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OKONKWO NGOZI RITA
PG/MBA/09/53842
PG/M. Sc/09/51723
INTERNATIONAL BUSINESS MANAGEMENT-AN ASSESSMENT OF THE ROLE OF MULTINATIONAL CORPORATION IN
NIGERIA
MANAGEMENT
A THESIS SUBMITTED TO THE DEPARTMENT OF MANAGEMENT, FACULTY OF
BUSINESS ADMINISTRATION, UNIVERSITY OF NIGERIA ENUGU CAMPUS
Webmaster
Digitally Signed by Webmaster’s Name
DN : CN = Webmaster’s name O= University of Nigeria, Nsukka
OU = Innovation Centre
MAY, 2011
2
INTERNATIONAL BUSINESS MANAGEMENT-AN ASSESSMENT OF THE ROLE OF
MULTINATIONAL CORPORATION IN NIGERIA
BY
OKONKWO NGOZI RITA PG/MBA/09/53842
DEPARTMENT OF MANAGEMENT
FACULTY OF BUSINESS ADMINISTRATION UNIVERSITY OF NIGERIA
ENUGU CAMPUS
SUPERVISOR
PROF. J.U.F EWURUM
MAY, 2011.
3
TITLE PAGE
INTERNATIONAL BUSINESS MANAGEMENT-AN ASSESSMENT OF THE ROLE OF
MULTINATIONAL CORPORATION IN NIGERIA
BY
OKONKWO NGOZI RITA PG/MBA/09/53842
DEPARTMENT OF MANAGEMENT FACULTY OF BUSINESS ADMINISTRATION
UNIVERSITY OF NIGERIA ENUGU CAMPUS
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF
BUSINESS ADMINISTRATION IN MANAGEMENT
SUPERVISOR
PROF. J.U.F EWURUM
MAY, 2011.
4
CERTIFICATION
This is to certify that this research work carried out by
Okonkwo Ngozi Rita with Registration Number
PG/MBA/09/53842, presented to the Department of
Management, Faculty of Business Administration, University
of Nigeria Nsukka, Enugu Campus has been accepted and
approved having met the requirement for the Award of Master
of Business Administration (MBA) in Management.
………………………………… OKONKWO NGOZI RITA
PG/MBA/09/53842
…………………… Date
………………………………… ………………………………… PROF. J.U.F. EWURUM PROF. J.U.F. EWURUM (Supervisor) (Head of Department)
………………………………… ………………………………… Date Date
5
DEDICATION
This work is dedicated to Almighty God. And also to my
lovely Mum, Mrs. Mercy Okonkwo and to my beloved Brother,
Daniel Akalum to their moral and financial support.
6
ACKNOWLEDGEMENT
A research of this nature would not have been successful
without the help and contribution of many individuals.
It is because of the above reason that I heartfully
acknowledged the helpful comment from Prof. U.J.F Ewurum
who despite his tight schedule found time to supervise this
research project, make some constructive criticism and
correction.
My sincere appreciate also goes to my immediate family
who endure and managed during my absence in pursuit of
this programme and to many others from whose books,
journals and publications I have abstracted information from.
My special thanks goes to my chaplain Rev. James Igwiro and
my friend Raphael Okonkwo and others. I owe immense debt
of gratitude.
7
ABSTRACT
The main objective of this study was to look, at international business management and assess the role of Multinational Corporation operating in Nigeria, in terms of their contribution to the socio-economic and technological development of the nation. The study was carried out in some selected multinational and it covered staff (respondent), 120 in number with at least secondary education. Data were collected mainly through structured questionnaires interviews and other secondary sources. The MNC are contributing to the economics and technological development of the nation. The economic contribution is moderate while the technological contribution is in adequate. The MNC are socially responsible that is to say, they are contributing to the social development of Nigeria. But this contribution was found to be inadequate. Finally, the work was concluded with a recommendation on further research and conclusion of the finding.
8
TABLE OF CONTENTS
Title Page … … … … … … … … … i
Certification … … … … … … … … ii
Dedication … … … … … … … … iii
Acknowledgement … … … … … … … iv
Abstract … … … … … … … … … v
Table of Contents … … … … … … … vi
List of Tables … … … … … … … … ix
CHAPTER ONE: BACKGROUND OF THE STUDY
1.1 Introduction … … … … … … … 1
1.2 Objective of the Study … … … … … 7
1.3 Scope of the Study … … … … … … 8
1.4 Limitation of the Study … … … … … 8
1.5 Research Questions … … … … … … 9
1.6 Significance of the Study … … … … … 10
1.7 Definition of the Terms … … … … … 10
References … … … … … … … … 12
CHAPTER TWO: LITERATURE REVIEW
2.1 The Inducement Factors and Entry Strategies into Multinational Business … … … … 13
9
2.2 Entry Strategies into Multinational Business … 14
2.3 Environmental Factor Affecting the MNC … … 15
2.4 The Managerial Functions in International Business 20
2.5 Management Policies and Strategies of MNC … 25
2.6 The Role of MNC as a Business Unit … … … 31
2.7 Benefits of MNC to Host Countries … … ... 36
2.8 Activities of MNC in the Development of Nigeria … 38
2.9 The Shortcomings of MNC in Nigeria … … … 44
2.10 Summary of Literature Review … … … … 51
References … … … … … … … … 53
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Sources of Data … … … … … … 59
3.1.1 Primary Data … … … … … … 59
3.1.2 Secondary Data … … … … … 60
3.2 Data Presentation and Analysis … … … … 60
3.3 Validity and Reliability of Measuring Instruments 60
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION 4.1 Data Presentation … … … … … … 62
10
CHAPTER FIVE: DISCUSSION OF FINDINGS, RECOMMENDATIONS AND CONCLUSION 5.1 Discussion of Findings … … … … … 94
5.2 Recommendations … … … … … … 101
5.3 Conclusions … … … … … … … 104
Bibliography … … … … … … … … 106
11
LIST OF TABLES
Table 1: Sex of Respondent … … … … … 62
Table 2: Age of Respondents … … … … … 63
Table 3: Nationality of Respondents … … … 63
Table 4: Level of Formal Education … … … … 64
Table 5: What is the Name of Your Company? … 65
Table 6: How Long Have You Worked in Your Company 66
Table 7: What is Your Rank/Status in your Company? 67
Table 8: Where is the Headquarters of your Company? 68
Table 9: Which of the following Environmental Factors Affect(s) your Company’s Operation in Nigeria? 69 Table 10: What Factor(s) in your Opinion Motivated your Corporation into having Subsidiary Operations in Nigeria? … … … … … … 70 Table 11: How would you Rate MNC Response to Government’s call for Direct Foreign Investment in Nigeria? … … … … … … 71 Table 12: Do You Agree that Foreign Investment has the Capacity of Boosting the Nation’s Economy? 72 Table 13: Do you Think that MNC in Nigeria Should Play an Active Role in the Socio-Economic Development of the Nation? … … … … … … 73 Table 14: How do you Rate the Contributions of your Company to the Economic Development of Nigeria? … … … … … … … 74
12
Table 15: How do you respond to the Association that MNC in Nigeria are mainly Interested in Profit Maximization … … … … … … 75 Table 16: Do you Agree that MNC in Nigeria do Repatriate Huge Profit to Home Countries? … … 76 Table 17: What Effect do you Think it will have on Nigerian’s Economy if the Money Repatriated from it is Higher than the Foreign Investment? … 77 Table 18: If MNC do Contribute to Governments Revenue Thorough, what Means is this Date? 78 Table 19: The Operations and Existence of NC in Nigeria often Bring about Unfavourable Competition for Local Firms … … … … … … 80 Table 20: Do You Think that MNC in Nigeria are Contribution to the Technological Development of Nigeria Encouraging? … … … … 81 TABLE 21: If yes is this Contribution Encouraging? 82 Table 22: If your Company is contributing to the Social Development of Nigeria, in What Areas are they Doing this? … … … … … 83 Table 23: Are these Contributions Adequate? … … 85
Table 24: How do you React to the Assertion that mainly Unskilled Indigenous Labour are Employed by MNC? … … … … … 86 Table 25: Expatriate Staffs of MNCS are paid better Salaries than Indigenous Staff of some rank in the same Company … … … … … 87
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Table 26:What is your view about the as Assertion that Some Sensitive Management Position in MNC are the Exclusive Reserve of Expatriates … … 88 Table 27: If true, why is to so? … … … … … 90
Table 28: How Does your Corporation Respond to People in the Immediate Environment in case of any Accidents (Natural Disaster Pollution etc?) 91
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CHAPTER ONE
BACKGROUND OF THE STUDY
1.1 INTRODUCTION
National or domestic business not withstanding there is a
literally a whole world out there for business to deal with. Just
imagine, Coke (Coca-Cola product) is sold all over the world.
American motors is building its jeeps in Japan, Scores of
Boeings Jetliners fly for various countries airlines. Peugeot is
assembled in Nigeria, you may carry a sony portable radio,
drive a Toyota car, wear Italian shoes here in Nigeria and any
other part of the world. They are all prove or evidence of
international business.
During the past three to four decades, the world has
experienced the growth of an economic phenomenon the
multinational corporation (MNC). Hicks and Gullet (1981),
maintain that MNC are involved in the international business,
through one exporting, licensing, franchising, joint venture,
foreign branch or wholly owned subsidiaries.
Whole the MNC is not new, its importance, power and
consequences have come to be appreciated fully only recently.
15
For instances, consider the significant role that large
Multinational Oil Companies are playing in the economic
systems of the World in General and Nigeria in particular. To
press home point, hear what a former Managing Director (MD)
of NNPC L.A. Amu, said about Nigeria economy.
“The Nigeria economy can largely be described as one
with a strong petroleum industry superimposed over an
undeveloped industrial base”. This is a kind of testimony of
the positive role of Multinational Oil Company in Nigeria
Economy. For without the oil companies, there would not have
been an oil or petroleum industry in the initial place.
According to Megginson, et al (1988) “MNC are more than
just giant business firms, for they tend to have social, and
even political effects as well as economic ones in their host
countries”. KINARD (1985) could not agree with this vie, when
he said that huge corporations like MNC, play not only
economic roles but also important political and social roles in
their environments.
For obvious reasons multinational business has its own
peculiarities. It involves different countries. Hence, it is
16
influenced by different environmental factors in these
countries. Therefore international business management or
multinational management is equally peculiar and
challenging. Multinational managers have to formulate or
device separate policies and strategies to survive in the
different environment.
Though it is the responsibility of a country government,
like that of Nigeria to imitate programmes and actions for her
socio-economic growth and development, but governments’
resources more often than not appear inadequate to discharge
those obligations effectively.
Megginson et al (1988) maintain the “MNC are more than
just giant economic units.
In many cases, they are nearly a form of government,
richer and more powerful than some of the countries in which
they are operate. For example, in a typical year, the combined
sales of Exxon, General Motors and Royal Dutch Shell Group
exceeded the GNP of most industrialized nations of the World”.
Hence, it is not out of place for society to expect and press
these MNC to assume a key role in the socio-economic
17
development of their host countries. At least if for nothing else,
they should endeavour to live up to their corporate social
responsibilities. Meginson et al (1988) puts it this way.
