Globalization and Its Effect on Multinational Corporations Operations in the USA and Abroad

Essay 2011 7 Pages

Politics - International Politics - Topic: Globalization, Political Economics



History has revealed a growing trend in our social institutional disposition, from the earlier kingdoms of the middle age, the nation-state of the mid-16th century to the current global environment of the 20-21st century. This progressive transformation reveals the latter system as being responsible for exacerbating interactions, scientific development, and so on. It has also become responsible for the modernity that drives industrialization, technology, and resulting in far flung interconnectedness. These interactions include economic, political and socio cultural collusions. Charon (2010) indicated that, “World interaction-the interconnectedness, interdependence, integration, social network, exchanges- accelerated at the end of the twentieth and the beginning of the twenty-first century” (p. 289).

These characteristics seem to be having a growing commonality in global product and service demands. The information system; media, telecom, internet technologies continue to introduce MNCs’ products and services globally. Charon posited that social interactions among people throughout the world have increased with the technology of air, ground transportation, and network communication (pg. 289). The basic gains of the growing world interactions are the intensified trades, outsourcing, and capital transfer, expansion of markets, corporate relocations, migration, and cultural cohesions.

The question this thesis will address is to ‘what extent is this trend beneficial, risky, or not, and what are some of the detriments?’ My analysis will reveal that this trend result in externalities, as group actions in turn affect other. As Charon insinuated, this system show tensions that exists due to social interactions among individuals, organizations, societies, and nations. He suggested that these tensions create social patterns that compete with societal and national patterns created and established hundreds of years ago (pg. 289). Although these changes have evolved into new social patterns, over the years post modernity has introduced newer systems such as human right cultures that continue to challenge the traditional and modern eras, now with growing conflict within societal and national institutions.

Globalization Trend

Globalization seems to be creating a global social structure, culture and institutions; this can be described as a “World Society” (Charon, 2010, p. 289). The United States corporations first started experiencing and getting involved in international economy in the 1960s. Their involvements included recognizing newer markets, production in some of those markets, exporting from those markets to the home and other oversea markets. Charon suggested that at first the unions did not understand the implication of this free trade to the domestic market (pg. 297). Among all the nations at the core involved in this trend, the US corporations became the largest MNCs globally, benefitting in the sales of goods and services with occasional issues. Opponents of globalization have based their discontent on the loss of jobs to the Global South and East states, as well as in the lean operations processes that have resulted in dehumanizing system in our social institutions. The basis of the foregoing is believed to stem from rationalizations by organization to create control, efficiency, effectiveness, predictability, and synchronized operations, a system which tends to be quite irrational to other stakeholders, spun from this modern system.

Modernization and Post Modernization Era

Modernization perspective has been recognized as resulting from industrial and urbanized social changes. Charon revealed that these changes that are taking place represent the development of traditional societies which are becoming modern and modern societies becoming more global (pg. 290). These developments in industrialization, information technology, trade, political structures, cultures, and institution have become sources of benefit to the world’s modernized organizations and consumers. This also seems to account for individuals’ lost of personal connection between work, life and community. There is also a drift from the rural areas where there is abundance of resources to the urban areas in search of opportunities in white and blue collar jobs. The latter had received the most attention by industrial and market developments. This is a pattern that is becoming more prevalent and making alienation more common. There are also other hazards linked to the industrial production due to technological improvements.

INFED; (the informal education homepage and encyclopedia of informal education) a not-forprofit site established in 1995 at the YMCA George Williams College, London insinuated that these risks are now global. “Modernization risks possess an inherent tendency towards globalization. A universalization of hazards accompanies industrial production, independent of the place where they are produced: food chains connect practically everyone on earth to everyone else. They dip under borders” (Infed, 2011, pg 6). Charon suggested that since the beginning of the Industrial Revolution, people have competed within societies and that with globalization of the postmodern era came a worldwide labor source that has allowed large corporations to shop the world to find the cheapest labor supply (pg. 301). This trend is as vast as the earth’s enormity and the comparative advantages resulting from this is becoming responsible for class stratification.

