One must take note that a multinationalbusiness is not one which just sells goods in more than one country. To be calleda multinational, a business must produce goods or services in more than onecountry. In other words, there is more to multinational companies than onethinks they know. There is a difference between Multinationals and globalcorporations.
The multinational corporation operates in a number of countriesand adjusts its products and practices in each at high relative costs (when theprice of a commodity as it compares to another is high). Meanwhile, the globalcorporation operates with settled constancy at low relative cost as if theentire world is one entity; it sells the same things in the same wayeverywhere. According to the (International Labour Organisation) ILO report “The essential nature of the multinational enterpriseslies in the fact that its managerial headquarters are located in one country,while the enterprise carries out operations in a number of othercountries”. Looking at the impact of multinational companies on their hostcountries, especially in Ireland, there are obvious advantages anddisadvantages in terms of impact on employment, small businesses and culture.Irelandis known as one of the most open economies in the European Union (UN), and thisfor sure is true. IBM in 2010 ranked Ireland as first in the world in terms ofjob creation by foreign investment relative to their population (Walsh, 2010). Over 13,000 multinational jobs were createdin Ireland in 2011.
Twitter, PayPal, Intel, IBM, Coca-Cola, and Pfizer wereamong the major companies which made powerful investments that year. Also, almost146, 000 people are employed by companies which were attracted to Ireland usingthe IDA (Industrial Development Authority). Governments are also said toimprove employment in this case, whereby Subsidiaries are responsible foraiding about half of the manufacturing employment (Berry & McDermott, 2001).Back to the more recent analysis on theemployment sector in Ireland, latest IDA numbers show employment in themultinational sector rose to 187,000 in 2015. This is as a result of IDA-backedfirms creating just under 19,000 jobs in 2015, therefore bringing totalemployment sector to 187,000, which is the highest level in the IDA’s 67-yearhistory.
An estimate was made, stating that for every 10 jobs created by FDI, afurther 7 indirect jobs are generated in the wider economy. This means about318, 000 jobs or one in five private-sector jobs are supported by Iris-basedmultinationals. As a result, by 2020 the IDA’s latest strategy targets thecreation of 80,000 new jobs. For instance, Apple made a heavy investment of€850 million in a new data center in Athenry, Co Galway. Facebook also made a huge investment of€200 million in a new data center in Clonee, Co Meath. This drastically booststhe economy of Ireland.
According to Richard Bruton, the minister for educationand skills, “Multinationals have played a massive role in the state’s economicrecovery”. (Burke-Kennedy, 2016)Multinationalsare said to have dominated the market for different products in Ireland, andthis makes it very difficult for local firms to be able to thrive. For example,supermarkets in Ireland are squeezing the margins of local corner shops, thereforeleading to less diversity. The reason behind this is that due to themultinational companies’ size and scale of operations, they are enabled tobenefit from economies of scale, enabling lower average costs and price forconsumers. Economies of scale are generally known as those factors that canhelp a business reduce their average cost of production as it increases.Examples of this are purchasing, marketing, managerial and technical economies.In developing economies like Nigeria, big multinationals can use theireconomies of scale to push local firms out of business, but for a developedeconomy like Ireland, this may not always be the case as a firm like ‘Penneys’, an Irish owned clothingcompany, has its customers fully interested and cannot be pushed out of themarket.
. According to the Central Statistics Office (CSO), the Irish grossdomestic product (GDP) grew by an enormous 26.3 percent in 2015 rather than the7.8 percent that was previously estimated in March. Another problem small firmsin Ireland face relating to multinational businesses is the fact thatmultinationals can change standards for doing business, therefore putting localfirms in the position of having to upgrade so that they can rise up to the newstandards. In many situations, small businesses are not able to survive becauseof competition between these multinationals they are coming up against. Thiscan be as a result of multinationals offering high volume deals and discountsthat small businesses cannot match.
TheIrish culture is very diverse and is said to be unique, from their customs totraditions, language, music, art, literature, folklore, cuisine and finallysports. But in terms of business, multinationals have influenced some parts ofIrish culture. For instance, fashion chains are impacting the way one dresses,meaning multinational clothing shops like Forever 21, Zara, H&M and otherpopular shops influence the way the Irish dress. Also, industries like Google,Facebook, and Apple, have boosted the usage of technology in Ireland, alongwith other technological industries, meaning that technological advancement isembedded in national cultures.
The common environment (Ireland), shared normsand cultural systems enhance interactive learning and innovation- especially inworkplaces with cultural diversity (Cantwell & Molero, 2003)In the book, Culture of informationEconomy-Influences and impacts on the Republic of Ireland,the author stated that copingwith different cultures can be made easier by focusing on the common point. Shegave an example stating how the Irish workers responded very favorably to theopen, nonhierarchical management style of the American firms, and they saw thisstyle as more similar to Celtic-Irish culture than those essentially Britishmodes of thought, feeling and behavior that they experienced in Irish firms.There was a contrast in that same statement about the Irish workers. She said,”This perception, however, may not always sit well with the indigenouspeople, as was the case in Ireland (Trauth, 2001)”. This wasbecause the viewpoint that was held by the Irish workers and managers was thatwhile multinationals were bringing certain welcomed norms and values to theworkplace, there should also be a significant influence of Irish culture on themultinational sector or industry, combining both international and Irish attitudesduring business. Inconclusion, from the information gathered based on the impacts of multinationalcompanies on employment, small firms and culture in Ireland, it can be saidthat multinationals have a huge role in the economy of Ireland as well as thewelfare of the people living there.
However, not all parts are impacted positivelyby multinationals. Small firms still have to struggle to survive in the marketas these multinationals enjoy economies of scale. The Irish economy hasimproved over time due to the foreign investments made by world multinationalslike Apple and Facebook, making room for development and employmentopportunities all at once.
The diversity of culture does not seem to alter theperformance of most multinationals in Ireland, as in fact, they expose Irishworkers to new values and attitudes for work, improving their level ofdiversity. Therefore we can say multinationals have a large role in thedevelopment of Ireland.ii ReferenceBerry, M.
, & McDermott, M. (2001). Multinationalsin a New Era. Palgrave Macmillan.Burke-Kennedy, E.(2016, January 6).
One-in-five now employed by foreign multinationals. RetrievedOctober 16, 2017, from Irish Times:https://www.irishtimes.com/business/economy/one-in-five-now-employed-by-foreign-multinationals-1.
2486929Cantwell, J., &Molero, J. (2003).
Multinational Enterprises, Innovative Strategies andSystems of Innovation. Cheltenham: Edward Elgar Publishing Limited.McDermott, M. B. Multinationalsin a New Era. Office, C. S. (2014).
Multinational:The Irish Perspective. Retrieved October 28, 2017, from CSO:http://www.cso.ie/en/releasesandpublications/ep/p-bii/bii2015/mns/Trauth, E. (2001). TheCulture of an Information Economy: Influences and Impacts in the Republic ofIreland.
Massachusetts: Springer Science & Business Media.Walsh, K. (2010). TheEconomic and Fiscal Contribution of US Investment in Ireland.
Journal of theStatistical and Social Inquiry Society of Ireland .