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Where power resides and whether governments, citizens or corporations are the most powerful? Essay Example

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Government, Corporation and Citizen Power

EXECUTIVE SUMMARY

This report aims at analyzing where power resides and which power is powerful between government power, corporation power and citizen power. A thorough literature review was conducted on the development of power in the past decades, how it was held and the lobbying groups as per the division of power. According to the result of the study, government power plays a major role in protecting its infant industries from exploitation by large corporation. The government through its power enforces antitrust policies and ensures price stability. Corporation power may exert political influence through political lobbying, political campaigns and through negotiation and actions of the court. The citizen power is exercises through protesting and boycotting to speak out their preferences and challenges. The study, therefore, recommends that the partnership of government power, corporation power and citizen power for consultation purposes should be enticed. This is because the different ideas of the different parties may be utilized for the development of the nation as a whole.

Introduction

In political and social science point of view, power is defined as the ability to control and influence other people behaviors. In a business context, powers can either be upward or downward. Upward power is where subordinates influence their superiors in an organization while in downward power; the top management influences the bottom management employees. It acts as a way through which the social actions are either induced or achieved or as a constraint to hinder the achievement of the social actions. Power can, therefore, be viewed as evil as well as undue, but also is a force that is accepted by the law to human beings. However, power and influence are different in that, influence is means that is used to impact power (Toure, et al., 2012). Therefore, it is important that the power should not involve force or duress. Often, authority is used in place of power in the case of legitimate power in the social structure basis. According to Stern (2012), power is a physical manifestation of a complex situation that is affecting individuals in a given community and hence requires both enforcement and limitation.

According to French and Raven (2012), there are five bases of power which include legitimate power, referent power, coercive power, expert power and reward power. Legitimate power also known as positional power involves authority an individual holds due to the duty and responsibility they holds in an organization. Referent power derives from the personal calibers an individual possess such as interpersonal skills and charismatic resulting to interpersonal influence. These characters attract their followers thus gaining satisfaction from being accepted by their aspirants. Coercive power devises from individuals applying threats and demotion against others to gain their acceptance and out of fear, people accepts they rules. Expert power the other basis of power involves the power an individual possess due their unique skills and the need of those skills to an organization at that time. Finally, reward power develops from the ability of a person to give a reward of certain kinds to others such promotion and benefits. To understand it better it will be discussed in the below section. Power will be divided into government power, corporation power and citizen power so as to draw an inference on which is powerful if there is any.

Literature Review

Government power

Government power development over the decades

During the past decades, most countries both the developing and developed countries have been characterized by political instability and conflicts, single party dominance and interventions by the military. Government power lays on the fact that they are the one who formulates and implements policies and rules that governs the behaviors of businesses and its citizen. Their influence may either create a positive impact or a negative impact. Jones (2009), states that the role of the government from the past has expanded from the need to deliver public goods and externalities to the provision of minor goods cannot be changed even with increased globalization. Measures of globalization to reduce that role of government will instead harness it. The rapid change of the government role of the 1980s and 1990s weakened most of the developing nations. This resulted to reduction of the role played by government in both the social arena and reducing the public services as well as it left many nations unprepared on how to face the problems and the rapid changes of globalization. Until now, most of the developing countries have not yet established protective measures in developed countries vital sectors. Stern, (2014) argues that nation incorporate into the world economies is a means to growth and alleviation of poverty in the developing nation economies. He added that more importantly if the developed nations ease and increase the openness of their economies as it will help the government to adopt policies that greatly favor competition.

In the business context, corporate governance entails about power and responsibility assignment such as who determines the allocation of money in an organization and needed sub-contracting supplies among others. It also reflects who is accountable of certain courses of action such as misuse of funds and declined performance. It also reflects the choices of public policies to be effected. Governments through legislation body formulate and implement laws which shape, motive and in turn the governance system. Some nations protect their domestic industries from unfair business trades through restricting foreign trading through imposition of heavy taxes, protecting of its minor stakeholders in the country among others. Other nations promote international trade through constraining competition, not protecting its weak shareholders and through placing restrictions on markets. The different policies regulations applied by different nations results to political differences and conflicts among nations as each is stressing on a specific set of rules for the benefit of its citizens. These disparities are the main cause of poor economic performance of institutions both in the developed and developing nations as well they are the results of the increased gap between the rich and the poor. According to Calomiris (2012), distinction in the efficiency of the economy is positively related to the disparities in the quality of both the legal and political environment.

