Multinational companies: innovators or adaptors?

MNCs dominate the international economy and are instrumental in driving forward processes of globalisation. Estimates of the number of multinationals world-wide rose from 37 000, owning 265 000 foreign subsidiaries in 1994, to over 53 000 with 448 000 subsidiaries overseas in 1998 (UN, 1994, 1998). In 1993, flows of foreign direct investment displaced conventional trade in goods and services as the most important form of international economic exchange (UN, 1993). Their contribution to trade is substantial too: Dicken (1998:43) reports that approximately one-third of world trade was accounted for by intra-firm transfers of goods and services across borders. Not surprisingly, multinationals employ a significant proportion of the workforce, particularly in the industrialised economies. The most recent figures available estimate that MNCs directly employ a total of 73 million people world-wide, 61 million in the industrialised economies (of which 44 million are employed in operations in the home country and 17 million in overseas operations), and 12 million in the developing countries. In total, MNCs’ direct employment accounts for some 20 per cent of the workforce in the industrialised countries, to which can be added a further equivalent proportion employed in local supplier companies (UN, 1994). MNCs have long been seen to play an important role in shaping changes in industrial relations structures and practice (Marginson and Sisson, 1996), including the diffusion of innovative practices across national borders.