The Impact of Multinational Corporations on the Sovereignty of Western Nations - Essay Example

The Home State has the power and authority to regulate the activities of these MNCs and set up laws that can control and impact their affairs both locally and internationally (Scott, 2012). The Home State of an MNC also must provide support services and assistance including a properly coordinated chamber of commerce system and all the vital diplomatic support necessary to achieve results in the foreign markets.

International regulations have their roots in the 1945 United Nations Charter which gave impetus for the formal recognition of numerous multinational organizations which set up various rules and regulations governing international trade. These rules are not absolute, nor are they strictly enforced. This has given room for most multinational entities to tilt towards a trend of self-regulation (Haufler, 2013). This implies that to a large extent, most of the rules and regulations regarding what MNCs should do on the international front are moral rather than legal.

Thus, there are numerous options and opportunities for these MNCs to disregard important regulations and carry out activities on their own accord. Despite this, the international legal framework is not as non-functional as it might seem. Some authorities argue that in some specific sectors like banking, there is global coordination and international rules are highly advanced and functional (Grubel, 2009). This is because these sectors are considered vital and there are effective international community organizations that set up rules that they apply significantly in most contexts and situations (Ruggie, 2014).

However, in an overall sense, it can be stated that multinational corporations have the power to override most of these regulations as a choice. On the other hand, some entities like banks evade these laws for international coordination. A case in point is the Western banks that evaded international laws like the Gate-Seagull Act of 1980 which gave room for the global financial crisis of 2008.