Does Economic Governance Matter?
Show Less

Does Economic Governance Matter?

Governance Institutions and Outcomes

  • New Directions in Modern Economics series

Edited by Mehmet Ugur and David Sunderland

This book contributes to the growing governance literature in three ways. First, it extends the analysis to new areas such as power asymmetry, regulation, transnational company strategies, and law enforcement. Secondly, it examines the role of formal institutions that shape and enforce the rules/norms codified in law; but also private-ordering institutions that function under the umbrella of the State; and private institutions (such as market rules/norms) that provide reputational and other information that foster compliance. Finally, the book extends and enriches the governance debate, addressing issues such as the determinants of institutional quality and efficiency, and the interaction between actor networks and institutional norms.
Buy Book in Print
Show Summary Details

Chapter 5: Strategies of Transnational Companies in the Context of the Governance Systems of Nation-states

Grazia Ietto-Gillies

Extract

5. Strategies of transnational companies in the context of the governance systems of nation-states1 Grazia Ietto-Gillies INTRODUCTION The transnational or multinational companies (TNCs or MNCs) are much talked about as if they were a totally different type of institution from the normal company or firm.2 Are they? And if they are, what makes them so? The distant antecedents of the transnational company can be dated back centuries to the Medici Bank in Renaissance Florence or to the trading companies from Northern Europe in the seventeenth and nineteenth centuries. Many business historians (Cox, 1997; Jones, 2002) agree that the main factor that led to the development of the TNC was the formation of joint stock companies. Nonetheless a TNC is not just another joint stock company. What are the key elements that make a company a TNC? The defining element is operations across frontiers. But not just any type of cross-border operations. Imports and exports on their own are not operations that identify a company as a TNC. The specific characteristics that identify the TNC are: (1) ownership of assets abroad leading to (2) direct business operations; and (3) the ability to control those operations. Control has two main connotations in the context of a TNC. The first connotation is the equity stake in the foreign enterprise. What percentage of the foreign assets must be owned by the main company for the latter to have control? The International Monetary Fund (1977) guidelines set a minimum of 10 per cent. Equity control...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.


Further information

or login to access all content.