Multinational Enterprises and Sustainable Development: Volume 33
Table of contents(12 chapters)
In spite of the outstanding efforts of the United Nations, the poverty alleviation targets outlined in Millennium Development Goals have not been fully achieved. The further need for improving the living standard of the world population led to the introduction of a new set of revised and expanded Sustainable Development Goals in 2015. The private business and especially large multinational enterprises (MNEs) are playing a significant role in the implementation of the sustainable development program. However, in spite of decades of research, the mechanisms through which MNEs can contribute to host country economic development are still not fully understood. Furthermore, the role of local government and its possibilities to influence MNEs’ activities have not received sufficient attention. The aim of the MNEmerge project was to develop and test the framework for an analysis of the contribution of MNEs to sustainable development agenda. Specific attention is placed on the formation of linkages between subsidiary and local stakeholders such as society, business, and government. The chapters in this book outline the findings of the project and provide recommendations and implications for policy makers.
The purpose of this chapter is to develop a framework that can be used to study the impact of multinational enterprises (MNEs) on sustainable development and poverty alleviation in developing countries. In the 3-year project awarded by the EC-FP7 program, six universities from Europe and three partners from developing countries participated: Brazil, Ghana, and India. For this purpose, a thorough literature review is done and a framework is presented. To confirm the conceptual framework, we performed several case studies with three MNEs in two countries, Ghana and India. Data collection was done through qualitative in-depth interviews with managers in the headquarters of MNEs, the subsidiaries, and the “linked” local firms and host governments. Results confirm our conceptual model that the autonomy of the subsidiary, strategies of MNEs, and local government policies play a major role in achieving positive externalities from MNE operations in developing countries. The key contribution of this study is the development of a relevant conceptual framework that can be used in the overall project. Our study confirms that an interaction between the MNE subsidiary and the local government is essential for the linkages and spillovers to occur that may benefit local economic development and poverty reduction in developing countries.
There is sufficient evidence to prove that the improved health status of a nation’s citizens results in economic growth and development via improved functionality and productivity of labor. It is also commonly accepted that healthcare expenditure significantly influences health status through, for instance, improving life expectancy at birth and reducing morbidity, death, and infant mortality rates. Within healthcare, medicines account for a considerable share of health-related expenditure in both developed and developing countries. Therefore, it seems reasonable to assume that improved access to medicines is likely to contribute not only to the well-being of families and individuals but also to the economic growth and development in all societies. It has been widely advocated that pharmaceutical multinational enterprises (MNEs) can play an important role to address this problem, as they develop and supply a significant proportion of the drugs imported by low- and middle-income countries. This chapter is dedicated to a systematic review of literature in order to identify the strategies implemented by pharmaceutical MNEs to improve access to medicines in the low- and middle-income countries. A total of 76 research articles have been identified, and we have found that the main strategies of pharmaceutical MNEs are related to improving health outcomes through R&D, establishing partnerships for product development, pricing strategies to improve access to medicines, technology transfer, licensing agreements, and nonmarket efforts to improve access to medicines, among other strategies to overcome barriers imposed by intellectual property rights. We have also found that pharmaceutical MNEs’ strategies take place within a complex system and often involve interactions with a wide range of actors, such as international organizations, governments, private not-for-profit sector, universities and research institutes, and generic manufacturers. However, there is still a need for major progress in the field of access to medicines, and pharmaceutical MNEs should be more active in this field in order to avoid potential negative consequences, such as loss of legitimacy and compulsory licensing of their patented medicines.
