EMPIRES OF
PROFIT
Commerce, Conquest and Corporate Responsibility
Book Author - Daniel B. Litvin
Book Review by - S S George
Dean, ICMR Case Studies and Management Resources
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In addition to local complications, multinationals face pressures from groups
in their home countries – at the time of the East India Company, it was the
missionaries and reformers who wished to convert and civilize the heathen in the
colonies.
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Today, there are environmentalists, humanitarian groups, and other NGOs who
pursue agenda of their own. Balancing these conflicting pressures, even
while ensuring the continuation and profitability of the operations in
diverse host countries is a tricky act, and according to the author, one
which few multinational corporations have mastered.
The author does not portray the multinationals as monsters; even the worst of
them, at some point or the other, showed some interest in the ‘natives’ and
their concerns. Alongside the many greedy, corrupt and ambitious men (the
characters discussed in the book are almost invariably men), there were at
least some others who had a relatively – for their time – enlightened view of
things, and believed that they had a responsibility towards the societies and
the people in the countries in which they operated.
The story of the English
East India Company in India is well known; the company began as a trader, and
ended up as the ruler of the country. Initially, the company had no intentions
of becoming an imperial power – indeed, the company’s directors attempted to
steer clear of local political entanglements. |
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However, a combination of personal
ambition and greed, circumstances, and ignorance of local conditions on the part
of the top management of the company (aided by the extremely slow communications
between India and the home country) led to the merchant becoming the
imperialist. As a result, some men became obscenely rich while millions sank
into poverty, and many of the social and political structures in India were
destroyed. Little would the merchants who incorporated the English East India
Company have imagined that their commercial ambitions would have such wide
reaching and long-lasting consequences!
And so it is with most of the examples
in the book. The multinational enters as a trader; but soon, political, personal
and commercial considerations tempt or force the company to meddle in local
affairs. If one goes by the examples in the book, the interventions are often
ham-handed, and made with little understanding of the local social and political
realities. In the short term, the company may see its objectives being met, but
in the longer term, the consequences turn out to be quite different from what
were originally intended – and often harmful to local society and people. The
multinational corporation, once it begins dabbling in local politics, is sucked
into deeper complications , almost against its will. Ultimately, in the long
term all this meddling probably does not help the company either. For example,
the author describes the ‘circularity’ of the English East India
Company’s strategy in India. The company wanted to control more and more
territory, believing that it would lead to greater revenues and profits; but, to
administer the territory it acquired, it was forced to spend more and more on
the military and the bureaucracy; this in turn forced it to look to gain more
territory, to cover its rising costs; and so on, in a spiral that ultimately led
to its destruction.
In India, one of the legacies of the
English East India Company is a general, all pervasive distrust of
multinationals; which, it must be said, appears to be justified if we consider
the activities of some multinationals (for example, Enron and the Dabhol Power
Project) in the recent years
Among the lessons we can learn from the stories in the book, there is this:
Greed and ambition are not confined to the employees of the multinational
corporations; almost always, there are locals eager to become willing
accomplices to the designs of these organizations, in order to further their own
political and commercial ambitions. Without such local support, it is difficult
to see how any of the companies described in the book could have taken root and
thrived in their host countries. In such cases, it is also difficult to
determine who exploits whom. It could be that the locals exploit the
multinational’s ignorance about the host country (and the company’s greed and
ambition); the company exploits their local accomplices’ lack of global
experience and ignorance about the realities in the home country (and, of
course, their greed and ambition). But by the time the sagas play out, the
endings are never what the protagonists intended.
A final thought; the book essentially deals with the failures of multinationals
in dealing with the complexities of societies and cultures in the developing
countries – failures that culminated in setbacks and tons of adverse publicity
for the companies involved. Successful interventions, presumably involve more
subtle moves, which will not come to the notice of the general public and the
press. So, the successful manipulators are probably the ones we do not know
about. Certainly, there are any number of powerful, successful, and low profile
multinational corporations operating in India and other developing countries.
Are our societies and institutions being manipulated by their invisible hands?
Or, could this be just another conspiracy theory?
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This case study is intended to be used as a basis for class discussion rather
than to illustrate either effective or ineffective handling of a management
situation. This case was compiled from published sources.
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