The Handbook of

Global CompaniesEdited by John Mikler

Handbooks of Global Policy

The Handbook ofGlobal Companies

Handbook of Global Policy Series

Series EditorDavid Held

Master of University College and Professor of Politics and InternationalRelations at Durham University

The Handbook of Global Policy series presents a comprehensive collection ofthe most recent scholarship and knowledge about global policy and governance.Each Handbook draws together newly commissioned essays by leading scholarsand is presented in a style which is sophisticated but accessible to undergradu-ate and advanced students, as well as scholars, practitioners, and others interestedin global policy. Available in print and online, these volumes expertly assess theissues, concepts, theories, methodologies, and emerging policy proposals in the field.

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The Handbook of Global Energy PolicyAndreas Goldthau

The Handbook of Global CompaniesJohn Mikler

The Handbook ofGlobal Companies

Edited by

John Mikler

A John Wiley & Sons, Ltd., Publication

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Library of Congress Cataloging-in-Publication Data

The handbook of global companies / edited by John Mikler.pages cm.

Includes bibliographical references and index.ISBN 978-0-470-67323-2 (cloth)1. International business enterprises–Political aspects. 2. Business and politics.

3. International relations. I. Mikler, John.HD2755.5.H368 2013322′.3–dc23

2012047270

A catalogue record for this book is available from the British Library.

Cover image: Singapore cityscape at sunset C© Jason Ho / ShutterstockCover design by Design Deluxe

Set in 10/12.5pt Sabon by Aptara Inc., New Delhi, India

1 2013

For Kara, Annika, and Erin

Contents

List of Illustrations xi

Notes on Contributors xiii

Preface xxi

1 Global Companies as Actors in Global Policy and Governance 1John Mikler

Part I Locating Global Companies 17

2 The Global Company 19Hinrich Voss

3 The National Identity of Global Companies 35Stephen Wilks

4 Big Business in the BRICs 53Andrea Goldstein

Part II Global Companies and Power 75

5 Theorizing the Power of Global Companies 77Doris Fuchs

6 Why, When, and How Global Companies Get Organized 96Tony Porter and Sherri Brown

7 How Governments Mediate the Structural Power ofInternational Business 113Stephen Bell

viii CONTENTS

8 How Global Companies Wield Their Power: The DiscursiveShaping of Sustainable Development 134Nina Kolleck

Part III Global Companies and the State 153

9 How Global Companies Make National Regulations 155Terry O’Callaghan and Vlado Vivoda

10 Making Government More “Business-Like”: ManagementConsultants as Agents of Isomorphism in Modern PoliticalEconomies 173Denis Saint-Martin

11 East Asian Development States and Global Companies asPartners of Techno-Industrial Competitiveness 193Sung-Young Kim

12 Varieties of the Regulatory State and Global Companies: TheCase of China 209Shiufai Wong

13 Global Companies and Emerging Market Countries 227Caner Bakir and Cantay Caliskan

Part IV Global Companies and International Organizations 239

14 Regulating Global Corporate Capitalism 241Sarianna M. Lundan

15 Global Companies as Agenda Setters in the World TradeOrganization 257Cornelia Woll

16 Business Interests Shaping International Institutions:Negotiating the Trans-Pacific Partnership Agreement 272Deborah Elms

17 Global Companies and the Environment: The Triumph ofTNCs in Global Environmental Governance 285Matthias Finger

18 Global Companies, the Bretton Woods Institutions, and GlobalInequality 300Pamela Blackmon

19 Outsourcing Global Governance: Public-Private VoluntaryInitiatives 316Marianne Thissen-Smits and Patrick Bernhagen

CONTENTS ix

Part V Global Companies and Society 333

20 Global Companies and Global Society: The Evolving SocialContract 335Ann Florini

21 Global Companies as Social Actors: Constructing PrivateBusiness in Global Governance 351Tanja Bruhl and Matthias Hofferberth

22 The Socially Embedded Corporation 371Kate Macdonald

23 Ecological Modernization and Industrial Ecology 388Frank Boons

Part VI The Exercise and Limitations of Private Global Governance 403

24 Global Companies as Agents of Globalization 405Shana M. Starobin

25 The Greening of Capitalism 421John A. Mathews

26 Global Companies and the Private Regulation of Global LaborStandards 437Luc Fransen

27 Global Private Governance: Explaining Initiatives in the GlobalMining Sector 456Hevina S. Dashwood

28 Will Business Save the World? 474Simon Zadek

Index 493

List of Illustrations

Figures

4.1 BRIC companies in Fortune Global 500 549.1 A simplified spectrum of regulation 164

12.1 Varieties of Chinese regulatory capitalism across the 100 largestglobal companies 222

Tables

2.1 The ten economically largest countries and enterprises, 2010 232.2 The ten most internationalized developed country MNEs, 1995 and

2010 252.3 The ten most internationalized developing country MNEs, 1995 and

2009 263.1 Transnationality index for countries, 2005 373.2 National distribution of large corporations 434.1 BRIC companies in Fortune Global 500 544.2 Data on big business in the BRIC 584.3 Top 100 companies’ sales in the BRICs, by ownership 584.4 Varieties of state capitalism in China 604.5 CEOs in the United States, Brazil, India, and China 644.6 The quality of management in Brazil, India, and China 654.7 Boards of directors in the BRICs 668.1 WBCSD and econsense 139

10.1 European consulting market, 2010 18012.1 Conflicting features of Chinese regulations 21018.1 ECA supported global companies 31021.1 Sub-categories for corporate participation in CSR and their keywords 36326.1 Overview of private standard organizations 441

Notes on Contributors

Caner Bakir is Assistant Professor in the International Relations Department atKoc University, Istanbul, Turkey. He has worked as an Assistant Lecturer in theAccounting and Finance Department at Monash University, Melbourne. Prior tothis, he worked as a banking specialist. His areas of research include institutionalanalysis, public policy, globalization, and governance. His work has been publishedin a number of leading journals including Governance and Public Administrationand he has published a book with Bilgi University Press. His researches have beensupported by the Scientific & Technological Research Council of Turkey (TUBITAK)and COST ACTION ISO905 (European Cooperation in Science and Technology).Bakir received the Incentive Award in Political Science awarded by TUBITAKin 2010.

