Do Multinational Enterprises Contribute to, or Reduce Global Inequality?

Do Multinational Enterprises Contribute to, or Reduce Global Inequality? open_in_new

Guest editors

Shasha Zhao, Middlesex University, London, United Kingdom
Paul N Gooderham, NHH Norwegian School of Economics, Bergen, Norway 
Anne-Wil Harzing, Middlesex University, London, United Kingdom
Marina Papanastassiou, Middlesex University, London, United Kingdom

About critical perspectives on international business

The mission of cpoib is to exclusively support critical reflections on the nature and impact of contemporary international business (IB) activities around the globe from inter-, trans- and multidisciplinary perspectives. The journal places a special emphasis on scholarly works that question the hegemony of multinational enterprises (MNEs) and evaluate the effects of their IB activities on the global economy and national societies.

Scope and Rationale of the Special Issue

CPOIB invites the submission of articles that address the theme: “Do Multinational Enterprises Contribute to, or Reduce Global Inequality?”. The term ‘inequality’ refers to various societal and economic phenomena inside or across nation states, such as income, gender, social class, economic conditions, welfare, as well as other wider developmental issues. 

Although the relationship between nation states and MNEs has been historically important, dominant IB thinking has traditionally paid considerably greater attention to firm level factors of MNEs such as strategy, structure, and performance. With some exceptions such as Ackroyd and Murphy (2013), Lee and Gereffi (2015), and Roberts and Dörrenbächer (2016), IB scholars have shown relatively sparse interest in the societal, economic, and cultural consequences of the emergence and growth of MNEs. However, a recent study by Piketty (2014) suggests that the world is witnessing rising inequalities in both advanced and emerging economies, a reversal of the post Second World War trend towards greater equality and integration. A critical question worth asking is what role (if any) MNEs play in the development of this trend. In April 2017 this question was a core plenary theme at the Academy of International Business UKI Chapter Conference. Panelists and delegates were divided on the issue, but several presenters argued that MNEs operating in contexts of institutional voids generally generate significant inequality. 

MNEs are facing an increasingly competitive and crowded global market, which has led to a rapid expansion of dispersed value-chain activities in search of greater and more sustainable competitive advantages. Two related developments contribute to the necessity and opportunity for greater dispersion. At the firm level, we see an intensified exercise by MNEs to fine-slice and (re)locate global value-chain activities to the most advantageous locations (Buckley 2009; Mudambi and Santangelo, 2016). At the country level, we note dynamic and heterogeneous shifts in market and institutional conditions of home and foreign nation states. For instance, some recent evidence shows that, for the first time in history, a significant growth in advanced-economy MNE innovation investment is taking place in emerging economies (Awate et al., 2015; Jha et al., 2015). This is predominantly due to institutional improvements in these countries and preferential government policies for promoting and supporting innovation activities (Liu et al., 2011). Similarly, continuous technological development and changes in manufacturing capabilities in the case of advanced economies as well as improvement in market and institutional conditions in the case of emerging economies are seen to create new learning and growth opportunities for emerging-economy MNEs. UNCTAD (2015) reports that the largest outward investment from emerging economies to advanced economies as well as other emerging economies has occurred in the past five years. As such, nation states around the world are experiencing the most extensive and dynamic MNE activities in their local territories to date (Clougherty et al., 2017). 

However, negative outcomes of MNE activities are increasingly noted. For instance, MNEs that were once trusted are found to act illegitimately across host countries. A recent case is the Volkswagen ‘Dieselgate’. In September 2015, the company admitted to cheating official environmental standard requirements by installing software inside each vehicle to falsify system information (Howe, 2015). A survey initiated by Legatum Institute London, an international think tank for promoting policies to address poverty, reveals that the public holds largely negative views of MNEs (Withnall, 2015). The survey covered seven nations, including advanced (Britain, USA, and Germany) and emerging economies (Brazil, India, Indonesia, and Thailand) and revealed that 90 per cent of respondents believe MNEs are not ‘clean’ and a substantial majority agree that MNE actions in host countries contribute to a growing inequality gap. Some other worth noting examples include the case of Bangladesh where Lim and Prakash (2017) find that Western brand owners often pressurise local suppliers to fulfill orders, causing the suppliers to sustain wages to bare minimum and ignore extremely poor working conditions. This subsequently led to the collapse of a factory building where over 1,000 workers (mostly female) died. In the case of the UK, Taylor and Driffield (2005) find empirical evidence which shows that inward investment by MNEs leads to 11 per cent increase in wage inequality because of shift in demand for new labour skills. On the other hand, some positive cases remain. For example, in a similar study on wage and labour skill, but in the case of Ireland, Figini and Görg (1999) find that the rise in wage inequality because of inward investment is temporary and drops eventually. In the case of China, Greaney and Li (2016) find no evidence that MNEs are to be blamed for the prominent issue of urban-rural income inequality. 

