1

OKONKWO NGOZI RITA

PG/MBA/09/53842

PG/M. Sc/09/51723

INTERNATIONAL BUSINESS MANAGEMENT-AN ASSESSMENT OF THE ROLE OF MULTINATIONAL CORPORATION IN

NIGERIA

MANAGEMENT

A THESIS SUBMITTED TO THE DEPARTMENT OF MANAGEMENT, FACULTY OF

BUSINESS ADMINISTRATION, UNIVERSITY OF NIGERIA ENUGU CAMPUS

Webmaster

Digitally Signed by Webmaster’s Name

DN : CN = Webmaster’s name O= University of Nigeria, Nsukka

OU = Innovation Centre

MAY, 2011

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INTERNATIONAL BUSINESS MANAGEMENT-AN ASSESSMENT OF THE ROLE OF

MULTINATIONAL CORPORATION IN NIGERIA

BY

OKONKWO NGOZI RITA PG/MBA/09/53842

DEPARTMENT OF MANAGEMENT

FACULTY OF BUSINESS ADMINISTRATION UNIVERSITY OF NIGERIA

ENUGU CAMPUS

SUPERVISOR

PROF. J.U.F EWURUM

MAY, 2011.

3

TITLE PAGE

INTERNATIONAL BUSINESS MANAGEMENT-AN ASSESSMENT OF THE ROLE OF

MULTINATIONAL CORPORATION IN NIGERIA

BY

OKONKWO NGOZI RITA PG/MBA/09/53842

DEPARTMENT OF MANAGEMENT FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA ENUGU CAMPUS

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF

BUSINESS ADMINISTRATION IN MANAGEMENT

SUPERVISOR

PROF. J.U.F EWURUM

MAY, 2011.

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CERTIFICATION

This is to certify that this research work carried out by

Okonkwo Ngozi Rita with Registration Number

PG/MBA/09/53842, presented to the Department of

Management, Faculty of Business Administration, University

of Nigeria Nsukka, Enugu Campus has been accepted and

approved having met the requirement for the Award of Master

of Business Administration (MBA) in Management.

………………………………… OKONKWO NGOZI RITA

PG/MBA/09/53842

…………………… Date

………………………………… ………………………………… PROF. J.U.F. EWURUM PROF. J.U.F. EWURUM (Supervisor) (Head of Department)

………………………………… ………………………………… Date Date

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DEDICATION

This work is dedicated to Almighty God. And also to my

lovely Mum, Mrs. Mercy Okonkwo and to my beloved Brother,

Daniel Akalum to their moral and financial support.

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ACKNOWLEDGEMENT

A research of this nature would not have been successful

without the help and contribution of many individuals.

It is because of the above reason that I heartfully

acknowledged the helpful comment from Prof. U.J.F Ewurum

who despite his tight schedule found time to supervise this

research project, make some constructive criticism and

correction.

My sincere appreciate also goes to my immediate family

who endure and managed during my absence in pursuit of

this programme and to many others from whose books,

journals and publications I have abstracted information from.

My special thanks goes to my chaplain Rev. James Igwiro and

my friend Raphael Okonkwo and others. I owe immense debt

of gratitude.

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ABSTRACT

The main objective of this study was to look, at international business management and assess the role of Multinational Corporation operating in Nigeria, in terms of their contribution to the socio-economic and technological development of the nation. The study was carried out in some selected multinational and it covered staff (respondent), 120 in number with at least secondary education. Data were collected mainly through structured questionnaires interviews and other secondary sources. The MNC are contributing to the economics and technological development of the nation. The economic contribution is moderate while the technological contribution is in adequate. The MNC are socially responsible that is to say, they are contributing to the social development of Nigeria. But this contribution was found to be inadequate. Finally, the work was concluded with a recommendation on further research and conclusion of the finding.

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TABLE OF CONTENTS

Title Page … … … … … … … … … i

Certification … … … … … … … … ii

Dedication … … … … … … … … iii

Acknowledgement … … … … … … … iv

Abstract … … … … … … … … … v

Table of Contents … … … … … … … vi

List of Tables … … … … … … … … ix

CHAPTER ONE: BACKGROUND OF THE STUDY

1.1 Introduction … … … … … … … 1

1.2 Objective of the Study … … … … … 7

1.3 Scope of the Study … … … … … … 8

1.4 Limitation of the Study … … … … … 8

1.5 Research Questions … … … … … … 9

1.6 Significance of the Study … … … … … 10

1.7 Definition of the Terms … … … … … 10

References … … … … … … … … 12

CHAPTER TWO: LITERATURE REVIEW

2.1 The Inducement Factors and Entry Strategies into Multinational Business … … … … 13

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2.2 Entry Strategies into Multinational Business … 14

2.3 Environmental Factor Affecting the MNC … … 15

2.4 The Managerial Functions in International Business 20

2.5 Management Policies and Strategies of MNC … 25

2.6 The Role of MNC as a Business Unit … … … 31

2.7 Benefits of MNC to Host Countries … … ... 36

2.8 Activities of MNC in the Development of Nigeria … 38

2.9 The Shortcomings of MNC in Nigeria … … … 44

2.10 Summary of Literature Review … … … … 51

References … … … … … … … … 53

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Sources of Data … … … … … … 59

3.1.1 Primary Data … … … … … … 59

3.1.2 Secondary Data … … … … … 60

3.2 Data Presentation and Analysis … … … … 60

3.3 Validity and Reliability of Measuring Instruments 60

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION 4.1 Data Presentation … … … … … … 62

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CHAPTER FIVE: DISCUSSION OF FINDINGS, RECOMMENDATIONS AND CONCLUSION 5.1 Discussion of Findings … … … … … 94

5.2 Recommendations … … … … … … 101

5.3 Conclusions … … … … … … … 104

Bibliography … … … … … … … … 106

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LIST OF TABLES

Table 1: Sex of Respondent … … … … … 62

Table 2: Age of Respondents … … … … … 63

Table 3: Nationality of Respondents … … … 63

Table 4: Level of Formal Education … … … … 64

Table 5: What is the Name of Your Company? … 65

Table 6: How Long Have You Worked in Your Company 66

Table 7: What is Your Rank/Status in your Company? 67

Table 8: Where is the Headquarters of your Company? 68

Table 9: Which of the following Environmental Factors Affect(s) your Company’s Operation in Nigeria? 69 Table 10: What Factor(s) in your Opinion Motivated your Corporation into having Subsidiary Operations in Nigeria? … … … … … … 70 Table 11: How would you Rate MNC Response to Government’s call for Direct Foreign Investment in Nigeria? … … … … … … 71 Table 12: Do You Agree that Foreign Investment has the Capacity of Boosting the Nation’s Economy? 72 Table 13: Do you Think that MNC in Nigeria Should Play an Active Role in the Socio-Economic Development of the Nation? … … … … … … 73 Table 14: How do you Rate the Contributions of your Company to the Economic Development of Nigeria? … … … … … … … 74

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Table 15: How do you respond to the Association that MNC in Nigeria are mainly Interested in Profit Maximization … … … … … … 75 Table 16: Do you Agree that MNC in Nigeria do Repatriate Huge Profit to Home Countries? … … 76 Table 17: What Effect do you Think it will have on Nigerian’s Economy if the Money Repatriated from it is Higher than the Foreign Investment? … 77 Table 18: If MNC do Contribute to Governments Revenue Thorough, what Means is this Date? 78 Table 19: The Operations and Existence of NC in Nigeria often Bring about Unfavourable Competition for Local Firms … … … … … … 80 Table 20: Do You Think that MNC in Nigeria are Contribution to the Technological Development of Nigeria Encouraging? … … … … 81 TABLE 21: If yes is this Contribution Encouraging? 82 Table 22: If your Company is contributing to the Social Development of Nigeria, in What Areas are they Doing this? … … … … … 83 Table 23: Are these Contributions Adequate? … … 85

Table 24: How do you React to the Assertion that mainly Unskilled Indigenous Labour are Employed by MNC? … … … … … 86 Table 25: Expatriate Staffs of MNCS are paid better Salaries than Indigenous Staff of some rank in the same Company … … … … … 87

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Table 26:What is your view about the as Assertion that Some Sensitive Management Position in MNC are the Exclusive Reserve of Expatriates … … 88 Table 27: If true, why is to so? … … … … … 90

Table 28: How Does your Corporation Respond to People in the Immediate Environment in case of any Accidents (Natural Disaster Pollution etc?) 91

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CHAPTER ONE

BACKGROUND OF THE STUDY

1.1 INTRODUCTION

National or domestic business not withstanding there is a

literally a whole world out there for business to deal with. Just

imagine, Coke (Coca-Cola product) is sold all over the world.

American motors is building its jeeps in Japan, Scores of

Boeings Jetliners fly for various countries airlines. Peugeot is

assembled in Nigeria, you may carry a sony portable radio,

drive a Toyota car, wear Italian shoes here in Nigeria and any

other part of the world. They are all prove or evidence of

international business.

During the past three to four decades, the world has

experienced the growth of an economic phenomenon the

multinational corporation (MNC). Hicks and Gullet (1981),

maintain that MNC are involved in the international business,

through one exporting, licensing, franchising, joint venture,

foreign branch or wholly owned subsidiaries.

Whole the MNC is not new, its importance, power and

consequences have come to be appreciated fully only recently.

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For instances, consider the significant role that large

Multinational Oil Companies are playing in the economic

systems of the World in General and Nigeria in particular. To

press home point, hear what a former Managing Director (MD)

of NNPC L.A. Amu, said about Nigeria economy.

“The Nigeria economy can largely be described as one

with a strong petroleum industry superimposed over an

undeveloped industrial base”. This is a kind of testimony of

the positive role of Multinational Oil Company in Nigeria

Economy. For without the oil companies, there would not have

been an oil or petroleum industry in the initial place.

According to Megginson, et al (1988) “MNC are more than

just giant business firms, for they tend to have social, and

even political effects as well as economic ones in their host

countries”. KINARD (1985) could not agree with this vie, when

he said that huge corporations like MNC, play not only

economic roles but also important political and social roles in

their environments.

For obvious reasons multinational business has its own

peculiarities. It involves different countries. Hence, it is

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influenced by different environmental factors in these

countries. Therefore international business management or

multinational management is equally peculiar and

challenging. Multinational managers have to formulate or

device separate policies and strategies to survive in the

different environment.

Though it is the responsibility of a country government,

like that of Nigeria to imitate programmes and actions for her

socio-economic growth and development, but governments’

resources more often than not appear inadequate to discharge

those obligations effectively.

Megginson et al (1988) maintain the “MNC are more than

just giant economic units.

In many cases, they are nearly a form of government,

richer and more powerful than some of the countries in which

they are operate. For example, in a typical year, the combined

sales of Exxon, General Motors and Royal Dutch Shell Group

exceeded the GNP of most industrialized nations of the World”.

Hence, it is not out of place for society to expect and press

these MNC to assume a key role in the socio-economic

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development of their host countries. At least if for nothing else,

they should endeavour to live up to their corporate social

responsibilities. Meginson et al (1988) puts it this way.

“Today’s international business firms are expected to

contribute to the host nation’s economic growth and

development as well as to produce a profit for the owners’.