“Today’s international business firms are expected to
contribute to the host nation’s economic growth and
development as well as to produce a profit for the owners’.
What they are saving is that MNC should not only be
interested in profit maximization in their host countries,
rather, they should equally assume other roles that will benefit
the society as well.
These societal expectations and demands and other
intricate issues in multinational business, as stated earlier,
pose great challenges to the management of MNC. For
example, any disruption to their operations as a result of crisis
between the company and host country/community like the
Ogoni-Shell dispute, will be detrimental to especially the
interest of the company and to other interest groups.
Therefore, multinational managers have to strike a rather
difficult balance between meeting societal expectations and
demands as well as other business demands.
18
Multinational corporations have been praised by many
people are agents of social, economic and technological
development of their host countries on the other hand,
however, other people feel an regards MNC as instruments of
exploitation in their host countries. These two views are based
on the extent to which the MNC have met the societal
expectations and demand as well as business expectations
and demands, in their environment.
There are many of such corporations operating in Nigeria.
They are mainly American, European, or Asian corporations,
and they are into high technology areas such as agriculture,,
construction, mining, manufacturing etc. Some of them are
coca-cola, Mobil, Julius Berger. Pfizer, Shell, Glaxo and KLM
etc. Expectedly, there are diverse opinions regarding their
impact or role in the country. Therefore, this research intends
to present a clearer picture of their actual role in Nigeria here
for a long time now. This fact not withstanding, Nigeria is still
technologically backward.
Secondly, most of these MNC have been reported to
recruit home-office personnel (expatriate managers) to fill key
19
executive positions instead of Nigeria managers. This does not
help the unemployment situation in the country.
Thirdly, it is claimed by some people that the MNC in the
country have contributed to the collapse of some domestic
companies.
In addition, the host communities of some of the
multinationals were constantly cried out that the MNC
operating in their area are not socially responsible. The Ogoni-
Shell Crisis is a case in point in this regard.
Moreover, it has been observed that these multinationals
make the repatriate huge amount of profit always, with little or
no reinvestments in the country. Also they appear to be
interested only in profit maximization to the detriment of the
nation. Base on the above, most people say that MNC are just
another form of imperialism exploiting people in under
developed nations in general and Nigeria in particular.
On the other hand, however, there are those who believe
that MNC are positive forces of social, economic and
technological development in their host countries.
20
As a result of the above contrasting views. It becomes
absolutely necessary to carry out this research to assess the
actual roles of the MNC operating in Nigeria.
1.2 OBJECTIVE OF THE STUDY
The board objective of this study is to look at
international business management and assess the role of
MNC operating in Nigeria.
The specific objectives of this study are:
a) To ascertain whether the multinational corporation in
Nigeria are social responsible.
b) To ascertain whether the MNC in Nigeria have any
contribution to the economic advancement of the nation.
c) To ascertain whether they contribute to the technological
development of Nigeria.
d) To determine the environmental factors that influences
the operations of the MNC
An attempt will be made to collate the activities of these
corporations and examine their respective and collective roles
in the development of Nigeria.
21
1.3 SCOPE OF THE STUDY
For obvious reasons, it will be difficult for a single
researcher to study the activities of al the multinationals
operating in Nigeria. This research therefore covered the socio-
economic and technological contributions of selected
multinational operating in Nigeria.
It is the intention of this researcher to arouse the interest
of future researchers, students and other interested groups in
the areas in question. This is so because; the researcher was
not able to give an exhaustive coverage of this interesting and
wide topic.
1.4 LIMITATION OF THE STUDY
An exhaustive and more detailed research of this topic
would have been carried out but for some obvious constraints
of time and finance.
Moreover, some staff of these, MNC were very UNCO-
operative in respect of giving out information. Either the
information sought is in a file with the inscription “out of
22
BOUNDS”. Some either said they were to busy to respond to
questions or they were not allowed to.
1.5 RESEARCH QUESTION
The research questions for this research are:
a) Are MNC in the country socially responsible?
b) Are MNC contributing to the technological advancement
of the nation?
c) Are they contributing to the manpower development of
Nigeria?
d) Are the MNC in Nigeria most interested in profit
maximization?
e) What impact has the repatriation huge profit to home
countries by MNC in Nigeria on the nation’s economy?
f) What effect has the foreign investment of these MNC on
Nigeria’s economy?
g) What effect has the operation and existence of these
corporations on the local business firms?
h) Are they helping to reduce the unemployment rate in
Nigeria?
23
1.6 SIGNIFICANCE OF THE STUDY
This study will be a great significance because; it will put
improper focus and will create awareness on the real role of
MNC in Nigeria. It will show whether they are helpful or
harmful to the nation. The findings will be useful to both
government and the management of MNC in future
development planning. Also it will be beneficial only social
researchers, environmentalists, but students in international
business management and academicians generally.
1.7 DEFINITION OF THE TERMS
International Business and international business
management.
International business according to John et al (1984)
refers to economic transactions that involve several countries,
while international business management is simply the
management of business transaction between citizens,
companies, or governments of two or more nations.
Multinational corporations (MNCs) and multinational
management. Kinard (1988) defined multinational
corporations (MNCs) as business firms that produce and
24
market goods and services in more than one country. They
include giants such as shell, UTC, Royal Dutch, Coca-cola etc.
According to Hicks and Gullett (1981) multinational
management refers to the management of business activities
that cross national boundaries. The simple implication of the
above definitions to that MNCs are in international business.
Aharani (1971) noted that there are some debates as to
when an organization can be characterized as a multinational.
the fact remains that, the organization will have to be
headquartered in one country (mostly developed countries)
and have to have business operations spread over other
countries. For these corporations, the degree of
internationalization and international commitment may cover
a wide range.
25
REFERENCES
Aharani, J. “On the definition of a Multinational Corporation”
Quarterly Review of Economics and Business, Autum 1971, Pp. 27-37.
Amu, L.A. “Oil Glut and the Nigerian Economy” NNPC Booklet,
P. 1. Hicks, H.G. and Gullett C.R. Management (New York: McGraw
Hill Inc. 1981) Pp. 143-145. John, J.H. Vermon, A.M. Business Contemporary Concepts
and Practices, (New Jersey: Prentice Hall Inc. 1984). P. 588.
Kinard, J.L. Management (Lexington Massec-husetts, Toronto:
DC Health & Co. (1988), P. 452 Megginson, L.C. True Blood, L.R. & Ross, G.M. Business (Lexington, Massachusetts, Toronto: D.C. Health & Co, 1985) p. 612.
Kinard, J.L. OP. Cit, P. 470. Megginson, L.C. Trueblood, L.R. & Ross, G.M. OP. Cit, P. 603. Megginson, L.C. Trueblood, L.R. and Ross, G. M. OP. Cit, P.
594.
26
CHAPTER TWO
LITERATURE REVIEW
Considerable amount of literature on MNC exists. The
areas considered relevant to this study are reviewed
accordingly in this chapter.
2.1 THE INDUCEMENT FACTORS AND ENTRY
STRATEGIES INTO MULTINATIONAL BUSINESS
Some of the reasons why MNC decided to go abroad
especially to developing countries are:
a) To achieve higher percentage of earning from their
operations there
b) The demand is greater
c) Competition is less in foreign markets
In some cases says Dale (1978) because of the installed
capacity of MNCs, they tend to produce more than they can
possibly market at home, hence they seek to exploit foreign
markets to dispose off the extra goods.
Another reason is the availability of raw materials and
other natural resources in the countries, which makes it
cheaper for the MNC to produce in that country.
27
Moreover, the availability of cheap labour especially in
developing countries like Nigeria equally makes the cost of
production less for MNC operating in these countries.
All these factors according to Megginson et al (1985)
eventually boil down to one thing-higher profit for the MNC.
2.2 ENTRY STRATEGIES INTO MULTINATIONAL
BUSINESS
Direct foreign investment for production abroad is the
long range and maximum level of commitment in
multinational business. However, it is common for most
organization to enter multinational business through various
other ways that require lesser degrees of commitment and
shorter time horizon. According to Hicks and Gullett (1981)
moving from a minimum to a maximum level of commitment of
company resources entry strategies can be grouped into the
following six categories.
1) Exporting
2) Licensing
3) Franchising
4) Foreign Branch
28
5) Joint Venture
6) Wholly Owned subsidiary
2.3 ENVIRONMENTAL FACTOR AFFECTING THE MNC
Everard et al (1979) argued that since business does not
operate in a vacuum it cannot isolate itself from the
environment. To this, Hicks and Gullette (1981) said that,
“Envy Corporation exists in relationship to its environment”.
In fact, environmental considerations are increasingly
appreciated as to how they affect the functioning of business
organization.
Environmental are in turn, influenced by the operations
of these organization.
Several authorities are of a common view that
environmental analysis particularly is very important for MNC.
These corporations face complex, diverse, and uncertain
environmental factors, in different countries, the different
environmental factors, they agreed, increase the elements of
risks, potential conflicts and operational problems.
Hick and Gullett (1981) gave four kinds of environmental
factors viz.
29
ECONOMIC ENVIRONMENT
The economic size of a nation measured by its Gross
National Product (GNP), its income level (Per Capital Income or
GNP Per Capita), and the distribution of that income within a
country may indicate a potential market or the lack of one. A
number of countries with underdeveloped economics want
foreign direct investments because of their potential economic,
technological and managerial benefits.
Some additional economic factors that are usually
considered by MNC are economic growth trends, inflation
rates, balance of payment, financial and labour institutions.
Also facilities and services such as transportation,
communication, electricity, water and housing are taken into
account. Since all these affect the MNC present, and future
business activities. They must consider both the potential
opportunities and the potential threats provided by the
economic environment of host nations.
SOCIAL AND CULTURAL ENVIRONMENT
Social and Cultural differences among countries can
affect the operations of multinationals. For example,
30
differences in customer behaviour and preferences require
product changes or different marketing strategies. Also
differences in behaviour and values of employees may affect
managerial practices of MNC. Employees in United States tend
to reject authoritarian managerial styles, while employees in
some countries of Europe and Asia expect managers to behave
in an autocratic manner. Hence managers have to adjust their
business practices accordingly.
POLITICAL AND LEGAL ENVIRONMENT
There are different political philosophies in all the
countries of the World. Foreign direct investment is more
welcomed in some countries than in others. Many countries do
not allow wholly owned subsidiaries of MNC in some
industries. In 1977, for examples, Venezuela did not permit
more than 20 percent ownership interest of foreign partners in
list major companies. Similarly, Nigeria published a list of
business enterprises in which foreign equity is limited to 4
percent.
31
Nationalistic philosophy, Dale (1978) says generally
favours nationals over foreigners for control of nation’s
economic resources.
This gives rise to struck regulations of foreign
investments. He then went further to say that “Political
instability of some developing countries makes life hard for
MNC”. In some, there is a distinct possibility of expropriation-
either outright seizure or seizure without sufficient
compensation.
Nigeria for one, over a long period of time now can be
described as anything but politically instable. This most
people feel, has affected negatively, the foreign investment in
the country. No wonders then, each successive government
will device one means or the other to woo the foreign investors.