The increased global connectedness resulting from this system has led to the questioning of modern science. Post Modernization perspective of the later centuries challenged the modern era. Operations have developed even more efficiently and become more rationalized. Charon posited that for many, it is not simply an evolution that goes back hundreds of years, but truly a new world that has changed economically, politically, socially, and culturally (pg. 289). Modern science had introduced dehumanization making challenges more unreasonable and common in occurrence. Postmodernism not only approves of the disorganized or chaotic side of society, but embraces it. The result has also accounted for the human right theme in our current culture.

There is also a sense of omission of individual differences and personal self-expression that are left out of the equation of the modern, rationalized system. Postmodernism recognizes the fact that this brings into focus the issues that opponents of this perspective emphasize on, and the fact that there is a fine line between benefits of rationalized business operations and the detriments of globalization. The foregoing also accounts for the dehumanizing experiences of employees and consumers, including how this system affects the poor and other peripheral parts of our global system.

Benefits and Drawbacks; Environment, Cultural Cohesion and Conflict, Economic Conditions of Different, Segments of the Global Population

There are many literatures on the various immediate benefits of the globalization system to all stakeholders, for one, because of their efficient rational lean production system the MNCs enjoy low cost capabilities, and this low cost benefits are passed on to consumers by way of low cost and multiple variety of products and services. Manufacturers are able to import back to the US products from low wage countries of the Global South and East. Under these circumstances Charon suggested that, globalization is thought to be good for consumers because products cost less (pg. 291). Benefits are also passed down to stakeholders, the organization itself, and states of the world at the core, such as the US and some European states, including others that have embraced the growth of an international environment, and MNCs that exceed the bounds of national politics. The search for low wage labor has left the Global North wondering its position with regards to the rate at which jobs are outsourced to the South. The foregoing underpins the structures or characteristics of MNCs’ operations, as well as some of the global risks they convey.

Ritzer (2011, pg. 143) noted that, most important, rational systems are unreasonable systems that deny humanity; the human reasons of the people who work within them or are served by them. There is so much disparity between the relative performance of the working class in different societies, organizations, and nation-states. Global interdependence is resulting in affluence, peace, democracy and social changes in the world, especially for the Global North states located at the core of the system and for the emerging economics such as Brazil, India, and other Global South states that currently benefit from this trend. The social gaps of both absolute and relative poverty are obvious. This global structure is also indicative of class stratification of both individuals and nations, “a discussion of value, a conflict between holding onto capitalistic values and institutions versus values that seek control over capitalism values, that is, other than profit” (Charon, 2010, pg. 292). US participation in this international system depicts continuous dominance as a core state. Capital and corporate headquarters are located in the US while manufacturing takes place in low wage countries. This result also draws on division of labor internationally, hence increasing international social class.

The unequal advantages experienced by nations at the periphery have not afforded them the opportunities as those that exist in nations such as the US at the core. They have no competitive or comparative advantages, thereby absolutely or relatively “making them socially unequal, with characteristics such as less economic power, large population, underdeveloped, unstable economy, dependent of few commodities, or a single mineral resource” (Charon, 2010, pg. 306). This also mirrors the postmodernist conflict of holding values and institutions versus the values that seek some control through capitalism. This situation results in the disparities that continue to exacerbate debates between proponents and opponents of globalization. The foregoing is responsible for the shift in demographic and labor pattern in the US and abroad. The Global North have been attracting migrants from the south (sometimes with the support of institutional initiatives such as North American Free Trade Agreement (NAFTA), World Trade Organization/General Agreement on Trade and Tariffs (WTO/GATT)), to fill jobs created by the MNCs rational systems, while irrationally taking from the old era high paid high skilled jobs. These Institutional initiatives are also principal players, creating amicable business climates, while debates rage on some fronts in the US on the possibility of protectionist policies to circumvent the loss of jobs to the global south. The core state governments really have little or no control over the business environment and are hardly able to regulate, leaving MNCs to operate by their own rules.

Charon suggested that modernity would eventually bring people together, depicting a global social culture (pg. 306). Although globalization promises interdependence and interconnections, cultural differences still exists. There is a tug between the emphases on the growing global culture and resisting national culture, another conflict that has prompted debates. Oppositions and receiving populations of the cultural incursion by core states continue to fuel market demands for growing homogenous products, while showing resistance on other fronts. Even in the mist of these interactions and discontent people are still committed to a world society. Charon suggested that, “efforts have turned to the future and the necessity for changing their ways. Global warming, environmental destruction, disrespect for human right are real issues because people feel a commitment to our world community” (Charon, 2010, pg. 313).