Stephen Bell is Professor and former Head of the School of Political Science andInternational Studies at the University of Queensland. He is a Fellow of the Academyof Social Sciences in Australia. His recent books include The Rise of the People’sBank of China: The Institutional Development of China’s Financial and MonetarySystem and Rethinking Governance: The Centrality of the State in Modern Society.He is currently working on two Australian Research Council funded projects, oneon banking reform in China and the other on the performance of banks in the globalfinancial crisis.

Patrick Bernhagen is Professor of Political Science at Zeppelin University, Germany,and Senior Lecturer in Politics and International Relations at the University ofAberdeen, United Kingdom. His main research interests are the political partici-pation of citizens and firms as well as their strategies and success in gaining politicalinfluence. He is the author of The Political Power of Business: Structure and Informa-tion in Public Policymaking (2007) and co-editor (with Christian Haerpfer, RonaldInglehart, and Chris Welzel) of Democratization (2009).

xiv NOTES ON CONTRIBUTORS

Pamela Blackmon is Assistant Professor, Department of Political Science at PennState Altoona. Her research focuses on the policies of the international financialinstitutions, and she is currently examining the role of export credit agencies ininternational trade and finance. Her articles have been published in InternationalStudies Review, Women’s Studies, and Central Asian Survey, in addition to variousbook chapters including a review essay in volume VI of the International StudiesEncyclopedia. Her first book, In the Shadow of Russia: Reform in Kazakhstan andUzbekistan, was published in 2011.

Frank Boons is Associate Professor in the Department of Public Administration atErasmus University Rotterdam, The Netherlands, and Director of the off-campusPhD program on Cleaner Production, Cleaner Products, Industrial Ecology andSustainability. He is subject editor, Governance of Material and Energy Flows, ofthe Journal of Cleaner Production.

Sherri Brown has a PhD in Political Science from McMaster University, and was a2007–2011 Trudeau Foundation Doctoral Scholar and SSHRC Canada GraduateScholar, with a research specialization in political economy and global health policy.She is currently a postdoctoral fellow at the University of California–San Francisco,with the Center for Tobacco Control Research and Education and the CardiovascularResearch Institute. Her current research explores the roles and impacts of tobacco,food and beverage, and alcohol companies in health policy processes in low- andmiddle-income countries.

Tanja Bruhl is Professor of Political Science at Goethe–University Frankfurt, focusingon international institutions and peace processes. Her main areas of research includeglobal governance; peace and conflict studies; and international environmental poli-tics. Notable publications are, inter alia: Nichtregierungsorganisationen als Akteureinternationaler Umweltverhandlungen (2003), and “Representing the People? NGOsin International Negotiations,” in Kristina Hahn and Jens Steffek (eds), EvaluatingTransnational NGOs: Legitimacy, Accountability, Representation (2010).

Cantay Caliskan is a graduate student in the Department of International Relations atKoc University, Istanbul, Turkey. His main research interests are political economy,the politics of Cyprus, and renewable energy.

Hevina S. Dashwood is Associate Professor of Political Science at Brock University,Canada. Dashwood’s broad research interests encompass private global governance,corporate social responsibility (CSR), and international development. Dashwood’scurrent research program is concerned with CSR adoption in the global mining sec-tor, the dissemination of global standards specific to mining and the translation ofglobal CSR standards at the local level in the developing country context. Dash-wood has numerous book chapters and articles in peer-review journals related toCSR and mining, including Canadian Journal of Political Science, Canadian Journalof Development Studies, Business and Society Review, and Business and Society(forthcoming). Dashwood’s recent book is The Rise of Global Corporate SocialResponsibility: Mining and the Spread of Global Norms (2012).

Deborah Elms is Head, Temasek Foundation Centre for Trade and Negotiationsand Senior Fellow of International Political Economy at the S. Rajaratnam School

NOTES ON CONTRIBUTORS xv

of International Studies at Nanyang Technological University, Singapore. Dr Elmsparticipates in teaching, research, and networking. Her research interests are negotia-tions and decision-making, particularly in trade. She also conducts a range of teachingand training for government officials from around Asia, for members of parliament,for business leaders, and for graduate students. She has provided consulting to thegovernments of Abu Dhabi, Sri Lanka, Cambodia, Taiwan, and Singapore on arange of trade issues. Dr Elms received a PhD in political science from the Universityof Washington, an MA in International Relations from the University of South-ern California, and a BA and BS from Boston University in international relationsand journalism.

Matthias Finger holds a PhD in Political Science and a PhD in Adult Education fromthe University of Geneva. He has been an Assistant Professor at Syracuse Univer-sity (New York), an Associate Professor at Columbia University (New York), and aFull Professor of Management of Public Enterprises at the Swiss Federal Institute ofPublic Administration. Since 2002, he holds the Chair of Management of NetworkIndustries at the Ecole Polytechnique Federale in Lausanne, Switzerland. Since 2010he has also been a part-time Professor at the European University Institute in Flo-rence, Italy, where he directs the Florence School of Regulation’s Transport Area.His main research interest is on the liberalization, re-regulation, and governanceof infrastructures in the transport, energy, and communications sectors. He is theco-editor-in-chief of the journal Competition and Regulation in Network Industries.