What they are saving is that MNC should not only be

interested in profit maximization in their host countries,

rather, they should equally assume other roles that will benefit

the society as well.

These societal expectations and demands and other

intricate issues in multinational business, as stated earlier,

pose great challenges to the management of MNC. For

example, any disruption to their operations as a result of crisis

between the company and host country/community like the

Ogoni-Shell dispute, will be detrimental to especially the

interest of the company and to other interest groups.

Therefore, multinational managers have to strike a rather

difficult balance between meeting societal expectations and

demands as well as other business demands.

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Multinational corporations have been praised by many

people are agents of social, economic and technological

development of their host countries on the other hand,

however, other people feel an regards MNC as instruments of

exploitation in their host countries. These two views are based

on the extent to which the MNC have met the societal

expectations and demand as well as business expectations

and demands, in their environment.

There are many of such corporations operating in Nigeria.

They are mainly American, European, or Asian corporations,

and they are into high technology areas such as agriculture,,

construction, mining, manufacturing etc. Some of them are

coca-cola, Mobil, Julius Berger. Pfizer, Shell, Glaxo and KLM

etc. Expectedly, there are diverse opinions regarding their

impact or role in the country. Therefore, this research intends

to present a clearer picture of their actual role in Nigeria here

for a long time now. This fact not withstanding, Nigeria is still

technologically backward.

Secondly, most of these MNC have been reported to

recruit home-office personnel (expatriate managers) to fill key

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executive positions instead of Nigeria managers. This does not

help the unemployment situation in the country.

Thirdly, it is claimed by some people that the MNC in the

country have contributed to the collapse of some domestic

companies.

In addition, the host communities of some of the

multinationals were constantly cried out that the MNC

operating in their area are not socially responsible. The Ogoni-

Shell Crisis is a case in point in this regard.

Moreover, it has been observed that these multinationals

make the repatriate huge amount of profit always, with little or

no reinvestments in the country. Also they appear to be

interested only in profit maximization to the detriment of the

nation. Base on the above, most people say that MNC are just

another form of imperialism exploiting people in under

developed nations in general and Nigeria in particular.

On the other hand, however, there are those who believe

that MNC are positive forces of social, economic and

technological development in their host countries.

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As a result of the above contrasting views. It becomes

absolutely necessary to carry out this research to assess the

actual roles of the MNC operating in Nigeria.

1.2 OBJECTIVE OF THE STUDY

The board objective of this study is to look at

international business management and assess the role of

MNC operating in Nigeria.

The specific objectives of this study are:

a) To ascertain whether the multinational corporation in

Nigeria are social responsible.

b) To ascertain whether the MNC in Nigeria have any

contribution to the economic advancement of the nation.

c) To ascertain whether they contribute to the technological

development of Nigeria.

d) To determine the environmental factors that influences

the operations of the MNC

An attempt will be made to collate the activities of these

corporations and examine their respective and collective roles

in the development of Nigeria.

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1.3 SCOPE OF THE STUDY

For obvious reasons, it will be difficult for a single

researcher to study the activities of al the multinationals

operating in Nigeria. This research therefore covered the socio-

economic and technological contributions of selected

multinational operating in Nigeria.

It is the intention of this researcher to arouse the interest

of future researchers, students and other interested groups in

the areas in question. This is so because; the researcher was

not able to give an exhaustive coverage of this interesting and

wide topic.

1.4 LIMITATION OF THE STUDY

An exhaustive and more detailed research of this topic

would have been carried out but for some obvious constraints

of time and finance.

Moreover, some staff of these, MNC were very UNCO-

operative in respect of giving out information. Either the

information sought is in a file with the inscription “out of

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BOUNDS”. Some either said they were to busy to respond to

questions or they were not allowed to.

1.5 RESEARCH QUESTION

The research questions for this research are:

a) Are MNC in the country socially responsible?

b) Are MNC contributing to the technological advancement

of the nation?

c) Are they contributing to the manpower development of

Nigeria?

d) Are the MNC in Nigeria most interested in profit

maximization?

e) What impact has the repatriation huge profit to home

countries by MNC in Nigeria on the nation’s economy?

f) What effect has the foreign investment of these MNC on

Nigeria’s economy?

g) What effect has the operation and existence of these

corporations on the local business firms?

h) Are they helping to reduce the unemployment rate in

Nigeria?

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1.6 SIGNIFICANCE OF THE STUDY

This study will be a great significance because; it will put

improper focus and will create awareness on the real role of

MNC in Nigeria. It will show whether they are helpful or

harmful to the nation. The findings will be useful to both

government and the management of MNC in future

development planning. Also it will be beneficial only social

researchers, environmentalists, but students in international

business management and academicians generally.

1.7 DEFINITION OF THE TERMS

International Business and international business

management.

International business according to John et al (1984)

refers to economic transactions that involve several countries,

while international business management is simply the

management of business transaction between citizens,

companies, or governments of two or more nations.

Multinational corporations (MNCs) and multinational

management. Kinard (1988) defined multinational

corporations (MNCs) as business firms that produce and

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market goods and services in more than one country. They

include giants such as shell, UTC, Royal Dutch, Coca-cola etc.

According to Hicks and Gullett (1981) multinational

management refers to the management of business activities

that cross national boundaries. The simple implication of the

above definitions to that MNCs are in international business.

Aharani (1971) noted that there are some debates as to

when an organization can be characterized as a multinational.

the fact remains that, the organization will have to be

headquartered in one country (mostly developed countries)

and have to have business operations spread over other

countries. For these corporations, the degree of

internationalization and international commitment may cover

a wide range.

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REFERENCES

Aharani, J. “On the definition of a Multinational Corporation”

Quarterly Review of Economics and Business, Autum 1971, Pp. 27-37.

Amu, L.A. “Oil Glut and the Nigerian Economy” NNPC Booklet,

P. 1. Hicks, H.G. and Gullett C.R. Management (New York: McGraw

Hill Inc. 1981) Pp. 143-145. John, J.H. Vermon, A.M. Business Contemporary Concepts

and Practices, (New Jersey: Prentice Hall Inc. 1984). P. 588.

Kinard, J.L. Management (Lexington Massec-husetts, Toronto:

DC Health & Co. (1988), P. 452 Megginson, L.C. True Blood, L.R. & Ross, G.M. Business (Lexington, Massachusetts, Toronto: D.C. Health & Co, 1985) p. 612.

Kinard, J.L. OP. Cit, P. 470. Megginson, L.C. Trueblood, L.R. & Ross, G.M. OP. Cit, P. 603. Megginson, L.C. Trueblood, L.R. and Ross, G. M. OP. Cit, P.

594.

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CHAPTER TWO

LITERATURE REVIEW

Considerable amount of literature on MNC exists. The

areas considered relevant to this study are reviewed

accordingly in this chapter.

2.1 THE INDUCEMENT FACTORS AND ENTRY

STRATEGIES INTO MULTINATIONAL BUSINESS

Some of the reasons why MNC decided to go abroad

especially to developing countries are:

a) To achieve higher percentage of earning from their

operations there

b) The demand is greater

c) Competition is less in foreign markets

In some cases says Dale (1978) because of the installed

capacity of MNCs, they tend to produce more than they can

possibly market at home, hence they seek to exploit foreign

markets to dispose off the extra goods.

Another reason is the availability of raw materials and

other natural resources in the countries, which makes it

cheaper for the MNC to produce in that country.

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Moreover, the availability of cheap labour especially in

developing countries like Nigeria equally makes the cost of

production less for MNC operating in these countries.

All these factors according to Megginson et al (1985)

eventually boil down to one thing-higher profit for the MNC.

2.2 ENTRY STRATEGIES INTO MULTINATIONAL

BUSINESS

Direct foreign investment for production abroad is the

long range and maximum level of commitment in

multinational business. However, it is common for most

organization to enter multinational business through various

other ways that require lesser degrees of commitment and

shorter time horizon. According to Hicks and Gullett (1981)

moving from a minimum to a maximum level of commitment of

company resources entry strategies can be grouped into the

following six categories.

1) Exporting

2) Licensing

3) Franchising

4) Foreign Branch

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5) Joint Venture

6) Wholly Owned subsidiary

2.3 ENVIRONMENTAL FACTOR AFFECTING THE MNC

Everard et al (1979) argued that since business does not

operate in a vacuum it cannot isolate itself from the

environment. To this, Hicks and Gullette (1981) said that,

“Envy Corporation exists in relationship to its environment”.

In fact, environmental considerations are increasingly

appreciated as to how they affect the functioning of business

organization.

Environmental are in turn, influenced by the operations

of these organization.

Several authorities are of a common view that

environmental analysis particularly is very important for MNC.

These corporations face complex, diverse, and uncertain

environmental factors, in different countries, the different

environmental factors, they agreed, increase the elements of

risks, potential conflicts and operational problems.

Hick and Gullett (1981) gave four kinds of environmental

factors viz.

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ECONOMIC ENVIRONMENT

The economic size of a nation measured by its Gross

National Product (GNP), its income level (Per Capital Income or

GNP Per Capita), and the distribution of that income within a

country may indicate a potential market or the lack of one. A

number of countries with underdeveloped economics want

foreign direct investments because of their potential economic,

technological and managerial benefits.

Some additional economic factors that are usually

considered by MNC are economic growth trends, inflation

rates, balance of payment, financial and labour institutions.

Also facilities and services such as transportation,

communication, electricity, water and housing are taken into

account. Since all these affect the MNC present, and future

business activities. They must consider both the potential

opportunities and the potential threats provided by the

economic environment of host nations.

SOCIAL AND CULTURAL ENVIRONMENT

Social and Cultural differences among countries can

affect the operations of multinationals. For example,

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differences in customer behaviour and preferences require

product changes or different marketing strategies. Also

differences in behaviour and values of employees may affect

managerial practices of MNC. Employees in United States tend

to reject authoritarian managerial styles, while employees in

some countries of Europe and Asia expect managers to behave

in an autocratic manner. Hence managers have to adjust their

business practices accordingly.

POLITICAL AND LEGAL ENVIRONMENT

There are different political philosophies in all the

countries of the World. Foreign direct investment is more

welcomed in some countries than in others. Many countries do

not allow wholly owned subsidiaries of MNC in some

industries. In 1977, for examples, Venezuela did not permit

more than 20 percent ownership interest of foreign partners in

list major companies. Similarly, Nigeria published a list of

business enterprises in which foreign equity is limited to 4

percent.

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Nationalistic philosophy, Dale (1978) says generally

favours nationals over foreigners for control of nation’s

economic resources.

This gives rise to struck regulations of foreign

investments. He then went further to say that “Political

instability of some developing countries makes life hard for

MNC”. In some, there is a distinct possibility of expropriation-

either outright seizure or seizure without sufficient

compensation.

Nigeria for one, over a long period of time now can be

described as anything but politically instable. This most

people feel, has affected negatively, the foreign investment in

the country. No wonders then, each successive government

will device one means or the other to woo the foreign investors.

