22/09/2008 9:24:18 am
In Praise of the Stateless Multinational. Few have been as criticised as multinational cororations, especially by the political left and the anti-globalisation movement. But, as the Economist shows in a Special Report, there are many good reasons to have the opposite view. Here is from the Leader:

"At first companies set up overseas sales offices, to watch over the export of goods made at home. Then they built small foreign replicas of the mother ship, to cater to local demand. Today the goal is to create what Sam Palmisano, the boss of IBM, calls the "globally integrated enterprise" - a single firm in which work is sourced wherever it is most efficient. ...

Some people assume that stateless multinationals inevitably compete away standards in a race to the bottom. It is true that multinationals tend to shop around for taxes, but in other ways they are usually sticklers for good behaviour. Encouragingly, firms from emerging markets are finding that a globally integrated company needs a single culture, and that the best way to foster this is to make the highest ethics anywhere in the firm the norm for everyone, wherever they are working. Anything less tends to corrode the culture. ...

In fact, the real threat comes from overly chummy links between a state and its multinationals. Although politicians may have been more comfortable in a world where what was good for General Motors was good for America, that tended to lead to protectionism and antiquated working practices. Firms in which loyalty to the state goes beyond the economic value it offers usually expect something in return?soft contracts and subsidies, perhaps, or standards conveniently set in their interest.

In fact the sorry story of GM itself highlights the dangers of being a national champion. Rather than fear the stateless corporation, people would be wise to do all they can to make them feel at home in their country."