ABSTRACT
This research work titled “Globalisation: The Role of Multinational Corporations in Nigeria” was necessitated by the controversy about the role of multinational corporations in Nigeria. Hence, this study will attempt to resolve this controversy by determining their contributions to the econ9omic and technological development of the country.
The research work is divided into five chapters. Chapter one introduces the topic under discussion. Here effort was made at giving a brief but general history of globalization, the activities, operations and roles of MNCs in Nigeria. The problem of the study was stated as well as the objectives. Also in this chapter, the research questions were formulated and terms defined.
Chapter two reviews some literature of relevance to the study. Chapter three discusses research methodology, where the procedure for data collection and analysis were stated.
The data collected from the field were presented, analysed and interpreted in chapter four.
Chapter five is the concluding chapter. Here, the findings of the study were highlighted and discussed. A summary of the study was given, recommendation was made and a conclusion of the findings drawn. The suggestions for areas of further study/research was made.
CHAPTER ONE
INTRODUCTION
1.1 CONCEPT OF GLOBALISATION
Globalisation refers to the process of the intensification of economic, political, social and cultural relations across international boundaries. It is principally aimed at the transcendental homogenization of political and socio-economic theory across the globe. It is equally aimed at “making global being present worldwide at the world stage or global arena”. It deals with the “increasing breakdown of trade barriers and the increasing integration of World market (Fafowora, 1998:5). In other words, as Ohuabunwa, (1999: 20) once opined: Globalisation can be seen as an evolution which is systematically restructuring interactive phases among nation
ns by breaking down barriers in the areas of culture, commerce, communication and several other fields of endeavour.
Globalisation, according to Ohiorhenuan (Ibid), is the broadening and deepening linkages of national economies into a worldwide market for goods and services, especially capital. As Tandon (1998B: 2) once opined, globalisation seeks to remove all national barriers to the free movement of international capital and this process is accelerated and facilitated by the supersonic transformation in information technology. It is principally aimed at the universal homogenisation of ideas, cultures, values and even life styles
(Ohiorhenuan 1998: 6) as well as, at the deterritorialisation and villagization of the world. Expanding this argument, Gordimer (1998), argued, that it is principally concerned with the expansion of trade over the oceans and airspace, beyond traditional alliances which were restricted by old political spheres of influence. Thus, it presupposes the “making or remaking” of the world (Diagne and Ossebi. 1996) by creating “a basic change in the way in which major actors think and operate across the globe” (Biersterker, 1998). In other words, it connotes “the rapid expansion through giant multinational companies of capitalism and their “blood sapping principles” of “liberalisation”, “commercialisation”, privatisation” and “undemocratic and property-based democratisation” to several areas of the world including where it had hitherto been resisted or put in check” (Madunagu, 1999, 53). Multinational Corporations
Oxford Dictionary of economics (2003:310) defines Multinational Corporations as a firm conducting business in more than one country, through branches or subsidiary companies. The Penguin Dictionary of economics (1980:315) defines Multinational Corporations as a company, or more correctly, an enterprise, operating in a number of countries and having production or services facilities outside the country of its origin. A
commonly accepted definition of an MNCs is an enterprise producing at least 25 per cent of its world output outside its country of origin.
The ways Multination Corporations are conceptualised have important implications for the claims of stakeholders. This is more so in view of the growth of huge multinational corporations (MNCs) worldwide and the implications of their operations in different jurisdictions. This work focuses on non-shareholding stakeholders, employees and the community in particular; whose position in relation to the corporation as this work demonstrates is largely dependent on the conception of the corporation. The work examines the role of MNCs in Nigeria against the background of the dominant theoretical construct of the corporation in the country. The work argues that because of their enormous economic power, which has been a subject of considerable debate, the dependency of the economy of the host country on their operations, their shareholding structure and because of the nature of the resources they exploit MNCs cannot justifiably be construed as private actors. This research further shows the consequences of the conception on corporations whose home states is in the E.U and therefore are largely construed as social institutions but when operating in an environment like Nigeria assumes a different role.
The Multinational Corporations take its principal decision in a global context and thus, often outside the countries in which it has particular operations. The rapid growth of these corporations and the possibility that conflict might arise between their interest and those of the individual countries in which they operate have provoked much discussion in the recent years. While Multinational Corporations present some legal and organizational problems, many firms find it worthwhile. It brings them closer to the suppliers and the markets, they also take advantage of international difference in resource and cost, the benefits and development can be spread over wider markets, and it gives a wider spectrum of risks. Multinational operations also improve their bargaining position in negotiating with national suppliers’ government, and trade unions.
During the past three decades, the would had witnessed the growth of an economic phenomenon. The Multinational Corporations (MNCs), hick and through one of exporting, licensing, franchising, joint venture, foreign branch or wholly owned subsidiaries.
While the MNCs is not new, its importance, power and consequences have come to be appreciated fully only recently. For instance, consider the role of Multinational oil companies in the economic systems of the world in
general and Nigeria in particular. According to Megginsion, et al (1988:603), “MNCs are more than just giant business firms, for they tend to have social, and even political effects as well as economic ones in their host countries: Kinard (1985:490) could not agree with this view more, when he said that, huge corporations like MNCs, play not only economic roles but also, important political and social roles in their environments.
For obvious reasons multinational business has its own peculiarities. It involves different countries. Hence, it is influenced by different environmental factors in these countries. Therefore, international business management or multinational management is equally peculiar and challenging. Multinational manager have to formulate or device separate policies and strategies to survive in different environments.