Each nation has its own laws and regulations regarding

investment from abroad. Matters such as investment approval,

incorporation, degree of foreign ownership permitted,

utilization of domestic materials and manpower and return of

profit to the parent countries. Others are import and export

regulations, tariffs, taxations patents and anti-trust laws. In

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this regard, the Nigeria government has over time promulgated

and repeated several devices depending on the policy the very

government is pursuing.

Binitie (1993) noted that, in 1995 the Nigeria military

government repealed some restrictive decrees to foreign

investments such as the exchange control act and the Nigeria

enterprises promotion decree. This was aimed at encouraging

more foreign investments, which have the capacity to share up

the value of the naira and boost the economy in general.

TECHNOLOGICAL ENVIRONMENT

The advance technology generally reflects capital –

intensive and labour saying devices. The developing countries

of the world in general regard small scale and labour intensive

technology to be more appropriate for their purposes.

Moreover, given the labour, skills, cost and workers

attitudes in the host country, a multinational organization

may need to simplify tasks and utilize equipment that might

be considered obsolete in a more advanced country. For

example, Well (1974) remarked that a plan may be adopted to

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replace automatic bottle washing machinery and mechanized

loading equipment with human efforts.

2.4 THE MANAGERIAL FUNCTIONS IN INTERNATIONAL

BUSINESS

There is evidence that shows that management

fundamentals are generally applicable in different countries.

However, the practice of carving out the managerial functions

of planning, organizing, staffing, lending and controlling differ

considerable in domestic and international enterprises.

Koontz, et al (1988) gave what managerial functions in

international business look like, this presented below;

Planning in the MNC: Planning, they say requires setting

objectives and then selecting strategies, policies, programmes

and procedures for achieving them. A critically important

activity for the MNC is the assessment of opportunities and

threats in the external environment. This is a complex task

even for a domestic enterprise, but it becomes much more

intricate when many different ever changing world markets

must be scanned.

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External threats and opportunities must be matched with

the internal strengths and weaknesses of the firm. For

example, a poor educational system makes it difficult to find

qualified personnel. Similarly, cultural orientation towards

time will affect planning specifically; cultural attitudes that

emphasize a short-time perspective will not be conducive for

long range planning.

Finally, political and economic instability in the host

country makes it difficult to forecast and will discourage long-

term commitment of resources. This last point is unfortunately

true of Nigeria. The country’s second name for sometime now

could as well be “instability”.

Organizing the MNC: According to Ronen (1986) organization

structures are established to achieve corporate objectives.

An enterprise may for example establish a vise

presidential position at corporate headquarters with

responsibility for the international divisions. An alternative is

to organize according to geographical areas. Organizing could

be by product lines. The truly multinational firm may integrate

domestic and international business into a global structure,

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which gives similar importance to domestic and foreign

business activities.

Each structure discussed above has its own advantages

and disadvantages. Hence, Koontz et al (1986) says that for

the large MNC only our structure may be insufficient.

Consequently, different organization designs may have to be

mixed, depending on the environmental and task demands.

Staffing in the MNC: When the organizational structure has

been established, qualified persons have to be selected to fill

the position there in this is staffing.

For the MNC there are three sources of managerial

talents.

a) Home Country

b) Host Country and

c) International Pool of Executives

More often than not a firm may use a variety of

combination of the above depending on the situation.

The present trend now is that people in most countries,

especially developing countries like Nigeria and better

prepared to assume responsibilities of managerial positions.

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Most MNC are reported to be tending towards employing

more host country nationals than managers from their home

countries because of the above reasons and for the fact that

doing so, tends to improve relation with the host country. On

the other hand, most people are of the view that in Nigeria and

some other African countries, most sensitive executive position

in these MNC are the exclusive reserve of the expatriate

managers. Lending in the MNC leading Akpala (1993) says

involvers motivating and communicating, it involves inducing

employee to contribute to enterprise objective. Motivation and

leadership demand and understanding of employees and their

cultural environment for example, participative management

may work well in one country but may fail and cause

confusion among employees in another country with a

tradition of autocratic rule.

Communication on the other hand is often a problem in

multinational firm with subsidiaries and affiliates in countries

where different languages are spoken. Even a firm with

operations in a country where the same language is spoken

may still encounter communication problems. This is because

37

of the distance between headquarters and the subsidiaries.

But new technology has greatly improved the transmission of

information skills; a telephone call is not quite the same as a

visit and a person-to-person discussion.

Controlling in the MNC: Controlling the measurement and

correction of performance to assure that events conform to

plan-is an essential managerial function that is influenced by

several environmental factors unique to international

enterprises. For example, revenue cost, and profit are

measured in different currencies. There are fluctuations in

exchange currencies. There are fluctuations in exchange rates,

accounting procedures, practices and financial reporting often

differs from country to country. Some or all of these may have

to satisfy the demands of tax authorities, government of

parent firm, stockholders, regulating agencies and banks.

Procedures must also meet the internal requirements of the

firm. To develop a procedure that meets all these demands at

the same time, is extremely difficult, to say the least.

Finally, partly owing the complex, nature of

measurement, there is a time lag in the measurement of

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performance which may delay detecting deviations from

actions. Computer however, have done much to speed up the

process in all, these few examples indicate that controlling the

international corporation is considerably more difficult than

monitoring domestic operation Koontz et al (1986) maintained.

2.5 MANAGEMENT POLICIES AND STRATEGIES OF MNC

Policy and strategy development for the management of

MNC should include several functional areas. However, Hicks

and Gullett (1981) gave four functional areas that are of

special important viz;

1) Marketing

2) Finance

3) Personnel and

4) Managerial philosophy

It must be emphasized that most MNC did not start with

predetermined strategic choices. But increased competitions

and growing environmental pressures have been forcing these

companies to examine strategic and policy issues more

carefully.

39

1) Marketing: For a MNC, the entire world is the potential

market. The global setting greatly expands potential

opportunities and complicates the firm’s product and

marketing mix strategies.

Keegan (1969) provides and excellent analysis of some

strategic alternatives for product and promotional

(communication) planning. He identified five strategic

alternatives Viz;

Strategy I: One product, one message worldwide soft drink

companies like Pepsi and Coca-Cola use this strategy.

Strategy II: Product extension, communication adaptation.

Here the product is the same worldwide but communication

(message) is modified to suit the environmental demands. For

example bicycles and motorcycles companies use this strategy

because the products serve different needs in different

markets.

Strategy III: Product adaptation, communication extension.

Here the product is change but the communication is the

same worldwide.

40

Strategy IV: Dual adaptation. This occurs when both the

product and the communication are changed to make the

product more acceptable.

Strategy V: Invention. An opportunity might exist to invent or

design an entirely new product when potential customers

cannot afford firm existing products. If the cost are not too

great, a new product can be invented that satisfies the

identified need at a price consumers can pay.

For instance, both ford and general motors have developed

small inexpensive and easily assembled automobiles for

underdeveloped countries. Those cars were designed with

emphasis on utility and durability rather than a style and

comfort.

According to Robock and Summands (1977) the choice of

appropriate strategy depends upon the specifics product-

market-company mix. Depending upon the degree of difference

of a foreign market compared to the home market, some

product demand adaptation others lend themselves to

adaptations and skills, others are better left unchanged. In

any case, a multinational manager needs to analyze the

41

product-market fit and the company’s ability to identify and

adapt when choosing the most potentially profitable and viable

strategy.

2) FINANCE: Formulation and implementation of financial

strategy and policy is perhaps the most complex task of a

multinational manager says Hicks and Gullett (1981) the

complexity is caused by new environmental

considerations, new sources of risks and new

opportunities for increased profits. Different tax laws,

currencies exchange rates, inflation rates, interest rates,

restrictions on movement of funds and exchange controls

have to be taken into account. Furthermore, these

elements are highly technical; the purpose here is merely

to portray the general nature of the financial environment

within which multinational corporations operate. The

general nature of problems they frequently face will be

highlighted.

For many MNC, Protection from the risks of change in

foreign exchange rates-devaluation and revaluations of

currencies is the most important change. Due to multinational

42

corporation superior maneuverability relative to the transfer of

funds among countries, it is possible to increase profit rather

than incur losses during changes in foreign exchange rate.

The MNC can also benefit by borrowing funds in a

country where interest rates are low and using these funds for

operations in a country with high interest rates. A transfer-

pricing policy can also be used to shift profits from high-tax to

low tax countries. Thus, overall taxes are reduced.

To develop an effective financial policy, a multinational

corporation has to be regarded as a system. According to

Robins and Stobaugh (1973), the system consists of units

(subsystem) operating in different countries with different

environments. The various units are connected through

financial transactions among them within limits imposed by

government regulations and financial market conditions, the

transactions within the units can be manipulated through

financial policies (lending policy, transfer price policy, dividend

policy) to maximize profit for the entire system (MNC) rather

than for its parts.

43

3) PERSONNEL: With respect to the recruitment and

development of international executives a MNC has but

three policy choices.

First, it can fill key executive positions overseas with

home office personnel.

Second, it can recruit personnel in countries of operations

(host country) to manage foreign subsidiaries.

Finally, it can develop a pool of international executives from

several countries for assignment anywhere in the world. Each

of the policies has some advantages and limitations.

4) MANAGERIAL PHILOSOPHY: The last important

functional area that Hicks and Gullett deliberated on; was

the managerial philosophy. Managerial philosophy is the

orientation of executives towards doing business around

the world. Perumetter (1969) identified three distinct sets

of philosophies. They are enthnocentric philosophy,

polycentric philosophy and geocentric philosophy.

Ethnocentric philosophy is essential home oriented and

environmental differences are ignored.

44

Polycentric philosophy, on the other hand, goes to the

other extreme. The subsidiaries of MNC are allowed to adapt

fully and completely in terms of local identify and behavour.

Geocentric philosophy is based on a worldwide

orientation. The global orientation of manager’s helps to

establish global goals. For example, the parent company

become but one company in the system and use of worldwide

resources.

2.6 THE ROLE OF MNC AS A BUSINESS UNIT

Concerning the role of business, Lessem (1989) say “though

the basic role of business remains profit maximization, it has

other roles”.

These other roles he has summarized as follows:

1. As a producer of goods and services, its prime function

was to fulfill the needs of its customers

2. As an economic unit, its role was to create and distribute

wealth

3. As an employer, its function was to create employment

4. As a market partner, its function was to participate in the

maintenance and development of a healthy economy.

45

5. As an innovator, its role was to create new and better

products, processes and services for particular customers

and for society in general.

6. As a social partner, its function was to participate in the

development and maintenance of a healthy society

7. Finally, as an organizer, its role was to maintain and

develop order, including orderly relationships among

people in society.

What Lessem means is that the goal of business is not

and should not be only profit maximization, rather it includes

other goals as enumerated above. All these other roles, can

come under what is today variously called social role, or social

responsibility or corporate social responsibility, Everard, et al

(1979) agreed with Lessem, when they stated “there are two

basic goals of business profit and social responsibility”.

According to Akpala (1993) corporate social responsibility

is calling on organization to consider themselves as owning

responsibility to the community or society as well as to their

own interest. They should show concern for their actions as

they affect their publics. Drucker (1980) remarked that “it is

46

not hostility to business that explains the demand for social

responsibility. On the contrary, it is the success of the

business system that leads to new and many cases,

exaggerated expectations. The demand for social responsibility

is the price of success”.

