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  • Print publication year: 2011
  • Online publication date: April 2011



The MNC as a political organization

I will argue that the business firm is properly viewed as a political system and that viewing the firm as such a system both clarifies conventional economic theories of the firm and … suggests some ways of dealing with classical problems in the theory of political systems generally.

(March 1962: 663)

Organizations, particularly large ones, are like governments in that they are fundamentally political entities. To understand them, one needs to understand organizational politics …

(Pfeffer 1992: 29)

The above quotes exemplify the reality of the functioning of all large and complex organizations. Large business firms in general and multinational corporations or companies (MNCs) in particular form a large and important set within this group. Yet most theories aimed at explaining the functioning of business firms, both in strategic management and economics either ignore the political dimension of the organization, or treat it as an aberration. In the mainstream literature, the strategy of business firms has traditionally been accepted to be the creation and maintenance of competitive advantage.

As noted by Mintzberg (1979), the operation of a business firm gives rise to both cooperation and conflict. Conflicts can arise between owners and managers in the division of the value created by the firm as well as amongst managers in the struggle for power and control rights within the firm. It is this latter set of conflicts that is the subject of this very topical volume.