Ann Florini is Professor of Public Policy, School of Social Sciences, Singapore Man-agement University. She is also Non-resident Senior Fellow in the Foreign PolicyStudies Program at the Brookings Institution in Washington, DC. She is internation-ally recognized as an authority on new approaches to global governance, focusingon the roles of information flows, civil society, and the private sector in address-ing global issues. Her books include China Experiments: From Local Innovation toNational Reform (with Hairong Lai and Yeling Tan, 2012); The Right to Know:Transparency for an Open World (2007); The Coming Democracy: New Rules forRunning a New World (2003; 2005); and The Third Force: The Rise of Transna-tional Civil Society (2000). She has published numerous scholarly and policy articlesin such journals as Energy Policy, Global Governance, Global Policy, InternationalSecurity, International Studies Quarterly, and Foreign Policy. Dr Florini received herPhD in Political Science from UCLA and a Masters in Public Affairs from PrincetonUniversity.

Luc Fransen is Assistant Professor at the Institute for Public Administration at LeidenUniversity and Jean Monnet Fellow at the European University Institute. He recentlypublished his monograph Corporate Social Responsibility and Global Labor Stan-dards (2012) and has published research articles in amongst others Socio-EconomicReview, Governance, Organization, and Review of International Political Economy.His research focuses on the transnational governance of social and environmentalstandards, international labor policy, corporate social responsibility, and the strate-gies of civil society organizations.

Doris Fuchs is Professor of International Relations and Development at the Univer-sity of Muenster, Germany. Her primary areas of research are corporate structural

xvi NOTES ON CONTRIBUTORS

and discursive power, private governance, sustainable development/consumption,and food politics and policy. Among her publications are Business Power in GlobalGovernance and An Institutional Basis for Environmental Stewardship, as well asarticles in peer-reviewed journals such as Millennium, Global Environmental Poli-tics, Business and Politics, International Interactions, Journal on Consumer Policy,Agriculture and Human Values, Food Policy, and Energy Policy.

Andrea Goldstein is the Senior Economic Affairs Officer at the Office for East andNortheast Asia of the UN Economic and Social Commission for Asia and the Pacific.He is on leave from the OECD, where he served in various capacities, including asDeputy Director of the Heiligendamm L’Aquila Process (the G8–G5 political dia-logue) Support Unit. Andrea also worked at the World Bank Group and studied atBocconi, Columbia, and Sussex Universities. He has published widely on emergingeconomies – including BRIC (2011), emerging multinationals, including Multina-tional Companies from Emerging Economies: Composition, Conceptualization andDirection in the Global Economy (2007, 2009) – and the impact of the emergence ofChina and India on other developing countries. He has published in refereed journals,including the Asian Development Review, Business History, Cambridge Journal ofEconomics, CEPAL Review, Industrial and Corporate Change, Journal of ChineseEconomic and Business Studies, Journal of World Business, Transnational Corpo-rations, and The World Economy. He has also published op-eds in the FinancialTimes, Helsingin Sanomat, Le Monde, South China Morning Post, La Repubblica,and Corriere della Sera. He is a frequent contributor to www.lavoce.info.

Matthias Hofferberth is Assistant Professor for International Relations at the Uni-versity of Texas, San Antonio. His research and teaching interests lie in the fields ofglobal governance and multinational enterprises, as well as in international relationstheory and norms. His recent publication is “The Binding Dynamics of Non-BindingGovernance Arrangements: The Voluntary Principles on Security and Human Rightsand the Cases of BP and Chevron,” Business and Politics, 13 (4), 2011.

Sung-Young Kim is Lecturer in the Department of Political Studies at the Uni-versity of Auckland, New Zealand. His expertise is industry strategy in East Asiaand his work has been published in a number of prestigious journals includingReview of International Political Economy and New Political Economy. He is cur-rently working on a book project entitled Telecommunications Inc.: Korea’s Chal-lenge to Qualcomm, while also undertaking research on Green Growth strategies inEast Asia.

Nina Kolleck is a postdoctoral researcher and lecturer for sustainability governanceat the Departments of Political and Educational Sciences and Psychology at the FreieUniversitat Berlin in Germany. She studied Political Science, Economics, and PublicLaw in Potsdam (Germany), Caen (France), and Quito (Ecuador) and holds a PhDin Political Science from the Freie Universitat Berlin.

Sarianna M. Lundan holds the Chair in International Management and Governanceat the University of Bremen in Germany. She received her PhD from Rutgers Uni-versity (United States), and has held prior appointments at the University of Read-ing (United Kingdom), and at Maastricht University (The Netherlands). She is an

NOTES ON CONTRIBUTORS xvii

Associate Research Fellow at the Research Institute of the Finnish Economy (ETLA)in Helsinki, and a founding member of the Center for Transnational Studies (Zen-Tra), a joint initiative of the Universities of Bremen and Oldenburg. She has pub-lished widely in journals and books, and has co-authored with John H. Dunningthe second edition of Multinational Enterprises and the Global Economy, which hasbecome an influential reference work in the field of international business. She hasalso participated extensively in the work of UNCTAD in connection with the WorldInvestment Reports and the Investment Policy Reviews. She is an elected Fellow ofthe European International Business Academy (EIBA), and serves on several editorialboards, including the Journal of International Business Studies, Multinational Busi-ness Review, and the Global Strategy Journal. Her current research interests focuson the co-evolution of multinational enterprises and the institutional environment inwhich they operate.