Going beyond these scattered examples as to how MNEs contribute to inequality, this special issue seeks papers which conceptually or empirically advance the debate on the relationship between MNEs and inequality. Whilst papers that argue in favor of MNEs contributing to equality are welcome, we are particularly keen to see papers which offer new theoretical or empirical angles useful in discussing the role of MNEs in contributing to inequality.

Papers focusing on the following specific themes should consider submitting to the special issue

However the list is by no means exhaustive or restrictive:

  • Whether and how do MNEs contribute to (or reduce) inequality in income, gender, social class, economic development, welfare, or other wider developmental issues?
  • Whether and to what extent does MNEs’ foreign direct investment (FDI) impact on multi-level factors of host countries (macro-level: e.g. culture, institutions; micro-level: e.g. individual, family)?
  • Whether and how do MNEs contribute to (or reduce) subnational inequality in the case of emerging economies? What can be learnt from possible inter-regional differences?
  • Whether and how do MNEs contribute to (or reduce) subnational inequality in the case of advanced economies? What can be learnt from possible inter-regional differences?
  • What, if any, are the similarities or differences between advanced-economy MNEs and emerging-economy MNEs in terms of their contribution to (or reduction of) inequality? What can be learnt from these similarities or differences?
  • Whether and to what extent do emerging economies and advanced economies experience different or similar impact of MNE FDI activities? That is, do emerging economies benefit or suffer more in comparison to advanced economies, or vice versa?
  • What methodological challenges and solutions exist when collecting empirical data in relation to MNEs and inequality (and equality)? What are the methodological considerations when measuring impact of MNE activities in host economies?
  • What indigenous insights can enrich the existing literature on the relationship between MNEs and inequality to inform managerial practices and future research?
  • What are new conceptual or empirical insights into policy-making or managerial challenges in inequality reduction? What theoretical and practical lessons can be learnt from cases of a reduction or increase in inequality? What can be useful policy frameworks that effectively address the impact of MNEs on inequality? 

Submission Process and Deadlines

Submission Instructions

Deadlines

  • Submission deadline: 31st December 2017
  • Estimated publication date: late 2018 or early 2019

More Information

Enquiries about the special issue should be directed to the guest editors –

Shasha Zhao (s.zhao@mdx.ac.uk)
Paul N. Gooderham (Paul.Gooderham@nhh.no) 
Anne-Wil Harzing (anne@harzing.com) 
Marina Papanastassiou (m.papanastasiou@mdx.ac.uk)

References

Ackroyd, S. and Murphy, J. (2013) Transnational corporations, socio-economic change and recurrent crisis, Critical Perspectives on International Business, 9 (4): 336-357.
Awate, S., Larsen, M. M., and Mudambi, R. (2015) Accessing vs sourcing knowledge: A comparative study of R&D internationalization between emerging and advanced economy firms. Journal of International Business Studies, 46 (1): 63-86.
Buckley, P. J. (2009) The impact of the global factory on economic development. Journal of World Business, 44 (2): 131-143.
Clougherty, J. A., Kim, J. U., Skousen, B. R., and Szücs, F. (2017) The foundations of international business: Cross‐border investment activity and the balance between market‐power and efficiency effects. Journal of Management Studies, 54 (3): 340-365
Figini, P., and Görg, H. (1999) Multinational companies and wage inequality in the host country: The case of Ireland. Review of World Economics, 135 (4): 594-612.
Greaney, T.M. and Li, Y. (2017) Multinational enterprises and regional inequality in China Journal of Asian Economics, 48: 120–133 
Howe, B. (2015) Volkswagen scandal: 5 scary numbers, CNN Money, 4th November, accessed on 16/05/2017, [available at: http://money.cnn.com/2015/11/04/news/companies]
Jha, S., Dhanaraj, C., and Krishnan, R. (2015) How does multinational R&D evolve in emerging markets? Working Paper, International Institute for Management Development, 2015-02
Lee, J. and Gereffi, G. (2015) Global value chains, rising power firms and economic and social upgrading, Critical Perspectives on International Business, 11 (3/4): 319-339
Lim, S. and Prakash, A. (2017) Four years after one of the worst industrial accidents ever, what have we learned? The Washington Post, the monkey cage section, accessed on 12/05/2017, [available at https://www.washingtonpost.com/news/monkey-cage]
Liu, F. C., Simon, D. F., Sun, Y. T., and Cao, C. (2011) China's innovation policies: Evolution, institutional structure, and trajectory. Research Policy, 40(7): 917-931.
Mudambi, R., and Santangelo, G. D. (2016) From shallow resource pools to emerging clusters: The role of multinational enterprise subsidiaries in peripheral areas. Regional Studies, 50(12): 1965-1979.
Piketty, T. (2014) Capital in the Twenty-First Century, Harvard University Press: Cambridge, MA.
Roberts, J., and Dörrenbächer, C. (2016) Renewing the call for critical perspectives on international business: towards a second decade of challenging the orthodox. Critical Perspectives on International Business, 12(1): 2-21.
Taylor, K., and Driffield, N. (2005) Wage inequality and the role of multinationals: Evidence from UK panel data. Labour Economics, 12 (2): 223-249.
UNCTAD (2015) World Investment Report, United Nations Publications: Geneva
Withnall, A. (2015) 2 charts that show what the world really thinks about capitalism, The Independent, 3rd November, accessed on 14/05/2017, [available at: www.independent.co.uk/news/business/news]

