Government corruption and the entry strategies of multinationals - Essay Example

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Controversy has reigned in respect of the corporate governance of Multinational Enterprises (MNEs), which has created problems regarding effective corporate governance in relation to activities of a corporate group and multinational enterprises (MNE), with practical difficulties…
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Government corruption and the entry strategies of multinationals
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Download file to see previous pages us of this paper is to undertake a review of the article of Rodriguez et al entitled “Government Corruption and the entry strategy of multinationals” and it is submitted at the outset that it is firstly necessary to undertake a contextual review of the central issues facing MNEs, government corruption and entry mode strategies, which I shall undertake in section 1 as a precursor to the detailed consideration of Rodriguez et al’s arguments in the article.
The limitations of the law as a tool for regulation of MNEs by states was further evidenced by the dictum of Slade LJ in the case of Adams v Cape ([1990] Ch 433) per Slade LJ where he asserted that “we do not accept as a matter of law that the court is entitled to lift the corporate veil against a defendant company which is the member of a corporate group merely because corporate structure has been used so as to ensure that legal will fall on another member of the group rather than the defendant company” (p.544).
Moreover, the UK courts have struggled to address the commercial reality of group companies, indicating a distinct preference for maintaining the sanctity of the separate legal entity principle, which on the one hand arguably facilitates potential for entry mode abuse of the MNE structure or alternatively impedes entry mode depending on the nature of state corruption. Indeed, Rodriguez et al highlight the importance of entry mode strategy to MNE success and therefore it is submitted that the interrelationship between effective governance, corruption and entry level strategy is, which is arguably ignored by Rodriquez et al in their article.
Additionally, group company structures often create problems of effective regulation and accountability, yet existing principles of law have arguably been stretched to ignore separate legal personality within a group, which clearly shapes entry mode strategy (Nygh, 2002). This further indicates a different dimension to the debate regarding corruption and MNE ...Download file to see next pagesRead More
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