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Although multinational enterprises (MNEs), according to John Dunning's work, are driven by motives of ownership, location, internalization and, ultimately, higher returns, these business entities, by virtue of their transnational products and services, and extensive reach and resources, provide direct and indirect mechanisms that can shape political and social outcomes. This paper seeks to explore those mechanisms in the context of the so‐called “Arab Spring”, the popular uprising that has ensued in a number of Arab countries. The paper also aims to explore virtual public spheres, the platform from which the Arab Spring was launched, and which owes much to the presence of MNEs.

The analysis is grounded on the theoretical construct of the virtual public sphere. The approaches taken are that of a general review and secondary research.

The main findings of this paper are three‐fold. First, in the examination of the role of MNEs and the virtual public sphere in the Arab Awakening, it is found that the new information and networking technologies have already made a sizable impact in terms of paving the way toward political and social changes. Second, it is found that foreign investments in Arab media, mobile, and internet markets are dominantly regional. Third, behind the social media phenomenon in the Arab world are “born‐global” American firms (MNEs), notably Facebook, Inc., Twitter, Inc., and Google, Inc.

Most research on the Arab Spring has not incorporated the likely distinctive influence of MNEs. In addition, the paper highlights the association between regional and transnational orientations of business activities of multinational firms and political outcomes.

The purpose of this paper is to investigate the impact of large business corporations, particularly media corporations, such as television (e.g. satellite networks), newspapers and social media (e.g. Facebook), on institutional change in the Arab world, which directly impact political and civil liberties in the region.

Although there are several methods to measure institutional change, this paper relied on Kaufmann et al. (2010)’s governance indicators that capture, historically, how authority is exercised in a nation state. As the focus of this paper is on how information flows have empowered citizens in the Arab world, we built a panel database around one relevant governance indicator: “Voice and Accountability”. As a measure of governance, “Voice and Accountability” summarizes the condition of political, civil and human rights such as freedom of expression and freedom of association in a given country. This indicator takes scores ranging from 2.5, corresponding to strong governance, to −2.5, corresponding to weak governance.

As predicted, the information flows variable has a positive and significant effect on institutional change. Table II also suggests that political globalization has a positive and significant effect on institutional change in the Arab world. In contrast, the variables for cultural proximity and human capital are associated with negative effects on institutional change.

This paper is unique in the sense that it tackles a growing trend in the Arab world, namely, the impact of media on institutions.