1
What is international management?
A critical analysis
Stream 3: Critical Perspectives on International Business
Alex Faria Ana Guedes
afaria@fgv.br guedes@fgv.br
EBAPE-FGV
Praia de Botafogo, 190/535
Rio de Janeiro-RJ,
22250-900, Brazil
Tel (+55)21-2559-5745
Fax (+55)21-2559-5710
1 ­ Introduction
The international dimension of management and business ­ due mainly to
globalisation ­ has become a major challenge to governments, institutions and
organizations. This helps explain why the area of international management (IM) is
becoming more important within the academic setting.
In spite of the increasing importance of this area researchers have been
overlooking important issues at a higher level of reality. The Enron scandal, among
others, is a good example of the sort of `governance crisis' brought by globalisation
(Clark and Demirag, 2002; Child, 2002). The IM literature fails to address in a more
realistic fashion the dynamics and local implications brought by the growing
investments of transnational corporations (TNCs) and their political power in
developing countries (see Haley, 2001).
IM researchers should address not just issues at the `management' level but also
at the level of governance. Accordingly, they should challenge the United States (US)
hegemony in the field (Usunier, 1998). Moreover, they should foster interdisciplinary
developments with two fields: international relations (IR) and international business
(IB).
Why IR? One of the reasons is that IR has historically focused its attention on
international issues led by states or governments (Halliday, 1999). Another important
reason is that, more recently, researchers related to the area of international political
economy (IPE) recognized the growing importance of TNCs and their interactions
and relations with governments from a governance standpoint (Strange, 1994; Gilpin,
2001).
Why IB? One of the reasons is the growing debate within IM on its diverse
meanings (Boddewyn et al. 2004), on what differentiates IM from IB (Contractor,
2000), and on the use of IB paradigms to define the domain of IM (Martínez and
Toyne, 2000).
This paper tries to demonstrate that, for many reasons, the IM field has been
developed from a perspective that privileges in a particular way the interests of
TNCs. It explains the suppression of interests and questions that are relevant to other
important agents, especially in developing countries. By fostering interdisciplinary
developments with the fields of IR and IB researchers could improve the relevance of
the IM field.
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The authors of this paper argue that the excessive focus of IM researchers on
certain `managerial' issues, mainly through the investigation of cultural and
intercultural matters and the neglect of governance problems related to globalisation,
has to do with the worldwide dominance achieved by a particular theory of economic
globalisation. The field of IR has been undertaking important debates on globalisation
which started to call the attention of IB researchers (Clark and Knowles, 2003).
Accordingly, it is argued that an interdisciplinary dialogue is necessary for the
development of a realistic perspective in the field of IM.
In spite of the difficulties that researchers face to define the concepts of
management and governance ­ which to some extent have to do with the difficulties
IR scholars face to define the concepts of state or nation (Halliday, 1999) or to
differentiate the political domain from the economic (Strange, 1996) ­ the authors of
this paper argue that management is related to practices and power of managers and
governance is related to practices and types of power a bit more complex. It involves
transnational institutions, governmental authorities, top executives and stockholders
of transnational corporations, non-governmental organizations, local institutions, etc
(Stopford and Strange, 1991).
This paper is divided into four sections. In this first section the authors present a
brief introduction to the theme. In the second section the authors describe and
analyse the dominant approach in the IM literature and show that the main problem is
that it represents, in a quite asymmetrical fashion, the main interests of TNCs by
reproducing a certain theory of globalisation. In the third section the authors,
grounded on the IR literature, argue that a more realistic approach to globalisation,
which problematizes the interfaces between the public and private domains, should
be taken into account by IM researchers. Finally, the authors present the main
concluding considerations and implications.
2. International Management and Governance Issues
2.1. An Understanding of Hegemony and Interdisciplinarity
Globalisation has demanded a great deal of efforts, skills and resources from the
field of management ­ in both private and public contexts and developed and
developing countries ­ to make managers, executives, public officers and
researchers capable of dealing with this new reality. As a result, the development of
the IM field, under the leadership of US scholars (Parker, 1997), resulted in
excessive emphasis on the private sector and in the marginalization of fields
historically related to the public context, such as IR and, to some extent, IB as well.
