Portal de Periódicos da CAPES

The Diplomacy of Business

2005; Taylor & Francis; Volume: 16; Issue: 2 Linguagem: Inglês

10.1080/09592290590948397

1557-301X

James Muldoon,

State Capitalism and Financial Governance

Abstract The "new" global capitalism is transforming the ways in which commerce is conducted and organized. Business enterprises have to perform and compete in a largely unregulated global market economy if they are to survive, let alone prosper, and contend with higher levels of financial and political risks. Transnational Corporations (TNCs) have come to occupy a pivotal position in the world economy, commanding immense financial resources and employing tens of thousands throughout the world, and are active participants in global political and economic affairs. TNC executives—the global corporate elite—crisscross the planet as they manage local, national, and international relationships, and represent and advance their global interests in myriad international conferences and meetings. TNCs are now interacting with states and international governmental organizations on a broad array of issues and problems (many far removed from the core business). As global actors with distinct and clear interests, they have had to develop their own representational mechanisms to manage the complex relationships that mark today's global system. Notes 1. See Simon Zadek, Third Generation Corporate Citizenship: Public Policy and Business in Society (London: The Foreign Policy Centre, 2001). 2. Joseph Nye (as well as other scholars of contemporary world affairs) points out that the different dimensions of globalization—economic, military, social/political, and cultural—are all changing the political processes within and among states and the distribution of power between state and non-state actors on the international level. Traditional politics based on the sovereign nation-state model is increasingly inadequate for "governing" or controlling today's global market economy and even less capable in dealing with the undesirable consequences of globalization. See chapter 3 of The Paradox of American Power by Joseph S. Nye Jr. (New York: Oxford University Press, 2002). 3. Georg Kell and John Ruggie argue that "globalization has increasingly disconnected one single element—networks of production and finance—from what had been an overall system of institutional relations, and sent it off on its own spatial and temporal trajectory. This has produced two disequilibria in the wnrld political economy, which will persist unless and until the strictly economic sphere is embedded once more in broader frameworks of shared values and institutionalized practices." Kell, Georg and John Gerard Ruggie (2000). "Reconciling Economic Imperatives with Social Priorities: The Global Compact," paper presented at the Carnegie Council on Ethics and International Affairs, New York, New York, February. For any effort towards restoring "institutional" equilibrium in today's global economy to succeed, all key global actors—TNCs, civil society groups, governments, and international economic organizations—will have to be represented and actively involved in the negotiations. 4. Robert Cooper, "Foreign policy, values and globalisation," Financial Times, 31 January 2002. 5. Micklethwait, John and Adrian Wooldridge (2003). "Stupid white men or the true revolutionaries of our age?" FT Weekend, Financial Times, 22/23 February. 6. Peter J. Buckley and Mark Casson (1976) The Future of Multinational Enterprise (New York: Holmes & Meier), p. 1. 7. Kolk and van Tulder argue that in the 1970s "international social and environmental behaviour of multinational corporations was very controversial. Consequently, international organisations such as the Organisation for Economic Cooperation and Development (OECD), the International Labour Organisation (ILO), and the United Nations (in particular the UN Centre on Transnational Corporations) pioneered the idea of codes of conduct for multinational corporations. A few companies reacted by adopting codes or introducing their own 'rules of engagement'. The overwhelming majority, however, resisted the pressure." Kolk, Ans, and Rob van Tulder (2002). International Codes of Conduct: Trends, Sectors, Issues and Effectiveness (Rotterdam: Rotterdam School of Management/Erasmus University). 8. Buckley and Casson pointed out that: "Negotiating with host governments over the external effects of foreign direct investments will absorb an increasing proportion of managerial resources and that skill in liaising with host governments will become an important attribute of successful MNEs." Buckley, Peter J. and Mark Casson (1976). The Future of Multinational Enterprise (New York: Holmes & Meier). 9. Mourdoukas, Panos (1999) The Global Corporation: The Decolonization of International Business (Westport, CT: Quorum Books). 10. Winfried Ruigrok (2002) "The taming of the shrewd multinational," European Business Forum, Issue 10 (summer), p. 17. 11. Recent studies of the effects of globalization on multinational corporations have found that the so-called "global" corporation as a distinct form of economic organization and a by-product of globalization is perhaps more myth than reality. See Whitley, Richard (1999). Divergent Capitalisms: The Social Structuring and Change of Business Systems (New York: Oxford University Press); van Tulder, Rob, Douglas van den Berghe, and Alan Muller (2001). Erasmus (S)coreboard of Core Companies—The World's Largest Firms and Internationalization (Rotterdam: Rotterdam School of Management/Erasmus University). 12. Hocking, Brian and Dominic Kelly (2002). "Doing the business? The International Chamber of Commerce, the United Nations, and the Global Compact," in Cooper, et al, eds. (2002) Enhancing Global Governance: Towards a New Diplomacy? (Tokyo and New York: United Nations University Press), pp. 203–228. 13. van Tulder, Rob (2002). "The power of core companies," European Business Forum, Issue 10 (Summer), pp. 9–11. 14. John Scott argues that business leaders are compelled by the system to formulate strategies that will enable the enterprise to survive (e.g., to survive an enterprise must earn sufficient profits to meet its commitments; and to prosper, it must do better than its competitors). Departing from this focus on seeking profits or profitability to more "soulful" strategies geared towards social responsibility and public welfare is the path to bankruptcy and decline for any enterprise. Scott, John (1997). Corporate Business and Capitalist Classes (New York: Oxford University Press). 