Each nation has its own laws and regulations regarding
investment from abroad. Matters such as investment approval,
incorporation, degree of foreign ownership permitted,
utilization of domestic materials and manpower and return of
profit to the parent countries. Others are import and export
regulations, tariffs, taxations patents and anti-trust laws. In
32
this regard, the Nigeria government has over time promulgated
and repeated several devices depending on the policy the very
government is pursuing.
Binitie (1993) noted that, in 1995 the Nigeria military
government repealed some restrictive decrees to foreign
investments such as the exchange control act and the Nigeria
enterprises promotion decree. This was aimed at encouraging
more foreign investments, which have the capacity to share up
the value of the naira and boost the economy in general.
TECHNOLOGICAL ENVIRONMENT
The advance technology generally reflects capital –
intensive and labour saying devices. The developing countries
of the world in general regard small scale and labour intensive
technology to be more appropriate for their purposes.
Moreover, given the labour, skills, cost and workers
attitudes in the host country, a multinational organization
may need to simplify tasks and utilize equipment that might
be considered obsolete in a more advanced country. For
example, Well (1974) remarked that a plan may be adopted to
33
replace automatic bottle washing machinery and mechanized
loading equipment with human efforts.
2.4 THE MANAGERIAL FUNCTIONS IN INTERNATIONAL
BUSINESS
There is evidence that shows that management
fundamentals are generally applicable in different countries.
However, the practice of carving out the managerial functions
of planning, organizing, staffing, lending and controlling differ
considerable in domestic and international enterprises.
Koontz, et al (1988) gave what managerial functions in
international business look like, this presented below;
Planning in the MNC: Planning, they say requires setting
objectives and then selecting strategies, policies, programmes
and procedures for achieving them. A critically important
activity for the MNC is the assessment of opportunities and
threats in the external environment. This is a complex task
even for a domestic enterprise, but it becomes much more
intricate when many different ever changing world markets
must be scanned.
34
External threats and opportunities must be matched with
the internal strengths and weaknesses of the firm. For
example, a poor educational system makes it difficult to find
qualified personnel. Similarly, cultural orientation towards
time will affect planning specifically; cultural attitudes that
emphasize a short-time perspective will not be conducive for
long range planning.
Finally, political and economic instability in the host
country makes it difficult to forecast and will discourage long-
term commitment of resources. This last point is unfortunately
true of Nigeria. The country’s second name for sometime now
could as well be “instability”.
Organizing the MNC: According to Ronen (1986) organization
structures are established to achieve corporate objectives.
An enterprise may for example establish a vise
presidential position at corporate headquarters with
responsibility for the international divisions. An alternative is
to organize according to geographical areas. Organizing could
be by product lines. The truly multinational firm may integrate
domestic and international business into a global structure,
35
which gives similar importance to domestic and foreign
business activities.
Each structure discussed above has its own advantages
and disadvantages. Hence, Koontz et al (1986) says that for
the large MNC only our structure may be insufficient.
Consequently, different organization designs may have to be
mixed, depending on the environmental and task demands.
Staffing in the MNC: When the organizational structure has
been established, qualified persons have to be selected to fill
the position there in this is staffing.
For the MNC there are three sources of managerial
talents.
a) Home Country
b) Host Country and
c) International Pool of Executives
More often than not a firm may use a variety of
combination of the above depending on the situation.
The present trend now is that people in most countries,
especially developing countries like Nigeria and better
prepared to assume responsibilities of managerial positions.
36
Most MNC are reported to be tending towards employing
more host country nationals than managers from their home
countries because of the above reasons and for the fact that
doing so, tends to improve relation with the host country. On
the other hand, most people are of the view that in Nigeria and
some other African countries, most sensitive executive position
in these MNC are the exclusive reserve of the expatriate
managers. Lending in the MNC leading Akpala (1993) says
involvers motivating and communicating, it involves inducing
employee to contribute to enterprise objective. Motivation and
leadership demand and understanding of employees and their
cultural environment for example, participative management
may work well in one country but may fail and cause
confusion among employees in another country with a
tradition of autocratic rule.
Communication on the other hand is often a problem in
multinational firm with subsidiaries and affiliates in countries
where different languages are spoken. Even a firm with
operations in a country where the same language is spoken
may still encounter communication problems. This is because
37
of the distance between headquarters and the subsidiaries.
But new technology has greatly improved the transmission of
information skills; a telephone call is not quite the same as a
visit and a person-to-person discussion.
Controlling in the MNC: Controlling the measurement and
correction of performance to assure that events conform to
plan-is an essential managerial function that is influenced by
several environmental factors unique to international
enterprises. For example, revenue cost, and profit are
measured in different currencies. There are fluctuations in
exchange currencies. There are fluctuations in exchange rates,
accounting procedures, practices and financial reporting often
differs from country to country. Some or all of these may have
to satisfy the demands of tax authorities, government of
parent firm, stockholders, regulating agencies and banks.
Procedures must also meet the internal requirements of the
firm. To develop a procedure that meets all these demands at
the same time, is extremely difficult, to say the least.
Finally, partly owing the complex, nature of
measurement, there is a time lag in the measurement of
38
performance which may delay detecting deviations from
actions. Computer however, have done much to speed up the
process in all, these few examples indicate that controlling the
international corporation is considerably more difficult than
monitoring domestic operation Koontz et al (1986) maintained.
2.5 MANAGEMENT POLICIES AND STRATEGIES OF MNC
Policy and strategy development for the management of
MNC should include several functional areas. However, Hicks
and Gullett (1981) gave four functional areas that are of
special important viz;
1) Marketing
2) Finance
3) Personnel and
4) Managerial philosophy
It must be emphasized that most MNC did not start with
predetermined strategic choices. But increased competitions
and growing environmental pressures have been forcing these
companies to examine strategic and policy issues more
carefully.
39
1) Marketing: For a MNC, the entire world is the potential
market. The global setting greatly expands potential
opportunities and complicates the firm’s product and
marketing mix strategies.
Keegan (1969) provides and excellent analysis of some
strategic alternatives for product and promotional
(communication) planning. He identified five strategic
alternatives Viz;
Strategy I: One product, one message worldwide soft drink
companies like Pepsi and Coca-Cola use this strategy.
Strategy II: Product extension, communication adaptation.
Here the product is the same worldwide but communication
(message) is modified to suit the environmental demands. For
example bicycles and motorcycles companies use this strategy
because the products serve different needs in different
markets.
Strategy III: Product adaptation, communication extension.
Here the product is change but the communication is the
same worldwide.
40
Strategy IV: Dual adaptation. This occurs when both the
product and the communication are changed to make the
product more acceptable.
Strategy V: Invention. An opportunity might exist to invent or
design an entirely new product when potential customers
cannot afford firm existing products. If the cost are not too
great, a new product can be invented that satisfies the
identified need at a price consumers can pay.
For instance, both ford and general motors have developed
small inexpensive and easily assembled automobiles for
underdeveloped countries. Those cars were designed with
emphasis on utility and durability rather than a style and
comfort.
According to Robock and Summands (1977) the choice of
appropriate strategy depends upon the specifics product-
market-company mix. Depending upon the degree of difference
of a foreign market compared to the home market, some
product demand adaptation others lend themselves to
adaptations and skills, others are better left unchanged. In
any case, a multinational manager needs to analyze the
41
product-market fit and the company’s ability to identify and
adapt when choosing the most potentially profitable and viable
strategy.
2) FINANCE: Formulation and implementation of financial
strategy and policy is perhaps the most complex task of a
multinational manager says Hicks and Gullett (1981) the
complexity is caused by new environmental
considerations, new sources of risks and new
opportunities for increased profits. Different tax laws,
currencies exchange rates, inflation rates, interest rates,
restrictions on movement of funds and exchange controls
have to be taken into account. Furthermore, these
elements are highly technical; the purpose here is merely
to portray the general nature of the financial environment
within which multinational corporations operate. The
general nature of problems they frequently face will be
highlighted.
For many MNC, Protection from the risks of change in
foreign exchange rates-devaluation and revaluations of
currencies is the most important change. Due to multinational
42
corporation superior maneuverability relative to the transfer of
funds among countries, it is possible to increase profit rather
than incur losses during changes in foreign exchange rate.
The MNC can also benefit by borrowing funds in a
country where interest rates are low and using these funds for
operations in a country with high interest rates. A transfer-
pricing policy can also be used to shift profits from high-tax to
low tax countries. Thus, overall taxes are reduced.
To develop an effective financial policy, a multinational
corporation has to be regarded as a system. According to
Robins and Stobaugh (1973), the system consists of units
(subsystem) operating in different countries with different
environments. The various units are connected through
financial transactions among them within limits imposed by
government regulations and financial market conditions, the
transactions within the units can be manipulated through
financial policies (lending policy, transfer price policy, dividend
policy) to maximize profit for the entire system (MNC) rather
than for its parts.
43
3) PERSONNEL: With respect to the recruitment and
development of international executives a MNC has but
three policy choices.
First, it can fill key executive positions overseas with
home office personnel.
Second, it can recruit personnel in countries of operations
(host country) to manage foreign subsidiaries.
Finally, it can develop a pool of international executives from
several countries for assignment anywhere in the world. Each
of the policies has some advantages and limitations.
4) MANAGERIAL PHILOSOPHY: The last important
functional area that Hicks and Gullett deliberated on; was
the managerial philosophy. Managerial philosophy is the
orientation of executives towards doing business around
the world. Perumetter (1969) identified three distinct sets
of philosophies. They are enthnocentric philosophy,
polycentric philosophy and geocentric philosophy.
Ethnocentric philosophy is essential home oriented and
environmental differences are ignored.
44
Polycentric philosophy, on the other hand, goes to the
other extreme. The subsidiaries of MNC are allowed to adapt
fully and completely in terms of local identify and behavour.
Geocentric philosophy is based on a worldwide
orientation. The global orientation of manager’s helps to
establish global goals. For example, the parent company
become but one company in the system and use of worldwide
resources.
2.6 THE ROLE OF MNC AS A BUSINESS UNIT
Concerning the role of business, Lessem (1989) say “though
the basic role of business remains profit maximization, it has
other roles”.
These other roles he has summarized as follows:
1. As a producer of goods and services, its prime function
was to fulfill the needs of its customers
2. As an economic unit, its role was to create and distribute
wealth
3. As an employer, its function was to create employment
4. As a market partner, its function was to participate in the
maintenance and development of a healthy economy.
45
5. As an innovator, its role was to create new and better
products, processes and services for particular customers
and for society in general.
6. As a social partner, its function was to participate in the
development and maintenance of a healthy society
7. Finally, as an organizer, its role was to maintain and
develop order, including orderly relationships among
people in society.
What Lessem means is that the goal of business is not
and should not be only profit maximization, rather it includes
other goals as enumerated above. All these other roles, can
come under what is today variously called social role, or social
responsibility or corporate social responsibility, Everard, et al
(1979) agreed with Lessem, when they stated “there are two
basic goals of business profit and social responsibility”.
According to Akpala (1993) corporate social responsibility
is calling on organization to consider themselves as owning
responsibility to the community or society as well as to their
own interest. They should show concern for their actions as
they affect their publics. Drucker (1980) remarked that “it is
46
not hostility to business that explains the demand for social
responsibility. On the contrary, it is the success of the
business system that leads to new and many cases,
exaggerated expectations. The demand for social responsibility
is the price of success”.