The most influential authors in IM (Bartlett and Ghoshal, 1989; Doz, 1986) have
argued, since the beginning of the 90s, that globalisation challenges our paradigms
because it forces companies, citizens and policy makers to see reality as a growing
interdependent network. However, such interdependent network has a particular
meaning for them. According to these authors the main driving force behind
globalisation is the fall of the national boundaries that impeded the full development
of the private sector and the corresponding creation of economics opportunities. They
argue that the decay of the public dimension should be taken as a `global asset'
(Ohmae, 1990).
These arguments are based on belief that global economic integration through
`free market' and `free trade' ideologies (see Steffek, 2003; Levine and Renelt, 1992)
overcomes disintegration and political stratification caused by ineffective States and
`political ideologies' (Sheth, 1992). According to IM key authors, globalization means
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the victory of the economic against the political and, correspondingly, of the private
against the public.
Globalisation for them means unlimited competition, access and progress by
eroding dysfunctional boundaries between nations, cultures and organizations and
between the public and the private domains. Globalisation is said to promote the
"growing building of partnership among organizations" (Parker, 1997, p. 425; Ohmae,
1989). Partnerships between large international groups and local governments in
many countries are taken as beneficial for all (Rugman and D'Cruz, 2000; Doz, 1986)
and much more effective than industrial policies ruled by national governments
(Larry, 1994).
This `hegemonic' discourse is based on the idea that the `economic'
interdependence and partnerships replace ineffective structures and practices
grounded on `political' asymmetry and government. Several researchers have
disclaimed such arguments. They have demonstrated that globalisation means
imperialism. They also argue that TNCs and transnational institutions became
hegemonic players within this overall process (see Korten, 2001; Soros, 1998).
Why have those important issues been overlooked by IM researchers? A key
issue is that as result of its infant (even marginal) status within the business academy
and the US leadership the IM field had to struggle for its constitution and
legitimisation as an autonomous discipline in particular ways (Contractor, 2000).
Researchers had to develop knowledge that could sort out managerial problems
faced and `selected' by TNCs (Boddewyn et al., 2004). They also had to set the
boundaries of the field by competing with the functional areas of management ­ as
marketing, human resources, and accounting - and for research funds, most of them
granted or sponsored by TNCs. This battle within the business academy seems to
have prevented researchers from addressing more relevant questions as those
related at the level of governance.
Such struggle between the IM field and the functional fields within the business
academy and the subordination of that field to certain interests of TNCs may explain
why three key questions have not been problematized yet: (a) what is international
management? (b) who should define the knowledge and scope of international
management? and (c) which fields of knowledge should constitute (and govern) the
IM field?. These questions are of central importance to the realistic approach we
outline in this paper, which is based on the recognition that the international
dimension affects an increasing number of organizations, policy makers, managers,
consumers, citizens, academics and other social and political actors in diverse parts
of the world.
Parochialism and ethnocentrism have also been pointed out as reasons for this
state of things. Authors more related to the IB field argue that US business
researchers have developed theories without being sufficiently aware of non-US
contexts, models, research, and values (Boyacigiller and Adler, 1991; Clark and
Knowles, 2000).
This would not be taken as much surprising by IR researchers nor by those who
point out colonialism as a key issue in the constitution of academic fields (Ashcroft et
al., 1995). For IR researchers globalisation reproduces historical processes of
imposition and dissemination of certain "cultural patterns, values and ideas" (Held et
al., 1999, p. 336) and suppression of local cultural patterns, values and ideas. TNCs
play a key role in this asymmetric structure of diffusion and selection of `ideas'. This
explains why the media industry, dominated by TNCs, has become one of the most
debated issues by more critical IR academics (see Strange, 1996; Dicken, 1998).
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This also explains their concern with the increasing influence of those corporations in
business schools and universities (Sklair, 2001).
IR authors argue that the political dimension of globalisation is as much important
as the economic dimension (Gilpin, 2001). This explains why some authors argue
that in countries in which the state is weak the TNCs define in a way or another
important governmental policies, such as tax policy, currency emissions, trade and
monetary systems, welfare policies, ecological issues and labour unions (Chang and
Ha, 1999, p. 33). Accordingly, the authors of this paper argue that the IM field,
especially in less developed countries or regions, requires a critical approach. IM
should not be treated from a mere `managerial' approach since this approach has
been relevant only to the main and controversial interests of TNCs, at the expense of
the legitimate interests of other `players'.