Kate Macdonald is a Lecturer at the University of Melbourne, having held previouspositions at the London School of Economics and Political Science, the AustralianNational University, and Oxford University. Her research focuses on the politics oftransnational production and business, with a particular focus on social, labor, andhuman rights regulation of global business.

John A. Mathews is Professor of Strategic Management at Macquarie GraduateSchool of Management, Macquarie University, Sydney. He is concurrently Eni Chairof Competitive Dynamics and Global Strategy at LUISS Guido Carli University,Rome. He is the author of several books including Strategizing, Disequilibrium andProfit (2006), Dragon Multinational: A New Model of Global Growth (2002), andTiger Technology: The Creation of a Semiconductor Industry in East Asia (2000),this latter appearing in a Chinese translation. His most recent contribution to thedebate over future directions for strategy and entrepreneurship studies is his paper“Lachmannian Insights into Strategic Entrepreneurship: Resources, Activities andRoutines in a Disequilibrium World,” published in the journal Organization Studiesin February 2010. Professor Mathews’ research has increasingly focused on theinterrelated topics of low-carbon economy, renewable energy and the industrialdynamics of transition away from fossil-fueled systems; on industrial clusters andnetworked development; and on the rise of China in the global economy. Papersaddressing these topics recently published include “China’s Moves towards Adoptinga Circular Economy” in Journal of Industrial Ecology; and “Mobilizing PrivateFinancing to Drive an Energy Industrial Revolution” in Energy Policy. A book-length treatment of the Next Great Transformation: The Greening of Capitalism,is currently under review. Prior to this latest emphasis, his research focused on theinternationalization of firms from the periphery, taking advantage of opportunitiescreated by globalization, and expounded in such publications as those related to“Dragon Multinationals,” and on patterns of technological learning in the newlyindustrializing countries of East Asia, with emphasis first on high-tech industries likesemiconductors and flat panel displays, and latterly on renewable energies and solarphotovoltaic systems.

John Mikler is Senior Lecturer in the Department of Government and InternationalRelations at the University of Sydney. His research interests are primarily focused on

xviii NOTES ON CONTRIBUTORS

the role of transnational economic actors, particularly multinational corporations,and the interaction between them and states, international organizations, and civilsociety. He is the author of Greening the Car Industry: Varieties of Capitalism andClimate Change (2009), and has published widely in journals including Business andPolitics, Regulation and Governance, Global Society, Policy and Society, CambridgeJournal of Regions, Economy and Society, and New Political Economy.

Terry O’Callaghan is a Senior Lecturer at the University of South Australia. Hisresearch focuses on political risk in mining and infrastructure sectors, primarilyin the Asia-Pacific region. He is Director of the Centre for International Risk atUniSA and has an interest in the study of multinational corporations. He is currentlyfinishing a book on reputation risk.

Tony Porter is Professor of Political Science at McMaster University in Hamilton,Canada. His books include Globalization and Finance (2005), Technology, Gover-nance and Political Conflict in International Industries (2002), Private Authority inInternational Affairs (1999), co-edited, with A. Claire Cutler and Virginia Haufler,and The Challenges of Global Business Authority: Democratic Renewal, Stalemate,or Decay? (2010), co-edited with Karsten Ronit. He is currently co-authoring, withHeather McKeen-Edwards, Transnational Financial Associations and the Gover-nance of Global Finance: Assembling Power and Wealth.

Denis Saint-Martin is an expert in public administration and policy. Since 2008, hehas been the director of the European Union Centre of Excellence at the Universitede Montreal and McGill University. His research interests deal with the regulation ofethics in politics, continuity and institutional change, new public management, andthe politics of expertise. In 2005, he was a Fulbright scholar at the Kennedy School ofGovernment and before that was a policy advisor in the Office of the Prime Ministerof Canada.

Shana M. Starobin is a PhD candidate at the Nicholas School of the Environ-ment and a Graduate Fellow at the Kenan Institute for Ethics at Duke Univer-sity. Her most recent publication, “The Search for Credible Information in Socialand Environmental Global Governance: The Kosher Label,”appears in the journalBusiness and Politics. Her current research interests include the transnational reg-ulation of food and agriculture and its implications for rural livelihoods and theenvironment. She received her A.B. magna cum laude from Harvard College, andshe completed a joint Masters in Public Policy and Environmental Managementat Duke.

Marianne Thissen-Smits is a PhD candidate in Politics and International Relationsat the University of Aberdeen, United Kingdom. Her research focuses on corporatesocial responsibility of transnational firms in a cross-country perspective. Prior toher PhD studies she worked as an Inspector for Health, Safety, and the Environmentfor the Dutch Mining Authorities and as a consultant for UNICEF (Kazakhstan),Shell (Oman), and Delta Environmental Logistics (Nigeria).

Vlado Vivoda is a Research Fellow at Griffith Asia Institute, Griffith University, inBrisbane, Australia. He has published widely on the topics related to the interna-tional political economy of extractive industries. His current research focus is on

NOTES ON CONTRIBUTORS xix

the political economy of mining and energy sectors, and on energy security in theAsia-Pacific region.

