Multinational Corporations and Nationality Essay

Multinational Corporations and Nationality - Essay Example The present research has identified that much contrary evidence suggests that even the most global of companies remain deeply rooted in the national business systems of their country of origin. Hu and Ruigrok have argued that MNCs exhibit national characteristics. Very few of the worlds largest companies are production highly internationalized as evidenced by very few Fortune top 100 companies have more than half their production facilities or their workforce outside the country of origin. Even though the home base does not account for the bulk of sales, operations, and employment, the home nation is almost always the primary locus of ownership and control. Board and senior management positions are staffed disproportionately - often overwhelmingly - by home country nationals, strategic decisions tend to be made in the home nation, and innovative activities are also disproportionately located there. The connection between national culture and MNC behavior rests on the academic industr y generated by Hofstede's analysis of `cultures consequences. Wong and Birnbaum, for example, have constructed hypotheses about MNC behavior on the basis of Hofstede's analysis of power distance, that is the perception by individuals of the degree of interpersonal power or influence exerted over them by their superiors in the organization. They found that the acceptance of unequal power distances in the banks home society was highly significant in explaining the centralization of authority in the bank operating in Hong Kong. The analysis using Hofstede’s ideas are said to have inconsistencies that make it unreliable. Hofstede came up with his five dimensions and scores with samples taken only from a single company – IBM. McSweeney points out that generalizing results from IBM employees to a global scale is unthinkable because there are no evidence-based reasons for assuming that the average IBM responses reflected ‘the’ national average.