In Brazil one of the most visible outcomes of the asymmetrical partnerships
between TNCs and local government is the tax war that has been played by local
councils for foreign direct investments in the automotive industry (Rodríguez-Pose
and Arbix, 2001). Correspondingly, the authors of this paper understand that
interdisciplinarity and the recognition of these governance issues, which are closely
related to the debates on state sovereignty that pushed the constitution and
development of the IR field within the Anglo-American context (Hertz, 2002), could
contribute to increase the relevance of the IM field in developing countries.
2.2. A Historical Understanding of the National-International Issues in IM
A more comprehensive understanding of those issues demands a critical and
interdisciplinary analysis of the national-international dichotomy that lay behind the
constitution and legitimisation of the IM field (Usunier, 1998; Martínez and Toyne,
2000). Who should define what international management is? Should exist an
universal definition of international management, applicable to any country? These
critical questions are grounded on the argument that academic knowledge is not
neutral (Chalmers, 1993; Caldas and Wood Jr., 1997).
One may argue that the IM field has a particular meaning and relevance by
opposing the notion of `national management'. In other words, the IM field exists
because it could address those issues that could not be addressed by such `national'
field. Nevertheless it is worth noticing that the formal label of `national management'
does not exist. In practice, however, `national management' means `universal
management' in the US and this explains the subordinate/marginal status of the IM
field and their difficulties to develop the field from a realistic approach (Boyacigiller
and Adler, 1991).
This important feature puts into question not only the international dissemination
of the management knowledge produced by US academics but also the controversial
constitution and relevance of the IM field. Critical authors argue that the universal
character of management was invented in the US for the legitimisation of the
discipline as `scientific' within the academic setting but in the end it was driven by
colonialism interests shared by corporations and the US government (Locke, 1996).
There is another important issue. When the field of IM was born within the US
academic setting the other fields of academic knowledge already established treated
that infant field as a second-class one due to its extremely instrumental character.
What deserves mention is that for fields of knowledge as Sociology, Law, Economics
and Political Science, the management of private firms as much as the administration
of the public organizations should be `governed' by national interests, structures and
institutions. From this perspective management issues and interests should be
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subordinated to governance issues and interests related to the nation. It was not
necessary to label that as `national management'. At the time no one could foresee
that the field of management would gain the importance it acquired over the last fifty
years (Wensley, 1996).
A similar process marked the constitution and legitimisation of the IR field in the
US context. The field faced serious obstacles within the academic setting because
academics of other disciplines refused the idea that important issues, interests,
decisions and institutions at the national level could be `governed' by (or
subordinated) to issues, interests, decisions and institutions at the international level.
This contradictory context explains why the bulk of the literature produced in US
carries `national' interests and why researchers based in developing countries or
regions should approach the field from a critical standpoint.
2.3. An Understanding of the National-International Issue in IM
Recent research on globalisation, in the IR field, challenged the historical
understanding of the national-international interplay regarding the role played by
business organizations and national governments. Researchers demonstrated that a
key feature of the globalisation is that TNCs gained the status of states in economic
and political terms. The IM field ignored the political implications of this turn because
its recognition could bring to the forefront the understanding that TNCs became a
threat to national sovereignty. This was a central issue for critical IR researchers
because it brought a serious asymmetry between the political and economic power of
those corporations and local governments, not only abroad (especially in developing
countries) but also domestically (Strange, 1996; Jackson and Sorensen, 1999;
Dicken, 1998).
IR authors have pointed out that one of the main objectives of globalisation is to
transform the meaning of nationalism, a term used in the last twenty years to address
in a legitimate fashion a "political and cultural project which seeks to achieve selfdetermination
and to create and shape states" (Held et al., 1999, p. 336), into
`patriotism' (Pinzani, 2002) or `protectionism' (Sklair, 2001). This transmutation of
meanings is obviously beneficial to US international corporations and it helps explain
why the IM field ignored it and why the IM literature established the operational focus
of management as dominant (Ohmae, 1990; Bartlett and Ghoshal, 1989).
Researchers in developing countries or regions (as much as researchers in US)
should recognize that US academics are motivated, consciously or not, by ideological
issues and disputes of interests, which are very much national (and political) in
character. Such national character has been made clear in the IM literature. Key
authors argue that the US - and in particular the local organizations - are more
capable to understand and practice international management than Europeans.
