Hirst and Thompson: Globalization in Question: Multinational Companies and the Internationalization of Business Activity

PQ Hirst and G Thompson, Globalization in question (Polity Press).

Ch. 3: Multinational Companies and the Internationalization of Business Activity:

"[This chapter] concentrates on the major changes in the structure of the international economy since the early 1980s, particularly in terms of the internationalization of production. One of the key changes identified and explored here is the increased salience of, and rapid growth in, foreign direct investment..." (66).

"This chapter is concerned to do a number of things. The first is to explore the overall significance of MNC activity and the geographically concentration of traditional measures such as FDI and trade. We also supplement this with the analysis of other measures of international inequality. Secondly, in this context, we analyze whether the advance of MNC activity has been quite so rapid and widespread as is often assumed by the strong globalization thesis, and particularly so fast as to seriously undermine the continuation of a national or local business system" (67-8).

This chapter has a wide variety of good data on MNCs and sectoral investment and advance. The dispersal of FDI has not at all been universal, and most has gone to industrialized countries.


"The argument of this chapter has involved a number of points. The first is that the internationalization of production and trading activity remains extremely unequally distributed, with a domination of the Triad countries and a few favored rapidly expanding less developed economies...Secondly, the extend of the internationalization of business activity is often exaggerated in both popular and academic accounts; and it is not increasingly at a particularly dramatic rate. From the quantitative analysis reported in the first part of the chapter it is reasonable to suggest that between 65 and 70 per cent of MNC value-added continues to be produced on the home territory...But there ahs obviously been some internatio0nalization of business activity. Thus a second issue was to assess the strategies of companies originating from different business systems. Despite the home-centeredness of the main findings, the remaining activity of the country groupings is quite diverse. That is, the different country MNCs operate in different areas to different extents...Connected to this is the question of what effects the limited internationalization of business activity is having on national systems of business, production and innovation...Finally, it is worth raising the issue of the 'governance' consequences of this analysis. These are twofold. In the first place, if national systems of production, business and technology still remain relatively firmly embedded, then there is still scope for the management of these in the interests of the stability and productivity of the national economy. Secondly, given that MNCs remain tethered to their home economies, whether these are specified either nationally or regionally, the opportunity arises for national or sub national regional bodies to more effectively monitor, regulate and govern them than if they were genuinely 'footloose capital'. Thus the overall conclusion of the chapter is that the extent of internationalization and its potential detrimental consequences for the regulation of MNC activity and for national economies is severely exaggerated. International businesses are still largely confined to their home territory in terms of their overall activity: they remain heavily 'nationally embedded'" (94-6).