive in a diverse environment, multinational managers must develop or devise distinct policies and tactics. Though it is the role of a country’s government, such as Nigeria’s, to emulate policies and activities for socioeconomic growth and development, governments’ resources frequently look insufficient to carry out those tasks efficiently.
Megginson et al. (1988) maintain that “MNCs are more than just massive economic units. In many situations, they function as a type of government, with greater wealth and influence than some of the countries in which they operate.
For example, in a typical year, Exxon, General Motors, and the Royal Dutch Shell Group’s combined revenues exceeded the GNP of the majority of the world’s industrialised nations.”
As a result, it is not surprising that society expects and presses multinational corporations to play an important role in the socioeconomic growth of their host countries.
At the very least, they should strive to meet their corporate social duties. Meginson et al. (1988) explain it thus way. “Today’s international business firms are expected to contribute to the host nation’s economic growth and development while also producing a profit for their owners.”
What they are arguing is that multinational corporations should not only be concerned with profit maximisation in their host countries, but should also take on other duties that help society. Many individuals hail multinational corporations as agents of social, economic, and technological growth in their host nations;
on the other hand, some consider MNCs as instruments of exploitation in those countries. These two perspectives are based on the extent to which multinational corporations have met societal and business expectations and demands in their surroundings.
Statement of the Problem
However, the role of multinational corporations includes contribution to government revenue through the payment of corporate tax, the non-statutory role that they discharge sometimes as a public relations effort to come across good corporate citizens, community
contribution to foreign exchange earnings through export drives or the provision of some infrastructure e.g. schools, health services, etc., decrease in unemployment problems and in equal income distribution,
These results are possible due to the vast resources available to multinational corporations in their cross-national operations, and they will be extremely beneficial to countries that have developed policies and enacted laws, regulations, and rules to control and attract these companies and their investment.
The objectives Of The study
The study’s aims are:
To determine whether multinational corporations in Nigeria are socially responsible.
Examine the role of multinational firms in Nigeria’s economic progress.
To discover the elements that influence the growth and success of multinational corporations in Nigeria.
To determine the function of multinational corporations in nation formation.