Among the most important motives lies the assumption ­ which has been
transformed into a universal myth and affects not only academics abroad but also US
academics ­ that US had been the responsible for the construction of the so-called
"managerial capitalism" (Chandler, 1992). This type of capitalism, in their own words,
was of great importance for the US and to the world because it challenged typically
European culture and practices, based on authoritarian and asymmetric governance
structures and mechanisms.
This helps explain why key IM authors point out that the manager and the
corporation are legitimate resources for economic development and social welfare
(Bartlett and Ghoshal, 1989, p. 43). This approach suppresses the political feature of
controversial strategies and practices implemented by US corporations over the
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recent decades both domestically and abroad (Jenkins, 1987; Mokhiber and
Weissman, 1999; Clark and Demirag, 2002). In spite of the historical disputes
between North Americans and Europeans, European TNCs have taken this
`managerial' ideology as convenient since it suppresses colonialist and equally
controversial practices implemented by European countries.
Given this complicated scenario of national interests and ideologies it is not
unsurprising that the growing IM literature has embraced a managerial approach,
focused in a very particular way on `cultural diversity' issues. The IM field gained
strength and followers by emphasizing differences between managers of different
national backgrounds or cultures who had to work in large international companies
(Hofstede, 1980). This emphasis on inter-cultural management issues (HampdenTurner
and Trompenaars, 1993; Jackson, 1995) aimed to transform certain
differences and cultural diversity into positive factors for the global expansion of
companies and, correspondingly, for the promotion of economic development in a
larger number of host countries and regions.
International issues at the level of governance, in particular those related to how
the political and economic dimensions of the performance of TNCs in developing
countries are related, have been suppressed. This reproduces the suppression of the
critical argument that one of the main features of globalisation is the enlargement of
the asymmetry between developing and developed countries or regions (Furtado,
1999).
More recently, some researchers, most of them based in Europe, embraced a
critical approach in IM. They argue that the main problem is not the ethnocentric and
colonialist features of the literature. The key issue is that IM has been transformed
into a new market opportunity by business schools in developed countries. This puts
Europeans and US into the `same boat'. IM became a sort of new `business market'
within the business academy. It puts into the same room students of different
nationalities, pushes the internationalisation of those schools, and attracts research
grants and other resources from TNCs. This business-driven attitude of business
schools explains to a large extent why the political features of globalisation are not
addressed by the IM field (Case and Selvester, 2000, p. 12).
David Boje argues that in parallel to the spread of globalisation, TNCs have
colonized business schools and even universities (Boje, 2001; 2000). This also
explains why IM textbooks, used in diverse parts of the world, treat the reports
produced by TNCs as truth rather than corporate propaganda. In these texts Nike
presents itself as an agent for ecologic and economic development (Boje, 1999),
Monsanto as an organization committed with the cure of world famine, World Bank as
an institution concerned with the elimination of `AIDS' through the financing of
education programs, and World Trade Organization as an organization dedicated to
eliminate world poverty.
This is similar to the way corruption and bribery issues are addressed in the IM
literature. Bribery of foreign officials by US companies and accounting tricks to
disguise it (Kaikati and Label, 1980) are taken as necessary resources because of
low moral standards of public administration in developing countries (Czinkota et al.,
1992, p. 185).
It is concerning that this literature has influenced areas of knowledge related to
the public/political dimension of administration such as economic development, public
administration, and public policy (Porter, 2000; Felbinger and Robey, 2001; Klijn and
Koppenjan, 2000). The US ex-president Bill Clinton for instance argued that within
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the globalisation context "each nation acts as a big corporation competing in the
global market" (Krugman, 1997, p. 4).
We will show in the next section a key issue for the development of a realistic
approach in the IM field is the understanding that the literature reproduces a
particular theory of globalisation, grounded on the retreat of the national state and the
hegemony of TNCs. A similar analysis was accomplished in the field of IB (Clark and
Knowles, 2003). Researchers identified disciplinary isolation and lack of general
definition of globalisation as responsible for relevance challenges faced by IB.
