Are Multinational Corporations (MNCs) Propellers of 'Organization Revolution'? Financial Management Implications for Developing Countries
M. R. K. Swamy
Om Sai Ram Centre for Financial Management Research
Journal of Financial Management and Analysis, Vol. 19, No. 2, July-December 2006
Multinational Corporations (MNCs) as propellers of 'Organization Revolution' transfer sophisticated and high-level and expensive technology-cum-manpower to developing countries - all in the name of techno-economic development. By taking advantage of good political risk-cum-high credit-worthiness combined with favourable foreign investment climate, MNCs, in the process, earn abnormal profits of 600 per cent by operating through their subsidiaries in developing countries. Overtime, with development tension affecting developing countries coupled with unfavourable foreign investment climate together with stringent measures and controls exercised by developing countries over operating MNCs, they would find their operation in developing countries increasingly difficult and consequently dump all sophisticated technology (machinery etc.) without local manpower and entrepreneurship capable of handling MNC - dumped sophisticated equipment leading to negative returns on capital employed.
Keywords: Multinational corporations, 600 percent abnormal profits, Sophisticated technology, Organization Revolution
JEL Classification: F23, L12, N17, O31, O55Accepted Paper Series
Date posted: April 13, 2007
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