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Q: Globalisation, MNC influencing workplace relation in developing countries ( Answered 4 out of 5 stars,   1 Comment )
Subject: Globalisation, MNC influencing workplace relation in developing countries
Category: Business and Money > Employment
Asked by: nonameplease-ga
List Price: $150.00
Posted: 31 Jul 2006 16:01 PDT
Expires: 30 Aug 2006 16:01 PDT
Question ID: 751249
Examine the extent to which Multinational Corporations (MNC) are
influencing workplace relations in developing nations. Identify both
the positive and negative contributions MNCs are making to managing
people at work. How should the actions of MNCs be regulated in respect
of control over their local workforces?

Clarification of Question by nonameplease-ga on 31 Jul 2006 16:21 PDT
I am looking for comprehensive research on the positive and negative
contributions MNCs are making to managing
people at work
Subject: Re: Globalisation, MNC influencing workplace relation in developing countries
Answered By: adiloren-ga on 31 Jul 2006 23:58 PDT
Rated:4 out of 5 stars
"Globalization enhances competitiveness, both at the level of the firm
and at the level of the nation. As observed in China, Malaysia, and
Korea, this leads management and the state to adopt strategies
designed to increase labor effectiveness to the benefit of capital.
However, the effect of globalization on industrial relations
procedures and substantive outcomes is contingent. Pressure for
greater flexibility in the use of labor is ubiquitous, but the outcome
is constrained by cultural norms valuing hierarchy and security. State
strategies vary by historical circumstance, resource endowments, and
internal political dynamics, including the influence of trade unions.
While Malaysian industrial relations is heavily constrained by the
discipline of high exposure to international capital, in China and
Korea, major struggles are shaping the future of workplace and
national labor market governance. Thus the extent and impact of
globalization vary between countries, resulting in similar
preoccupations by policymakers yet leading to variable responses and
industrial relations outcomes."
"This article examines the labour relations practices of multinational
corporations (MNCs) in the German and Spanish quick-food service
sectors. The demand for greater   profitability and lower costs is
leading to a greater standardization of work methods across a widening
range of food service operators, resulting in the gradual  
elimination of more expensive, skilled and experienced workers, and an
increasingly non-union approach in employee relations practices. The
outcome involves increasing  standardization, union exclusion, low
trust, low skills, and low pay. These sectoral characteristics appear
to outweigh both country-of-origin and host-country effects.  The
findings therefore confirm continuing variation within national
industrial relations systems and the importance of sectoral
characteristics and   organizational contingencies in understanding
MNC cross-border behaviour."

GRIEVANCE DEBATE - Globalisation
"Let me make this point crystal clear: globalisation offers enormous
potential opportunities for the benefit of all. However, unchecked
globalisation offers no protection to working people or to developing
nations from the often exploitative practices of multinational
corporations. It cannot be ignored that half of the world's largest
economies today are corporations, not nations. Many of these
corporations do not actually produce anything. John Ralston Saul
pointed out on his visit to Australia this year that the sales of 200
transnational corporations represent 28.3 per cent of the world's GDP.
There is nothing wrong with that, except that they employ only 0.75
per cent of the work force."

South African Case Study:


-Globalization and MNC's have empirically benefited developing countries:
"The benefits of that growth have been shared. The countries that are
getting poorer are those that are not open to world trade, notably
many nations in Africa. China?s opening to world trade has brought it
growth in income from $1460 a head in 1980 to $4120 by 1999. In 1980,
American?s earned 12.5 times as much as the Chinese, per capita. By
1999, they were only earning 7.4 times as much. The gap between rich
and poor is also shrinking with most nations in Asia and Latin

Many people believe that exports create jobs, and imports cost jobs
and that it therefore makes sense to have barriers against imports.
This thinking led to the Great Depression in 1930, because so many
countries had erected barriers against imports that global trade fell
with catastrophic consequences."
"Evidence supplied by the World Bank and United Nations strongly
suggests that multinational corporations are a key factor in the large
improvement in welfare that has occurred in developing countries over
the last forty years. In sub-Saharan Africa and South Asia, where the
presence of multinational corporations is negligible, severe poverty
rates persist and show little sign of improvement.

