Political Ideology and MNEs - Essay Example

In the era of globalization, MNEs act as investors to local economies, either inducing or reducing capital based on perceived political conditions. For example, if an MNE perceives the political ideology of a local government to be hostile to business interests, it can simply pull out of the country and invest that capital at a more favourable country. Authors Daniels et al touch upon this important facet to business practice in their book. Just as governing political ideology have a say in MNE decision making, the converse is also true.

In this way, MNEs as a collective force hold a veto power over the decisions of governments. By collectively threatening to withdraw capital, MNEs can coerce governments into tailoring policies that suit their ends. Such is the world of real politic that often political ideology comes second to the imperatives of business needs. This other, more vicious, side to MNEs’ relationship to political ideology is not exposited in the book. This is a considerable omission, for, often, businesses operate in the world of real-politic and not stated political ideology.

The authors claim in their introduction to the book that their objective is to achieve an “effective balance between authoritative theory and meaningful practice.” But, disappointingly, this objective has not been met by virtue of the afore-stated omission. Just as Political Ideology has an impact on MNE operations, the local culture also has an impact. This facet to MNE management is brought to light by Redpath & Nielsen in their journal article titled ‘A Comparison of Native Culture, Non-Native Culture and New Management Ideology’ published in the prestigious French language journal Revue Canadienne Des Sciences De L'Administration.

One of the challenges facing MNEs when they enter a new market is dealing with local cultural sensibilities. There is no systematic approach to resolving this challenge. Often a charismatic leadership with a tactful and diplomatic approach toward understanding local culture works best. Daniels et al in their book on International Business do not deal with this component of MNE operations in any great detail. On the other hand, the article by Redpath & Nielsen does. They describe “Hofstede’s five key dimensions of national cultural differences and examine the connections between cultural values and management practices.

” (Redpath & Nielsen, 2007) Hofstede’s dimensions are then analyzed to “provide insights into the differences between Native and non-Native cultures and how Native organizations may draw on traditional cultural values to improve organizational effectiveness. In general, Native cultures are described as collectivist, egalitarian, adaptive, and tolerant. The argument is made that the cultural context in which Native organizations operate is in many ways more compatible with the new management ideology than is the society in which this ideology prevails.

” (Redpath & Nielsen, 2007) One of the drawbacks in the book by Daniels and his team is the lack of rigor in referring to economic theories that are the backbone of modern business. For example, the major principles of capitalism as laid down by Adam Smith, and which are still central to modern business operations, do find much mention at all. It should be remembered that capitalism is as much a political ideology as it is an economic system. In the era of neoliberal capitalism, this sparse treatment of theory by Daniels et al is a