Advertisement

Managing Relationships with the Indian Government: The Critical Challenges for Multinational Firms

  • Rajesh Kumar
  • Anand Kumar Sethi
Chapter

Abstract

Historically, the relationship between multinational firms and developing countries has been that of conflict.1 This “conflict” view found its expression in the “obsolescence bargaining model” developed by Raymond Vernon.2 This model conceptualized the relationship between multinational firms and host countries in terms of the key construct of bargaining power. When a multinational firm first enters a host country, it has the bargaining advantage at the point of entry but this advantage is lost once the multinational firm invests in the country. The fixed assets of the firm now become a hostage to the policies of the host country and the government can potentially alter the terms of the new bargain in its favor. This framework was originally applied to explain the expropriation of assets of multinational firms active in the natural resources sector. Subsequently, the framework was utilized for explaining investment of multinational firms in the manufacturing sector but with much less convincing results.3

Keywords

Host Country Foreign Investor Indian Environment Nongovernmental Organization Multinational Firm 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Notes

  1. 1.
    R. Vernon (1971). Sovereignty at Bay: The Multinational Spread of US Enterprises. New York: Basic books.Google Scholar
  2. 3.
    S. Kobrin (1987). “Testing the Bargaining Hypothesis in the Manufacturing Sector in Developing Countries.” International Organization, 41: 609–638.CrossRefGoogle Scholar
  3. 4.
    R. Narula and J.H. Dunning (2000). “Industrial Development, Globalization, and Multinational Enterprises: New Realities for Developing Countries.” Oxford Development Studies, 28: 141–167.CrossRefGoogle Scholar
  4. 5.
    Y. Luo (2001). “Toward a Cooperative View of MNC-Host Government Relations: Building Blocks and Performance Implications.” Journal of International Business Studies, 32: 401–419;CrossRefGoogle Scholar
  5. R. Vernon (1998). In the Hurricane’s Eye: The Troubled Prospects of Multinational Enterprises. Cambridge, MA: Harvard University Press.Google Scholar
  6. 7.
    L.T. Wells. Jr. (1998). “Multinationals and Developing Countries.” Journal of International Business Studies, 29: 101–114.CrossRefGoogle Scholar
  7. 8.
    L. Eden, S. Lenway, and D.A. Schuler (2004). “From the Obsolescing Bargain to the Political Bargaining Model.” Paper presented at the workshop “International Business and Government Relations in the 21st Century,” Thunderbird, Phoenix, Arizona, January 5, 2004.Google Scholar
  8. 9.
    R. Ramamurti (2001). “The Obsolescing ‘Bargain Model’? MNC-Host Developing Country Relations Revisited.” Journal of International Business Studies, 32: 23–39.CrossRefGoogle Scholar
  9. 11.
    K.E. Meyer (2004). “Perspectives on Multinational Enterprises in Emerging Economies.” Journal of International Business Studies, 35: 259–276.CrossRefGoogle Scholar
  10. 13.
    L. Alfaro (2002). Foreign Direct Investment. Cambridge, MA: Harvard Business School Press.Google Scholar
  11. 16.
    R.E. Kennedy and R.D. Telia (2001). Corruption in International Business (B). Cambridge, MA: Harvard Business School Press.Google Scholar
  12. 18.
    T.J. Palley (2002). “The Child Labor Problem and the Need for International Labour Standards.” Journal of Economic Issues, 36: 601–615.CrossRefGoogle Scholar
  13. 21.
    M. Patibandla and B. Petersen (2002). “Role of Transnational Corporations in the Evolution of a High Tech Industry: The Case of India’s Software Industry.” World Development, 30: 1561–1577.CrossRefGoogle Scholar
  14. 22.
    I. Ivarsson and C.G. Alvstam (2004). “International Technology Transfer to Local Suppliers by Volvo Trucks in India.” Tijdschrift voor Economische en Sociale Geografie, 95: 27–43.CrossRefGoogle Scholar
  15. 24.
    D.J. Encarnation (1989). Dislodging Multinationals: India’s Strategy in Comparative Perspective. Ithaca, NY: Cornell University Press.Google Scholar
  16. 26.
    J.B.P. Sinha (2004). Multinationals in India: Managing the Interface of Cultures. New Delhi: Sage.Google Scholar