About the Special Issue Editors

Shasha Zhao is Senior Lecturer (Associate Professor) of International Business and Global Innovation at Middlesex University Business School, London. She received her Ph.D. from Alliance Manchester Business School, University of Manchester, UK, and previously held positions at Royal Holloway College, University of London, and Plymouth University, UK. Her research focuses on MNE subsidiary role, MNE innovation strategy, and impact of MNE FDI on host economies. Her research has been published in journals such as Human Resource Management Journal, and International Marketing Review. She also acts as a regular reviewer for a number of journals such as Asian Business & Management, Human Resource Management Journal, and Journal of Knowledge Management. Her latest research focuses on MNE innovation activities in emerging economies, and possible social and political implications. 

Paul N. Gooderham is Professor of International Management and Head of the Department of Strategy & Management at NHH: Norwegian School of Economics, Bergen. He is also an adjunct professor at Middlesex University. His research interests are concentrated on international and comparative management. He has published over 80 books, book chapters, and academic articles in journals such as Journal of World Business, Journal of Management, Journal of Management Studies, Journal of International Business Studies, Strategic Management Journal, Human Relations and Administrative Science Quarterly. Among his books are a co-authored textbook, International Management: Theory and Practice (Edward Elgar) published in 2013. Paul is on the senior advisory board of Journal of Organizational Effectiveness and a regular reviewer of journals including Journal of World Business, Human Resource Management Journal, and Human Relations. Since 1994, he has been a member of Cranet the largest comparative HRM research network in the world. 

Anne-Wil Harzing is Professor of International Management at Middlesex University, London. Previously, she was Professor and Associate Dean Research at the University of Melbourne, Australia. Her research interests include international HRM (e.g. gender issues), headquarter-subsidiary relationships, the role of language in international business, and the quality and impact of academic research. She has been an associate editor of management journals and a current editorial board member of 13 management journals including Journal of International Business Studies, Journal of World Business, and International Business Review. Anne-Wil has published more than 100 books, book chapters, and academic papers in journals such as Journal of International Business Studies, Journal of World Business, Journal of Organizational Behavior, Human Resource Management, Organization Studies, and Strategic Management Journal. More than a dozen of her articles have won research awards or distinctions. Anne-Wil has been listed on Thomson Reuter's Essential Science Indicators top 1% most cited academics in Economics & Business worldwide since 2007. 

Marina Papanastassiou is Professor of International Business and Innovation at Middlesex University Business School, London. She was also the Head of Department of International Management and Innovation at Middlesex University Business School (2014-16). Marina received her Ph.D. from the University of Reading and previously held positions such as research professor at Copenhagen Business School, Denmark and University of Athens, Greece. Her research focuses on MNE FDI strategy. Marina has published in a number of related journals including Journal of World Business, Management International Review, R&D Management, and Research Policy. Her latest research includes FDI in emerging economies. She is a regular reviewer of journals such as Management International Review, and R&D Management. She is also a Fellow of the European International Business Academy.


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