Though it is the responsibility of a country’s government, like that of development, but government’s resources more often than not, appear inadequate to discharge those obligations, effectively. And Megginson, et al (1988) maintain that “MNCs are more than just giant economic units. In many cases, they are nearly a form of government, richer, and more powerful than some of the countries in which they operate. For example in a typical year, the combined sales of Exxon, general Motors and Royal Dutch and Shell Group exceeded the GNP of most industrialized nations of the
world”. Hence, it is not out of place, for society to expect and press these MNCs to assume a key role in the socio-economic development of their host countries. At least if for nothing else, they should endeavour to live up to their corporate social responsibilities.
These social expectations and demands and other intricate issues in multinational business, as stated earlier; pose great challenges to the management of MNCs. For example, any disruption to their operations as a result of crises between the company and the host country/community, like the Ogoni-Shell dispute, will be detrimental to especially the interest of the company and the other interest groups. Therefore, multinational managers have to strike a rather difficult balance between meeting societal expectations and demands.
Multinational corporations have been praised by many people as agents of social, economic and technological development of their host countries. On the other hand, however; other people feel and regard MNCs as instruments of exploitation in their host countries. These two views are based on the extent to which the MNCs have met the societal expectations and based on the extent to which expectation and demands, in their environments.
There are many of such corporations operating in Nigeria. They are mainly American, European, or Asian corporations and they are into high technology areas such as Agriculture, construction, Mining, Manufacturing etc. some of them are Cocoa-cola, Mobil, Julius Berger, Pfizer, Shell ITT, Glaxo, Klm etc. Expectedly, there are diverse opinions regarding their impact or role in the country. Therefore, this research intends to present a clearer picture of their actual role Nigeria.
1.2 STATEMENT OF THE PROBLEM
As stated earlier; virtually all the MNCs operating in Nigeria are into high technology areas. Most of them have been here for a long time now. This fact not withstanding, Nigeria is still technologically backward.
Secondly, most of these MNCs have been reported to recruit him- office Personnel (expatriate managers) to fill key executive positions instead of Nigerian managers. This does not help the unemployment situation in the country.
Thirdly, it is claimed by some people that the MNCS in the country have contributed to the collapse of some domestic companies.
In addition, the host communities of some of the Multinationals have constantly cried out that the MNCs operating in heir areas are not socially responsible. The Ogoni-Shell crisis is a case in point in this regard.
Moreover, it has been observed that these multinationals make and repatriate huge amount of profit always, with little or no reinvestments in the country. Also, they appear to be interested only in profit maximization to the detriment of the nation.
Based on the above, most people say that MNCs are just another form of imperialism exploiting people in under-developed nations in general and Nigeria in particular.
On the other hand, however, there are those who believe that MNCs positive forces of social, economic and technological development in their host country.
As a result of the above contrasting views it becomes absolutely necessary to carry out this research to assess the actual roles of the MNCs operating in Nigeria.
1.3 OBJECTIVE OF THE STUDY
The broad objective of this study is to look at Globalisation and its impact on the role of MNCs operating in Nigeria.
The specific objectives of this study are:
a) To ascertain whether the Globalisation of Multinational Corporations in Nigeria respond to the expected responsibilities.
b) To ascertain whether the MNCs in Nigeria have any contribution to the economic advancement of the nation.
c) To ascertain whether they contribute to the technological development of Nigeria.
d) To determine the environmental factors that influence he operations of the MNCs.
An attempt will be made to collate the activities of these corporations and examine their respective and collective roles in the development of Nigeria.
1.4 RESEARCH QUESTION
The research question for this research are:
a) Are MNCs in the country socially responsible to the host community?
b) Are these MNCs contributing to the technological advancements of the nation?
c) Are they contributing to the manpower development of Nigeria?
d) Are the MNCs in Nigeria mostly interested in profit maximization?
e) What impact has the repatriation of huge profit to home countries by MNCs in Nigeria on the nation’s economy?
f) What effect has the foreign investment of these MNCs on
Nigeria’s economy?
g) What effect has the operation and existence of these corporations on the local business firms?
h) Are the MNCs helping to reduce the unemployment rate in
Nigeria?
1.5 SIGNIFICANCE OF THE STUDY
This study will be of great significance because, it will put in proper focus and will create awareness on the real role of MNCs in Nigeria. It will show whether they are helpful or harmful to the nation. The findings will be useful to both government and the management of MNCs in future development planning. Also, it will be beneficial not only to social researchers, environmentalist, but students, in international business management environmental studies, MNCs, governments and academicians,
generally. It brought into focus, the concept of globalization, the study of which is inexhaustible and therefore provides for further research and studies.
1.6 DEFINITION OF TERMS
INTERNATIONAL BUSINESS AND INTERNATIONAL BUSINESS MANAGEMENT: International Business according to John, et al (1984:588) refer to economic transactions that involve several countries, while international business management is simply the management of business transaction between citizens, companies, or governments of two or more nations. MULTINATIONAL CORPORATIONS (MNCs) and MULTINATIONAL MANAGEMENT: Kinard as business firms that produce and market goods, and services in more than one country. They include giants such as IBM, ITT Royal dutch/Shell group, Coca-Cola, etc. According to Hicks and Gillet (1981:143) Multinational Management refers to the management of business activities that cross national boundaries. The simple implication of the above definitions is that MNCs are involved in international business. Aharoni, (1971:27-37), noted that there are some debates as to when an organization can be characterizes as a multinational Corporation. The fact remains that, the organization will have to be head-quartered in one country (mostly developed countries) and have to have business operations spread over other countries. For these corporations, the degree of internationalization and international commitment may a wide range.
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