3. Understanding Globalisation through the Glasses of the IR Field
3.1. The Hegemonic Debate within the IR Literature
Held and McGrew (2000) argue that the term `globalisation' has been actually
used only as from the early 1970s. By that time the orthodox theoretical approaches
assumed the separation between internal and external issues, more specifically
between the national and the international domains. Political and economic
interdependence were explained mainly by rival theories such as the world system
theory (Wallerstein, 1974) and the complex interdependence theory (Keohane and
Nye, 1977).
After the fall of the so-called state socialism and the establishment of the
capitalism at a global level, globalisation has transformed into a major concept within
the academy and within diverse domains of the public and private lives, in almost
every corner of the world. A key feature of globalisation is that everyone argues that it
exists but a few, if any, are capable of defining what it is.
Held and McGrew (2000) argue that there is not a single and universally
accepted definition of globalisation (see also Thompson, 2000). The IM literature
does not recognise this feature. IM key authors just reproduce one of the extreme
theoretical approaches most found in the literature ­ so-called globalism.
The proper understanding of globalisation has been constrained by the diffusion
of those two extreme theoretical approaches. These approaches, which have
dominated the specialized literature and the media in general, have blocked the
development and dissemination of other theoretical approaches that could be useful
for the development of a realistic approach in the IM field in developing countries or
regions. The literature on globalisation has been championed (Held and McGrew,
2000) by two major theoretical groups or factions: (a) those who see globalisation as
a historic and real process ­ the so-called `globalists' ­ and (b) those who see
globalisation as a mythical or ideological construction ­ the so-called sceptical.
Sceptical authors argue that globalisation is a myth that legitimises a worldwide
neo-liberal project, which major conceptual or ideological basis is the Washington
Consensus. Grounded on this understanding, authors argue that the `global' cannot
be empirically investigated. Accordingly, globalisation does not have descriptive or
explanative value. They argue that what is found in the literature are analyses based
on abstract and imprecise models of global economy, global culture and global
society (see Held, 2000). For this reason the sceptical argue that internationalisation,
regionalization or `triadization' are concepts more valid than globalisation (Held and
McGrew, 2000).
From the standpoint of IM researchers the sceptical model is problematic
because it leads to an extreme importance of national and inter-national boundaries.
This would lead IM researchers to the development of frameworks grounded on
imperial or colonial issues ­ regarding political, economic, social, and legal issues.
This model is not much adequate because its particular focus on national boundaries
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disclaims the notion of the representation of the international context as a sort of free
market. In other words, it challenges the major interests of TNCs. Moreover the
sceptical model emphasizes political questions, more closely related to the public and
government domains, instead of economic questions and the private domain.
At the other extreme of the theoretical dispute, the globalists take the hegemonic
side and deny the argument that globalisation is an ideological construction or a
synonym to imperialism or colonialism. They understand that there are sound
evidences of real structural transformations at the level of social organization that has
been caused by the expansion of multinational enterprises and stock markets, the
diffusion of popular culture, and the increasing concern with the environmental
degradation of the planet.
They do not portray globalisation as an exclusively economic phenomenon. They
argue that researchers and analysts should adopt a multidimensional conception that
contemplates the diverse power networks at the economic, political, environmental,
technological and cultural domains (Held and McGrew, 2000, p.18-20). In spite of this
they emphasize that the economic domain, viewed from a free-market perspective,
has become more important than the others and that this explains why reality is
becoming increasingly transnational. As a result the relative importance of the
national boundary, from a political standpoint, to the understanding and prediction of
the so-called global world is getting lower.
For this reason, IR academics call the most IM influential authors as hyperglobalists
(such as Ohmae, 1989) due to their belief in a borderless world ruled by
certain `market' forces and in the erosion of the power of the government to rule the
national economy (see Held et al., 1999).
3.2. In Search of a Realistic Approach
Held and McGrew (2000) challenge the sceptical and the globalists by pointing
out that the debate between these two extremes is problematic for two main reasons.
First because the position held by the sceptical has been transformed as resource for
the legitimisation of the position held by the globalists and for its hegemony within the
literature. Second, because the resulting debate has been preventing us from
recognizing or using a realistic theory on globalisation. A similar argument has been
put forward by IB researchers (Clark and Knowles, 2003).