Lessem, (1989) noted that Dauman and Hargreaves have
divided the area of corporate social responsibility into three-
societal, organizational and basic responsibilities.
Basic responsibilities are generated by the very fact of the
corporation’s existence. The corporation has to pay its taxes,
obey the laws, observe legal standards for employees and
satisfy its shareholders deal honourably with supplies,
customers and creditors. When not fulfilled clearly, it will be in
serious problems either from the law, or the market place.
Organization Responsibilities. Here it is said that most
companies influence there environments more widely and have
to look further in scope and time than is suggested at level one
(basic level). This second level relates to the organizational
responsibility of the company to meet the ever-changing needs
of all its “stakeholders” – employees, customers; shareholders,
47
suppliers and the local community. Note that it is at this point
that most of the thinking on social responsibility is
concentrated.
Pollution from a chemical plant for example may well
affect a wide range of people in the community, outside the
plant most of whom are in no way associated with the
company.
Organizational responsibilities at this level are principally
as follows:
1. To pay heed to the spirit, rather than to just the letter of
the law, acting in anticipation of impending legislation
2. To respond to current attitudes, needs and values of all
stakeholder and anticipate and respond to expected
changes.
Social Responsibility: This according to Lessem is based on
the perception that the health of the business subsystem is
ultimately dependent upon that of the social system as whole.
Hence the individual corporation has to consider the political,
social, economic, technological, ecological, and cultural
foundations upon which the whole society is built and with
48
which it interacts. Therefore, business becomes involved in
development of society as a whole, hence assuming a wide
variety of roles.
In general, the argument on the roles of MNC as a
business unit in its environment falls into two very different
creeds. The creeds according to Kinard (1988) are the free
enterprise creed. (Conservative view point) and the social
responsibility creed (Liberal view point). Proponents of the free
enterprise creed, such as Friedman, (1971) and Theodorere,
(1979) argue that corporation ought not to assume social
responsibility that has not direct bearing on their profitability
position. To them, the sole aim of business is profit
maximization. This view point is often being criticized for
aiming to protect the philosophy of free enterprise. Proponents
of the liberal view point or social responsibility creed, such as
Dahh (1975) and Uzoaga (1976) argue that the overriding
objective of business should not necessarily be profit
maximization. Rather, they suggest that this be de-
emphasized in favour of social obligations of business to its
environment as a whole. As Kinard (1988), puts it “the
49
proponents of the social responsibility doctrine point out that
in today’s society, huge corporations play not only a vital
economic role, but also important political and social roles”.
2.7 BENEFITS OF MNC TO HOST COUNTRIES
Megginson, et al (1985), remarked that MNC in their
operations move capital skills know-how, goods and services
and other resources to various nations. They are of the views
that this can benefit the host country by providing the capital,
technology and managerial skill needed to produce economic
development there. This is particularly true of a developing
country like Nigeria. As if to confirm this view, Hicks and
Gullett (1981) has this to say, “A number of countries with
underdeveloped economics want foreign direct investment
because of their potential economic technological and
managerial benefits”.
Hicks and Gullett (1981) are very particular about
technological advancement to them, MNC frequently acts as a
change agent through its ability to transfer advanced
technological know-how to other countries. In fact the special
50
strength of MNC lies in their knowledge of sophisticated
technology. This technology is a major means of economic and
social development in host countries. It is therefore not
surprise that a large part of multinational business. The World
over is made up of industrial products such as chemicals and
pharmaceuticals, petroleum, farm and construction
machinery, tires, motor vehicles, electronics computer etc.
Increased foreign investment of the MNC can raise the value of
the local currently. It can also create employment for the
unemployed in the host country. For example a voice of
America (VOA) programme (Day Dake Africa News) on the 14
of February 1997, it was reported by Al Fames (the presenter)
that the South African Band (the South African Currency) got
to its highest point in three months, after coca-cola
announced an expansion move coxing a huge sum of dollars,
in South Africa. The South African economy got a needed
boost, and a lot of jobs will be created the report concluded.
In summary, people are of the view that in an ideal situation,
the establishment of multinational corporations in a place
brings about a lot of benefits such as:
51
1. Rapid industrialization and technological advancement
2. Provision of investment finance
3. Rapid development of place
4. Increase in per capita income thereby leading to
increased and better standard of living.
5. Creation of employment in the host country.
6. General improvement in enlightenment and awareness
and
7. Improved managerial skill through training
All the above, undoubtedly it is argued, will bring about
rapid socio-economic and technological development of the
host countries, obviously, it is believed that MNC bring about
rapid development especially in third world countries, Blow
(1979).
2.8 ACTIVITIES OF MNC IN THE DEVELOPMENT OF
NIGERIA
In Nigeria, development started from the costal areas as a
result of the fact that the foreigners mainly whites, first settled
on these areas some natural factors accounted mostly for the
sitting of these corporation there. The big sea, for instance
52
Lawal (1982) remarked that “the concentration of the MNC in
the coastal region of Nigeria is as a result of natural factors
that makes easy important and or exportation of raw materials
and evacuation of produce of the extractive industries in
Nigeria”. This no doubt, accounts for why such areas like
Lagos and Port-Harcourt are very beautiful cities today.
Most of these MNC in Nigeria are engaged in
1. Construction
2. Mining
3. Technology Transfer
4. Investment Financing
5. Aviation
6. Communication
7. Employment Creation
8. Agriculture
9. Sport Development
10. Healthcare among others.
CONSTRUCTION: MNC in this area Diemez, MCC, RCC,
Julius Berger etc. The network of roads, flyovers and drainage
system in Abuja, Lagos metropolis are for instance, the
53
handwork of Julius Berger. This is how Oladipo (1985) put it,
when he was referring to the role Julius Berger in Lagos.
“What would have become of Lagos in view of its smallness
and Crowdiness but for Julius Berger”? In the same Light
Oladeji (1985) adds “the history of Lagos will be incomplete
without Julius Berger.” In like manner, most of the express
roads, bridges and important building in the country were
constructed by all the above named MCC.
MINING: The mining sector is dominated by foreign oil
company such as ELF, Gulf, Chevron, Mobil, Agip, Texaco,
Total, and Shell among others. Their operations resulted in the
beefing up of public revenue to the extent that revenue from
oil now, according to Olumhense, (1994) accounts for about 90
percent of the country’s annual foreign exchange earnings.
Thereby pushing agriculture to the background. The first
multinational oil company to embark on mining in Nigeria is
shell petroleum development company of Nigeria. The first
crude oil was exported in 1958. This therefore launched
Nigeria into the community of crude oil producer and
exporters. The nation’s economy got a needed boast from
54
them. Hence Ukpevo, et al (1993), puts it thus, the discovery
of oil in 1956, marked the beginning of economic buoyancy for
Nigeria”.
TECHNOLOGY TRANSFER: The essential factor for socio-
economic development, which is lacking in Nigeria and other
developing countries, is technical know-how or technology. Be
that as it may, the advent of these MNC in the country has
brought about a positive development in this regard,
comparatively that is, at least when one considers the state of
the country’s technology before the advent of the MNC.
Today, one can see some factories that apply improved
production processes in their operations.
INVESTMENT FINANCING: The provision of finance, which is
often, the supply of capital goods, is very important in tracing
the roles of MNC. Accordingly, the MNC in Nigeria helped in no
small measure to beef up the magnitude of the public fund,
Hence, as against the previous national development plans.
Nwankwo (1981) says “it was only in the third national
development plan that public investment was estimated to be
55
greater than the target private investment. This was due to
increase government revenue from petroleum (oil).
From the above, it is believed that from the advent and
activities of multinational oil companies such as shell
petroleum in Nigeria Oil Industry, the revenue accruing to the
government skyrocketed and brought about increased public
expenditure. Hence, the MNC help provide finance for
development, Nwankwo (1980) says “up to 1974, when the
indigenization decree took effect, foreign investment in Nigeria
as estimated, contributed not less than 60-80 percent of total
investment.
AVIATION: The Nigeria Airways was molded by a technical
partner – KLM of the Netherlands. The contributed immensely
to the full take off of the indigenous airline.
COMMUNICATION: In telecommunication, ITT among others
has helped greatly in the development of network of
communication systems in the country. There in the country
today, telephone, telex, fax, teleprinters systems internet etc.
EMPLOYMENT CREATION: Some people are of the view that
these MNC do serve a source of employment to some
56
Nigerians. They say both skilled workers are employed. This to
some extent improves the standard of living of these people
and their families.
AGRICULTURE: Companies such as Pfizer, Ciba-Gelgy etc.
are involved in the provision of drugs and chemicals for
improved productivity in agriculture in the country. Others
MNC, it is know have introduced the practice of mechanized
agriculture into country. This equally leads to increased
agricultural productivity.
SPORT DEVELOPMENT: If there is any one thing that has the
capability of uniting the nation as one, it is sports (especially
football or soccer). Some MNC being aware of this simple
truth, have made their impact felt in this field. Their aim is to
develop sports in the country. Notable among them are Pepsi,
Coca-Cola, Cadburg, First Bank and Nestle.
HEALTHCARE: Drug companies such as Glaxco, Sterling
Health Beachem etc. have been acclaimed to have develop and
provide the Nigerian people drugs for the prevention and
treatment of most diseases and sicknesses thereby
contributing to improved healthcare in the country.
57
Given all the above contributions, some people feel that MNC
are positive forces in the social economic and technological
development of Nigeria. While others feel that the other side of
the coin (their shortcomings) is more glaring. We shall now
look at their negative or shortcomings.
2.9 THE SHORTCOMINGS OF MNC IN NIGERIA
Against the acclaimed positive contributions of MNC to
the development of the Nigeria economy, are their alleged
negative contributions.
They are accused of causing balance of payment
difficulties through huge repatriation of funds. This difficulties
arise when such repatriation of funds exceed incoming foreign
investment funds. To confirm his Santo (1990) says that “the
amount of capital leaving the developing nations is greater
than that entering”. In this way, it is argued that MNC act as
a drain on host country investment as “decapitalization effect”.
Moreover, the MNC are said to inflate the value of
imparts (materials, equipment and machinery) and undervalue
58
their exports, thereby using the differences to offset the
amount they pay as taxes and royalties.
It is further argued that the techniques of some of these
MNC distort the distribution of value added in favour of foreign
factors (equipment, machinery and skills) and against local
factors (labour, social responsibility and raw materials) of
Nigeria. Besides, the choice of technology of some are regarded
as too capital-intensive for the relatively labour-abundant
Nigeria, thereby limiting the number of people (Nigerians)
employed in such companies.
Barnet and Muller (1974) maintained that “the
characteristics of global corporations with the most
devastating consequences for the poor countries are that it
destroys jobs”. For example UAC Nigerian PLC, a
multinational, established huge plantations across the country
(palm in cross-river, cocoa in Ondo and Rubber in Edo States)
in doing this the dispossessed and deprived most farmers in
these areas of their means of subsistence and income. They
59
introduced mechanized farming and only employed very few
people as machine operators and the rest were left jobless.