- The alternatives to multinational corporations would be far worse-
with less jobs available
"Critics of multinational corporations often profess to have a higher
moral vision and to be pursuing a world with laudable goals of just
wages and a clean environment. On the other hand, the extreme left
conveniently ignores the socially destructive behavior of those
economies that rely heavily on governmental regulations and
state-operated monopolistic enterprises. These economies have incurred
extreme rates of poverty, repressed human rights, and excessive
environmental damage. For reasons mentioned below, the problem
countries have almost no multinational corporations and are
concentrated in sub-Saharan Africa, South Asia, North Africa, and the
Middle East."

-MNC's lead to high wage jobs in developing countries and increased investment
"Further, multinationals are not siphoning jobs from high- to low-wage
countries; in fact, they tend to preserve high-wage jobs in developed
countries; in 1998, 75 percent of foreign direct investment went to
developed countries. Besides, labor costs alone do not determine where
multinational corporations base their affiliates; other variables?such
as political stability, infrastructure, education levels, future
market potential, taxes, and governmental regulations?are more
decisive. In 1998, multinational corporations had eighty-six million
employees?nineteen million in developing countries? and were also
responsible, indirectly, for another 100 million jobs. The jobs
created abroad also tend to pay far more than the domestic employers
do. Based on an August 4 2000, discussion with both the general
manager of Chesterton Petty and the senior manager of Price Waterhouse
Coopers in Beijing, their Chinese employees average approximately
$10,000 per year?a small fortune in China, where an upper-middle-class
full professor or medical doctor brings home slightly more than $200
per month in the city of Jinan."

-Empirical examples

"For example, from 1980 to 1998, world child labor rates (the
percentage of children working between the ages of ten and fourteen)
tumbled from 20 to 13 percent. Child labor rates dropped from 27 to 10
percent in East Asia and the Pacific, from 13 to 9 percent in Latin
America and the Caribbean, and from 14 to 5 percent in the Middle East
and North Africa. Interestingly, regions lacking multinational
corporations had the worst child labor rates and the smallest
reductions: Sub-Saharan Africa?s and South Asia?s child labor rates
dropped from 35 to 30 percent and from 23 to 16 percent, respectively.
This reduction in rates was attributable to increased family income,
which has permitted families to improve their diets, to have better
homes, and to provide their children with more educational
opportunities. School enrollment rates for ages six to twenty-three
rose for all developing countries from 46 percent in 1960 to 57
percent in 1995. Only sub-Saharan Africa had an enrollment ratio below
50 percent in 1995."

MNC's bring technologies and advancement to workforces in developing countries
"When multinational corporations make profits, this does not mean that
developing countries are being exploited. Both the multinational
corporations and domestic country are better off?the developing
country receives jobs, an expanded tax base, and new technologies. If
the investment does not do well, the multinational corporations may
lose their investment and the developing country does not receive the
aforementioned benefits, but the developing country owes no
restitution. As a result, multinational corporation investments do not
contribute to the external debt problems of developing countries."

"Developing countries must be allowed to further themselves
economically through free markets and the expansion of multinational
corporations. Such countries want jobs, not welfare. Furthermore, what
is comforting but not easily understood is that the promotion of trade
increases the welfare not only of developing countries but also of
developed ones; free trade is a positive-sum game."


The WTO and the World Bank
both have some good resources on globalisation. Particularly valuable
at the World Bank is a series of relatively short briefing papers on
assessing globalisation. is an internet site based resource which provides
links to reports on major globalisation issues. Its orientation is
pro-market and sound science.