Hinrich Voss is a Roberts Academic Research Fellow at the Centre for Interna-tional Business University of Leeds (CIBUL). He is interested in the internationalbusiness strategies of multinational enterprises (MNEs) from developed and devel-oping countries. Within this context he researches the internationalization and theinternational competitiveness of mainland Chinese companies. This research strandincorporates the influence of China’s institutions on the international investmentbehavior of Chinese firms. He is also interested in how emerging market MNEs areaffected by climate change policies and the institutional objectives to move towards.His research has been published in the Journal of International Business Studies,Management International Review, International Business Review, and the ChineseAcademy of Social Science journal China & World Economy. In 2011, he publishedhis monograph “The Determinants of Chinese Outward Investment.” Dr Voss hasbeen involved in research projects for UK Trade and Investment (China’s RegionalCities) and Nestle and received external research and travel funding from the EU, theBritish Economic and Social Research Council, the Sino-British Fellowship Trust, andthe Worldwide Universities Network. Before joining CIBUL, he was a PostdoctoralResearch Fellow at the White Rose East Asia Centre/National Institute for ChineseStudies. Dr Voss has been Visiting Researcher at the universities of Nanjing andSydney. He is the Academic Leader of the Worldwide University Network Contem-porary China Center (WUN CCC), Head of the advisory board of the NetImpactChapter of LUBS, and ad hoc expert for the Europe China Research and AdviceNetwork (ECRAN) and the EU SME Center, Beijing.

Stephen Wilks is Professor of Politics and former Deputy Vice Chancellor at theUniversity of Exeter. He was a member of the UK Competition Commission andis currently a member of the UK Competition Appeal Tribunal. He has writtenextensively on government–industry relations and competition policy. His latest bookis The Political Power of the Business Corporation forthcoming in 2013.

Cornelia Woll is Research Professor at Sciences Po Paris and co-directs the MaxPlanck Sciences Po Center for Coping with Instability in Market Societies (MaxPo)and the Interdisciplinary Center for the Evaluation of Public Policy (LIEPP). Herresearch focuses on international and comparative political economy, in particularbusiness-government relations, trade, financial regulation, and European politics.She is the author of Firm Interests: How Governments Shape Business Lobbying onGlobal Trade (2008) and co-editor with Ben Clift of Economic Patriotism in OpenEconomics (2012). Her current book manuscript analyzes the recent bank bailoutsin the United States and the European Union.

Shiufai Wong is Associate Professor at Macao Polytechnic Institute. He was VisitingAssistant Professor at Oklahoma State University and Senior Research Associate atCity University of Hong Kong after receiving his PhD in Government and Interna-tional Relations from the University of Sydney. He also has a decade-long experiencein China and Asian markets, working for a German infrastructure consortium in itsdealings with central and local governments. He has published more than a dozenarticles on the state and governance.

xx NOTES ON CONTRIBUTORS

Simon Zadek is writing in his independent capacity, and is Senior Fellow at theGlobal Green Growth Institute, and Senior Advisor at the International Institutefor Sustainable Development. He is the founder and was the Chief Executive ofAccountAbility, and until recently a non-resident Senior Fellow at Harvard’s J.F.Kennedy School for Government. His book, The Civil Corporation, was awardedthe Academy of Management’s Social Issues in Management Award in 2006.

Preface

Policy is not something that is exclusively a matter for nation states. Nor is globalpolicy purely a matter of concern for the international and intergovernmental orga-nizations to which they belong. Each volume of the handbooks in this series ofHandbooks of Global Policy focuses on particular policy areas (such as global trade,global social policy, and global health policy) or on issues (such as global inequalityand poverty, and global migration), and all focus on institutions and governance.However, this Handbook explicitly focuses on perhaps the most important non-state actors that impact on and drive global policy processes and outcomes: globalcompanies.

As they have grown and become increasingly multinational in their operations,global companies have taken on the mantle of central organizers of the global econ-omy in addition to national economies. They control global markets and industrysectors, and are determiners of “who gets what” and therefore of social outcomes.The relationship that they have with the governments of nations and their citizensis central to any study of global policy. How odd it is then, that aside from studiesof international business and management they remain relatively under-studied bycomparison to the state and society. In particular, in the fields of international rela-tions and comparative politics, and their related sub-fields, it is notable that studyingglobal companies as complex and purposive political and social actors, in additionto economic ones, is still a relatively “cutting edge” endeavor. As I have noted else-where, while states and social movements are relatively well drawn, it remains thecase that global companies are too often sketched as economic mechanisms of profitmaximization, responding to market imperatives and regulations, and sometimesseeking to modify both, given their power to do so.

Global companies are so much more complex than this though. The authors ofthe chapters in this Handbook see them as political, social, and cultural, as wellas economic entities, and examine their centrality in debates about global policy inthis light. Some of the authors are emerging scholars. Others are well-established

xxii PREFACE

names in their fields. I am flattered to have been given the opportunity to approachthem and to find myself in their company, and I thank them unreservedly for theirexcellent contributions. While there were several senior colleagues who warned methat taking on such an endeavor would be both time consuming and stressful, intruth thanks to the quality and timeliness of the chapters contributed it has largelybeen a delight.

As is always the case in any such project, there are many others who deservemention. Inevitably, I am bound to leave someone out, and I hope they will forgivetheir unintended omission. My greatest thanks go to David Held, General Editor forthe Handbooks of Global Policy series, for his helpful advice and guidance. I amparticularly appreciative of the constructive, positive, and timely manner in whichthis has been offered – his kind words of encouragement and support have helpedmake the whole endeavor easier. For their support and advice on how to bring thewhole Handbook together, and strategies for managing the processes involved, Ialso thank Ariadne Vromen, Diarmuid Maguire, Graeme Gill, Rodney Smith, andDavid Schlosberg. For both their words of encouragement and advice on poten-tial contributors, I would particularly like to thank Linda Weiss, Susan Sell, SolPicciotto, Natalia Nikolova, Miranda Schreurs, Jennifer Clapp, Claudio Radaelli,Kelly Kollman, Aseem Prakash, Michael Edwards, and Robert Wade. I also wish tothank the staff of Wiley-Blackwell for all their support and advice, particularly BenThatcher, Justin Vaughan, Sally Cooper, and Karen Raith. As always, I thank mywife, Kara, for her seemingly limitless understanding, much appreciated suggestions,and patience.