Moreover, it is argued that, since much of the research of
these corporations is conducted in their headquarters, it
makes the idea of technology transfer to Nigeria partly useless,
because the local environment is not considered. For example,
it was reported that the research to establish the controversial
Ajaokuta steel complex was carried out in faraway Russia, the
furnace was designed to use Russian coal thereby neglecting
the huge coal deposit in Nigeria (Enugu) it is pointless to begin
to explain the implication of this, for it is very obvious.
Nwankwo (1981) maintains that MNC do not supply
technology a commodity that can be purchased in the open
market. Rather, they supply as their own investment,
packaged up in materials, equipment and skill. Factories have
been built, construction works have been undertaken and
such other capital goods as aeroplane and electronic
equipment impart. These are taken as technology supplied by
60
multinational corporation, but they are supplied and not
transferred.
The activities of some of these MNC are a major source of
pollution in the nation. One does not have to go far to detect
pollution. Pollution affects the land use, the water we drink
and the air we breathe noted Everard, et al (1979).
In many cities like Lagos, Kano, Port-Harcourt among
others, the air is filled with harmful fumes from factories and
cars. Some of these factories belong to MNC, while the cars
and fuel and product of multinationals. Many rivers and
streams are claimed to be filled with waste from MNC, to the
points of killing fishes, or making the water hazardous to
drink. The land it is said has not been spared, it has been
misused in various ways such as the wasteful removal of
natural resources, the creation of unsightly junk piles and use
of harmful chemicals to destroy insects and rodents.
A very good example of pollution by MNC is that reported
to be carried out by the multinational oil companies. As leton,
the president of the movement for the survival of Ogoni people
61
(MOSOP) puts it, “we are in troubled waters”. We have woken
up to find out lands devasted by agents of death called oil
companies. Our atmosphere has been totally polluted our land
degraded, our waters contaminated, our trees poisoned, so
much so that our flora and fauna have virtually disappeared.
Laton (1993) other oil rich communities where these oil
companies operated are reported to suffer similar fate as the
Ogoni. These communities it is claimed suffer from social
neglect and unfairness. “Neglect and unfairness by the oil
companies who smile to the bank daily”. Says Agbese (1993).
In the words of Ekpu (1993) “According to the people
(Ogonis), (the geese that lay the golden eggs if you like), there
is not electricity, no pipe-borne waster, no good roads in their
lands. Only poverty, neglect and pollution.
What the Ogonis and other oil rich communities are
passing though, simply points to one fact, says critics of the
multinational oil companies-they (multinational oil companies)
are not socially responsible.
62
In virtually all the multination in the country, critics say,
there is discrimination regarding the payment of staff. In no
situation are Nigerians and expatriate managers on the same
level paid the same amount. These companies, it is said,
capitalize on the abundant labour force in the country. They
pay the indigenous staff very low salaries, while using them to
the fullest, knowing that they can easily be replaced if they
(local staff) complain and decided to leave. In some cases, it is
argued, junior expatriate staff tends to earn more than a
Nigeria senior staff in the same company. This is not a healthy
development.
In terms recruitment in most cases, foreign managers are
preferred to local managers. This observer’s say is not proper
for one. They do not agree with the excuses of the MNC that
Nigerians have not gotten the needed skill and knowledge to
handle such positions.
Furthermore, the MNC are almost, always accused of
only interested in maximizing their profit in their operations in
Nigeria and as such they hardly care about their social
63
responsibility to the host communities in particular and the
nation as a whole. These huge profits, they are reported, to
repatriate to their home countries with little or no
reinvestment in the country.
Base on their wealth of experience, power and other
resources the MNC stand at a rather advantaged position
when compared with their Nigeria counterparts. As on critic
put it, foreign investors damage host country’s economy by
suppressing local firms by using their worldwide contracts,
advertising skills and range of essential support services to
drive out local competition and inhibit the emergence of local
enterprise.
The ramification of these companies into all sectors of the
economy and the orientation of local consumers, who often
positively favour foreign goods because they are considered
more superior, have made competition difficult for local firms
hence some have gone out of existence as a result.
64
2.10 SUMMARY OF LITERATURE REVIEW
In general, several authorities remarked that the
management functions and operations of multinational
corporations in their host environments (countries) are more
complex and intricate because they are affected by different,
ever-changing world business environment, where such
environmental factors as political, legal, economic, social,
cultural and technological factors are considerable
implications.
Also in the review, some writers are of the view that one
of the basic roles of a MNC as a business unit, is profit
maximization and that it has other roles to play in its
environment, such as contributing to the socio-economic and
technological development of its host country. In the words of
Kinard (1988), “in today’s society, huge corporations play not
only a vital economic role, but also important social roles. It
was equally reported that the failure of MNC to meet the social
obligations adequately often resulted in clashes between the
MNC involved and its host community. The Ogoni-shell case
was mentioned.
65
Some authors agreed that direct foreign investment in
underdeveloped economics have potential economic,
technological, managerial and social benefit for such
economics, Blow (1989) puts in this way “MNC investment
brings about rapid developing especially in third world
countries”.
On the other hand, there were those who felt and argued
that MNC are instruments of exploitations in their host
countries, repatriating very huge profit to home countries,
causing balance of payment problems, causing the collapse of
local firms not facilitating technology transfer by making
highly technical positions, the exclusive reserve of expatriate
managers etc.
The relevance of this literature review to this study, is
that it gave the researcher a general overview and idea of what
have been written and said about multinational corporations
as it affects their contributions to the socio-economic and
technological development of their host environments
This knowledge or idea formed the basis of most of the
questions asked in the research questionnaire. With that, the
researcher was to generate enough information that lead to
the finding of this study.
66
REFERENCES
Agbese D. “The Curse of Oil Newswatch, Lagos January 25, 1993 p.8
Akpala, A. Management: An Introduction and the Nigeria
Perspective (Enugu Dept of Management UNEC 1993) pp. 99
Akpala, A. Op cit pp. 38 & 39 Barnet R.S. and Mullter R.E. “The Power of Multinational
Corporations Global Reach. New York Simon and Scheter, 1974.
Biersteker, J. “Distortion or Development? Contending
Perspectives on the MNC”. Global Reach Cambridge Mit Press, 1978.
Bintic C “The Budget 95”, Tell January 30 1995 p 28 Blow, P. Multinational and the Third World (New Delhi:
Prentice Hall Ltd. 1979) Dale, E Management Theory and Practices. (Tokyo McGraw-
Hill 1978) pp 500 Drucker, F.P. Management: An Abridged and Revised Version
of Management: Task, Responsibilities Practices, (London Dan Books & Heinemann (1980) Pp 261 & 262
Ekpu, R. Exploitation, Agony of the Ogoni Newswatch January
25, 1993, p. 7 Everard, K.E. Shilt B.A. Op Cit, P 30 Everard, K.E. Shilt B.A., Business Principles and Management
(Cincinnati, Ohio South-Western Publishing Co. 1979) pp23.
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Everard, K.E. Shilt, B.A. Op Cit, p. 39 Friedman, M. (1971:13-14): Bank Administration (USA) April Hessem, R. (1989) Global Management Principles (London
Prentice Hall,) Pp. 365 & 366. Hicks, H.G. and Gullet, C.R. (1981) Management (New York:
McGraw-Hill Inc.) Pp 140 Hicks, H.G. and Gullet, G.R. Op Cit Pp. 152 Hicks, H.G. and Gullet, G.R. Op Cit Pp.43 Kinard, J.L. (1988:470): Management (Lexington
Massachusetts Toronto: DC Health & Co.) Koontz, h & Welhrich, H. (1988) Management (Singapore
McGraw-Hill Book Co.) Pp 638-642 Laval, D. (1982:3) “Operations of the Multinational
Corporation in Nigeria, a Paper Presented at the Annual Dinner of UTC Held at Eko Holiday Inn Lagos, 10th December
Leton (1993: 12) “Exploitation “Newswatch, January 25, Megginson, L.C. Trueblood L.R & Ross G.M. Business
(Lexington Massachusetts, Toronto D.C. Health & Co. 1985) p. 603
Nwankwo A. Can Nigeria Survive? (Enugu Fourth Dimension
Publishers 1981) Oladeji, O. “Leadership and the Joy of Achievement” Julius
Berger Award Night Paper December 18, 1985 p. 2
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Oladip, James, “The Legacy of the Construction Giants in Nigeria” National Conference Paper an Works and Planning, July 1982 p. 2
Oluhense, S. “Ringing the Divorce Bells”, Tell May 22, 1994, p.
14 Perlmutter, H.V. “The Tortuous Evolution of the MNC”
Columbia Journal of World Business. January-February 1969 Pp 9 & 18
Robrns, S.M. Stobaugh R.B. Money in Multinational
Enterprise, (New York: Basic Books 1973).
69
CHAPTER THREE
RESEARCH METHODOLOGY
Sample Procedures: Multistage random sampling
method was used in the selection of the research. In the first
stage, the population was made up of all the listed leading
multinational corporations in Nigeria. From this a sample
random sample of 14 MNCs was selected. In the second stage
the population was made up of all the staff of the 14 randomly
selected MNCs. From this population a sample of 120
respondents was eventually selected to serve as the research
sample.
Note that, the sample sizes of the two samples were
determined scientifically. The questionnaires were distributed
to the 120 respondents indiscriminately, as long as they had
at least a secondary school education.
Sample size determination: The sample size was determined
using statistical method.
Size were determined using statistical method
Size of the first sample using the formula
70
n = 2(P (1-P) e2 Where;
n = sample size
2 = confidence level desired
e = sampling error allowed
p = estimated true population of success
1 = constant
or n = N 1 + N(e2)
n = Sample size
N = Population size
e = Sampling error allowed
Applying the first formula
The level of confidence was taken as 95% with P as 0.5
and an allowable error of 26.5%.
Substituting, these values in the first equation we have
N = (1.962) (0.5) (0.5) 0.9604 0.2652 = 0.070225
n = 13.676041
= 14
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With the second formular n = N 1 + N(e2)
The population of listed MNC (N) = 82
Sampling error allowed e = 27% (0.27)
Thus n = 82 82 82 1 + 82(0.272) 83(.0729) 6.0507
n = 13.552 = 14
SIZE OF THE SECOND SAMPLE (RESEARCH SAMPLE)
Here the formula used was n = 2(P(1-P) e2
Level of confidence desired = 95% = 1.96
Estimated true population of success P = 0.5
Sampling error allowed, e = 8.95% (0.0895)
Thus:
n = (1.96)2 (0.5) (0.5) = 0.9604 0.8952 0.0080103
n = 119.89563 = 120
The researcher choose the two sample sizes of 14 and
120 in stages one and two respectively in order to slightly over
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satisfy the criteria desired. This was done by simple rounding
up the determined value to the next highest inter value.
3.1 SOURCES OF DATA
For the purpose of this study, Data were collected from
both primary and secondary source.
3.1.1 Primary Data
Primary data were collected by structured
questionnaires, oral interviews and personal observations. The
questionnaires used were pretested to ensure that the
respondents does not find the final questionnaires difficult to
respond to. The observed shortcomings of the questionnaire
were rectified before the final copies of 120 were eventually
produced.
The questionnaires were distributed to the 120
respondents and collected back personally by the researcher.