The Cato Institute is a long-standing advocate of the benefits of free
trade and free markets. Its resources on globalisation are at

One of the best documents on the benefits of free trade is the OECD
paper, "Open Markets Matter: The Benefits of Trade and
Liberalisation". There is a summary at

Management consultants A.T. Kearney established the Global Business
Policy Council -
- as a strategic service to help chief executives monitor and
capitalize on geopolitical, economic, social and technological change
worldwide. It is best known for its Globalization Index which views
free trade in a positive light.

Famous free-trade business magazine, The Economist, maintains a page
on globalisation. Access to some articles is free.

The US Alliance for Trade Expansion is an organisation devoted to
answering some of the criticisms raised by critics of globalisation.

The Institute for International Economics has a good page of articles
and speeches on globalisation and the WTO, particularly a short paper
on the benefits of globalisation.

The WTO and the World Bank have some
good resources on globalisation. Particularly valuable at the world
bank is a series of relatively short briefing papers on assessing


"The World Trade Organisation agreements on free trade have functioned
principally to prise open markets for the benefit of transnational
corporations at the expense of national economies; workers, farmers
and other people; and the environment.

The WTO should not solely focus on opening markets but also allow
trade to be restricted to support human rights, labour rights and
environmental objectives in other countries. The WTO and trade
agreements should also allow non-government organisations a direct
voice in their governance.

The freeing of financial markets has brought global instability, as
evidenced in financial crises in Asia and Latin America and the
continuing marginalisation of sub-Saharan Africa."

-Profits motivate MNC's leading to economic exploitation in developing
countries where there is less regulation and oversite
"For many companies, the largest cost is often the work force. Hence,
where profits are the bottom line, it is only natural for companies to
seek out the cheapest labor possible. However, when international
agreements are often designed to foster an environment where cheaper
and cheaper labor is promoted, the workers themselves are often not
paid enough to live on. When a nation tries to provide regulatory
steps to improve workers conditions (which does mean more costs to the
companies), multinational corporations naturally pick up and go to
other places where there are less measures in place. In this way,
improving working conditions will always be difficult, as it is not in
the interest of the large companies."

Noam Chomsky argues that MNC's prevent effective unionization in
developing countries leading to poor working conditions and wages:
"On top of that, union organizing is essentially impossible.
Corporations can operate internationally, but unions can't -- so
there's no way for the work force to fight back against the
internationalization of production. The net effect is expected to be a
decline in wealth and income for most people in Mexico and for most
people in the US."

-MNC's have a huge portion of the economy at the expense of developing
countries and their workers
"While the sales of the Top 200 are the equivalent of 27.5 percent of
world economic activity, they employ only 0.78 percent of the world's
"Large, transnational corporations are becoming increasingly powerful.
As profits are naturally the most important goal, damaging results can
arise, such as violation of human rights, lobbying for and
participating in manipulated international agreements, environmental
damage, child labor, driving towards cheaper and cheaper labor, and so
"Various international trade agreements that large corporations are
able to strongly lobby favorable conditions in, are often designed in
part to make resources (including work forces) cheaper."

-Empirical examples of exploitation of workforces by MNC's
"Famous brands like Nike, the Coca-Cola Company, and many others all
do this. In some respect it is a cycle of competition driving each
other to such measures to keep up and to maximize profits. Nike, for
example use cheap labor in South East Asia, where they can get away
from the tighter enforcement and regulations of USA and Europe. In
fact, they have been exposed for using child labor, as well. Coca Cola
for example, have been accused of intimidating workers around the
world, even hiring (often indirectly, through intermediaries)
paramilitaries to intimidate or kill union leaders.

The apparel industry has often been strongly criticized for the use of
sweat shop-like conditions in its east Asian factories. In May 1998,
for example, a panel of experts on international law condemned the
violation of workers rights in the garments and sportswear industries;
twelve witnesses from ten developing countries had testified on actual
working conditions in the industry, pointing out seven leading
transnationals: sportswear manufacturers Nike and Addidas, clothing
traders H&M, Levi Strauss, C&A and Walt Disney, and the world?s
biggest mail order company, Otto-Verstand."