The opportunity in editing this Handbook was to present contemporary thoughtand analysis on the rise of companies that are more global than national, or aresubstantially transnational in their operations, with this in the context of a wide-ranging set of volumes on specific aspects of global policy and governance. In theprocess I have been given the chance to approach those whose work I have longadmired, and to become acquainted with those whose research marks them as newand important voices in the field. I can think of no greater pleasure, and I hope thatthe readers of the Handbook will find it as useful and informative as I have enjoyedediting it.

John MiklerUniversity of Sydney, Australia

Chapter 1

Global Companies as Actors in GlobalPolicy and Governance

John Mikler

Introduction

Globalization is the master concept of our time, invoked to describe the way inwhich the vast transborder flows of capital, goods, ideas, and people are transform-ing society, politics, and economics. However, it is unfortunately the case that thecentrality of global companies as actors in this process of transformation, and a com-plex understanding of the role they play in respect of it, remains more a matter of apriori assumptions in much of the globalization literature. In assuming corporationsare primarily “mechanisms” for profit maximization, from a policy and governanceperspective anything they do beyond this is usually seen as resulting from threats totheir financial performance via penalties for non-compliance with regulations, or tax-ing their products so that changes in market forces present them with no alternativebut to change what they offer consumers. Alternatively, incentives are required suchas subsidies for new products (e.g. research and development tax breaks), or newopportunities stemming from market mechanisms (e.g. emissions trading schemes).This is made more difficult in a global context, given the structural power of globalcompanies that undermines national efforts to regulate them in the public interest.

Depending on the issues and the circumstances, this may all be true to a greateror lesser extent, but such a simplistic rendering of global companies does not conveyenough about their underlying motivations. As their role as agents of globalizationhas come to be better understood, their motivations are increasingly the subjectof much deeper and complex analysis. In particular, many scholars, including thecontributors to this Handbook, are now addressing their relative under-constructionby comparison to studies of the state and society. They analyze them as not justpurely economic, but as political and social actors, and not just for the impacts theyhave, but the outcomes they drive.

The Handbook of Global Companies, First Edition. Edited by John Mikler.C© 2013 John Wiley & Sons, Ltd. Published 2013 by John Wiley & Sons, Ltd.

2 GLOBAL COMPANIES AS ACTORS

The intention in this introductory chapter is to lay some initial foundations andset the scene for the contributions by these scholars in the chapters to follow. Whereglobal companies are located in the waves of theorizing globalization is consideredinitially, before considering how global companies matter as actors in global policyand governance. With a sense of them in this respect, just who and what they are thatthey matter in this regard is then outlined in order to set the scene for an overviewof the parts and chapters to follow.

The State Is Not Yet Dead and the Market Is Not “in Charge”

Much of the early globalization debates revolved around the manner in whichimpersonal market forces, rather than states, were increasingly “in charge.” As theredoubtable Susan Strange put it, “where states were once the masters of markets,now it is markets which, on many crucial issues, are the masters over the govern-ments of states” (Strange 1996: 4). In the aftermath of the Cold War, this was seenas an inevitable result of the irresistible “forces” of globalization by authors suchas Fukuyama (1992) and Ohmae (1990) who saw a world of laissez faire capi-talism and the “inevitability” of neoliberal market deregulation and privatizationthat went with it. The view of these hyperglobalists, as they are now often called,was popularized by Friedman’s (1999: 87) declaration that all states had no alter-native but to don their “golden straightjackets” in recognition that globalizationmeans “your economy grows and your politics shrinks.” They could try to puton other “clothes,” but not only would they be unfashionable, they would sufferthe consequences as the market chastised them for so doing with all the economic,social, and political pain that would be inflicted as a result. As such, many com-mentators actually foresaw the death of the state. Those on the left of the politicalspectrum despaired of the prospect, while those on the right celebrated it, but inbetween the extremes there was a growing acceptance of the proposition that stateswould increasingly function (rather than rule) in a passive, facilitative role as theplaces where global market imperatives were played out, and in this respect theywould serve as “merely the handmaidens of firms” (Strange 1997: 184; see alsoCrouch 2004).

What a load of “globaloney” retorted others (Hay and Marsh 2000: 6)!1 Skeptics,such as Hirst and Thompson (1996) and Weiss (1998) who famously dismissed the“myth of the powerless state,” subsequently attacked the hyperglobalists’ zeal forthe inevitability of free market capitalism writ large on the world. Their skepticismwas not so much ideological, as it was based on a critique of what seemed a muchtoo sweeping and disembodied account of globalization. In particular, they pointedout that the governments of nations remain very much drivers of the processes andoutcomes of governance, as did those who followed them (e.g. see Bell and Hindmoor2009; Drezner 2007; Weiss 2003). While many stressed the way the marketizationof all aspects of society and state functions has produced a neoliberal form of thestate, scholars in this vein stressed the way that states have embraced markets asa policy choice rather than having it thrust upon them (e.g. see Tiberghien 2007;Thatcher 2007). Indeed, there has been a vast literature since Vogel’s (1996) FreerMarkets More Rules that examines the marketization of the functions of the state asa process of reregulation rather than deregulation.

