Revisit from the previous parts
The previous parts of this paper have discussed changes on economic coordination leading to the evolution of economic governances. The paper also discussed disputed elements when a multinational enterprise operates in a host country. The final section of this paper will provide recommendations taken by multinational enterprises in devising strategies to cope with conflicting issues between multinational enterprise interests and the host government.
Foresight Steps
We recommend multinational enterprises to adopt foresight steps suggested by Daheim and Uerz (2006) in confronting issues on relations between MNEs and the host government. MNEs should apply four steps: identifying, projecting, anticipating and shaping issues associated with MNE operations in the host country. MNE can then characterize attributes of economic, social, political and environmental issues on each of these steps.
The identification step requires MNE to recognize issues both those in the pasts and developing issues in the current contexts. As disputes between MNE and the host government arise on economic/business, political, social and environmental dimensions, these factors must be taken into account. Past issues can be used as a learning process in which similarities with present issues and recurring issues in the pasts occur either in the exact forms or in different manifestations. These issues can enrich the MNE strategic vocabularies in anticipating long term outcomes that affect MNE operations once the strategic decisions have been made. On the other hand, developing issues are important for projecting the position of the MNE relative to the current and medium term contexts.
Some of the methods used to identify issues that may potentially lead into disputes between MNE and the host government can be in the form of literature studies, surveys or gathering information from experts. MNE can setup an internal organization dedicated to conduct activities associated with the host government – MNE relations. The organization does not necessarily restrict its activities in identifying issues but also can be extended to other steps (e.g. anticipating, projecting and shaping). Hence, the organization may be split into several divisions.
Four steps in confronting issues between MNE and the host government
Some examples on issues that can be identified by MNE are provided in
Results from the identification activities above can be employed as inputs for the projection activities. Based on the identified issues, MNE can project future outlooks that affect MNE operations. Uncertainties that may affect MNE operations can be derived by analyzing results gathered from the identification step. MNE can utilize literature reviews to analyze patterns from past histories and then combined with existing issues, MNE can project future developments based on similarities between data on past histories and identified trends/issues. Another way to project future developments is by using expert recommendations. Identified issues gathered by MNE can be forwarded to futurists to obtain sound judgements on future developments that affect MNE operations. MNE can also conduct scenario exercises to portray future developments. MNE staffs involved in strategic analyses or business developments can participate in scenario exercises. The 2 by 2 matrix highlighting 2 attributes on each element (i.e economic, social, political and environmental issues) can be applied when conducting scenario exercises.
Results from the identification activities above can be employed as inputs for the projection activities. Based on the identified issues, MNE can project future outlooks that affect MNE operations. Uncertainties that may affect MNE operations can be derived by analyzing results gathered from the identification step. MNE can utilize literature reviews to analyze patterns from past histories and then combined with existing issues, MNE can project future developments based on similarities between data on past histories and identified trends/issues. Another way to project future developments is by using expert recommendations. Identified issues gathered by MNE can be forwarded to futurists to obtain sound judgements on future developments that affect MNE operations. MNE can also conduct scenario exercises to portray future developments. MNE staffs involved in strategic analyses or business developments can participate in scenario exercises. The 2 by 2 matrix highlighting 2 attributes on each element (i.e economic, social, political and environmental issues) can be applied when conducting scenario exercises.
Anticipating issues are a creative process. Results from projection activities are crucial to develop strategies and tactics for MNE to secure its operations in the host country. Anticipation should be followed with shaping activities where interactions with key individuals and organizations become essential in maintaining the MNE business. Anticipation requires measures to be taken. MNE should devise carefully its objectives, plans and actions prior to entering into the shaping step. Literature studies on international business particularly the ones which are related with government attitudes and policies towards MNEs must be taken into account. The inputs from projection activities must be well fitted into studies and reviews conducted by experts. Anticipating plans and strategies should reflect scenario writings exercised in the previous steps. In summary, results coming from previous steps must be incorporated in the anticipating steps. Some examples on anticipating issues are provided in
Once the anticipation activities have been formulated, MNE can start taking actions to implement these activities. The larger portion of shaping activities should be directed on interactions with stakeholders affecting MNE business operations. These include interactions with government officials, house representatives/policy makers and lobbyist group (i.e. NGO). The aim of the interaction should be targeted for obtaining prognosis while at the same time influencing these stakeholders to devise policies and actions that maintain the MNE interests. Interactions with stakeholders can also be conducted for obtaining information on the tracks/policies that will be developed by policy makers as well as those policies that will be promoted by lobbyist groups/NGOs to the policy makers. In such case, MNE will have the advantage of gaining information will further enrich inputs for the subsequent steps (i.e. projecting and anticipating steps).
The shaping step can also be done with proactive communications through various media channels. MNE can use newspapers to promote its social responsibility programs or expand its communication channels by applying electronic media for wider coverage. In addition, joining industry associations are very effective to secure the MNE operation particularly if other MNEs within the industry share similar concerns. MNE can use this channel to influence policy makers in devising policies in favour of the MNE.
References
Blomstrom, M., & Kokko, A. (1997). The Impact of Foreign Investment on Host Countries: A Review of the Empirical Evidence.
Dunning, J. (1997). Governments and the macro organization of economic activity: an historical and spatial perspective. Review of International Political Economy, 4(1), 42 - 86.
Krismantari, I. (2008, 29 March ). French Areva to invest $ 15 m for business expansion in Indonesia. Jakarta Post.