The administration was more or less done
indiscriminately to the staff of the randomly selected 14
multinationals.
73
However, the researcher ensured that only those with a
least secondary level of education got the questionnaires each,
while the remaining 6 MNC had 8 questionnaires each.
3.1.2 Secondary Data
Secondary data for the literature reviews were collected
from research reports, textbooks, journals, newspapers,
magazines, seminars, papers and other published as well as
unpublished materials of relevance to the study.
3.2 DATA PRESENTATION AND ANALYSIS
Data collected from this study were presented and
analyzed using descriptive statistical approach, such as
frequently distribution tables expressed in percentage and
explanatory statistical analysis.
3.3 VALIDITY AND RELIABILITY OF MEASURING
INSTRUMENTS
In order to ensure the validity and reliability of the
questionnaire in this study, the researcher made sure that
only those questions that would give relevant information were
asked.
74
Secondary, the questions asked were so simple and
straight forward that the respondents would find them easy to
respond to. Also, multiple choice options were provided as
possible answers to virtually all the question asked. This made
it easier for them to respond to and ensured that all the
responses were valid.
Moreover, the questions were objectively frame without
any clue as to which particular answers were needed
In addition, wherever possible, the research used interview
technique to ensure that the questions were really understood
by the respondents and that the appropriate answers were
given. With the interview, the researcher got explanations for
certain responses made by the respondents thereby making
the information were valid and reliable.
Also the make sure that the questionnaire were valid and
reliable, they were tested before the final copies were
produced.
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CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 DATA PRESENTATION
The data collected from the field are presented, analyzed
and interpreted here. This is aimed at bringing out the true
situation of the similar and diverse opinions of the
respondents towards achieving the objectives of this study.
TABLE 1: SEX OF RESPONDENT
Response Respondents Percentage %
Male 96 80
Female 24 20
Total 120 100
Interpretation
From the above table 96 out of 120 respondents that are
80% are male, while 24 that are 20% of them are females.
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TABLE 2: AGE OF RESPONDENTS
Response (Yes) Respondents Percentage %
18-40 101 84.17
41-55 19 15.83
Total 120 100
Interpretation
Table 2 shows that 101 or 84.17% of the respondents are
between 18-40 years old. While 15.83% are between the ages
of 41-55 years
TABLE 3: NATIONALITY OF RESPONDENTS
Response Respondents Percentage %
Nigeria 120 100
Non Nigeria - -
Total 120 100
Interpretation
Table 3 shows that all the respondents were Nigerians. This
does not mean that there are no non-Nigeria in these MNC.
The fact is that when approached to respond to the
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questionnaires, they simply referred one to a lower worker in
the company with the explanation that they could give as
much and good information as themselves.
Moreover, the appeared to be busy for such things.
TABLE 4: LEVEL OF FORMAL EDUCATION
Response Respondents Percentage %
Illiterate - -
Primary level - -
Secondary level 30 25
Post secondary level 90 75
Total 120 100
Interpretation
Table 4 shows that 25% of the respondents have attained
only secondary education. 90 or 75% of them are educated
beyond secondary level. This means that the respondents are
educated enough to know what is happening around them and
would be able to give information to that effect as it regards
this study.
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TABLE 5: WHAT IS THE NAME OF YOUR COMPANY?
Response Respondents Percentage %
NBC PLC (Coca Cola) 9 7.5
John Holt Venture (Plc) 9 7.5
Lever brother Nig. (Plc) 8 6.66
UAC Plc 9 7.5
Nigeria Breweries Plc 9 75
Allens 8 6.66
A.G. Levents Plc 9 7.5
Pfizer 8 6.66
Smith Klime Beacham 9 7.5
Elf 9 7.5
Bata (Nig) Plc. 8 6.66
Benal (Plc) 8 6.66
Cadbury (Nig) Plc 9 7.5
Total 120 100
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Interpretation
Table 5 shows that 9 respondents each were from 8 of
the 14 corporations. They are NBC Plc (Coca-Cola), John Holt
Venture Plc, UAC Plc, A.G. Leventis Plc, Smith Klime
Beacham, ELF, and Cadbury (Nig) Plc. The other 6 companies
have 8 respondents each. These are lever brothers, Allens,
Pfizers, Dal, Bata, Bewal.
TABLE 6: HOW LONG HAVE YOU WORKED IN YOUR COMPANY
Response (Years) Respondents Percentage %
1-10 70 58.33
11-20 50 41.67
20 and above
Total 120 100
Interpretation
In table 6 above, 70% or 58.33% of the respondents says
that they have worked in their company for between 1 to
10years. Others 50 or 41.67% have worked for their company
for between 11 to 20 years. No of the respondents has worked
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for 21 years and above. For the fact that most of them have
worked long enough in their companies’ means that they
would be able to give reasonable information about their
companies, as it affect this study.
TABLE 7: WHAT IS YOUR RANK/STATUS IN YOUR COMPANY?
Response Respondents Percentage %
Managers 78 65
Non-manager 42 35
Total 120 100
Interpretation
From table 7w, 65% of the respondents indicated that
their ranks fall within the manager rank. That is both top
management level, middle management level and lower
management level.
The remaining 35% of the 120 respondents are non-
managers. They are operatives. In most of the MNC here,
Nigerians are the Managing Directors and General Managers.
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TABLE 8: WHERE IS THE HEADQUARTERS OF YOUR COMPANY?
Response Respondents Percentage %
Overseas 120 100
Nigeria - -
Total 120 100
Interpretation
In table 8, all the respondents indicated that the
headquarters of their companies are in overseas. That is to say
that all the multinational corporations used for this study
have their headquarters abroad.
However, most of them in the country have their head
offices at Lagos and branches offices in other parts of the
country.
82
TABLE 9: WHICH OF THE FOLLOWING ENVIRONMENTAL FACTORS AFFECT(S) YOUR COMPANY’S OPERATION IN NIGERIA?
Response Respondents Percentage %
Economic environment - -
Social and cultural environment - -
Political and legal environment - -
Technological environment - -
All of the above 120 100
Total 120 100
Interpretation
As the table above shows, all of the respondents, 120
indicated that their corporation’s operations in Nigeria are
effected by all the environmental factors listed. This not
withstanding, they were all equally very particular about the
political, legal and economic environment. They argued that
the unstable political and economic conditions in the country
are seriously affecting their activities and operations, more
than any other at least for the time being.
83
TABLE 10: WHAT FACTOR(S) IN YOUR OPINION MOTIVATED YOUR CORPORATION INTO HAVING SUBSIDIARY OPERATIONS IN NIGERIA?
S/No Response Respondents Percentage %
1 Presence of human and
material resources
- -
2 Good markets 28 23
3 Government
encouragement
- -
4 All of the above 92 77
5 Others - -
Total 120 100
Interpretation
From table 10 above, 28 or 23% of the respondents
agreed that the factors that motivated their companies into
having subsidiary operations in Nigeria, was the good market
potentials that the country has. But majority of the
respondent 92 or 77% says that their companies were
motivated to have a subsidiary in Nigeria by the presence of
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human and material resources, good market and government
encouragement for direct foreign investment.
TABLE 11: HOW WOULD YOU RATE MNC RESPONSE TO GOVERNMENT’S CALL FOR DIRECT FOREIGN INVESTMENT IN NIGERIA?
S/No Response Respondents Percentage %
1. Encouraging 51 42.5
2. Not
Encouraging
69 57.5
Total 120 100
Interpretation
Table 11 shows that 42.5 of the respondents rated the
response of MNC to government’s call for direct foreign
investment in the country as encouraging, while a higher
percentage of 69 of the respondents are of the view that the
MNC are not responding encouragingly to the call.
When asked why, they said that the political and
economic conditions of the country would not allow the MNC
to make any new investments in the country, no matter the
amount of the encouragement the government would claim to
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be giving them. The MNC can only invest in a stable, healthy
and promising political and economic environment.
TABLE 12: DO YOU AGREE THAT FOREIGN INVESTMENT HAS THE CAPACITY OF BOOSTING THE NATION’S ECONOMY?
S/No Responses Respondents Percentage %
1. Yes 120 100
2. No - -
Total 120 100
Interpretation
In table 12 above, all the respondents agreed that direct
foreign investment in Nigeria can boost the nation’s economy.
That is to say that they are of the view that the investment of
MNC in the economy can improve productivity, raise the value
of the naira, increase the range of goods and services available
in Nigerians for consumptions. The investment can also lead
to creation of job opportunities for Nigerians.
Moreover, the standard of living of the people can be
increased through the investments of these MNC, all things
being equal.
86
Unfortunately, as observed earlier on, the much needed
foreign investment is not coming because of Nigerians
undesirable political and economic situation. Therefore, it is
not possible to get all the mentioned advantages of foreign
investment to any economy.
TABLE 13: DO YOU THINK THAT MNC IN NIGERIA SHOULD PLAY AN ACTIVE ROLE IN THE SOCIO-ECONOMIC DEVELOPMENT OF THE NATION?
S/No Responses Respondents Percentage %
1. Yes 120 100
2. No - -
Total 120 100
Interpretation
In table 13, the entire respondents of 120 were of the
view that MNC in Nigeria should play an active role in the
socio-economic development of the nation. What this means is
that the people feel that MNC should not only be interested in
profit making from their operations in the country. Rather,
they should equally take into consideration the development of
87
the economic and social environment of the country. This
view-point fall in line with the liberal view point about the role
of MNC as a business unit. That is over riding objective of
business should not necessarily be profit maximization,
rather, the profit motive/objective should be pursued along
side some socio-economic development objectives of the host
environment.
TABLE 14: HOW DO YOU RATE THE CONTRIBUTIONS OF
YOUR COMPANY TO THE ECONOMIC
DEVELOPMENT OF NIGERIA?
S/No Responses Respondents Percentage %
1. Very adequate 12 10.00
2. Adequate 23 19.17
3. Moderate 67 55.83
4. Inadequate 18 15.00
5. Very
inadequate
- -
Total 120 100
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Interpretation
From table 14, it could be seen that, only 10% of the total
respondents agreed that their company’s contributions to the
economic development of Nigeria is very adequate. Another
19.17% say that this contribution is just adequate while a
larger percentage of 55.83% are of the view that their
company’s contributions are moderate. But 15% of the
respondents did not agree that the contributions of their
companies to the socio-economic development of the country
are adequate. They feel it is inadequate.
TABLE 15: HOW DO YOU RESPOND TO THE ASSOCIATION THAT MNC IN NIGERIA ARE MAINLY INTERESTED IN PROFIT MAXIMIZATION
S/No Responses Respondents Percentage %
1. True 74 61.17
2. False 46 38.33
Total 120 100
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Interpretation
In table 15, of the 120 respondents, 74 or 61.17% agreed
that MNC in Nigeria are mainly interested in profit
maximization meaning that this group equally feel that these
corporations do not respond adequately to the social and
economic needs of their host communities and the nation at
large. On
On the hand, 46 or 38.33% of the respondents says that
MNC in Nigeria are not mainly interested in profit
maximization. That is the MNC do attend to the social and
economic needs of their host environment.
TABLE 16: DO YOU AGREE THAT MNC IN NIGERIA DO REPATRIATE HUGE PROFIT TO HOME COUNTRIES?