GLOBAL COMPANIES AS ACTORS 3

As for the ideological aspects underpinning globalization, many scholars have rec-ognized the power of the idea, and the political impact of leaders who enthusiasticallyembraced the neoliberal market reforms that sprang from it. For example, MargaretThatcher did her best to institutionalize this view given her much cited “TINA” prin-ciple: There Is No Alternative to the free market. Ronald Reagan agreed, as did worldleaders of more left-leaning political persuasions who followed, such as Bill Clintonwhose 1992 presidential campaign was marked by the phrase “it’s the economystupid” to excuse his administration’s likely impotence in the face of global marketforces. In a similar vein, on taking office as Britain’s new Labour Prime Minister in1997 Tony Blair said that “the determining context of economic policy is the newglobal market,” which Ralston Saul (1997: 21) cheekily translated as “don’t worry,I won’t be able to do much.” Even so, they were skeptical that there was anythingparticularly new about globalization. As Wade (1996) pointed out, those predisposedto embrace the inevitability of the market being in charge and the demise of the statehave been predicting this for at least the last two hundred years. For example, writersof the early to mid-nineteenth century envisaged “a single, more or less standardizedworld where all governments would acknowledge the truths of political economyand liberalism would be carried throughout the world” (Hobsbawm 1977, quotedin Wade 1996: 61).

Where are corporations in this debate? As authors such as Culpepper (2011) andFuchs (2005) note, too often they go missing in what amounts to a states-versus-markets account, with more focus on the states and a priori assumptions aboutthe markets. The politics of global capitalism is more complex than this, and thereality is that as key agents of global integration, global companies are central to anunderstanding of the transformations underway in the policy process and new formsof governance that are the outcome of the increasingly globalized world in which welive. After all, the complex independence that underlies the concept of globalizationcalls for a study of the continually evolving relationship between state and non-stateactors, rather than claiming the loss of sovereignty by states to “markets.” Therefore,focusing on global companies as the dominant private actors driving the processes ofglobalization grounds the debate as it re-embodies the forces for change as opposedto the shrill pronouncements of those who declared the inevitable death of the stateon the altar of global forces that are “out there” beyond their control.

Considering global companies also shifts the focus to the processes by whichglobal politics is being transformed. Globalization is a dynamic concept. As the termimplies, it is a set of processes not an outcome. It is not an “ism” but a processof “ization.” Seen in this light, authors such as Held et al. (1999), Dicken (2007),Hay and Marsh (2000), and contributions to be found in collections such as Heldand McGrew (2003) are emblematic of those who embrace a contemporary trans-formationalist perspective on the concept of globalization. They reject the epochalchange prophesized by the hyperglobalists, but while sharing the concerns of theskeptics they have a dynamic perspective on the question of state sovereignty, in thesense that they see states’ political agency as increasingly relying on them sharingsovereignty with each other in order to retain it, as well as with non-state actors suchas global companies that are themselves agents of the transformation underway.Theirs is an institutional and relational conception of globalization through whichpolitical agency is being reconstructed as a result of the processes of transformation

4 GLOBAL COMPANIES AS ACTORS

driven by the actors involved. As such, an actor-centered basis for analysis serves usbest in understanding this as it is not that disembodied market “forces” have takenover, but that in a more interdependent world there are more actors involved, andglobal companies are central among these.

The Dominance of Global Companies

The myth that markets are and should be in charge has long been propoundedby those who would attack the state. The “father of liberalism,” Adam Smith, wasamong the first to lead such an attack with his reference to the governing power of themarket’s invisible hand. The invisible hand he referred to was an allegorical one, butit came to be accepted as real and inevitable. In Mikler (2012) I have argued that theveracity of “the market” as a concept for understanding global economic relationsshould be more widely debated than it often is. This is because rather than beingbuffeted by the competitive forces of global markets that the hyperglobalists assertedwere now in charge, the reality is that the global economy is highly concentrated andoligopolistic. All the world’s major industrialized sectors are now controlled by fivemultinational corporations (MNCs) at most, while 28% have one corporation thataccounts for more than 40% of global sales (Harrod 2006: 25; see also Fuchs 2007).

A basic measure of the size and power of these corporations is given by theirannual sales revenues in comparison to the national incomes and expenditures ofstates. Data from UNCTAD (2011) and the IMF (2011) indicates that in 2008 thetop 20 non-financial corporations’ sales were worth US$4.3 trillion, equivalent tothe combined national expenditure of the bottom 163 states, and greater than thecombined gross domestic product (GDP) of the bottom 137 states. These are aston-ishing figures, given that there are currently 192 states in total. On the basis of GDP,many of the top 20 corporations are as large as middle-income or emerging statessuch as Chile, Algeria, and the Philippines. On the basis of national expenditure, theyare as large as many of the top 30 high income states. Only the world’s largest andmost influential economic powerhouses, such as the United States, Germany, Japan,and (relatively recently) China may be said to rival them.2 It may also be noted thatin 2008 the United Nations had a budget of just US$4.2 billion (United Nations2007), and perhaps more pertinently, given that it describes itself as “the only globalinternational organization dealing with the rules of trade between nations” (WTOn.d.a), the World Trade Organization (WTO) had a budget of just US$171 mil-lion (WTO n.d.b).3 These global companies are much larger than not only manyof the world’s most powerful nations, but also the international organizations towhich they belong that are supposed to make “rules for the world” (Barnett andFinnemore 2004).

Global companies are therefore vast conglomerates that underpin not just wholenational economies, but the world economy. The decisions they make have flow-oneffects to other industries and industrial sectors. For example, 5 of the world’s top 30non-financial corporations are car firms. They dominate the automotive sector whichaccounts for 4% to 8% of GDP and 2 to 4% of the labor force in OECD countries.The industry’s importance is then further magnified in particular states and regions.In the United States, car manufacturing employs 14 million people either directly orindirectly in component suppliers and related industries, contributes 6% to private

GLOBAL COMPANIES AS ACTORS 5

sector GDP overall and as much as 20% in some regions. In the EU, the car industryaccounts for 9% of manufacturing value added and directly or indirectly employsover 12 million. In Japan, 7.1 million people are employed by the industry directlyor indirectly, and it accounts for 11% of total manufacturing output (UNEP andACEA 2002; see also UNEP 2002). Market forces are not in charge on the basis ofthe disembodied laws of Smith’s invisible hand, but the embodied interests of globalcompanies such as these.