"A meeting in Oslo suggests that the current model of the Markets and
Globalization may not be the way to go. This is because when it comes
to a country trying to impose some environmental or societal
considerations and legislation on multinational corporations, they
just move to a country where the rules and regulations aren't as

For example
"Phillips-Van-Huesen have been criticized for closing a factory in
Guatemala because the workers tried to form a union to protect their
basic rights. A report by three human rights organizations revealed
the details. It reveals how the company closed a factory in order to
destroy the union and profit from lower wages by sweatshop contractors
in Guatemala."
"Concern is rising at the priorities of medical research and
pharmaceutical companies. There is concern that the profit motive has
led to emphasis on research that is aimed more at things like baldness
and impotence, rather than various tropical diseases that affect
millions upon millions of people in developing countries.
Unfortunately, while a large market therefore exists, because most of
these people are poor and unable to afford treatments, the
pharmaceutical companies develop products that can sell and hence
target wealthier consumers"

-Illegal activity by MNC's
"Through corporate crime, tax havens, transfer pricing and many other
policies, both legal and illegal, billions of dollars are avoided from
being taxed. The much needed money would helped developing (and
developed) countries provide important social programs for their
populations. Usually, these crimes, which often have far worse effects
than individual crimes, go unaccounted."

"Many industries such as the enegry and fossil fuels industry leave
many environmental problems in their wake. Because international
lending schemes are tied with "reforms" that include cutting back on
regulatory and safety measures such as health, education and the
environment, problems can arise without many resources available to
deal with them. While large corporations are able to profit, the costs
from environmental and other damage has to be borne by the local


? J.W. Smith, The World?s Wasted Wealth 2, (Institute for Economic
Democracy, 1994), pp. 127, 139.
"Furthermore, the freeing up of labor in wealthy countries through
elimination of wasted distribution and wasted capital, combined with
efficient job-destroying technologies that we have today, means there
would be more unemployment?but that should be used to society?s
advantage: we should share remaining productive jobs?that would reduce
the workweek for all. This is detailed much more in this web site?s
section behind consumption and consumerism."
"In fact, instead, things like SAPs open up poor countries economy for
?Foreign Direct Investment?, for ?constructive engagement? etc. But
these are often ?constructive? for the multinationals, not always for
the host country, because there is ?investment? to create sweatshops,
?constructive engagement? to extract resources, and so on. There is
little ?constructive investment? in helping these countries build
their own industries. So, such investments might look like they create
jobs in the poor countries, but compared to the real potential of what
the poor countries could achieve, this is very little, and much
potential for poverty alleviation instead is lost."

"    Our merchants and master-manufacturers complain much of the bad
effects of high wages in raising the price, and thereby lessening the
sale of their good both at home and abroad. They say nothing
concerning the bad effects of high profits. They are silent with
regard to the pernicious effects of their own gains. They complain
only of those of other people."

    ? Adam Smith, The Wealth of Nations, Book I, (Everyman?s Library,
Sixth Printing, 1991), pp. 87-88


    * A multiplier effect of their money would be created as it
circulates around their economy, not around someone else?s (i.e. the
TNCs, and other countries)
    * Wealth in the poor country would be created more rapidly.
    * Much of the production and distribution we now see are wasteful
of resources, capital and labor in this way because they are largely
owned by foreign investors, or influenced heavily by foreign actors.
Poorer countries are dependent on export-oriented economies, and much
of the production flows to the wealthier regions. (And the effort that
goes into maintaining these disparities and keeping real competition
from the poor countries at bay is also wasteful.)
    * Addressing this could eliminate much in terms of environmental
degradation from distribution (although perhaps be offset by new local
(national or regional) industries, which must be countered with
alternative/sustainable/less wasteful use of resources, etc.)
    * Free?but somewhat managed?trade between like nations, within
regions etc would be beneficial to all involved. ?Free? trade in its
current form between unequal nations is itself unequal and continues
inequality as a result.
    * Furthermore, the freeing up of labor in wealthy countries
through elimination of wasted distribution and wasted capital,
combined with efficient job-destroying technologies that we have
today, means there would be more unemployment?but that should be used
to society?s advantage: we should share remaining productive jobs?that
would reduce the workweek for all. This is detailed much more in this
web site?s section behind consumption and consumerism.