Lessem, (1989) noted that Dauman and Hargreaves have

divided the area of corporate social responsibility into three-

societal, organizational and basic responsibilities.

Basic responsibilities are generated by the very fact of the

corporation’s existence. The corporation has to pay its taxes,

obey the laws, observe legal standards for employees and

satisfy its shareholders deal honourably with supplies,

customers and creditors. When not fulfilled clearly, it will be in

serious problems either from the law, or the market place.

Organization Responsibilities. Here it is said that most

companies influence there environments more widely and have

to look further in scope and time than is suggested at level one

(basic level). This second level relates to the organizational

responsibility of the company to meet the ever-changing needs

of all its “stakeholders” – employees, customers; shareholders,

47

suppliers and the local community. Note that it is at this point

that most of the thinking on social responsibility is

concentrated.

Pollution from a chemical plant for example may well

affect a wide range of people in the community, outside the

plant most of whom are in no way associated with the

company.

Organizational responsibilities at this level are principally

as follows:

1. To pay heed to the spirit, rather than to just the letter of

the law, acting in anticipation of impending legislation

2. To respond to current attitudes, needs and values of all

stakeholder and anticipate and respond to expected

changes.

Social Responsibility: This according to Lessem is based on

the perception that the health of the business subsystem is

ultimately dependent upon that of the social system as whole.

Hence the individual corporation has to consider the political,

social, economic, technological, ecological, and cultural

foundations upon which the whole society is built and with

48

which it interacts. Therefore, business becomes involved in

development of society as a whole, hence assuming a wide

variety of roles.

In general, the argument on the roles of MNC as a

business unit in its environment falls into two very different

creeds. The creeds according to Kinard (1988) are the free

enterprise creed. (Conservative view point) and the social

responsibility creed (Liberal view point). Proponents of the free

enterprise creed, such as Friedman, (1971) and Theodorere,

(1979) argue that corporation ought not to assume social

responsibility that has not direct bearing on their profitability

position. To them, the sole aim of business is profit

maximization. This view point is often being criticized for

aiming to protect the philosophy of free enterprise. Proponents

of the liberal view point or social responsibility creed, such as

Dahh (1975) and Uzoaga (1976) argue that the overriding

objective of business should not necessarily be profit

maximization. Rather, they suggest that this be de-

emphasized in favour of social obligations of business to its

environment as a whole. As Kinard (1988), puts it “the

49

proponents of the social responsibility doctrine point out that

in today’s society, huge corporations play not only a vital

economic role, but also important political and social roles”.

2.7 BENEFITS OF MNC TO HOST COUNTRIES

Megginson, et al (1985), remarked that MNC in their

operations move capital skills know-how, goods and services

and other resources to various nations. They are of the views

that this can benefit the host country by providing the capital,

technology and managerial skill needed to produce economic

development there. This is particularly true of a developing

country like Nigeria. As if to confirm this view, Hicks and

Gullett (1981) has this to say, “A number of countries with

underdeveloped economics want foreign direct investment

because of their potential economic technological and

managerial benefits”.

Hicks and Gullett (1981) are very particular about

technological advancement to them, MNC frequently acts as a

change agent through its ability to transfer advanced

technological know-how to other countries. In fact the special

50

strength of MNC lies in their knowledge of sophisticated

technology. This technology is a major means of economic and

social development in host countries. It is therefore not

surprise that a large part of multinational business. The World

over is made up of industrial products such as chemicals and

pharmaceuticals, petroleum, farm and construction

machinery, tires, motor vehicles, electronics computer etc.

Increased foreign investment of the MNC can raise the value of

the local currently. It can also create employment for the

unemployed in the host country. For example a voice of

America (VOA) programme (Day Dake Africa News) on the 14

of February 1997, it was reported by Al Fames (the presenter)

that the South African Band (the South African Currency) got

to its highest point in three months, after coca-cola

announced an expansion move coxing a huge sum of dollars,

in South Africa. The South African economy got a needed

boost, and a lot of jobs will be created the report concluded.

In summary, people are of the view that in an ideal situation,

the establishment of multinational corporations in a place

brings about a lot of benefits such as:

51

1. Rapid industrialization and technological advancement

2. Provision of investment finance

3. Rapid development of place

4. Increase in per capita income thereby leading to

increased and better standard of living.

5. Creation of employment in the host country.

6. General improvement in enlightenment and awareness

and

7. Improved managerial skill through training

All the above, undoubtedly it is argued, will bring about

rapid socio-economic and technological development of the

host countries, obviously, it is believed that MNC bring about

rapid development especially in third world countries, Blow

(1979).

2.8 ACTIVITIES OF MNC IN THE DEVELOPMENT OF

NIGERIA

In Nigeria, development started from the costal areas as a

result of the fact that the foreigners mainly whites, first settled

on these areas some natural factors accounted mostly for the

sitting of these corporation there. The big sea, for instance

52

Lawal (1982) remarked that “the concentration of the MNC in

the coastal region of Nigeria is as a result of natural factors

that makes easy important and or exportation of raw materials

and evacuation of produce of the extractive industries in

Nigeria”. This no doubt, accounts for why such areas like

Lagos and Port-Harcourt are very beautiful cities today.

Most of these MNC in Nigeria are engaged in

1. Construction

2. Mining

3. Technology Transfer

4. Investment Financing

5. Aviation

6. Communication

7. Employment Creation

8. Agriculture

9. Sport Development

10. Healthcare among others.

CONSTRUCTION: MNC in this area Diemez, MCC, RCC,

Julius Berger etc. The network of roads, flyovers and drainage

system in Abuja, Lagos metropolis are for instance, the

53

handwork of Julius Berger. This is how Oladipo (1985) put it,

when he was referring to the role Julius Berger in Lagos.

“What would have become of Lagos in view of its smallness

and Crowdiness but for Julius Berger”? In the same Light

Oladeji (1985) adds “the history of Lagos will be incomplete

without Julius Berger.” In like manner, most of the express

roads, bridges and important building in the country were

constructed by all the above named MCC.

MINING: The mining sector is dominated by foreign oil

company such as ELF, Gulf, Chevron, Mobil, Agip, Texaco,

Total, and Shell among others. Their operations resulted in the

beefing up of public revenue to the extent that revenue from

oil now, according to Olumhense, (1994) accounts for about 90

percent of the country’s annual foreign exchange earnings.

Thereby pushing agriculture to the background. The first

multinational oil company to embark on mining in Nigeria is

shell petroleum development company of Nigeria. The first

crude oil was exported in 1958. This therefore launched

Nigeria into the community of crude oil producer and

exporters. The nation’s economy got a needed boast from

54

them. Hence Ukpevo, et al (1993), puts it thus, the discovery

of oil in 1956, marked the beginning of economic buoyancy for

Nigeria”.

TECHNOLOGY TRANSFER: The essential factor for socio-

economic development, which is lacking in Nigeria and other

developing countries, is technical know-how or technology. Be

that as it may, the advent of these MNC in the country has

brought about a positive development in this regard,

comparatively that is, at least when one considers the state of

the country’s technology before the advent of the MNC.

Today, one can see some factories that apply improved

production processes in their operations.

INVESTMENT FINANCING: The provision of finance, which is

often, the supply of capital goods, is very important in tracing

the roles of MNC. Accordingly, the MNC in Nigeria helped in no

small measure to beef up the magnitude of the public fund,

Hence, as against the previous national development plans.

Nwankwo (1981) says “it was only in the third national

development plan that public investment was estimated to be

55

greater than the target private investment. This was due to

increase government revenue from petroleum (oil).

From the above, it is believed that from the advent and

activities of multinational oil companies such as shell

petroleum in Nigeria Oil Industry, the revenue accruing to the

government skyrocketed and brought about increased public

expenditure. Hence, the MNC help provide finance for

development, Nwankwo (1980) says “up to 1974, when the

indigenization decree took effect, foreign investment in Nigeria

as estimated, contributed not less than 60-80 percent of total

investment.

AVIATION: The Nigeria Airways was molded by a technical

partner – KLM of the Netherlands. The contributed immensely

to the full take off of the indigenous airline.

COMMUNICATION: In telecommunication, ITT among others

has helped greatly in the development of network of

communication systems in the country. There in the country

today, telephone, telex, fax, teleprinters systems internet etc.

EMPLOYMENT CREATION: Some people are of the view that

these MNC do serve a source of employment to some

56

Nigerians. They say both skilled workers are employed. This to

some extent improves the standard of living of these people

and their families.

AGRICULTURE: Companies such as Pfizer, Ciba-Gelgy etc.

are involved in the provision of drugs and chemicals for

improved productivity in agriculture in the country. Others

MNC, it is know have introduced the practice of mechanized

agriculture into country. This equally leads to increased

agricultural productivity.

SPORT DEVELOPMENT: If there is any one thing that has the

capability of uniting the nation as one, it is sports (especially

football or soccer). Some MNC being aware of this simple

truth, have made their impact felt in this field. Their aim is to

develop sports in the country. Notable among them are Pepsi,

Coca-Cola, Cadburg, First Bank and Nestle.

HEALTHCARE: Drug companies such as Glaxco, Sterling

Health Beachem etc. have been acclaimed to have develop and

provide the Nigerian people drugs for the prevention and

treatment of most diseases and sicknesses thereby

contributing to improved healthcare in the country.

57

Given all the above contributions, some people feel that MNC

are positive forces in the social economic and technological

development of Nigeria. While others feel that the other side of

the coin (their shortcomings) is more glaring. We shall now

look at their negative or shortcomings.

2.9 THE SHORTCOMINGS OF MNC IN NIGERIA

Against the acclaimed positive contributions of MNC to

the development of the Nigeria economy, are their alleged

negative contributions.

They are accused of causing balance of payment

difficulties through huge repatriation of funds. This difficulties

arise when such repatriation of funds exceed incoming foreign

investment funds. To confirm his Santo (1990) says that “the

amount of capital leaving the developing nations is greater

than that entering”. In this way, it is argued that MNC act as

a drain on host country investment as “decapitalization effect”.

Moreover, the MNC are said to inflate the value of

imparts (materials, equipment and machinery) and undervalue

58

their exports, thereby using the differences to offset the

amount they pay as taxes and royalties.

It is further argued that the techniques of some of these

MNC distort the distribution of value added in favour of foreign

factors (equipment, machinery and skills) and against local

factors (labour, social responsibility and raw materials) of

Nigeria. Besides, the choice of technology of some are regarded

as too capital-intensive for the relatively labour-abundant

Nigeria, thereby limiting the number of people (Nigerians)

employed in such companies.

Barnet and Muller (1974) maintained that “the

characteristics of global corporations with the most

devastating consequences for the poor countries are that it

destroys jobs”. For example UAC Nigerian PLC, a

multinational, established huge plantations across the country

(palm in cross-river, cocoa in Ondo and Rubber in Edo States)

in doing this the dispossessed and deprived most farmers in

these areas of their means of subsistence and income. They

59

introduced mechanized farming and only employed very few

people as machine operators and the rest were left jobless.

