Environmentalism and the multinational corporation: a viewpoint‐part II

This is Part Two of a two‐part paper on environmentalism and the multinational corporation. Part One was published in the previous issue of this journal.

In Part One, we explored the concept of “power as capability” as seen in the rationale for international production, namely, ownership, locational, and internalization advantages. In this Part, we apply the concept of “power as influence” to re‐examine the bargaining power of the host country, the MNC, the home country, and Non‐Governmental Organizations. It is argued that in the initial bargaining with LDC host country, the power balance is tipped in favor of MNC as the lack of technical expertise may hinder feasibility assessment of pollution performance. However, over time, the bargaining power of LDC host increases, but constrained by the momentum of globalization. The power of the MNC is higher in manufacturing than in extractive industries. Home country plays an important role in influencing the formulating of corporate environmental policies by the MNC. The influence of NGOs is minimal while a lack of effective international pressure on MNCs arises from the non‐existence of a powerful a supranational IGO.