They argue that the conceptualisation of globalisation requires the recognition of
three fundamental issues: (a) material, (b) time-space and (c) cognitive. The first is
represented by the flows of trade, capital and people, which have been facilitated by
three types of infrastructure ­ physical (transportation and informatics), normative
(international trade rules) and symbolic (English language as universal language).
The second is represented by the change in the spatial reach of social action and
organization between the local and global levels. The third is represented by the
recognition of the causal relation between remote events, structures and issues and
local matters (and vice-versa), as much as corresponding changes in our notions of
space and time.
The analysis of these issues leads them to argue that globalisation exists. In
spite of this we should not take as `natural' or inexorable the harmony between
interests of different parts, the universalization of values, or the convergence of
cultures and civilizations. Rather, globalisation should be taken as a complex sociohistorical
process that carries with it political features and practices. Globalisation,
from this perspective, generates dynamic processes of cooperation as much as
animosity and conflict.
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Drawing upon a similar line of reasoning Thompson (2000, p. 90-91) argues that
the debate on globalisation has been undertaken from three perspectives: (a)
globalist, (b) traditionalist and (c) transformationalists. Thompson (2000, p.102-109)
points out the flows of international trade as one of the evidences of the increasing
interdependence of the world economy. He also stresses the flows of capital,
especially through foreign direct investments (FDI), as another important evidence.
He does not deny that globalisation exists as a real phenomenon.
The author argues that the volume increase of FDI since the early 1980s is one
of the most important evidences that globalisation exists. Nevertheless, he argues
that the relative importance of flows of capital within the GDPs of national economies
suggest that the contemporaneous international economy is not as much globalised
as it was in 1913. Accordingly, he denies the argument held mainly by globalists that
the state and the corresponding political dimension do not make a difference as from
the early 1990s.
He argues then that the approach called `trilateral regionalism' is more realistic
for the understanding of the contemporaneous international economic system. More
specifically the author argues that the triad ­ US, Japan and European Union accounts
for more than 75% of the world economy and that, correspondingly, almost
85% of the world population has been excluded from the major benefits generated by
globalisation (Thompson, 2000, p. 110). He also argues that despite the free-market
discourse the triad remains closed concerning interdependence and integration of
investments. This means that TNCs should be uncritically taken as `transnational'
since they remain `governed' (from a political and national perspectives).
In sum, the author challenges the argument held by globalists that globalisation is
based on economic-based competition, free market and progress. What is
particularly important given the objectives of this paper is that the author challenges
local governments, of less developed countries or regions that have been accepting
governance rules and mechanisms imposed by TNCs. His argument is that the global
world is a context of political and complex disputes in which both states or
governments and TNCs have become key players.
3.3. Governance Issues within International Management
Some other streams of thought on globalisation that emphasize the domain of
governance from a critical standpoint have also been dismissed by IM academics.
Among those streams three of them deserve mention: (a) international political
economy, focused on the global economy (see Strange, 1994; Gilpin, 2001), (b)
cultural studies, focused on global culture (see Featherstone, 1990), (c) global
sociology, focused on transnational actors and structures (see Sklair, 1995).
Even though important authors of these three areas recognize that the concept of
globalisation lacks precision they agree that one issue should not be neglected: the
governance within the global context. A major question for these authors is: is there
any form of global governance? (Hirst and Thompson, 1998).
Among these three areas the area of IPE deserves special attention given the
objectives of this paper. In analytical terms the most important argument of IPE is
that researchers should address the political and the economic domains properly.
The analyst should preserve the analytical properties of each domain instead of
imposing one on the other. A key issue behind this argument is that the area
recognizes the influence of ideologies and interests behind the production and
diffusion of academic knowledge.
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In other words IPE authors challenge the idea that knowledge in the international
domain can be taken as `neutral'. Their major focus, from a critical standpoint, is on
the complex relations and interactions between the authority ­ taken as the political
domain ­ and the market ­ taken as the economic domain (Strange, 1996). Some of
its authors give emphasis to the authority (represented by the realist and the
nationalist schools), others to the market (represented by the economic and the
liberal schools), and some others to the possibility of a balanced relation between the
authority and the market (represented by the idealist and the socialist schools). What
deserves special mention is that only a few researchers addressed the increasing
power of TNCs in developing countries and its impact on governance matters since
`business issues' are just an emerging topic.
