Impact of Tnc Towards Host Communities
“Transnational Corporation (TNCs) have frequently brought disaster to the local communities in whose regions they invest.” Debate the validity of this claim, with supporting evidence and reasoned arguments.
1.0 Introduction
TNC or also known as Multinational Corporation (MNC) is a decentralize-national company which primarily has locus of management controls over its subsidiaries in whose region they invest (Shinsato, 2005); (Stonehouse , 2000). Although many statements by Daniels, (2004) claimed that TNCs are perceived by host-country as salvation in their economic development, the pitfalls are yet to venture and catastrophe the local community eventually. Although TNC may not always viewed as catastrophes to the local community, this essay will intended to focus upon the occurrence of externalities brought by TNC in the aspect of political, economical, socio-cultural, technological and other aspects as well.
2.0 Clashes of Interest
TNC’s key decision-making over host-country’s economy triggered conflict of interest between TNC and local community as TNC has no real commitment towards local economic interest (Hill 2003, pg. 243) and tends to favour their PCN’s objectives. For instance, local community enforced MNC to provide and maintain job opportunity and at the same time, the local government urged TNC provides training to the local workforce and invest R&D activities in the host-country. On the other hand, MNC demands for reasonable tax revenues and reliefs from its subsidiaries operating in host-country (Bennett 1999, pg. 170).
Inability of both parties compromise to an agreeable point may result conflict of interests between TNC and local community, where host country failed to pursue its policy in securing its local community welfare due to insufficient leverage upon TNC decision-making (Dicken, 2009).
3.0 Practices of Bribery
According to Morimoto (2005, pg. 23), TNC engages bribery as medium to obtain favourable
1.0 Introduction
TNC or also known as Multinational Corporation (MNC) is a decentralize-national company which primarily has locus of management controls over its subsidiaries in whose region they invest (Shinsato, 2005); (Stonehouse , 2000). Although many statements by Daniels, (2004) claimed that TNCs are perceived by host-country as salvation in their economic development, the pitfalls are yet to venture and catastrophe the local community eventually. Although TNC may not always viewed as catastrophes to the local community, this essay will intended to focus upon the occurrence of externalities brought by TNC in the aspect of political, economical, socio-cultural, technological and other aspects as well.
2.0 Clashes of Interest
TNC’s key decision-making over host-country’s economy triggered conflict of interest between TNC and local community as TNC has no real commitment towards local economic interest (Hill 2003, pg. 243) and tends to favour their PCN’s objectives. For instance, local community enforced MNC to provide and maintain job opportunity and at the same time, the local government urged TNC provides training to the local workforce and invest R&D activities in the host-country. On the other hand, MNC demands for reasonable tax revenues and reliefs from its subsidiaries operating in host-country (Bennett 1999, pg. 170).
Inability of both parties compromise to an agreeable point may result conflict of interests between TNC and local community, where host country failed to pursue its policy in securing its local community welfare due to insufficient leverage upon TNC decision-making (Dicken, 2009).
3.0 Practices of Bribery
According to Morimoto (2005, pg. 23), TNC engages bribery as medium to obtain favourable
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