Moreover, it is argued that, since much of the research of

these corporations is conducted in their headquarters, it

makes the idea of technology transfer to Nigeria partly useless,

because the local environment is not considered. For example,

it was reported that the research to establish the controversial

Ajaokuta steel complex was carried out in faraway Russia, the

furnace was designed to use Russian coal thereby neglecting

the huge coal deposit in Nigeria (Enugu) it is pointless to begin

to explain the implication of this, for it is very obvious.

Nwankwo (1981) maintains that MNC do not supply

technology a commodity that can be purchased in the open

market. Rather, they supply as their own investment,

packaged up in materials, equipment and skill. Factories have

been built, construction works have been undertaken and

such other capital goods as aeroplane and electronic

equipment impart. These are taken as technology supplied by

60

multinational corporation, but they are supplied and not

transferred.

The activities of some of these MNC are a major source of

pollution in the nation. One does not have to go far to detect

pollution. Pollution affects the land use, the water we drink

and the air we breathe noted Everard, et al (1979).

In many cities like Lagos, Kano, Port-Harcourt among

others, the air is filled with harmful fumes from factories and

cars. Some of these factories belong to MNC, while the cars

and fuel and product of multinationals. Many rivers and

streams are claimed to be filled with waste from MNC, to the

points of killing fishes, or making the water hazardous to

drink. The land it is said has not been spared, it has been

misused in various ways such as the wasteful removal of

natural resources, the creation of unsightly junk piles and use

of harmful chemicals to destroy insects and rodents.

A very good example of pollution by MNC is that reported

to be carried out by the multinational oil companies. As leton,

the president of the movement for the survival of Ogoni people

61

(MOSOP) puts it, “we are in troubled waters”. We have woken

up to find out lands devasted by agents of death called oil

companies. Our atmosphere has been totally polluted our land

degraded, our waters contaminated, our trees poisoned, so

much so that our flora and fauna have virtually disappeared.

Laton (1993) other oil rich communities where these oil

companies operated are reported to suffer similar fate as the

Ogoni. These communities it is claimed suffer from social

neglect and unfairness. “Neglect and unfairness by the oil

companies who smile to the bank daily”. Says Agbese (1993).

In the words of Ekpu (1993) “According to the people

(Ogonis), (the geese that lay the golden eggs if you like), there

is not electricity, no pipe-borne waster, no good roads in their

lands. Only poverty, neglect and pollution.

What the Ogonis and other oil rich communities are

passing though, simply points to one fact, says critics of the

multinational oil companies-they (multinational oil companies)

are not socially responsible.

62

In virtually all the multination in the country, critics say,

there is discrimination regarding the payment of staff. In no

situation are Nigerians and expatriate managers on the same

level paid the same amount. These companies, it is said,

capitalize on the abundant labour force in the country. They

pay the indigenous staff very low salaries, while using them to

the fullest, knowing that they can easily be replaced if they

(local staff) complain and decided to leave. In some cases, it is

argued, junior expatriate staff tends to earn more than a

Nigeria senior staff in the same company. This is not a healthy

development.

In terms recruitment in most cases, foreign managers are

preferred to local managers. This observer’s say is not proper

for one. They do not agree with the excuses of the MNC that

Nigerians have not gotten the needed skill and knowledge to

handle such positions.

Furthermore, the MNC are almost, always accused of

only interested in maximizing their profit in their operations in

Nigeria and as such they hardly care about their social

63

responsibility to the host communities in particular and the

nation as a whole. These huge profits, they are reported, to

repatriate to their home countries with little or no

reinvestment in the country.

Base on their wealth of experience, power and other

resources the MNC stand at a rather advantaged position

when compared with their Nigeria counterparts. As on critic

put it, foreign investors damage host country’s economy by

suppressing local firms by using their worldwide contracts,

advertising skills and range of essential support services to

drive out local competition and inhibit the emergence of local

enterprise.

The ramification of these companies into all sectors of the

economy and the orientation of local consumers, who often

positively favour foreign goods because they are considered

more superior, have made competition difficult for local firms

hence some have gone out of existence as a result.

64

2.10 SUMMARY OF LITERATURE REVIEW

In general, several authorities remarked that the

management functions and operations of multinational

corporations in their host environments (countries) are more

complex and intricate because they are affected by different,

ever-changing world business environment, where such

environmental factors as political, legal, economic, social,

cultural and technological factors are considerable

implications.

Also in the review, some writers are of the view that one

of the basic roles of a MNC as a business unit, is profit

maximization and that it has other roles to play in its

environment, such as contributing to the socio-economic and

technological development of its host country. In the words of

Kinard (1988), “in today’s society, huge corporations play not

only a vital economic role, but also important social roles. It

was equally reported that the failure of MNC to meet the social

obligations adequately often resulted in clashes between the

MNC involved and its host community. The Ogoni-shell case

was mentioned.

65

Some authors agreed that direct foreign investment in

underdeveloped economics have potential economic,

technological, managerial and social benefit for such

economics, Blow (1989) puts in this way “MNC investment

brings about rapid developing especially in third world

countries”.

On the other hand, there were those who felt and argued

that MNC are instruments of exploitations in their host

countries, repatriating very huge profit to home countries,

causing balance of payment problems, causing the collapse of

local firms not facilitating technology transfer by making

highly technical positions, the exclusive reserve of expatriate

managers etc.

The relevance of this literature review to this study, is

that it gave the researcher a general overview and idea of what

have been written and said about multinational corporations

as it affects their contributions to the socio-economic and

technological development of their host environments

This knowledge or idea formed the basis of most of the

questions asked in the research questionnaire. With that, the

researcher was to generate enough information that lead to

the finding of this study.

66

REFERENCES

Agbese D. “The Curse of Oil Newswatch, Lagos January 25, 1993 p.8

Akpala, A. Management: An Introduction and the Nigeria

Perspective (Enugu Dept of Management UNEC 1993) pp. 99

Akpala, A. Op cit pp. 38 & 39 Barnet R.S. and Mullter R.E. “The Power of Multinational

Corporations Global Reach. New York Simon and Scheter, 1974.

Biersteker, J. “Distortion or Development? Contending

Perspectives on the MNC”. Global Reach Cambridge Mit Press, 1978.

Bintic C “The Budget 95”, Tell January 30 1995 p 28 Blow, P. Multinational and the Third World (New Delhi:

Prentice Hall Ltd. 1979) Dale, E Management Theory and Practices. (Tokyo McGraw-

Hill 1978) pp 500 Drucker, F.P. Management: An Abridged and Revised Version

of Management: Task, Responsibilities Practices, (London Dan Books & Heinemann (1980) Pp 261 & 262

Ekpu, R. Exploitation, Agony of the Ogoni Newswatch January

25, 1993, p. 7 Everard, K.E. Shilt B.A. Op Cit, P 30 Everard, K.E. Shilt B.A., Business Principles and Management

(Cincinnati, Ohio South-Western Publishing Co. 1979) pp23.

67

Everard, K.E. Shilt, B.A. Op Cit, p. 39 Friedman, M. (1971:13-14): Bank Administration (USA) April Hessem, R. (1989) Global Management Principles (London

Prentice Hall,) Pp. 365 & 366. Hicks, H.G. and Gullet, C.R. (1981) Management (New York:

McGraw-Hill Inc.) Pp 140 Hicks, H.G. and Gullet, G.R. Op Cit Pp. 152 Hicks, H.G. and Gullet, G.R. Op Cit Pp.43 Kinard, J.L. (1988:470): Management (Lexington

Massachusetts Toronto: DC Health & Co.) Koontz, h & Welhrich, H. (1988) Management (Singapore

McGraw-Hill Book Co.) Pp 638-642 Laval, D. (1982:3) “Operations of the Multinational

Corporation in Nigeria, a Paper Presented at the Annual Dinner of UTC Held at Eko Holiday Inn Lagos, 10th December

Leton (1993: 12) “Exploitation “Newswatch, January 25, Megginson, L.C. Trueblood L.R & Ross G.M. Business

(Lexington Massachusetts, Toronto D.C. Health & Co. 1985) p. 603

Nwankwo A. Can Nigeria Survive? (Enugu Fourth Dimension

Publishers 1981) Oladeji, O. “Leadership and the Joy of Achievement” Julius

Berger Award Night Paper December 18, 1985 p. 2

68

Oladip, James, “The Legacy of the Construction Giants in Nigeria” National Conference Paper an Works and Planning, July 1982 p. 2

Oluhense, S. “Ringing the Divorce Bells”, Tell May 22, 1994, p.

14 Perlmutter, H.V. “The Tortuous Evolution of the MNC”

Columbia Journal of World Business. January-February 1969 Pp 9 & 18

Robrns, S.M. Stobaugh R.B. Money in Multinational

Enterprise, (New York: Basic Books 1973).

69

CHAPTER THREE

RESEARCH METHODOLOGY

Sample Procedures: Multistage random sampling

method was used in the selection of the research. In the first

stage, the population was made up of all the listed leading

multinational corporations in Nigeria. From this a sample

random sample of 14 MNCs was selected. In the second stage

the population was made up of all the staff of the 14 randomly

selected MNCs. From this population a sample of 120

respondents was eventually selected to serve as the research

sample.

Note that, the sample sizes of the two samples were

determined scientifically. The questionnaires were distributed

to the 120 respondents indiscriminately, as long as they had

at least a secondary school education.

Sample size determination: The sample size was determined

using statistical method.

Size were determined using statistical method

Size of the first sample using the formula

70

n = 2(P (1-P) e2 Where;

n = sample size

2 = confidence level desired

e = sampling error allowed

p = estimated true population of success

1 = constant

or n = N 1 + N(e2)

n = Sample size

N = Population size

e = Sampling error allowed

Applying the first formula

The level of confidence was taken as 95% with P as 0.5

and an allowable error of 26.5%.

Substituting, these values in the first equation we have

N = (1.962) (0.5) (0.5) 0.9604 0.2652 = 0.070225

n = 13.676041

= 14

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With the second formular n = N 1 + N(e2)

The population of listed MNC (N) = 82

Sampling error allowed e = 27% (0.27)

Thus n = 82 82 82 1 + 82(0.272) 83(.0729) 6.0507

n = 13.552 = 14

SIZE OF THE SECOND SAMPLE (RESEARCH SAMPLE)

Here the formula used was n = 2(P(1-P) e2

Level of confidence desired = 95% = 1.96

Estimated true population of success P = 0.5

Sampling error allowed, e = 8.95% (0.0895)

Thus:

n = (1.96)2 (0.5) (0.5) = 0.9604 0.8952 0.0080103

n = 119.89563 = 120

The researcher choose the two sample sizes of 14 and

120 in stages one and two respectively in order to slightly over

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satisfy the criteria desired. This was done by simple rounding

up the determined value to the next highest inter value.

3.1 SOURCES OF DATA

For the purpose of this study, Data were collected from

both primary and secondary source.

3.1.1 Primary Data

Primary data were collected by structured

questionnaires, oral interviews and personal observations. The

questionnaires used were pretested to ensure that the

respondents does not find the final questionnaires difficult to

respond to. The observed shortcomings of the questionnaire

were rectified before the final copies of 120 were eventually

produced.

The questionnaires were distributed to the 120

respondents and collected back personally by the researcher.

