This report seeks to clarify this debate by evaluating the work of other researchers. Following the literature work of other researchers, relevant theories including Neo-Classic theory and Global reach has been discussed. Finally the analysis has been done to reach on a conclusion.
Multinational companies have been a force for a century and one group of people believe that these companies have their root in the British East India Company of the 18th century; whereas, the other group believe that root of these companies is in 17th century Dutch (VOC) Verenigde Oost Indische Compagnie (Hijzen & Swaim, 2008). The point of Hijzen and Swaim highlights the point that multinational firms have been a force for a century now and their emergence is not a recent phenomenon.
It is interesting to note that most of the researchers do agree that multinational firms are a force. A general argument is that inward investments made by multinational firm is a force for political, social and economic progress of the state for improving the rights of people however, this approach is limited because of various governments are very repressive (Kuhn). Multinational firms appear to exert powerful force in the developing country especially in the provision of health and safety and they are even more influential than governments and local cultures (Ladou, 1996, pg. 363-366).
Multinational companies not only influence the host countries but they have a strong impact on both home and host states. Japan and United States are two major countries which are either the home countries or sources of FDI in the world, therefore, the role which MNEs are playing in both of these countries are directly influencing the decisions of policy makers and private sector leaders (National Academic Press, n.d., pg.16).
The strong influence of multinational firms is insisting the governments to regulate the operations of these giants. Economic regulation of multinational world is a