The same may be said of Ricardian comparative advantage, because it has longbeen recognized that the majority of trade between developed countries is intra-firmrather than inter-state in nature (e.g. see Karliner 1997; Grubel and Lloyd 1975).Already by the 1990s, as much as 60 to 70% of trade in manufactured goods betweenOECD countries was intra-firm (Bonturi and Fukasaku 1993; see also Bardhan andJaffee 2005; Strange 1996).4 The reality is that trade data are less a reflection ofnational comparative advantage, and more of the internal corporate strategies of ahandful of global companies and the global supply chains they control. No wonderthe Director General of the WTO, Pascal Lamy, recently enjoined corporate leaders toassist in maintaining and crafting future rules for international trade and investmentin the following terms:

It no longer suffices that you trade while relying on governments to craft the regulatoryframework for you in the WTO through which your trade relations would take place.You must provide the “evidence,” through your trade experience, of what is actuallyhappening on the ground, and must guide us in how to make things better. (WTO 2011)

According to authors such as Sell (2003), they have already taken up his offer.In the context of her analysis of the manner in which the WTO’s Trade RelatedAspects of International Property Rights agreement was largely fashioned by, andin the interests of, the world’s major corporations, she quotes James Enyart, formerDirector of International Affairs for Monsanto, as saying that “the rules of interna-tional commerce are far too important to leave up to government bureaucrats” (Sell2003: 96).

Scratching the surface, and in so doing removing the veneer of abstractions suchas “markets” and “competition” in them, the implications of a global economydominated by large, powerful, multinational corporations is that rather than Smith’sinvisible hand of the market, a visible handful of global companies straddle the globe“freed . . . from the restraints of classical competition” (Harrod 2006: 25).

The Geopolitics of Global Companies

Just as power is not globally diffuse in markets, nor is it the case that global companiesthemselves are everywhere and nowhere. Despite over sixty years of a supposedlyglobal liberal agenda, it remains the case that rich, industrialized countries stillaccount for 80% of world output, 70% of international trade and make up to 90%of foreign direct investments (Chang 2008: 32). But to be more accurate, it is thecorporations from these countries that do so. The FT Global 500 companies5 areresponsible for 30% of world output, 70% of international trade and at least 80%of the world’s stock of foreign direct investment, and they are not placeless entities.

6 GLOBAL COMPANIES AS ACTORS

A third of them are headquartered in the United States, and the top 10 states byheadquarters account for 79% of them. They are (in order) the United States, China,Japan, the United Kingdom, France, Canada, Germany, India, Switzerland, andAustralia (Financial Times 2011; see also Rugman 2000; Bryant and Bailey 1997).

Those still adhering to the hyperglobalization perspective will be keen to pointout even so there is an inevitable process of transnationalization underway, but thisis only true up to a point. First, the change so far has been extremely gradual. TheUnited Nations Conference on Trade and Development’s (UNCTAD) transnation-ality index (TNI) is a measurement of corporations’ transnationality, and is a simplecomposite average of foreign assets, sales and employment to total assets, sales andemployment. The average TNI for the world’s top 100 MNCs grew from 52 to59 between 1993 and 2008 (UNCTAD 2011; Dicken 2007),6 so that at this rateit will be another 30 to 40 years before their average TNI reaches 75%. Secondly,such global trends mask national specificities. For example, the average TNIs of US,German, and Japanese firms in the top 100 MNCs are just 51, 55 and 52 respectively(UNCTAD 2011), so that on average the largest corporations headquartered in theworld’s major industrialized nations retain half their sales, assets, and employmentat home. Thirdly, it is by no means certain that the gradual long-term trend towardsgreater corporate transnationality is irreversible. Corporations have certainly con-structed elaborate supply chains to benefit from the weaker standards, lower wages,more “flexible” conditions and general financial benefits of internationalizing theiroperations. However, as the opportunities for efficiencies shrink with the develop-ment of the states in which these companies have invested, such as China and India,and as the rising cost of oil and carbon emissions must ultimately be factored intocorporate strategic decision-making, local rather than global strategies may becomeincreasingly attractive (e.g. see Economist 2011). Even if this does not involve awholesale rush back to corporations’ home bases, it may produce a rationalizationof their supply chains.

This raises the point that it is not just the location of existing global companiesthat is important, but the states and regions from which new ones are emerging.Chinese and Indian companies in particular are moving rapidly to take their placeon the world stage, and this mirrors the rapid emergence of China and India aseconomic powers. It is no longer as true to say that “a statistical profile for thecurrent corporation indicates that it is predominantly Anglo-American” (Harrod,2006: 27–28), but it remains the case that the home bases of the world’s largest cor-porations are like a map of global economic power, both established and emerging.Global companies emerge from, and have their headquarters in, distinct territoriesfrom which they then impact on others, and just where these places are is alsoundergoing transformation.

This is certainly true of ownership and control, which has long been recognized asremaining very much national rather than multinational or global. This is illustratedby considering the car industry. Despite often being taken as “a paradigm caseof a globalised industry” (Paterson 2000: 264) because it is dominated by globalcompanies that manufacture and distribute products on an integrated global scale,Deutsch Bank’s (2004) overview of it demonstrates that mergers, takeovers, andcross-shareholdings mean that it is controlled by a shrinking handful of companies ofpredominantly North American, European, and East Asian nationality. Furthermore,