Multinational Companies from Emerging Economies

Goldstein, Andrea
Palgrave Macmillan, Basingstoke, 2009, ISBN: 978-0-230-57794-7, 205 pp.
Reviewed by or other comment: 

Vatsyayan, Amit

This book provides interesting insights into the broader environment within which multinationals from emerging economies operate, and it successfully links that context to the growth strategies and learning curves of these businesses. The author introduces the idea in the first chapter, although the summary is not very clear about why it is so important or indeed difficult to identify multinational corporations from emerging economies (EMNCs). One of the critical gaps, evident right from the first chapter, is the lack of analysis of these companies' impact on the societies in which they do business, in terms of both their origins and their operations.
Chapter 2 investigates some of the complexities involved in describing corporate nationality; the interesting example of Mittal Steel clearly illustrates the typical difference between an EMNC's political identity and its legal identity. However, in the latter part of the chapter the author becomes too narrowly focused on the technical data, and for the common reader who is not well versed in econometrics the plot starts slipping away.
Chapter 3 is dedicated to industry categorisation, and although the examples given are illuminating to some extent in themselves, the author fails to produce a picture that gives glimpses of any kind of categorisation beyond what is already known, i.e. extractive industries and non-financial services. Chapters 4 and 5 consider EMNCs from Asia and Latin America and provide very interesting examples and trends, explaining why some companies continue to rise, whereas others have either become less important players or have shrunk in size. The examples also link up the crucial roles which the respective governments have played in the growth or decline of these EMNCs. Chapter 6 explores the existing theories and their relevance to EMNCs; however, the inconclusive approach left this reviewer feeling lost: the author seems to have analysed all the theories but come to no conclusion about what would be appropriate in the event that none of these theories explained the realities of the EMNCs. Chapter 7 explores the role of the government in terms of policies and the political economy of the EMNCs, highlighting the continued role of government agendas the world over, both for and against the MNCs, but also exposing the pitfalls for EMNCs in terms of lack of accountability, state interference, and operating in unsavoury and at times unethical markets.
I had high expectations of Chapter 8, which explores 'some key questions', and to some extent issues such as the role of diaspora entrepreneurship in foreign direct investment (FDI), the challenge of multinational management, and financial market matters are dealt with. However, the book falls short on the analysis of some of the key aspects of EMNC impacts on society. It should have explored in greater depth the impacts on the informal economy, and what happens when an EMNC invests in some of the poorest regions. Does it lead to further erosion of labour rights? The author gives the example of Ramatex Namibia, but fails to give a well-articulated analysis of EMNCs with a background of differing accountability which can have far-reaching impacts on the stability of the relatively poorer countries where they are setting up their supply chains/manufacturing bases. The book does not explore innovative businesses which are selling to and procuring from the poor, or new approaches to sustainable development in the face of the climate-change debate.
The other disappointment for this reviewer was the book's complete neglect of the critical issues of gender relations and its failure to present or analyse gender-disaggregated data concerning how these companies have changed or reinforced gender stereotypes.
Chapter 9 explains the consequences for OECD governments, firms, and workers, and to some extent it does explain the consequences for the former; however, the concerns of workers are not analysed in terms of EMNC impacts on incomes and job security. Considering that these are some of the key drivers for political motivation, a comprehensive analysis of consequences for the workers as well as for OECD governments and firms is regrettably lacking.
Chapter 10 looks at conclusions and the way forward. Here, the author highlights some of the key similarities as well as dissimilarities between Western MNCs and EMNCs and also raises important questions about the structure, governance, and viability of EMNCs. It would have been useful if the author had set up an agenda for future research on the impact that the EMNCs might have beyond business and FDI, to look at some of the key future drivers of change in terms of social and environmental bottom lines.
Overall the book covers global issues in considerable depth and breadth, and presents well-analysed concepts. Its main strength is in putting up a convincing case by providing well-substantiated examples of issues that might otherwise be very complex and obscure. Although it is essential reading for anyone who wants to understand the current and future impacts of this new business order on the political and economic balance of society, the present reviewer would not recommend the book for the general public, as it is far too data-heavy in Chapter 2, while Chapters 3 and 6 are inconclusive. The book could, however, be recommended for policy makers, development strategists, business leaders, and scholars, as they would find interesting insights to build upon what they already know.