ex/a,m

Running Head: REFLECTION

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Reflection

Do MNC's "rule the world"? Why or why not?

MNCs can rule the world; it is their ability to efficiently operate, coordinate, and adjust for a settlement between the different governments which gives them a lot of power. MNCs may and will relocate the production or manufacturing from a country with a high cost to a country with low-cost labor and production to improve efficiency. Moreover, MNCs also influence the world economy and their respective national economies. As a fact, the choices of MNCs have far-reaching consequences for a broader range of policy concerns such as investment protection, taxation, immigration in various countries with different economic and political structures.

Besides this, MNCs are considered to be more efficient in reaching their target markets because they operate in countries where the target market is located. These companies have easy access to raw supplies and too low labor costs. They can also take advantages of comparative advantages, such as labor costs and technology use. They own firms in other countries and allow them to enter the nation's marketplace (Becker-Ritterspach et al., 2017).

How effective is "shareholder activism"? Provide evidence.

Shareholder activism can be defined as to be a useful management instrument that can be used to enhance corporate governance efficiency. In many cases, shareholder activism is used to improve performance, boost firm value, and improve decision-making. Shareholder activism permits the shareholders to take more ownership and responsibility of the company. They allow them to express their dissatisfaction with issues such as non-financial issues. And the issues such as social, environmental, and governance issues. It also includes the opening up of additional value and earning a higher return on investment (Bobillo et al., 2018).

The example to discuss the effectiveness of shareholder activism includes Wellington Management, the largest shareholder of Bristol-Myers Squibb, who has spoken against a drugmaker with a $74 billion acquisition of biotech Celgene in 2019. This showed a larger shift towards a more shareholder-centric approach for corporate governance (Shekita, 2020).

References

Becker-Ritterspach, F., Lange, K., & Becker-Ritterspach, J. (2017). Divergent patterns in institutional entrepreneurship of MNCs in emerging economies. Critical perspectives on international business.

Bobillo, A. M., Rodríguez‐Sanz, J. A., & Tejerina‐Gaite, F. (2018). Corporate governance drivers of firm innovation capacity. Review of International Economics, 26(3), 721-741.

Shekita, N. (2020). Interventions by common owners. Available at SSRN.