Transnational corporations: international citizens or new sovereigns?

Dennis A Rondinelli suggests that new systems of countervailing power may be needed to encourage further corporate citizenship while preventing potential abuses of political and economic power.

The growth of transnational corporations (TNCs) is increasing their influence around the world. Together and individually they work with international agencies and non-governmental organisations (NGOs) to define policy issues and even intervene on their own account to solve social problems. Within and across industries they develop, put in place and police selfregulatory codes. They also help to shape regulatory policies or administrative decisions by governments and international organisations on key business issues.

Increasingly they are sources of charitable giving to poorer countries and deprived groups via direct corporate contributions and executives’ personal and family foundations. They endeavour to influence public opinion through socially targeted advertising campaigns and use their wealth to affect the way governments deal with social, economic and environmental problems.

In both advanced economies and developing countries the privatisation of a wide range of what had previously been thought of as “public goods and services” – such as telecommunications, transport, health, education, utilities, job training and vocational education, and even safety and security – has moved decision making about resource allocation, terms of service provision, service coverage and pricing from the public sector to the private sector. This increasing public influence on both business and public policy wielded by giant corporations around the world raises questions. Are they acting solely in their own interests (to the detriment of unorganised and poorer groups)? And do their public roles distort or pre-empt the legitimate regulatory functions of sovereign national governments?

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