This foregoing exacerbates the conflict that exists between the traditional, modern, postmodern perspectives and their affects on global economy, human right, and democracy. Postmodernity also seems to bring to light the emergence of emphasis on human right and democracy. Charon insinuated that human right transcends and penetrates US culture, limiting the government power, military, business and religion, and encouraging diversity and respect for minorities (pg. 309). This trend continues to supersede the growing modern global economy and traditional religious theme that came before it. This sort of highlights the discontent of Postmodernity for modern science and its accomplishments.

The global system exposes the connection and advantages on one hand, and a clear line of disadvantages on the other. This also stresses the relative gains to individuals and states. Charon suggested that the globalized system connects those working at the grassroots level to protect, restore, nurture the environment, and to enhance access for the disadvantaged the basic resources they need to live a dignifying existence (pg. 292). The outcome of this is that each state benefiting from this system specializes in a certain area based on their comparative advantages. The connectedness also means shared risks, increased conflicts, and problems; international civil wars, the speed of the spread of diseases, etc. For example, a disease which originated in the Far East Asia in 2003, the severe acute respiratory syndrome (SARS), spread vehemently and ended up in numerous states in such a short time. The fear of contamination by this disease was felt all over the world. The global environment has become so fluid that there are only virtual borders, no firm boundary line between States anymore. This conflict accentuates the benefits and risks that now exist.


The foregoing paper indicates that although globalization increases interaction there is still no world culture and some are critical of the cultural thrust (Charon, pg. 307). The modern global economic culture of postmodernity continues to conflict with critics of the capitalism, economic globalization, and modernization (pg. 308). The US is certainly experiencing a pull between this global trend and humanitarian culture, where the cultural theme emphasizes the protection, nurture of human right, and the environment. This is exemplified in the recent reactions to the outsourcing of jobs from the US while creating over 3600 more jobs in the Global South and East by US and other MNCs. The benefits of globalization are certainly enormous and favorable to corporations, while the risks are clear. Dissatisfied citizens are beginning to contemplate protectionist initiatives. As already noted this is sure to create disputes based on agreements under WTO/GATT, NAFTA and other trade treaties and alliances.

The postmodernity perspective seems to support the human agency and social movements that strive to bring cohesive diversity to the world culture, nevertheless, national cultures continue to compete with globalization. This cultural imbalance limits globalization. In the case of governments that think of controlling this trend, under the watchful eyes of institution and agreements such as the WTO/GATT may lose reputation or face reprimands. Violations such as enacting policies or introduce unfair subsidies that distort this free market system may require partners to mitigate through levying of countervailing duties. Other disciplinary action for any protectionist policies could also be possible. In the meantime, the US grandfather status in the world system continues to guarantee her dominant position in the world economy, and of course, with some increasing requests for major internal policy changes to off shoring and minimal back shoring.

Basically, a University of Alabama article on anthropological theories depicts that, “we must now come to terms with the second revolution, that of the Twentieth Century, of postmodernity, which is the immense process of the destruction of meaning equal to the earlier destruction of appearances. Whoever lives by meaning dies by meaning” (Stewart, Wesley, & Weiss, 2011). They revealed that postmodernity concentrates on the tensions of differences and similarity erupting from process of globalization: the accelerating circulation of people, the increasing dense and frequent cross cultural interactions, and the unavoidable interactions of local and global knowledge. The issues discussed above resound the fact that skepticism and affirmation surrounds postmodern thoughts, insinuation control in place by modernity, and the support movement organized around peace, environment, and feminism (Stewart et al, 2011), all of which have been discussed above and signifies the current globalization trend.


Charon J.M. (2010). Ten Questions: A Sociological Perspective, 7th Edition. Australia: Wadsworth Cengage Learning.

Infed (2011). The Theory and Experience of Globalization. Retrieved from http://www.infed.org/biblio/globalization.htm.

Ritzer G., (2011). The McDonaldization of Society, 6th Edition, Los Angeles. Sage

Stewart R., Wesley K., & Weiss S., (2011). Postmodernism and Its Critics: Department of Anthropology., The University of Alabama. Retrieved from http://www.as.ua.edu/ant/Faculty/murphy/436/pomo.htm.



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Title: Globalization and Its Effect on Multinational Corporations Operations in the USA and Abroad