S/No Responses Respondents Percentage %
1. Yes 85 70.83
2. No 35 29.17
Total 120 100
90
Interpretation
Table 16 shows that 70.83% of the respondents agreed that
MNC in Nigeria do repatriate huge profits of their home
countries. This means that very little or nothing out of the
profit is invested back into business here in Nigeria. On the
other hand 35 or 29.17% of the respondents did not agree
with this assertion. They are of the view that reasonable
amount of profit is plough back into business here in Nigeria.
TABLE 17: WHAT EFFECT DO YOU THINK IT WILL HAVE ON NIGERIAN’S ECONOMY IF THE MONEY REPATRIATED FROM IT IS HIGHER THAN THE FOREIGN INVESTMENT?
S/No Responses Respondents Percentage %
1. Negative effect 120 100
2. Positive effect - -
3. No effect at all - -
Total 120 100
Interpretation
Looking at table 17, it will be discovered that the whole
respondents of 120, think that when the repatriation of profit
91
from Nigeria to the home countries of the multinationals is
greater than the amount of foreign investment coming into the
country, the country will experience some undesirable
(negative) economic problem. For instance it will negatively
affect the country’s foreign exchange reserve, investment
capital formation e.t.c.
However, despite the fact that they all agree that the
above argument, some felt that the money repatriated cannot
be higher than the investment. This was how a manger in
John Holt put it. I do think that the money repatriated in
Nigeria will be higher than the foreign investment per se”.
TABLE 18: IF MNC DO CONTRIBUTE TO GOVERNMENTS REVENUE THOROUGH, WHAT MEANS IS THIS DATE?
S/No Responses Respondents Percentage
%
1. Taxation - -
2. Royalty - -
3. Revenue from share - -
4. Ownership gifts and donations - -
5. All of the above 120 100
6. Others - -
Total 120 100
92
Interpretation
In the table 18 above, all the 120 respondents answered
the questions, indicating that multinationals in Nigeria
contribute to government revenue.
Moreover, they were all in agreement that MNC
contribution to government revenue is through all or a
combination of taxation, royalty, revenue from shares
ownership and gifts and donations.
All the respondents when asked said the major one is
actually taxation. As for royalty, it affects mainly the MNC in
the extractive industries or sectors like the multinational oil
companies like shell, ELF etc. Revenue that comes to the
government through share ownership of course applies only to
those MNC where government has share, they argued. They
went further to say that the issue of gifts and donations to the
government is just a way of warming up to the government
and to boost their corporate social image before the
government.
93
TABLE 19: THE OPERATIONS AND EXISTENCE OF MNC IN NIGERIA OFTEN BRING ABOUT UNFAVOURABLE COMPETITION FOR LOCAL FIRMS
S/No Responses Respondents Percentage %
1. True 102 85
2. False 18 15
Total 120 100
Interpretation
The above table shows, of the 120 respondents, a large
percentage of 85% says that it is true that the operations of
the MNC do bring about unfavourable competition for the local
firms. What this group is implying is that this competition
could lead to the collapse of these local firms. In fact when
some of them were asked, they did not mince words to say
that MNC have actually caused the collapse of some local
firms.
On the other hand, only 18 respondents out of 120
disagreed that the operations of the MNC in Nigeria, do bring
unfavourable competition for local firms. In his own way, the
area manager of NBC Plc says that through the operations and
94
existence of MNC are bad for local business firms, but left
alone. There is no way the local firms could have able to
satisfy the whole Nigeria market with all its needs adequately.
So in this view, the operation of the MNC is like a double-
edged sword.
TABLE 20: DO YOU THINK THAT MNC IN NIGERIA ARE CONTRIBUTION TO THE TECHNOLOGICAL DEVELOPMENT OF NIGERIA?
S/No Responses Respondents Percentage %
1. Yes 104 86.67
2. No 16 13.33
Total 120 100
Interpretation
Table 20 shows that out of the 120 respondents 104 or
86.67% agreed that the multinational corporations (MNC) in
the country are contributing to the technological development
of the nation. While 16 or 13.33% thinks that they are not
making any contribution towards Nigeria technological
development. This last group are of view that these MNC are
not interested in Nigerian’s technological development,
95
because according to them, if they do, they will lose Nigeria as
one of those countries that rely on them.
So as much as possible, they try not to pass on or
transfer their technology, to the country, this view expressed
by this few percentage of respondents fall in line with that
highlighted earlier on in the review of related literature to this
study, that MNCs do not actually like to transfer technology
because they like to maintain that monopoly that their
technological know-how offers them.
TABLE 21: IF YES IS THIS CONTRIBUTION ENCOURAGING?
S/No Responses Respondents Percentage %
1. Yes 38 30.77
2. No 82 69.23
Total 120 100
Interpretation
In table 21 of the 120 respondents that says that the
MNC in Nigeria are contributing to her technological
development, only 38 in 30.77% are of the opinion that this
96
contribution is encouraging. On the other hand, a large
number, 82 of the 120 respondent felt that the contribution to
the technological development of the nation by the MNC is not
encouraging. This could be the explanation why Nigeria is still
technological backwards.
TABLE 22: IF YOUR COMPANY IS CONTRIBUTING TO THE SOCIAL DEVELOPMENT OF NIGERIA, IN WHAT AREAS ARE THEY DOING THIS? YES NO TOTAL
S/N
Respon
den
ts %
Respon
den
ts %
Respon
den
t %
1. In education 72 60 48 40 120 100
2. In job creation 120 100 - - 120 100
3. In provision of basic amenities 64 53.33 56 46.67 120 100
4. In manpower development 120 100 - - 120 100
5. In other area 55 45.83 65 54.17 120 100
Interpretation
From the above table, one could see that 72 of the
respondents say that their corporations are contributing to the
97
social development of Nigeria through education. That is
through scholarship to citizens and building of schools as well
as supply education materials to school in the country. The
remaining 48 says that their companies do not contribute to
the education development of the nation.
On the issue of job creation or employment all the 120
respondents indicated that their companies do create job
opportunities for the people of Nigeria through their operations
in the country. This means that MNC are helping to reduce the
unemployment rate that has lit on all time high in the country.
This appears to be one of the major areas of their contribution.
In terms of provision of basic amenities (such as health
facilities water, light, good road, bridges etc) 64 or 53.33% o
the respondents agreed that their companies do engage in the
provision of some or a combination of the above mentioned
basic amenities in their host communities. But 56 of the 120
respondents said their companies do not provide any of the
above amenities.
As for manpower development, all the respondents are in
agreement that their companies do engage in the development
98
of manpower in Nigeria. Moreover, 55 or 45.83% of the 120
respondents says that their companies do contribute to the
social development of Nigeria through other areas such as the
development of sports.
TABLE 23: ARE THESE CONTRIBUTIONS ADEQUATE?
S/No Responses Respondents Percentage %
1. Yes 26 21.67
2. No 94 78.33
3. Do not know - -
Total 120 100
Interpretation
In table 23 of the entire respondents of 120, 21.67%
agreed that the contribution of their companies to the social
development of the country are adequate, while the large
chunks of 94 or 78.33% says that the contribution are not
adequate. This not withstanding some people in this very
group did agree that the MNC are trying in the aspect of job
99
creation, but in other areas, the MNC effort can best be
described as a drop of water in a might ocean.
TABLE 24: HOW DO YOU REACT TO THE ASSERTION THAT MAINLY UNSKILLED INDIGENOUS LABOUR ARE EMPLOYED BY MNC?
S/No Responses Respondents Percentage %
1. True 16 13.33
2. False 96 80.00
3. Do not know 8 6.67
Total 120 100
Interpretation
Table 24 indicates that 16 of the respondents said that
actually, MNCs in Nigeria employs mainly unskilled
indigenous labour, meaning that only small number of skilled
indigenous labour is employed by the multinationals.
On the other hand, a whole 80% or 96 of the respondents
are of the view that multinationals in Nigeria do not mainly
employed unskilled indigenous labour. They argued that large
chunk of their staff are skilled Nigerians. In the words of the
100
area manager of NBC Plc, “multinational corporations also
employ large numbers of skilled Nigeria for instance.
In may company 9%% of the management staff are
skilled Nigerians”. A sales representative at Allens adds to the
best of my knowledge. My company goes for the best skilled
labour”. Only 8 respondents claimed that the do not know
whether MNC in Nigeria employ mainly unskilled indigenous.
TABLE 25: EXPATRIATE STAFFS OF MNCS ARE PAID BETTER SALARIES THAN INDIGENOUS STAFF OF SOME RANK IN THE SAME COMPANY
S/No Responses Respondents Percentage %
1. True 96 80
2. False 24 20
Total 120 100
Interpretation
Table 25 shows that 96 or 80% of the respondents agreed
that expatriates are better paid in MNC that indigenous staff of
the same company. The remaining 24 respondents said that
the assertion is false. Some of those that said the assertion is
101
false argued that in their company there is a kind of scale of
which any staff, be you an expatriate or Nigeria, in any
position earns the same amount.
Other argued that if any difference has to exist, it may
depend on the agreement reached and the particular situation.
If you ask me, I would want to think that this last argument is
rather but stressing the fact that expatriate staffs do earn
better salaries than indigenous staff of the same rank in the
same company.
TABLE 26: WHAT IS YOUR VIEW ABOUT THE AS ASSERTION THAT SOME SENSITIVE MANAGEMENT POSITION IN MNC ARE THE EXCLUSIVE RESERVE OF EXPATRIATES
S/No Responses Respondents Percentage %
1. True 66 55
2. False 54 45
Total 120 100
Interpretation
From table 26, one can see that 66 out of the 120
respondents agreed to assertion that some sensitive
102
management positions in multinational corporations in Nigeria
are the exclusive reserve of expatriate managers. They argued
that positions that have the potentials of enabling the Nigeria
staff acquire that basic technological knowledge were never
given to Nigerians. For example, in very big manufacturing
multinational corporations e.g. Nigeria Brewery Plc, an
expatriate is always the technical manger.
The remaining 54 respondents hold a different view
about this assertion. They do not agree to it at all. They hinge
their position on the fact that in their companies Nigerians are
found in very high positions such as Managing Directors (MD)
General Manager (GM), Financial Managers and the like. They
stated further that this could be true in those days and now
when there are a lot of experienced and competent Nigerian
every where, and all areas of human endeavour.
103
TABLE 27: IF TRUE, WHY IS TO SO?
S/N Responses Respondents Percentage %
1. Nigerian don’t have the skill 7 10.61
2. Management policy 32 48.48
3. Others 27 40.91
Total 120 100
Interpretation
Table 27 shows that of the 66 respondents who agreed to
the assertion that some sensitive positions in MNC are the
exclusive reserve of expatriates in table 26, only 7 in 10, 61%
indicated that the reason for this is because Nigerians do not
have the skill for such sensitive positions. Another 32 or
48.48% agreed that it is the management policy of MNC. In
addition, 27 of them did not agree that this is caused by the
lack of skill of Nigerians or management policy. Rather, they
cited such reasons as sentiment, the tendency to protect and
monitor adequately their huge investment, the dubious and
corrupt nature of some Nigerians, who might want to abuse
such position to the detriment of the company. In fact, one
management staff of NBC (Coca-Cola) to me that a more is
104
presently being put forward to make expatriate the plant
managers of most of the coca-cola plants in the country. The
reasons for this, is that the present Nigeria plant managers are
not performing to expectation. They even neglect the staff
welfare. Mind you the staffs are mainly Nigerians and they are
not well treated.