Strange (1994) is an important author in the area who has undertaken systematic
studies focused on globalisation from the type of realist perspective we propose in
this paper. Her major contribution, given the objectives of this paper, was the
accomplishment of an extensive empirical investigation, grounded on an
interdisciplinary approach, which aimed at understanding the dynamics between
government and TNCs in Malaysia, Brazil and Kenya. The study provoked the
challenging encounter between the areas of IPE and international business (Stopford
and Strange, 1991) but has been ignored by the IM field for not reproducing the
globalist theory.
Drawing upon the increasing interdependence between states, between business
organizations, and between business organizations and states, Stopford and Strange
(1991) argue in this study that national governments in developing countries started
to recognize the importance of `managing' the scarce resources controlled by TNCs.
More specifically, they point out that some structural transformations within the
technology, finance and politics domains in recent years forced national governments
to cooperate with TNCs.
The authors then investigated negotiation processes between governments and
companies concerning specific investment projects in those three developing
countries. Among the contributions of this investigation, we point out the framework
developed by the authors grounded on the extension of the diplomacy domain. They
add two dimensions to this traditional domain. Besides the traditional negotiations
between states through their governments they discovered that companies and
government have to negotiate as much as companies among themselves. (see
Figure 1). The triangular diplomacy framework shows us that TNCs are as much
concerned with governance issues as with management issues. Correspondingly, it
also shows that IM researchers should challenge the hegemony of the globalist
theory within the field given that it does not fit the reality of neither TNCs nor national
governments.
Finally, Stopford and Strange conclude that national governments have lost their
bargain power to TNCs. Though states still control access to their territory and
labour, companies control capital and technology (or have better access to both).
Due to the importance of capital and technology in the capitalist system companies
have increased their bargain power. Consequently, the authors suggest that
governments and companies must learn how to `manage' more effectively these new
complexities. In sum, the author stress that the most relevant aspect is the capacity
to produce sustainable growing despite the difficulties to implement this concept.
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Figure 1 ­ The Triangular Diplomacy Framework: An Interdisciplinary Approach
Government-Government Company-Company
(International Relations) (International Management /
International Business)
Government-Company
(International Political Economy / International Business)
Source: adapted from Stopford and Strange (1991, p. 22).
This framework should invite us to rethink practices, education, and research
within the IM field. One of the most important issues is that neither the economic
performance of TNCs nor the political performance of governments can be
addressed by frameworks centred at the management level. For this reason IM
researchers should, through the application of the triangular diplomacy model and
the critical recognition of other globalisation theories provided by the IR field,
recognize the interfaces between governance and management. Correspondingly,
the field should problematize not just private actors and organizations but also the
public ones. This concern is very important in developing countries because these
countries have to deal not only with the political asymmetry in relation to developed
countries but also economical asymmetry in relation to transnational corporations.
4. Final Considerations and Future Implications
This paper tried to show that IM researchers, particularly in less developed
countries or regions, should address not only management issues but also
governance issues. By challenging the hegemony of the globalist theory within the IM
field through an interdisciplinary perspective, the realistic approach proposed in this
paper could make the knowledge produced by the field relevant not only to TNCs but
also to local governments, local managers, public administrators and policy makers.
The effective accomplishment of such objective requires that IM researchers
promote interdisciplinary developments with IR and IB fields in general and more
specifically with the area of IPE. This type of endeavour should not be taken as easy
to implement (Knights and Willmott, 1997). The `hegemony' of the globalist theory
within the IM field should not be taken as `neutral'.
In this respect the authors of this paper suggest that IM researchers should
recognize that an increasing number of TNCs have been `filling those gaps' created
by the weakening of the state or the government on a global basis. It has created
controversy outcomes at the level of local governance (Korten, 2001; Sklair, 1995),
also within the academic setting. For this reason, no matter the efforts and
developments undertaken by individual researchers, it is realistic to argue that the
type of approach and the type of interdisciplinarity proposed in this paper only could
be effectively accomplished if the main academic institutions and agencies,
particularly the public ones, support the legitimisation and diffusion of this type of
knowledge.
12
In other words, no matter the progresses achieved by individual researchers, it is
realistic to argue that the type of approach and the type of interdisciplinarity proposed
in this paper only could be effectively developed in developing countries if the main
academic institutions and agencies, particularly the public ones, support the
legitimisation and diffusion of this type of knowledge.
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