Multinational Enterprises from Asia are ‘Born Global’

Subject: Globalization
Pages: 2
Words: 347
Reading time:
2 min

The nature of most multinational enterprises (MNEs) in Asia is characterized by globalization and semi-globalization. MNEs expand internationally in assuming that specific markets are integrated for their specific use and not in terms of there being a homogeneous existence of location advantages. The benefits of setting up fully integrated manufacturing facilities facilitate benefits of economies of scale and the ability to gain from the national differences.

Contrary to such practices is the case of the firms that focus only within their home country and operate quasi autonomously in different countries whereby the sole strategy pertains to responding to the provided guidelines and processes within the given framework. Empirical evidence in this regard has suggested that activities of MNEs are conducted more within the host country to gain from the accrual of economies of scale within the region in terms of low-cost skilled labor and availability of resources at competitive prices.

Economies are taken advantage of by MNEs by way of operating in countries that are geographically different to achieve greater regional cohesion. Development for MNEs requires partnering between the state and the market with the requisite division of responsibilities so that there is the creation of a competitive and well-functioning market economy with the main objective of raising living standards and reducing the gaps amongst countries regarding incomes and technology. With the developmental policies pursued as a result of the WTO initiatives, the production of goods and services is now being increasingly left to the market forces.

Firms can thus produce goods and provide the required services as per consumer demands in aiming at improving their entrepreneurial capabilities. Asian governments are increasingly bringing about policy changes to enable companies to compete in a healthy environment with the least red tape and bureaucratic practices. There is thus an advantage for MNEs in terms of a level playing field by way of the availability of the much-needed infrastructure along with the required legal framework that ensures macroeconomic stability and correction in market imperfections.