When asked the staff were very willing to accept the
change because according to them, the expatriate managers
will ensure that they get all their entitlement and benefits
unlike the Nigerian managers.
TABLE 28: HOW DOES YOUR CORPORATION RESPOND TO PEOPLE IN THE IMMEDIATE ENVIRONMENT IN CASE OF ANY ACCIDENTS (NATURAL DISASTER POLLUTION ETC?)
S/No Responses Respondents Percentage %
1. Financial and material - -
2. Assistance/compensation - -
3. Message of sympathy - -
4. All of the above 120 100
5. Others - -
6. No response - -
Total 120 100
105
A glance at the above table shows that all the
respondents said that their companies do give financial and
material assistance/compensation as well as message of
sympathy to the people of their immediate host communities
in case of any accident.
The issue of compensation involves firms that are into
exploration of minerals and those that are in manufacturing.
MNC in those that are in manufacturing. MNC in these areas
are constantly polluting the environment. Most times spillages
do occur and these companies have to compensate the people
affected. The issue of pollution and oil spillage and adequate
compensation has been a constant source of conflict between
the multinational oil companies and the people of their host
communities.
106
CHAPTER FIVE
DISCUSSION OF FINDINGS, RECOMMENDATIONS AND
CONCLUSION
It is pertinent at this point to finalize this study in this
chapter with discussions of findings, recommendations and
conclusion.
So far, in this research work, an attempt has been made
to examine the contribution of multinational corporations
operating in Nigeria to the social, economic and technological
development of the country. Efforts were equally made towards
determining the adequacy of the contribution.
Moreover, attempts were further made at presenting the
views of various authors and researchers on the socio-
economic and technological input of multination of their host
environment.
To be able to achieve the objectives of this study some
research questions were formulated. The questions in the
questionnaires were based on the research questions, which
were distributed to 120 respondents, for the purpose of data
collection.
107
Finally, the collected data has been presented analyzed in
chapter four. This now formed the basis for the finding that
will be presented and discussed presently.
5.1 DISCUSSION OF FINDINGS
The findings of this study are highlighted and discussed
here.
First of all, it was found out that the employees of most
the multinational corporations (MNC) in Nigeria are mainly
Nigerians males and females. This observation or discovery is
in line with what is obtainable in other business firms that
prefer to employ men to the employment of women for reasons
that may or may not be justifiable. Most times those reasons
hinge on sex discriminations.
It was also discovered that most the employees are within
the age brackets of 18 to 40 years and most of them are
educated to school level and above.
Another discovery from this study was that virtually all
the multinational corporations in Nigeria have their corporate
headquarters in overseas (home countries), while their head
offices in Nigeria are in Lagos. This discovery confirms that
108
Aharani (1971) said that at cited in the definition of terms of
this study that MNC are organizations that are headquartered
in one country (mostly developed countries) and have to have
business operations spread over other countries.
One other finding was that just as previously reported by
various authors and researchers, the MNC operating in the
country are affected by the following environmental factors,
economic, social, cultural, political, legal as well as
technological factor with political and economic environment
taking the lead, due to the instability and unhealthy nature of
these two environment in the country.
The social factor is also a critical one for instance, only
recently there was a crisis in Warri in Delta State as a result of
a political issue. This crisis led to the loss of N3.3bn by Shell
Petroleum Development Company (SPDC) between March and
May 1997 Owolabi (1997).
It was equally found out that what motivated most of the
MNC, into having subsidiary operations in the country are
good market, abundance human and internal resources in the
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country and government encouragements for direct foreign
investments.
Moreover, this study led to the finding that although the
foreign investment of multinational corporations has the
capacity of boosting the Nigeria economy. The MNC are not
responding encouraging to the call by the government for their
(MNC) direct foreign investment. The reasons for this
unfortunate development, it was further gather was connected
to the political and economic uncertainty in the country. For
no organization will be very willing to invest in a place where
you can’t tell what will happen in the next minute or second
with a reasonable degree of accuracy. Hence it could be rightly
said, that to a large extent, the government has failed in its bit
to attract or the MNC to invest in the country. Even those that
are already here are not finding things easy, says are manger
in Leventis Plc.
Another interesting finding was that generally, MNC in
the country are contributing moderately to the economic
development of the country.
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In addition, it was found out that the multinationals in
the country are mainly interested in profit maximization and
that greater part of this profit is being repatriated to their
home countries overseas.
This means that very small amount if any of the profit is
ploughed back into business here in the country and very little
too, goes to the execution of some social obligations to their
host environment and nation at large.
One more interesting findings was that if the huge profit
repatriation by MNC exceeds the incoming foreign investment,
the country will experience negative economic problems such
as balance of payment difficulties, drain on the nation’s
investment capital (decapitalization effect as described by
Bieistelch (1978), in the literature review of this work).
It was also discovered that all the multinationals
corporations in Nigeria contribute towards increasing
government’s revenue through the payment of royalty, taxes,
gifts and donations to government, revenue accruing to
government from share ownership in some of the corporations.
For some of them, this is done through one source, while
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for others it is through a combination of two or more of these
sources. By and by the means that applied to virtually all the
MNC is taxation. Only MNC in the extractive sector pay royalty
and government only get share revenue from those companies
where she has shares.
An important finding from this study was that the
operations and existence of multinational corporations in the
country do bring about unfavourable competition for local
holigenous firms.
This is so because these MNC are better equipped
compete more favourable than the local firms. They have a
great wealth of experience world wide contacts, advertising
skills and a wide range of essential support services which the
local firms cannot boast of so, they are at a very disadvantages
position to compete with the MNC. Hence most times, the
unfavourable competition often leads to the collapse of these
local firms.
This problems is a very sensitive one because, when left
alone, the local firm would not be able to satisfy the Nigerian
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large market, yet the coming in of the MNC to help out of this
undesirable problem the collapse of local firms.
Moreover, because of tendency of consumers to often
positively favour foreign goods against locally produced goods
may due to their superior quality or just ordinary sentiment or
complex, the problems of the local firms are further
compounded, since they lose the market sooner than later,
when the tread continues without stopping.
On the issue of technological development, was found out
that MNC in Nigeria are contributing the technological
development of the country. However, this contribution was
found to be headquarter (not encouraging). This might explain
why Nigeria is still technologically backward, because, it
seems that the MNC are not in any haste to transfer thin
technology to Nigeria, since doing so, will mean that Nigeria
will not depend on them again and this they do not want.
Therefore, they have to prevent this much needed
technology transfer in the way they know best.
Another major finding was that MNC in Nigeria are
contributing to the social development of the nation through
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education, job creation, provision of basic amenities,
manpower development, provision of health facilities and
sports development. However, in general, these contributions
were found to be inadequate.
The fact that these multinationals are responding to the
social needs of host environment is a notification of the fact
that the MNC are imbibing the warning of Dalu (1975) “Today
it is absurd to regard the corporation simply as an enterprise
for the sole purpose of profit making. Every corporation should
be thought of as a social enterprise whose existence and
decisions can be justified only in so far as they serve public or
social purposes”
The study further proved that the major area of MNC
contributions is in job creation or employment and manpower
development. Hence MNC in Nigeria are playing a positive role
towards reducing the rate of unemployment in the country.
Another interesting finding of this study was that
Multinational Corporation in the country employs both skilled
and unskilled holigenous labour but the expatriate staff are
paid better than the indigenous staff and certain sensitive
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position are the exclusive reserve of the expatriates in most of
the multinations. This is one of the ways that these MNC are
using to prevent the Nigerians from actually acquiring the real
knowledge of the technology involved in their production
processes. If this trend of the corporation keeping the
knowledge of their technology secrete continues then the
much needed, talked about, and controversial technology
transfer will consistently remain and illusion to the nation.
Unless something drastic or unconventional is done
about it. Such as steeling the technology and make little
modification to make it look different and original, if you like.
If the country can do this, in no distance time, the nation will
be talking about her own technology.
5.2 RECOMMENDATIONS
Based on the findings of this study, the following
recommendations are made.
The multinational operating in Nigeria should as a matter
of urgency improve on the adequacy of their contributions to
the economic, social and technological development of the
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nation, through more or increase investment provision of basic
amenities and ensuring that Nigeria managers man positions
that will equip them with the much needed technological know
how.
Multinational corporations in the country should either
be persuaded or compelled by the government through
legislations to increase the percentage of profit reinvest in the
country and spent on meeting their social responsibilities to
their host communities in particular and the country in
general. This will also prevent the negative implication of the
repatriation of huge profit to home countries of those MNC.
The government or ruling class should at all times endeavour
to pursue economic, political policies and development policies
generally that will stabilize the economic and political
environment of the country.
This could be achieved if and only if the right persons are
allowed into the leadership positions and the selfish and
greedy tendencies of the average Nigerian are de-emphasized
for the general good of the nation. With this done, in no time,
the Nigerian economy will become attractive once more to
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foreign investors to the point that they may not even require to
be invited or wood in any way. This is because Nigeria is
naturally endowed and most people desire to do business here
under normal situations.
Moreover, the government should do something, either
through legislation, to protect local firms from the
unfavourable competition with MNC which often leads to their
collapse. Also, Nigerian consumers should at least, if only for
patriotism sake, patronize the goods and services of our local
business firms, for their products are as good as the foreign
ones and even better sometimes.
On the issue of technology transfer, since the
multinationals have shown consistently that they are not will
to affect a real transfer of technology to the country.
Conventionally, Nigeria government and Nigerians in
general should adopt a rather drastic and unconventional
approach-espionage. When the technological knowledge have
been acquired through this means, it can be modified and
adapted to suit the Nigerian environment, thus making it
different from where it was copied and hence original, if you
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like, the country can do this without relying fully on the MNC
for the illusive technology transfer, in no distance time, the
nation will be taking about her own technology.
This study gave a very general overview of the role MNC
in Nigeria. Hence it is recommended that an exhaustive and
more detailed research on this topic be carried out; with
emphasis on particular sectors e.g. oil construction etc.
5.3 CONCLUSIONS
By and large, efforts have been made at carefully
analyzing bit by bit the subject of this research. Also all the
research questions formulated.
From the findings of this research, one can make bold to
say that multinational corporations in the country rate
contributing to the social, economic and technological
development of Nigeria. Save that while the economic
contributions are inadequate. That is to say that, their
response to their corporate social responsibilities and
technological impact in the country is nothing to write home
about.
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Therefore give or take, the multinational corporations
operating in Nigeria are helpful to Nigeria’s economy generally
but given the enormous wealth made by these MNC in the
country, their managerial and technological know-how, this
help is considered as a spit in the ocean. There help
notwithstanding, the MNC in Nigeria equally have their fair
share of shortcomings.
Finally, it is believe of the researcher that this will go a
long way in opening up new areas of research and t hereby
enriching the knowledge of academicians and mankind
generally.
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