Example Business Essay: Discuss the basis of the three different views of the motivation of transnational corporation (TNCs) below.

Example Business Essay: Discuss the basis of the three different views of the motivation of transnational corporation (TNCs) below.
The view that TNCs aim to maximise shareholder value is a reflection of the economic model of the firm. This model sees all corporations, including TNCs, as production – distribution units whose sole goal is to provide maximum value to their owners.
As such, under this model TNCs will always pursue maximum shareholder value according to the duty that they have to their owners to maximise the return on investment (Coase, 1937). In contrast, agency theory holds that as the owners appoint managers to act as their agents, the interests of these managers will often override those of the owners. This is particularly relevant for major multinational corporations, who are likely to have a number of disparate owners who are unable to exercise effective control over the managers and the company as a whole. As such, the top managers’ goals can override those of the owners as the top managers are directing the TNC’s activity (Ietto-Gillies, 2001). However, in a major TNC the top managers themselves are often unable to effectively exercise control over the entire organisation, and have to devolve responsibility to divisional and unit managers. In this case, it is the techno-structure itself, defined as the number of managerial and control levels in the TNC, that determines the overall direction of the TNC, with limited influence from top managers and owners. The techno structure defines these interests depending on how many levels of management there are, hence defining how well the owners and top managers can maintain any control.

Example Business Essay: Discuss the basis of the three different views of the motivation of transnational corporation (TNCs) below. 9.5 of 10 on the basis of 913 Review.