15. Wahl, Asbjorn (2002). "Privatization, TNCs and Democracy," Sands in the Wheel, No. 150 (weekly newsletter by ATTAC), October 23. Also see Scott 1997, pp. 249–251. 16. For a comprehensive discussion about global public goods, see Kaul, Inge, Isabelle Grunberg, and Marc A. Stern, eds. (1999). Global Public Goods: International Cooperation in the 21st Century (New York: Oxford University Press) and Kaul, Inge, Pedro Conceição, Katell le Goulven, and Ronald U. Mendoza, eds. (2003). Providing Global Public Goods: Managing Globalization (New York and Oxford: Oxford University Press). 17. Virginia Haufler, Claire Cutler, and Tony Porter have done the most research on the growing authority of TNCs in today's global economy and the ways international firms are setting their own rules to govern business practices and interaction. See Cutler, A. Claire, Virginia Haufler, and Tony Porter, eds. (1999) Private Authority and International Affairs (Albany: State University of New York Press) and Haufler, Virginia (2001) A Public Role for the Private Sector: Industry Self-Regulation in a Global Economy (Washington, D.C.: Carnegie Endowment for International Peace). 18. Gerald Helleiner (2001) warns that the increasing influence of large private corporations over political decision-making of the major powers is spilling over into the rule making processes for the global economy: "As all Geneva trade diplomats know, [private corporations] influence over ostensibly international negotiations is also considerable; witness the role of the pharmaceuticals industry in intellectual property debates and the banking and financial sector in debates over capital account regime and trade in financial services. The international activities of business lobbies are not subject to registration requirements or regulation. The bulk of their activity is not transparent to the public." (p. 248). 19. Grayson, David and Adrian Hodges (2002). Everybody's Business, Managing risks and opportunities in today's global society (London and New York: DK Publishing, Inc.). David Grayson and Adrian Hodges (2002) define stakeholders as "those who have an interest in the outcome of the actions" of an institution or organization. "For business, the stakeholders include those who are considered to affect business success, such as shareholders, employees, customers, business partners, suppliers, communities, governments and regulators, and increasingly, special interest groups such as environmental activists. Their expectations of business are changing, and their capacity to make their views heard is increasing" (p. 74). 20. Jeffrey Garten (2002) The Politics of Fortune (Boston: Harvard Business School Press), pp. 15–16. 21. Robert Davies and Jane Nelson, "The Buck Stops Where? Managing the Boundaries of Business Engagement in Global Development Challenges," a briefing for the World Bank/IBLF European CEO Forum on Development, International Business Leaders Forum, January 2003, p. 2. 22. Commission on Business in Society (2002) "Business in society: making a positive and responsible contribution," International Chamber of Commerce, p. 1. 23. Kollman, Kelly L. (2003). "Transnational Business Networks and Global Governance: Are Business Actors Capable of Promoting Corporate Reform that Matters?," paper presented at the Annual Meeting of the Midwest Political Science Association, Chicago, Illinois, April. 24. Ibid., p. 26. 25. Ibid., p. 35. 26. PricewaterhouseCoopers' 2002 Sustainability Survey Report (Boston: PricewaterhouseCoopers' LLC) found that the larger companies (firms with annual revenues greater than $25 billion) within their sample of 140 U.S. companies have defined sustainability as it applies specifically to their business and that "an overwhelming number of companies (89%) thought that there would be more emphasis on sustainability within the next five years." (pp. 6–7) Furthermore, many companies believe that "sustainability is a paradigm shift that will fundamentally change the way companies are internally managed and externally evaluated." (p. 2). 27. Litvin, Daniel (2003). "Ethical goals will not stop criticism of business," Financial Times, May 12, 2003, p. 11. 28. Zadek, Simon (2001). Third Generation Corporate Citizenship: Public Policy and Business in Society (London: The Foreign Policy Centre). 29. Hocking and Kelly 2002, p. 205. 30. Simon Zadek makes a useful distinction between multi-sector partnerships and new social partnerships with the former being "interest-based alliances, where direct commercial gains are offered in exchange for some agreed performance measure, the retreat of the state from direct provision, and generally public money," and the latter being more than interest-based alliances where business partners enter the relationship with an explicit interest in achieving social and environmental aims that goes beyond short-term fee-for-service or goods-for-sale strategies." "Commercial interests in these contexts, have more to do with the participating businesses' broader licence to operate, which they see as having to be earned and sustained through demonstrable participation in addressing public policy objectives." (Zadek 2001, pp. 16–17). 31. Hocking and Kelly 2002, p. 208. 32. Forstater, Maya, Jacqui MacDonald, and Peter Raynard (2002) Business and Poverty: Bridging the gap (London: The Prince of Wales International Business Leaders Forum). 33. PricewaterhouseCoopers 2002, p. 8. 34. The corporate social responsibility movement and advocates of corporate citizenship and sustainability usually develop a "business case" in order to demonstrate the benefits to business of getting on board—"The business case is the mechanism by which the [corporate social responsibility] movement hopes to bring business self-interest and environmental and social sustainability closer together, towards a win-win situation where social, environmental and financial performance go hand in hand." Forstater, MacDonald, and Raynard 2002, p. 48. See also Zadek 2001.