The competitive advantage of the transnational corporation as an institutional form: A reassessment

Abstract

Addresses the nature of the competitive advantage of the transnational corporation as an institutional form versus alternative forms of economic organization. It is argued that an important – and undertheorized – source of the TNC’s institutional superiority arises from its ability to extract rents from other significant stakeholders such as states and workers through structurally increasing bargaining power (driven by globalization) over these groups. A related issue which is considered is that of the changing sources of competitive advantage for TNCs operating in host countries and their associated distributional effects on key stakeholder groups, presented as ranging from positive‐sum to zero‐sum based on certain specific contingencies. To the extent that the particular sources of TNC competitive advantage matter in terms of their social significance, TNCs can, under certain circumstances, be understood as institutional mechanisms which exploit and extend market failures in the name of shareholder wealth rather than as agents of global allocative efficiency, thus making the question of their overall social utility contentious. Substantial public policy implications are therefore raised and briefly outlined. Some final comments are directed at the need for orthodox theories of the TNC to revisit comparative institutional and distributional considerations.

Citation

Jones, M.T. (2000), "The competitive advantage of the transnational corporation as an institutional form: A reassessment", International Journal of Social Economics, Vol. 27 No. 7/8/9/10, pp. 943-958. https://doi.org/10.1108/03068290010336919