The Indian pharmaceutical industry accounts for 8% of global production and exports medicines to over 200 countries. Multinational enterprises (MNEs) enter the Indian market either directly through the establishment of subsidiaries or indirectly through licensing arrangements. However, evidence on MNE’s contribution toward development in India in terms of capability enhancement and linkages or through other spillover effects is limited. The purpose of this research was to generate evidence on (a) contribution of MNEs in the pharmaceutical market in India, (b) nature and impact of foreign direct investment (FDI) inflows in the Indian pharmaceutical sector, (c) contribution of MNEs in R&D and innovation in India, and (d) MNE’s contribution toward introducing new chemical entities (NCEs) and new biological entities (NBEs) in India through a mixed method research design. We conducted an in-depth quantitative analysis on multiple data sets and qualitative interviews of various stakeholders to generate a holistic understanding on the aforementioned research objectives. Our findings suggest that from the perspective of capability enhancement and linkages, the contribution of pharmaceutical MNEs in India is limited. We observed that majority of FDI investments are brownfield against desired greenfield investments. In addition, MNEs are investing far less of profit before tax (PBT) compared with Indian firms on research and development. However, MNEs are contributing significantly toward access to certain pharmaceutical segments like vaccines, hormones, and parenterals, which require sophisticated production facilities, advanced technology, and intellectual capital. Further, MNEs role in innovation and introduction of new medicines (new molecular entity [NME] and NBE New Chemical and Biological Entities (NCEs and NBEs)) in India is significant. We propose that creating a conducive policy environment and predictable regulatory environment can facilitate capability enhancement and linkages through MNEs. Some of the potential policy instruments include appropriate implementation of FDI policy and Intellectual Property Rights (IPR) policy to balance trade and public health.
Governments worldwide have adopted the Sustainable Development Goals (SDGs) and are committed to attain them by 2030. Moreover, they recognize that they cannot mobilize the necessary resources and capabilities for this purpose alone. Hence, they have called for cooperation from all stakeholders including multinational enterprises (MNEs) to assume responsibility and strive to contribute to the SDGs. However, since co-partnering with the state for inclusive development is outside the traditional mandate of MNEs, this chapter explores the ways in which policy can nudge MNEs to contribute to the first pillar of sustainable development, namely SDG1—to end poverty in all its forms everywhere. A two-stage methodology is applied to address the research queries. First, a conceptual framework on impact of MNE interventions on SDG1 is developed. Second, the framework is validated through a meta-analysis of the abstracts of articles selected via a scoping review of the economics and management literature. This leads to an in-depth understanding of policy design features that can nudge MNEs to make positive contributions toward poverty alleviation. Four distinct pathways foreign direct investment (FDI), public–private partnerships (PPP), corporate social responsibility (CSR), and knowledge transfer are identified for nudging MNEs toward SDG1. Nevertheless, the potential impact may not be realized due to the inappropriate strategies of the MNE, the drawbacks of the policies of the host government, and/or systemic challenges of the host country context. This chapter further explores the positive and negative impact on these pathways as a step toward exploring how MNEs can contribute to all the SDGs.
Agri-biotech multinational enterprises (MNEs) are persisting to push genetically modified plant varieties (GMV) worldwide including emerging countries as a technological solution for sustainable development. However, in emerging countries, the structure and effectiveness of regulation and compliance measures to ensure human and environmental safety are much less developed. There are three types of concerns: the economic risks faced by farmers while using existing low-yielding conventional seed varieties, in the face of inadequate institutional mechanisms and safety nets, the long-term environmental risks, and finally, risks posed by other possible externalities. In an attempt to provide some insight on the aforementioned debate, this chapter focuses on a commercially successful GMV—namely genetically modified cotton, also referred to as Bt cotton. The literature on adoption of Bt cotton is first examined, and its findings are confronted with the reality of the introduction and diffusion of Bt cotton in India to derive inferences on how MNE and emerging countries’ governments can manage coexistence. Our findings indicate that in order to be successful, MNEs have to establish the sociopolitical legitimacy of GMV through investment in outreach with regulatory authorities, government departments dealing with the environmental and bio safety, farmer groups, and nongovernmental organizations (NGOs). MNEs also have to keep in mind that pricing and high technology fee can become an impediment for the legitimization of technology. Finally, MNEs can partner with NGOs to educate and accompany farmers to maximize their livelihood, while preserving the ecological sustainability of their farm lands.