Of course, other issues will arise and the above glosses over numerous
other issues (which links below will address in more detail, or point
to sources with much more detail.) Local populations will have to
continue to demand fairness and just actions from the new
?capitalists? in the poor countries?such as demanding wages are fair,
that environmental and other social standards and concerns are
observed and respected, there is no concentration of ownership in
land, technology, money and so on, like there currently is in the
global sense (which also needs to be addressed).

Some might fear these suggestions, thinking they are communist or
something, but they are not. These are all capitalist theories. There
is nothing anti-capitalist about this. Instead, it is addressing a key
issue of enhancing rights (economic rights) to all. Of course, this is
not saying that there should be no international trade whatsoever, but
that at least for the development of the current third world, the
international setting should be something along the lines of the first
world assisting by trading tools that help create industry (what some
call tools of production) in those countries. Adam Smith, Henry George
and others have all pointed to aspects of this. Of course, politics
has meant that some of these theories have been distorted from
original intent, or there may even be problems within the original
theories. J.W. Smith for example, highlights well that philosophically
much of this is possible:

    Elimination of poverty is simple:

    The impoverishment of the developing world is understandable once
one learns how ?plunder by trade? locks the world into violence and

    Eliminating poverty is not philosophically complicated; Eliminate
the monopolization of land, technology, and finance capital and
equalize pay for equally productive work, both within internal
economies and between trading nations. Once all nations and all people
have access to technology and their labor is paid equally for equally
productive work, the buying power of labor in different nations, and
within nations, will equalize. Eliminating those monopolies will
instantly distribute a share of the wealth to all members of society
even as economic efficiency increases and produces more wealth. This
is a more cooperative and democratic capitalism that will assure all
rights for all people.

    ? J.W. Smith, Institute for Economic Democracy

(J.W. Smith quote above, describes in detail over 800 years of history
of ?plunder by trade? that is mentioned above, and how at the world
level, the subtle monopolization of land, technology, capital etc have
all come about, including the waste of wars and other factors to
maintain such systems. Furthermore, he provides details on how society
has unwittingly supported what has amounted to plunder of the poorer
regions of the world.)

WTO Watch constantly updates news on anti-globalisation perspectives

Public Citizen and Canadians provide North American anti-free trade
perspectives and materials

The Third World Network is a Malaysian based anti-globalisation

The International Centre for Trade and Development provides a
pro-environmental NGO perspective on international trade.

The New Internationalist provides an anti-globalisation perspective on
trade and development.

Statement of the Top 10 reasons to oppose the WTO from the left NGO
organisation, Global Exchange.

Clarification of Answer by adiloren-ga on 02 Aug 2006 22:53 PDT
Search Strategy:

-corporations, globalization or globalisation, employees,  "developing countries"

-multinational corporations or MNC's, globalization or globalisation,
developing countries, or lesser developed countries or LDC's or "third

Google Scholar search
-above terms

Thank you for the question. I will be happy to clarify my answer at
your request. Also, if you need the answer narrowed down, I can help
with that as well.
nonameplease-ga rated this answer:4 out of 5 stars

Subject: Re: Globalisation, MNC influencing workplace relation in developing countries
From: czh-ga on 31 Jul 2006 16:12 PDT
This seems to be a homework question.

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