Origin and characteristics

This entry was posted by on Tuesday, 16 February, 2010 at

Origin and characteristics of the multinational’s best known commentator on the origin and consequences of multinationals as John Kenneth Galbraith, who since 1967. proclaimed that the elevation to the primacy of the types of companies from the Second World War has profound implications for economic, social and political. Meanwhile, the other argues that they outweigh the risk problem, central to traditional businesses, which achieved mainly due to the strengths of one hand to be in a position to obtain long-term contracts in the area of both buying and selling (included with unions) and relations with other countries and to expand its activities to the financial sector. A consequence of the above, free competition as conceived in the classical conceptions ceases to exist and becomes a situation of, at best, imperfect competition. For example, a condition of real competition is the right information and independent.But multinationals distort that information through the control of advertising, which now extends to the production of complete lines of magazines or newspapers. No doubt some of these companies became very large and spread to various countries or regions, but in the classical companies of the Rockefellers, Vanderbilts, Carnegies, or the owner was Rothschild who made the decisions. That situation began to change in the first two decades of the twentieth century. Already in 1911 Schumpeter refers to the importance it assumes what might be called the “professional entrepreneur” (entrepreneur) who is (in the words of Schumpeter) “the guy who takes no personal financial risk. Adam Smith had a very critical view of this situation. For him, risk and the reward was a matter between individuals who are in the free market.How could these individuals compete freely if they delegate their representation to others in fact, as can be competitive if the owners of any property or service (from labor to capital) are grouped to share or reduce the risk this situation is simply a market distortion. Galbraith points out another consequence of the rise of professional business, a result that follows directly from the classical perception of the economic behavior of individuals. That business shall inevitably pursue their interests-both as individuals and as a group the same way that other individuals or groups seek to manipulate the market in order to benefit, these entrepreneurs are doing. Smith himself the situation before the shareholders, which are what Smith terms assume the economic risk will only receive “what the directors consider it appropriate to give them” About “the directors” says that “without an exclusive privilege … have generally mismanaged the company.And with that privilege, they have both mismanaged and have restricted Much has been written about the nature and role of “entrepreneur.” Generally those who consider themselves supporters of capitalism and liberalism (in its classical or neo versions ) forget that aspect of the position both of Smith, Schumpeter and others to focus on another part of the Schumpeterian analysis: the entrepreneur as an innovator (see entrepreneur). While it is true that Schumpeter identifies that professional manager as an innovator, it is equally true that that innovation is not necessarily favorable to investors or to society in general because, as Galbraith points out, is not and can not be motivated by a desire to better others, but staff. In a society where everyone pursuing personal interest, you can not expect that those who control firms are the exception are those motivated by the good of others. That the business and professional firms manipulate the market for personal gain is not just a moral or legal question.Beyond extreme cases such as Enron – the problem lies in the perception of mismanagement Smithian and restriction of the company. In that sense it exemplarity the case of IBM, one of the first modern multinational, which starting from a strong position in the market came almost to the bankruptcy of the late twentieth century (in 1993 IBM announced the biggest loss was in the history of that country to date: U.S. 4.97 billion in 92), a situation that was due to a phenomenon foreseen by Galbraith: proliferation of bureaucracy in the form of more and more layers of managers: one says that IBM came to managers have more than ten per employee who worked at the same time, these layers are transformed into a real brake on innovation at each layer needed to do an analysis before recommending action to the next level.

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