The administration was more or less done

indiscriminately to the staff of the randomly selected 14

multinationals.

73

However, the researcher ensured that only those with a

least secondary level of education got the questionnaires each,

while the remaining 6 MNC had 8 questionnaires each.

3.1.2 Secondary Data

Secondary data for the literature reviews were collected

from research reports, textbooks, journals, newspapers,

magazines, seminars, papers and other published as well as

unpublished materials of relevance to the study.

3.2 DATA PRESENTATION AND ANALYSIS

Data collected from this study were presented and

analyzed using descriptive statistical approach, such as

frequently distribution tables expressed in percentage and

explanatory statistical analysis.

3.3 VALIDITY AND RELIABILITY OF MEASURING

INSTRUMENTS

In order to ensure the validity and reliability of the

questionnaire in this study, the researcher made sure that

only those questions that would give relevant information were

asked.

74

Secondary, the questions asked were so simple and

straight forward that the respondents would find them easy to

respond to. Also, multiple choice options were provided as

possible answers to virtually all the question asked. This made

it easier for them to respond to and ensured that all the

responses were valid.

Moreover, the questions were objectively frame without

any clue as to which particular answers were needed

In addition, wherever possible, the research used interview

technique to ensure that the questions were really understood

by the respondents and that the appropriate answers were

given. With the interview, the researcher got explanations for

certain responses made by the respondents thereby making

the information were valid and reliable.

Also the make sure that the questionnaire were valid and

reliable, they were tested before the final copies were

produced.

75

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1 DATA PRESENTATION

The data collected from the field are presented, analyzed

and interpreted here. This is aimed at bringing out the true

situation of the similar and diverse opinions of the

respondents towards achieving the objectives of this study.

TABLE 1: SEX OF RESPONDENT

Response Respondents Percentage %

Male 96 80

Female 24 20

Total 120 100

Interpretation

From the above table 96 out of 120 respondents that are

80% are male, while 24 that are 20% of them are females.

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TABLE 2: AGE OF RESPONDENTS

Response (Yes) Respondents Percentage %

18-40 101 84.17

41-55 19 15.83

Total 120 100

Interpretation

Table 2 shows that 101 or 84.17% of the respondents are

between 18-40 years old. While 15.83% are between the ages

of 41-55 years

TABLE 3: NATIONALITY OF RESPONDENTS

Response Respondents Percentage %

Nigeria 120 100

Non Nigeria - -

Total 120 100

Interpretation

Table 3 shows that all the respondents were Nigerians. This

does not mean that there are no non-Nigeria in these MNC.

The fact is that when approached to respond to the

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questionnaires, they simply referred one to a lower worker in

the company with the explanation that they could give as

much and good information as themselves.

Moreover, the appeared to be busy for such things.

TABLE 4: LEVEL OF FORMAL EDUCATION

Response Respondents Percentage %

Illiterate - -

Primary level - -

Secondary level 30 25

Post secondary level 90 75

Total 120 100

Interpretation

Table 4 shows that 25% of the respondents have attained

only secondary education. 90 or 75% of them are educated

beyond secondary level. This means that the respondents are

educated enough to know what is happening around them and

would be able to give information to that effect as it regards

this study.

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TABLE 5: WHAT IS THE NAME OF YOUR COMPANY?

Response Respondents Percentage %

NBC PLC (Coca Cola) 9 7.5

John Holt Venture (Plc) 9 7.5

Lever brother Nig. (Plc) 8 6.66

UAC Plc 9 7.5

Nigeria Breweries Plc 9 75

Allens 8 6.66

A.G. Levents Plc 9 7.5

Pfizer 8 6.66

Smith Klime Beacham 9 7.5

Elf 9 7.5

Bata (Nig) Plc. 8 6.66

Benal (Plc) 8 6.66

Cadbury (Nig) Plc 9 7.5

Total 120 100

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Interpretation

Table 5 shows that 9 respondents each were from 8 of

the 14 corporations. They are NBC Plc (Coca-Cola), John Holt

Venture Plc, UAC Plc, A.G. Leventis Plc, Smith Klime

Beacham, ELF, and Cadbury (Nig) Plc. The other 6 companies

have 8 respondents each. These are lever brothers, Allens,

Pfizers, Dal, Bata, Bewal.

TABLE 6: HOW LONG HAVE YOU WORKED IN YOUR COMPANY

Response (Years) Respondents Percentage %

1-10 70 58.33

11-20 50 41.67

20 and above

Total 120 100

Interpretation

In table 6 above, 70% or 58.33% of the respondents says

that they have worked in their company for between 1 to

10years. Others 50 or 41.67% have worked for their company

for between 11 to 20 years. No of the respondents has worked

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for 21 years and above. For the fact that most of them have

worked long enough in their companies’ means that they

would be able to give reasonable information about their

companies, as it affect this study.

TABLE 7: WHAT IS YOUR RANK/STATUS IN YOUR COMPANY?

Response Respondents Percentage %

Managers 78 65

Non-manager 42 35

Total 120 100

Interpretation

From table 7w, 65% of the respondents indicated that

their ranks fall within the manager rank. That is both top

management level, middle management level and lower

management level.

The remaining 35% of the 120 respondents are non-

managers. They are operatives. In most of the MNC here,

Nigerians are the Managing Directors and General Managers.

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TABLE 8: WHERE IS THE HEADQUARTERS OF YOUR COMPANY?

Response Respondents Percentage %

Overseas 120 100

Nigeria - -

Total 120 100

Interpretation

In table 8, all the respondents indicated that the

headquarters of their companies are in overseas. That is to say

that all the multinational corporations used for this study

have their headquarters abroad.

However, most of them in the country have their head

offices at Lagos and branches offices in other parts of the

country.

82

TABLE 9: WHICH OF THE FOLLOWING ENVIRONMENTAL FACTORS AFFECT(S) YOUR COMPANY’S OPERATION IN NIGERIA?

Response Respondents Percentage %

Economic environment - -

Social and cultural environment - -

Political and legal environment - -

Technological environment - -

All of the above 120 100

Total 120 100

Interpretation

As the table above shows, all of the respondents, 120

indicated that their corporation’s operations in Nigeria are

effected by all the environmental factors listed. This not

withstanding, they were all equally very particular about the

political, legal and economic environment. They argued that

the unstable political and economic conditions in the country

are seriously affecting their activities and operations, more

than any other at least for the time being.

83

TABLE 10: WHAT FACTOR(S) IN YOUR OPINION MOTIVATED YOUR CORPORATION INTO HAVING SUBSIDIARY OPERATIONS IN NIGERIA?

S/No Response Respondents Percentage %

1 Presence of human and

material resources

- -

2 Good markets 28 23

3 Government

encouragement

- -

4 All of the above 92 77

5 Others - -

Total 120 100

Interpretation

From table 10 above, 28 or 23% of the respondents

agreed that the factors that motivated their companies into

having subsidiary operations in Nigeria, was the good market

potentials that the country has. But majority of the

respondent 92 or 77% says that their companies were

motivated to have a subsidiary in Nigeria by the presence of

84

human and material resources, good market and government

encouragement for direct foreign investment.

TABLE 11: HOW WOULD YOU RATE MNC RESPONSE TO GOVERNMENT’S CALL FOR DIRECT FOREIGN INVESTMENT IN NIGERIA?

S/No Response Respondents Percentage %

1. Encouraging 51 42.5

2. Not

Encouraging

69 57.5

Total 120 100

Interpretation

Table 11 shows that 42.5 of the respondents rated the

response of MNC to government’s call for direct foreign

investment in the country as encouraging, while a higher

percentage of 69 of the respondents are of the view that the

MNC are not responding encouragingly to the call.

When asked why, they said that the political and

economic conditions of the country would not allow the MNC

to make any new investments in the country, no matter the

amount of the encouragement the government would claim to

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be giving them. The MNC can only invest in a stable, healthy

and promising political and economic environment.

TABLE 12: DO YOU AGREE THAT FOREIGN INVESTMENT HAS THE CAPACITY OF BOOSTING THE NATION’S ECONOMY?

S/No Responses Respondents Percentage %

1. Yes 120 100

2. No - -

Total 120 100

Interpretation

In table 12 above, all the respondents agreed that direct

foreign investment in Nigeria can boost the nation’s economy.

That is to say that they are of the view that the investment of

MNC in the economy can improve productivity, raise the value

of the naira, increase the range of goods and services available

in Nigerians for consumptions. The investment can also lead

to creation of job opportunities for Nigerians.

Moreover, the standard of living of the people can be

increased through the investments of these MNC, all things

being equal.

86

Unfortunately, as observed earlier on, the much needed

foreign investment is not coming because of Nigerians

undesirable political and economic situation. Therefore, it is

not possible to get all the mentioned advantages of foreign

investment to any economy.

TABLE 13: DO YOU THINK THAT MNC IN NIGERIA SHOULD PLAY AN ACTIVE ROLE IN THE SOCIO-ECONOMIC DEVELOPMENT OF THE NATION?

S/No Responses Respondents Percentage %

1. Yes 120 100

2. No - -

Total 120 100

Interpretation

In table 13, the entire respondents of 120 were of the

view that MNC in Nigeria should play an active role in the

socio-economic development of the nation. What this means is

that the people feel that MNC should not only be interested in

profit making from their operations in the country. Rather,

they should equally take into consideration the development of

87

the economic and social environment of the country. This

view-point fall in line with the liberal view point about the role

of MNC as a business unit. That is over riding objective of

business should not necessarily be profit maximization,

rather, the profit motive/objective should be pursued along

side some socio-economic development objectives of the host

environment.

TABLE 14: HOW DO YOU RATE THE CONTRIBUTIONS OF

YOUR COMPANY TO THE ECONOMIC

DEVELOPMENT OF NIGERIA?

S/No Responses Respondents Percentage %

1. Very adequate 12 10.00

2. Adequate 23 19.17

3. Moderate 67 55.83

4. Inadequate 18 15.00

5. Very

inadequate

- -

Total 120 100

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Interpretation

From table 14, it could be seen that, only 10% of the total

respondents agreed that their company’s contributions to the

economic development of Nigeria is very adequate. Another

19.17% say that this contribution is just adequate while a

larger percentage of 55.83% are of the view that their

company’s contributions are moderate. But 15% of the

respondents did not agree that the contributions of their

companies to the socio-economic development of the country

are adequate. They feel it is inadequate.

TABLE 15: HOW DO YOU RESPOND TO THE ASSOCIATION THAT MNC IN NIGERIA ARE MAINLY INTERESTED IN PROFIT MAXIMIZATION

S/No Responses Respondents Percentage %

1. True 74 61.17

2. False 46 38.33

Total 120 100

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Interpretation

In table 15, of the 120 respondents, 74 or 61.17% agreed

that MNC in Nigeria are mainly interested in profit

maximization meaning that this group equally feel that these

corporations do not respond adequately to the social and

economic needs of their host communities and the nation at

large. On

On the hand, 46 or 38.33% of the respondents says that

MNC in Nigeria are not mainly interested in profit

maximization. That is the MNC do attend to the social and

economic needs of their host environment.

TABLE 16: DO YOU AGREE THAT MNC IN NIGERIA DO REPATRIATE HUGE PROFIT TO HOME COUNTRIES?