  17. 32.
    T.U-M. Nazki (2004). “Business Confidence for FDI in India.” Hyderabad, India: ICFAI Business School Case Development Center.Google Scholar
  18. 33.
    Cited in A. Perry (2004). “An Eternally Faltering Flame: Despite its Billion-Plus Population, India is always an Also-Ran at the Olympics. August 16. www.time.com/asia/magazine/article/0Google Scholar
  19. 34.
    N. Bardhan and P. Patwardhan (2004). “Multinational Corporations and Public Relations in a Historically Resistant Host Culture.” Journal of Communication Management, 8: 246–263.CrossRefGoogle Scholar
  20. 35.
    Cited in R.H.K. Vietor and E.J. Thompson (2004). India on the Move. Cambridge, MA: Harvard Business School Press.Google Scholar
  21. 36.
    V.K. Rangan and A. McCaffrey (2004). Stakeholder Analysis: Enron and the Dabhol Power Project in India. Cambridge, MA: Harvard Business School Press.Google Scholar
  22. 40.
    P. Dittakavi (2003). “Coke and Pepsi in India: Pesticides in Carbonated Beverages.” Hyderabad, ICFAI Knowledge Center.Google Scholar
  23. 44.
    N. Assanie, Y.P. Woo, M.A. Jans, and J. Purves (2003). Emerging India: Canadian Business Perceptions on Trade and Investment (p. 15). Vancouver: Asia Pacific Foundation of Canada.Google Scholar
  24. 45.
    R. Kumar (2000). “Confucian Pragmatism vs Brahmanical Idealism: Understanding the Divergent Roots of Indian and Chinese Economic Performance.” Journal of Asian Business, 16: 49–69; B.S. Raghvan (2002). “Nettle that Nobody Grasps—Bureaucratic Cobwebs Defy Brooms.” Businessline. March 26.Google Scholar
  25. 46.
    G. Das (2002). The Elephant Paradigm: India Wrestles With Change. (p. 62) New Delhi: Penguin Books.Google Scholar
  26. 49.
    C. Rufin, U.S. Rangan, and R. Kumar (2003). “The Changing Role of the Electricity Industry in India, China, & Brazil: Differences and Explanations.” American Journal of Economics and Sociology, 62: 649–675.CrossRefGoogle Scholar
  27. 51.
    R.E. Kennedy and R.D. Telia (2001). Corruption in International Business (A). Cambridge, MA: Harvard Business School Press.Google Scholar
  28. 55.
    J.P. Doh, P. Rodriguez, K. Uhlenbruck, J. Collins, and L. Eden (2003). “Coping with Corruption in Foreign Markets.” Academy of Management Executive, 17: 114–127.CrossRefGoogle Scholar
  29. 57.
    M. Habib and L. Zurawicki (2002). “Corruption and Foreign Direct Investment.” Journal of International Business Studies, 33: 291–307.CrossRefGoogle Scholar
  30. 61.
    K.K. Tummala (2002). “Corruption in India: Control Measures and Consequences.” Asian Journal of Political Science, 10: 43–69 (p. 51).CrossRefGoogle Scholar
  31. 64.
    J.E. Campos, D. Lien, and S. Pradhan (1999). “The Impact of Corruption On Investment: Predictability Matters.” World Development, 27: 1059–1067.CrossRefGoogle Scholar
  32. 65.
    A. Karnani (1996). Competing for the local Market: local Firms vs MNCs. New Delhi: Indian Institute of Foreign Trade.Google Scholar
  33. 70.
    T. Kostova and S. Zaheer (1999). “Organizational Legitimacy under Conditions of Complexity: The Case of the Multinational Enterprise.” Academy of Management Review, 24: 64–81.Google Scholar
  34. 71.
    R. Kumar (2004). “Interpretative Performance and the Management of Legitimacy in Emerging Market Economies: Lessons from India.” Business and Society Review, 109: 363–388.CrossRefGoogle Scholar
  35. 78.
    C.K. Prahalad and A. Hammond (2002). “Serving the World’s Poor, Profitably.” Harvard Business Review, September 4–11, 80: 9.Google Scholar
  36. 79.
    E. Szwajkowski (2000). “Simplifying the Principles of Stakeholder Management: The Three Most Important Principles.” Business and Society, 39: 379–396.CrossRefGoogle Scholar
  37. 81.
    P. Ghandikota (2002). When “Power Failures” Undermine International Business Negotiations: A Negotiation Analysis of the Dabhol Power Project. Mald Thesis, Boston, MA: Fletcher School of Law and Diplomacy.Google Scholar

Copyright information

© Rajesh Kumar and Anand Kumar Sethi 2005

Authors and Affiliations

  • Rajesh Kumar
  • Anand Kumar Sethi

There are no affiliations available

Personalised recommendations