The rise of global inequality and multinational enterprises

[Guest post by my co-author Shasha Zhao. In this post Shasha introduces the special issue that we co-edited with other Middlesex colleagues.]

Until recently IB scholars have showed relatively sparse interest in the societal and economic consequences of the emergence and growth of multinational enterprises (MNEs). However, the world is witnessing a rapid rise in inequalities in both advanced and emerging economies. Therefore, a critical question worth asking is what role MNEs play in the development of this trend.

The special issue articles

In order to better explain the link between MNEs and inequality, this special issue featured an introduction and four articles which offer diverse theoretical and empirical analyses as well as evidence useful in explicating the role of MNEs in contributing to inequality.

  • Zhao, S., Gooderham, P. N., Harzing, A.W., & Papanastassiou, M. (2021) Do Multinational Enterprises Contribute to, or Reduce Global Inequality? Critical Perspectives on International Business, vol. 17, no. 1, pp. 1-7 Available online... - Publisher's version - Related blog post

Interactions between MNEs and national economies

The lead article by Pearce and Tang proposes a four-dimension evaluation framework of MNE performance that highlights the implications in contexts beyond the achievement of firm own financial interests.

The second article is by Narula and van der Straaten who continue the discussion in the first article by offering an insightful commentary on how MNE activities in host economies impact on economic inequality and the importance and urgency of examining such inequality from a within-country perspective. The authors echo the suggestion provided in the first articled that an exploration of the interaction between MNEs and national economies from within these countries can generate important new insights.

The effect of global value chains on individual wages

The third article is by Ramos who focuses on exploring whether individual wages of the locally hired increase or decrease as a result of value-chain activities and how this varies between advanced and emerging economies. The empirical investigation into the wages in Germany and Slovenia over the period 12 years shows mixed results. This finding reflects the fact that inequality is a complex phenomenon to measure and that the effects of value-chain activities on wages can differ by country, by industry and by individual skills.

Critical literature review on MNEs, global value chains, and inequality

The fourth article is by Rygh who provides a comprehensive and critical review of the literature on MNEs, global value chains, and inequality. Apart from identifying several important limitations in the literature, the author develops a conceptual framework outlining channels of effects from MNEs activities on different forms of inequality. This framework provides useful insights for IB scholars in terms of future research avenues in the area of economic inequality.

Personal dedication

To end, the guest editorial team would like to dedicate this special issue to our friend and colleague Professor Robert D. Pearce (University of Reading) for being a major scholarly inspiration for this special issue as well for his specific contribution to this special issue. This article is one of the last pieces he crafted before his passing. We will miss him dearly.

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