S/No Responses Respondents Percentage %

1. Yes 85 70.83

2. No 35 29.17

Total 120 100

90

Interpretation

Table 16 shows that 70.83% of the respondents agreed that

MNC in Nigeria do repatriate huge profits of their home

countries. This means that very little or nothing out of the

profit is invested back into business here in Nigeria. On the

other hand 35 or 29.17% of the respondents did not agree

with this assertion. They are of the view that reasonable

amount of profit is plough back into business here in Nigeria.

TABLE 17: WHAT EFFECT DO YOU THINK IT WILL HAVE ON NIGERIAN’S ECONOMY IF THE MONEY REPATRIATED FROM IT IS HIGHER THAN THE FOREIGN INVESTMENT?

S/No Responses Respondents Percentage %

1. Negative effect 120 100

2. Positive effect - -

3. No effect at all - -

Total 120 100

Interpretation

Looking at table 17, it will be discovered that the whole

respondents of 120, think that when the repatriation of profit

91

from Nigeria to the home countries of the multinationals is

greater than the amount of foreign investment coming into the

country, the country will experience some undesirable

(negative) economic problem. For instance it will negatively

affect the country’s foreign exchange reserve, investment

capital formation e.t.c.

However, despite the fact that they all agree that the

above argument, some felt that the money repatriated cannot

be higher than the investment. This was how a manger in

John Holt put it. I do think that the money repatriated in

Nigeria will be higher than the foreign investment per se”.

TABLE 18: IF MNC DO CONTRIBUTE TO GOVERNMENTS REVENUE THOROUGH, WHAT MEANS IS THIS DATE?

S/No Responses Respondents Percentage

%

1. Taxation - -

2. Royalty - -

3. Revenue from share - -

4. Ownership gifts and donations - -

5. All of the above 120 100

6. Others - -

Total 120 100

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Interpretation

In the table 18 above, all the 120 respondents answered

the questions, indicating that multinationals in Nigeria

contribute to government revenue.

Moreover, they were all in agreement that MNC

contribution to government revenue is through all or a

combination of taxation, royalty, revenue from shares

ownership and gifts and donations.

All the respondents when asked said the major one is

actually taxation. As for royalty, it affects mainly the MNC in

the extractive industries or sectors like the multinational oil

companies like shell, ELF etc. Revenue that comes to the

government through share ownership of course applies only to

those MNC where government has share, they argued. They

went further to say that the issue of gifts and donations to the

government is just a way of warming up to the government

and to boost their corporate social image before the

government.

93

TABLE 19: THE OPERATIONS AND EXISTENCE OF MNC IN NIGERIA OFTEN BRING ABOUT UNFAVOURABLE COMPETITION FOR LOCAL FIRMS

S/No Responses Respondents Percentage %

1. True 102 85

2. False 18 15

Total 120 100

Interpretation

The above table shows, of the 120 respondents, a large

percentage of 85% says that it is true that the operations of

the MNC do bring about unfavourable competition for the local

firms. What this group is implying is that this competition

could lead to the collapse of these local firms. In fact when

some of them were asked, they did not mince words to say

that MNC have actually caused the collapse of some local

firms.

On the other hand, only 18 respondents out of 120

disagreed that the operations of the MNC in Nigeria, do bring

unfavourable competition for local firms. In his own way, the

area manager of NBC Plc says that through the operations and

94

existence of MNC are bad for local business firms, but left

alone. There is no way the local firms could have able to

satisfy the whole Nigeria market with all its needs adequately.

So in this view, the operation of the MNC is like a double-

edged sword.

TABLE 20: DO YOU THINK THAT MNC IN NIGERIA ARE CONTRIBUTION TO THE TECHNOLOGICAL DEVELOPMENT OF NIGERIA?

S/No Responses Respondents Percentage %

1. Yes 104 86.67

2. No 16 13.33

Total 120 100

Interpretation

Table 20 shows that out of the 120 respondents 104 or

86.67% agreed that the multinational corporations (MNC) in

the country are contributing to the technological development

of the nation. While 16 or 13.33% thinks that they are not

making any contribution towards Nigeria technological

development. This last group are of view that these MNC are

not interested in Nigerian’s technological development,

95

because according to them, if they do, they will lose Nigeria as

one of those countries that rely on them.

So as much as possible, they try not to pass on or

transfer their technology, to the country, this view expressed

by this few percentage of respondents fall in line with that

highlighted earlier on in the review of related literature to this

study, that MNCs do not actually like to transfer technology

because they like to maintain that monopoly that their

technological know-how offers them.

TABLE 21: IF YES IS THIS CONTRIBUTION ENCOURAGING?

S/No Responses Respondents Percentage %

1. Yes 38 30.77

2. No 82 69.23

Total 120 100

Interpretation

In table 21 of the 120 respondents that says that the

MNC in Nigeria are contributing to her technological

development, only 38 in 30.77% are of the opinion that this

96

contribution is encouraging. On the other hand, a large

number, 82 of the 120 respondent felt that the contribution to

the technological development of the nation by the MNC is not

encouraging. This could be the explanation why Nigeria is still

technological backwards.

TABLE 22: IF YOUR COMPANY IS CONTRIBUTING TO THE SOCIAL DEVELOPMENT OF NIGERIA, IN WHAT AREAS ARE THEY DOING THIS? YES NO TOTAL

S/N

Respon

den

ts %

Respon

den

ts %

Respon

den

t %

1. In education 72 60 48 40 120 100

2. In job creation 120 100 - - 120 100

3. In provision of basic amenities 64 53.33 56 46.67 120 100

4. In manpower development 120 100 - - 120 100

5. In other area 55 45.83 65 54.17 120 100

Interpretation

From the above table, one could see that 72 of the

respondents say that their corporations are contributing to the

97

social development of Nigeria through education. That is

through scholarship to citizens and building of schools as well

as supply education materials to school in the country. The

remaining 48 says that their companies do not contribute to

the education development of the nation.

On the issue of job creation or employment all the 120

respondents indicated that their companies do create job

opportunities for the people of Nigeria through their operations

in the country. This means that MNC are helping to reduce the

unemployment rate that has lit on all time high in the country.

This appears to be one of the major areas of their contribution.

In terms of provision of basic amenities (such as health

facilities water, light, good road, bridges etc) 64 or 53.33% o

the respondents agreed that their companies do engage in the

provision of some or a combination of the above mentioned

basic amenities in their host communities. But 56 of the 120

respondents said their companies do not provide any of the

above amenities.

As for manpower development, all the respondents are in

agreement that their companies do engage in the development

98

of manpower in Nigeria. Moreover, 55 or 45.83% of the 120

respondents says that their companies do contribute to the

social development of Nigeria through other areas such as the

development of sports.

TABLE 23: ARE THESE CONTRIBUTIONS ADEQUATE?

S/No Responses Respondents Percentage %

1. Yes 26 21.67

2. No 94 78.33

3. Do not know - -

Total 120 100

Interpretation

In table 23 of the entire respondents of 120, 21.67%

agreed that the contribution of their companies to the social

development of the country are adequate, while the large

chunks of 94 or 78.33% says that the contribution are not

adequate. This not withstanding some people in this very

group did agree that the MNC are trying in the aspect of job

99

creation, but in other areas, the MNC effort can best be

described as a drop of water in a might ocean.

TABLE 24: HOW DO YOU REACT TO THE ASSERTION THAT MAINLY UNSKILLED INDIGENOUS LABOUR ARE EMPLOYED BY MNC?

S/No Responses Respondents Percentage %

1. True 16 13.33

2. False 96 80.00

3. Do not know 8 6.67

Total 120 100

Interpretation

Table 24 indicates that 16 of the respondents said that

actually, MNCs in Nigeria employs mainly unskilled

indigenous labour, meaning that only small number of skilled

indigenous labour is employed by the multinationals.

On the other hand, a whole 80% or 96 of the respondents

are of the view that multinationals in Nigeria do not mainly

employed unskilled indigenous labour. They argued that large

chunk of their staff are skilled Nigerians. In the words of the

100

area manager of NBC Plc, “multinational corporations also

employ large numbers of skilled Nigeria for instance.

In may company 9%% of the management staff are

skilled Nigerians”. A sales representative at Allens adds to the

best of my knowledge. My company goes for the best skilled

labour”. Only 8 respondents claimed that the do not know

whether MNC in Nigeria employ mainly unskilled indigenous.

TABLE 25: EXPATRIATE STAFFS OF MNCS ARE PAID BETTER SALARIES THAN INDIGENOUS STAFF OF SOME RANK IN THE SAME COMPANY

S/No Responses Respondents Percentage %

1. True 96 80

2. False 24 20

Total 120 100

Interpretation

Table 25 shows that 96 or 80% of the respondents agreed

that expatriates are better paid in MNC that indigenous staff of

the same company. The remaining 24 respondents said that

the assertion is false. Some of those that said the assertion is

101

false argued that in their company there is a kind of scale of

which any staff, be you an expatriate or Nigeria, in any

position earns the same amount.

Other argued that if any difference has to exist, it may

depend on the agreement reached and the particular situation.

If you ask me, I would want to think that this last argument is

rather but stressing the fact that expatriate staffs do earn

better salaries than indigenous staff of the same rank in the

same company.

TABLE 26: WHAT IS YOUR VIEW ABOUT THE AS ASSERTION THAT SOME SENSITIVE MANAGEMENT POSITION IN MNC ARE THE EXCLUSIVE RESERVE OF EXPATRIATES

S/No Responses Respondents Percentage %

1. True 66 55

2. False 54 45

Total 120 100

Interpretation

From table 26, one can see that 66 out of the 120

respondents agreed to assertion that some sensitive

102

management positions in multinational corporations in Nigeria

are the exclusive reserve of expatriate managers. They argued

that positions that have the potentials of enabling the Nigeria

staff acquire that basic technological knowledge were never

given to Nigerians. For example, in very big manufacturing

multinational corporations e.g. Nigeria Brewery Plc, an

expatriate is always the technical manger.

The remaining 54 respondents hold a different view

about this assertion. They do not agree to it at all. They hinge

their position on the fact that in their companies Nigerians are

found in very high positions such as Managing Directors (MD)

General Manager (GM), Financial Managers and the like. They

stated further that this could be true in those days and now

when there are a lot of experienced and competent Nigerian

every where, and all areas of human endeavour.

103

TABLE 27: IF TRUE, WHY IS TO SO?

S/N Responses Respondents Percentage %

1. Nigerian don’t have the skill 7 10.61

2. Management policy 32 48.48

3. Others 27 40.91

Total 120 100

Interpretation

Table 27 shows that of the 66 respondents who agreed to

the assertion that some sensitive positions in MNC are the

exclusive reserve of expatriates in table 26, only 7 in 10, 61%

indicated that the reason for this is because Nigerians do not

have the skill for such sensitive positions. Another 32 or

48.48% agreed that it is the management policy of MNC. In

addition, 27 of them did not agree that this is caused by the

lack of skill of Nigerians or management policy. Rather, they

cited such reasons as sentiment, the tendency to protect and

monitor adequately their huge investment, the dubious and

corrupt nature of some Nigerians, who might want to abuse

such position to the detriment of the company. In fact, one

management staff of NBC (Coca-Cola) to me that a more is

104

presently being put forward to make expatriate the plant

managers of most of the coca-cola plants in the country. The

reasons for this, is that the present Nigeria plant managers are

not performing to expectation. They even neglect the staff

welfare. Mind you the staffs are mainly Nigerians and they are

not well treated.