Intentions of managers of pharmaceutical multinational enterprises (MNEs) to adopt business strategies, which will aid global health and wellbeing, are in some ways linked with their understanding of the returns that their company will receive from these investments. However, the MNE’s managers are unaware of business strategies that will allow them to link their business activities with the corporate objectives of contributing to Sustainable Development Goals (SDGs). Pharmaceutical companies are moving toward monopolistic practices by acquiring local companies for manufacturing purposes or by engaging local companies in contract manufacturing and directing the focus of these companies away from innovation and toward profit making. At the same time, pharmaceutical MNEs are promoting global health and wellbeing as their SDGs. This study uses knowledge from existing sources and expert insights to explain the returns that MNEs can get from their investments related to global health and wellbeing. One of the important recommendations from the ethical point of view is engaging local firms in the innovation process; from the marketing perspective, this study recommends the use of a corporate brand and not a product brand for offering generic medicines. The operations perspective explains how MNEs can incorporate the social agenda into their mainstream business strategies. Limitations of the study are discussed, and avenues for future research are explained.
MNEs and Capabilities Building in Ghana
This study investigates the impact of multinational enterprises (MNEs) on economic and human development in Africa. Specific focus is placed on the local managerial capability building. Capability building is an important part of the Millennium Development Goals (MDGs) framework and is considered a necessary prerequisite for achieving poverty alleviation targets. The low level of local capabilities is a well-recognized issue in Africa. The study also addresses the emerging stream of research devoted to MNEs from developing countries. Such MNEs have a different level of managerial capabilities, a different corporate culture, and different operation models compared to MNEs from developed countries. This study analyzes the industrial development of Ghana and compares cases of Chinese and European MNEs operating in this country. On the basis of multimethod analysis, we provide extensive policy implications.
Access to affordable and sustainable energy is crucial for the improvement of the well-being of modern societies. Most energy technologies require comparatively high up-front investment, which adds to the challenge of electrification, despite the recognized multiple benefits. Partnership with multinational enterprises (MNEs) can provide necessary investment in infrastructure, finance, and technology for renewable energy and contribute to improving development indicators. However, remote areas with poor infrastructure do not have access to MNEs that are profit seekers. The Brazil experience with MNEs and “Light for All” (LfA) program shows that people gaining access to electricity invest more in businesses, education, health, and women reduce their drudgery at household chores. However, areas having a poor infrastructure in the north remain out of electricity, and attempts to create universal access were failed until a regulatory incentive framework and particular attention from the government was established. This is a great learning for the developing countries aiming to achieve sustainable development goals. A host country can gain development cooperation from MNEs with rightly formulated and implemented policies and regulatory conditions.
The relationship between multinational enterprises (MNEs) and host governments has seen different waves of trust and mistrust. Over the years, it has changed from a period of conflict after World War II, where MNEs were investing for purposes felt to be contradictory to government policies, to a more cooperative one, where countries are providing incentives and competing with each other to attract foreign direct investment (FDI). The 1990s saw the cooperative relationship leading to the danger of race to the bottom through excessive locational competition. In this chapter, we look at the past, present, and future state of this relationship as reported by different scholars from these periods. We look at the most influential literature from the 1970s onward and the current state of this relationship. Our analysis reveals that the increased tensions are caused by anxiety owing to unanticipated developments in the political economy, company strategies, and government policies. Thanks to globalization MNEs are increasingly becoming more powerful and often this process is accelerated owing to lack of any collaboration between MNEs and the governments. Thus, governments, particularly in emerging markets, are becoming more and more frustrated by the fact that on the one hand they want the MNEs to come and invest in their countries and, on the other hand, they feel that they cannot direct these MNEs to contribute toward economic development and poverty alleviation in their countries. In this chapter, we intend to evaluate the past and the present literature and look ahead to the future. Finally, on the basis of our own studies performed in this project and reported in different chapters of this book, we provide some policy guidelines for host country governments as to how they can encourage MNEs to contribute toward sustainable development and poverty reduction.
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- Emerald Publishing Limited
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