When asked the staff were very willing to accept the

change because according to them, the expatriate managers

will ensure that they get all their entitlement and benefits

unlike the Nigerian managers.

TABLE 28: HOW DOES YOUR CORPORATION RESPOND TO PEOPLE IN THE IMMEDIATE ENVIRONMENT IN CASE OF ANY ACCIDENTS (NATURAL DISASTER POLLUTION ETC?)

S/No Responses Respondents Percentage %

1. Financial and material - -

2. Assistance/compensation - -

3. Message of sympathy - -

4. All of the above 120 100

5. Others - -

6. No response - -

Total 120 100

105

A glance at the above table shows that all the

respondents said that their companies do give financial and

material assistance/compensation as well as message of

sympathy to the people of their immediate host communities

in case of any accident.

The issue of compensation involves firms that are into

exploration of minerals and those that are in manufacturing.

MNC in those that are in manufacturing. MNC in these areas

are constantly polluting the environment. Most times spillages

do occur and these companies have to compensate the people

affected. The issue of pollution and oil spillage and adequate

compensation has been a constant source of conflict between

the multinational oil companies and the people of their host

communities.

106

CHAPTER FIVE

DISCUSSION OF FINDINGS, RECOMMENDATIONS AND

CONCLUSION

It is pertinent at this point to finalize this study in this

chapter with discussions of findings, recommendations and

conclusion.

So far, in this research work, an attempt has been made

to examine the contribution of multinational corporations

operating in Nigeria to the social, economic and technological

development of the country. Efforts were equally made towards

determining the adequacy of the contribution.

Moreover, attempts were further made at presenting the

views of various authors and researchers on the socio-

economic and technological input of multination of their host

environment.

To be able to achieve the objectives of this study some

research questions were formulated. The questions in the

questionnaires were based on the research questions, which

were distributed to 120 respondents, for the purpose of data

collection.

107

Finally, the collected data has been presented analyzed in

chapter four. This now formed the basis for the finding that

will be presented and discussed presently.

5.1 DISCUSSION OF FINDINGS

The findings of this study are highlighted and discussed

here.

First of all, it was found out that the employees of most

the multinational corporations (MNC) in Nigeria are mainly

Nigerians males and females. This observation or discovery is

in line with what is obtainable in other business firms that

prefer to employ men to the employment of women for reasons

that may or may not be justifiable. Most times those reasons

hinge on sex discriminations.

It was also discovered that most the employees are within

the age brackets of 18 to 40 years and most of them are

educated to school level and above.

Another discovery from this study was that virtually all

the multinational corporations in Nigeria have their corporate

headquarters in overseas (home countries), while their head

offices in Nigeria are in Lagos. This discovery confirms that

108

Aharani (1971) said that at cited in the definition of terms of

this study that MNC are organizations that are headquartered

in one country (mostly developed countries) and have to have

business operations spread over other countries.

One other finding was that just as previously reported by

various authors and researchers, the MNC operating in the

country are affected by the following environmental factors,

economic, social, cultural, political, legal as well as

technological factor with political and economic environment

taking the lead, due to the instability and unhealthy nature of

these two environment in the country.

The social factor is also a critical one for instance, only

recently there was a crisis in Warri in Delta State as a result of

a political issue. This crisis led to the loss of N3.3bn by Shell

Petroleum Development Company (SPDC) between March and

May 1997 Owolabi (1997).

It was equally found out that what motivated most of the

MNC, into having subsidiary operations in the country are

good market, abundance human and internal resources in the

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country and government encouragements for direct foreign

investments.

Moreover, this study led to the finding that although the

foreign investment of multinational corporations has the

capacity of boosting the Nigeria economy. The MNC are not

responding encouraging to the call by the government for their

(MNC) direct foreign investment. The reasons for this

unfortunate development, it was further gather was connected

to the political and economic uncertainty in the country. For

no organization will be very willing to invest in a place where

you can’t tell what will happen in the next minute or second

with a reasonable degree of accuracy. Hence it could be rightly

said, that to a large extent, the government has failed in its bit

to attract or the MNC to invest in the country. Even those that

are already here are not finding things easy, says are manger

in Leventis Plc.

Another interesting finding was that generally, MNC in

the country are contributing moderately to the economic

development of the country.

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In addition, it was found out that the multinationals in

the country are mainly interested in profit maximization and

that greater part of this profit is being repatriated to their

home countries overseas.

This means that very small amount if any of the profit is

ploughed back into business here in the country and very little

too, goes to the execution of some social obligations to their

host environment and nation at large.

One more interesting findings was that if the huge profit

repatriation by MNC exceeds the incoming foreign investment,

the country will experience negative economic problems such

as balance of payment difficulties, drain on the nation’s

investment capital (decapitalization effect as described by

Bieistelch (1978), in the literature review of this work).

It was also discovered that all the multinationals

corporations in Nigeria contribute towards increasing

government’s revenue through the payment of royalty, taxes,

gifts and donations to government, revenue accruing to

government from share ownership in some of the corporations.

For some of them, this is done through one source, while

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for others it is through a combination of two or more of these

sources. By and by the means that applied to virtually all the

MNC is taxation. Only MNC in the extractive sector pay royalty

and government only get share revenue from those companies

where she has shares.

An important finding from this study was that the

operations and existence of multinational corporations in the

country do bring about unfavourable competition for local

holigenous firms.

This is so because these MNC are better equipped

compete more favourable than the local firms. They have a

great wealth of experience world wide contacts, advertising

skills and a wide range of essential support services which the

local firms cannot boast of so, they are at a very disadvantages

position to compete with the MNC. Hence most times, the

unfavourable competition often leads to the collapse of these

local firms.

This problems is a very sensitive one because, when left

alone, the local firm would not be able to satisfy the Nigerian

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large market, yet the coming in of the MNC to help out of this

undesirable problem the collapse of local firms.

Moreover, because of tendency of consumers to often

positively favour foreign goods against locally produced goods

may due to their superior quality or just ordinary sentiment or

complex, the problems of the local firms are further

compounded, since they lose the market sooner than later,

when the tread continues without stopping.

On the issue of technological development, was found out

that MNC in Nigeria are contributing the technological

development of the country. However, this contribution was

found to be headquarter (not encouraging). This might explain

why Nigeria is still technologically backward, because, it

seems that the MNC are not in any haste to transfer thin

technology to Nigeria, since doing so, will mean that Nigeria

will not depend on them again and this they do not want.

Therefore, they have to prevent this much needed

technology transfer in the way they know best.

Another major finding was that MNC in Nigeria are

contributing to the social development of the nation through

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education, job creation, provision of basic amenities,

manpower development, provision of health facilities and

sports development. However, in general, these contributions

were found to be inadequate.

The fact that these multinationals are responding to the

social needs of host environment is a notification of the fact

that the MNC are imbibing the warning of Dalu (1975) “Today

it is absurd to regard the corporation simply as an enterprise

for the sole purpose of profit making. Every corporation should

be thought of as a social enterprise whose existence and

decisions can be justified only in so far as they serve public or

social purposes”

The study further proved that the major area of MNC

contributions is in job creation or employment and manpower

development. Hence MNC in Nigeria are playing a positive role

towards reducing the rate of unemployment in the country.

Another interesting finding of this study was that

Multinational Corporation in the country employs both skilled

and unskilled holigenous labour but the expatriate staff are

paid better than the indigenous staff and certain sensitive

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position are the exclusive reserve of the expatriates in most of

the multinations. This is one of the ways that these MNC are

using to prevent the Nigerians from actually acquiring the real

knowledge of the technology involved in their production

processes. If this trend of the corporation keeping the

knowledge of their technology secrete continues then the

much needed, talked about, and controversial technology

transfer will consistently remain and illusion to the nation.

Unless something drastic or unconventional is done

about it. Such as steeling the technology and make little

modification to make it look different and original, if you like.

If the country can do this, in no distance time, the nation will

be talking about her own technology.

5.2 RECOMMENDATIONS

Based on the findings of this study, the following

recommendations are made.

The multinational operating in Nigeria should as a matter

of urgency improve on the adequacy of their contributions to

the economic, social and technological development of the

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nation, through more or increase investment provision of basic

amenities and ensuring that Nigeria managers man positions

that will equip them with the much needed technological know

how.

Multinational corporations in the country should either

be persuaded or compelled by the government through

legislations to increase the percentage of profit reinvest in the

country and spent on meeting their social responsibilities to

their host communities in particular and the country in

general. This will also prevent the negative implication of the

repatriation of huge profit to home countries of those MNC.

The government or ruling class should at all times endeavour

to pursue economic, political policies and development policies

generally that will stabilize the economic and political

environment of the country.

This could be achieved if and only if the right persons are

allowed into the leadership positions and the selfish and

greedy tendencies of the average Nigerian are de-emphasized

for the general good of the nation. With this done, in no time,

the Nigerian economy will become attractive once more to

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foreign investors to the point that they may not even require to

be invited or wood in any way. This is because Nigeria is

naturally endowed and most people desire to do business here

under normal situations.

Moreover, the government should do something, either

through legislation, to protect local firms from the

unfavourable competition with MNC which often leads to their

collapse. Also, Nigerian consumers should at least, if only for

patriotism sake, patronize the goods and services of our local

business firms, for their products are as good as the foreign

ones and even better sometimes.

On the issue of technology transfer, since the

multinationals have shown consistently that they are not will

to affect a real transfer of technology to the country.

Conventionally, Nigeria government and Nigerians in

general should adopt a rather drastic and unconventional

approach-espionage. When the technological knowledge have

been acquired through this means, it can be modified and

adapted to suit the Nigerian environment, thus making it

different from where it was copied and hence original, if you

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like, the country can do this without relying fully on the MNC

for the illusive technology transfer, in no distance time, the

nation will be taking about her own technology.

This study gave a very general overview of the role MNC

in Nigeria. Hence it is recommended that an exhaustive and

more detailed research on this topic be carried out; with

emphasis on particular sectors e.g. oil construction etc.

5.3 CONCLUSIONS

By and large, efforts have been made at carefully

analyzing bit by bit the subject of this research. Also all the

research questions formulated.

From the findings of this research, one can make bold to

say that multinational corporations in the country rate

contributing to the social, economic and technological

development of Nigeria. Save that while the economic

contributions are inadequate. That is to say that, their

response to their corporate social responsibilities and

technological impact in the country is nothing to write home

about.

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Therefore give or take, the multinational corporations

operating in Nigeria are helpful to Nigeria’s economy generally

but given the enormous wealth made by these MNC in the

country, their managerial and technological know-how, this

help is considered as a spit in the ocean. There help

notwithstanding, the MNC in Nigeria equally have their fair

share of shortcomings.

Finally, it is believe of the researcher that this will go a

long way in opening up new areas of research and t hereby

enriching the knowledge of academicians and mankind

generally.

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