Impact of government power to the business

Governments play major roles in protecting the infants industries from global exploitation by large corporations with monopoly power. These infants industries are given time to grow, expand and become competitive over time. This is usually at a cost because the local consumer has to bear the cost by buying products from these industries at high prices. Maintaining price stability is another impact of government power to business. Prices are controlled through erecting taxation to hinder importation of goods and services into the country hence favoring the local producers. Imposition of subsidies makes imported goods and services cheaper and those that are being exported expensive. Development of an equitable tax structure is another vital impact of government to the business. It is through taxation that the government can generate revenue for development purposes such as infrastructure and social networks improvement, for peace and security maintenance, to improve and increase the social welfare and for the purpose of the completion of projects such schools and medical health centers. Finally, the government power has impact on businesses through the enforcement of policies such as antitrust policy to limit the power of corporation

Corporation power (MNCs)

Corporation power development over the decade

According to Dunning (2009), large corporations in the global world today are inevitable and have a forced impact on cultural, economic, political and social. These corporations aim to maximize growth and profit as well as the social and environmental causes. These corporations have recorded positive impact on the lives of many individuals globally through the activities and services they provide. Policies by these large corporations such as wage rates and working place conditions affect the lives of the global society. They use political influence to gain better terms of trade, reduced tax burden, favorable subsidies and improve the public policies. Multinational corporations are firms that operate in more than one country and initially begin as a single firm but later expand and develop some subsidiaries. In the past decades, corporations were viewed as public entities unlike today where they are viewed as private entities. They were controlled by the state to ensure they meet the interest of the people through offering the public goods. The corporation operated within the confined state laws. Following the civil war, the corporation was granted legal right similar to those of individuals in 1886 thus changed to private entities.

Power of corporation accelerated spontaneously nearly the end of the 19th century where the laws that restricted the operation of large corporations were amended (EUISSS & UNU-CRIS, 2010). Instead they were replaced through the formulation of trust simulating independent operations. This trust independent operation faced much opposition from the public but majority of the corporation were able to expand through acting against the state requirements. In 1889, a law that allowed one corporation to own equity in the rest corporation was passed. This resulted to the state corporation to lobby for the removals of laws such as laws that restricted the size of a corporation and mergers as well. As the corporation power grew, the anti-trust laws were passed. This resulted to dismantle of some of the large corporation hence economic depression. The state maintained the check of the corporation power as the state stressed on the existence of corporation to serve the public goods to the society through the application of the Keynesian economics. In the 1970s, the Keynesian economics failed to control the rising rate of the unemployment and inflation. This called for restraining the enforcement of the anti-trust laws, reduction in the tax burden rate of the corporate and removal of the deregulation of corporations.

By the end of the 20th century, the free market capitalism role dominated globally after the collapse of USSR and the Eastern trade blocs. Corporation such as Coke and Levis expanded quickly and were established even in new countries where they never existed when they were communal. Washington consensus arose which brought together the main economic organization such as world trade organizations, World Bank among other into a free and privatization system. This consensus is being practiced even today such as nations removes trade barriers through the international trade agreements formulated to regulate how trade is being conducted.

The political influence of multinational corporations (MNCs)

According to Coll (2012) in his study of power influence of NGO in Bangladesh, he writes that the power of NGO was noted to increase in the recent years compared to that of the government. First, Multinational Corporation may influence the governments through political lobbying to meet the interest of the citizens. This has been observed through corporation supporting their existing influential group, some hire the lobbying groups and others groups for a specific cause of action. These groups then take actions of creating awareness of business view at hand through even writing letters to the lawmakers and the legislation members who drafted the law ruining their operations

Secondly, through the public campaign where most of these corporations play fundamental roles in in monitoring and educating citizen on issues relating to elections increasing their power compared to the ruling government. Other corporations represent the interest of the business such as tax reductions and subsidies both in developing and developed countries.

Finally, through actions of the courts and negotiation is another key way through which the corporations politically influence on the government. Here, the corporation strives to negotiate with the concerned body as well as through court actions to obtain favorable terms of the issue at hand.

Citizen Power

Development of Citizen Power and its impact to the government and corporations

It began in the in early 1920s and 1930s where there was more emphasis on culture rather than power. Power was held by some elite group of people who were very influential in the society. Decision making and role of the community was directed to the influential people after the community power structure was executed after the World War II. In these past decades citizen power had no root and was viewed as being in opposition compared to other sectors. Citizen power is important and dynamic for the preservation of democracy and fair dealing of every citizen in a country (McGiffen, 2008).

There has been increased awareness and acceptance by the management about the interests and expectations of the diverse group of citizens to be accommodated in the organizations in the recent past. This has resulted to the addition role of the management of the social responsibility. Social responsibility may be divided into four distinct groups. First is the group that does not value the role of social responsibility in an organization and treat it as unavoidable constraint. It aims at maximizing profit as the key social responsibility. Secondly, group that exercises social responsibility in a selective way. The social responsibility is taken as a critical factor that determines the long term success of organization while undertaking promotion or any other measures to improve its performances. Business organizations that take into consideration their social responsibility roles while making policies are said to prosper unlike the others where the management assumes these roles. The main conflicting issue that arises includes control of pollution and control of job position where control of pollution dictates an extra cost to be incurred. This induces an uncompetitive cost that may result to the closure of the organization and hence job loss (Herman, 2009).

The third group considers social responsibility as very vital in the formulation and implementation of policies in corporations. Organizations at this group would be willing to bear declines in the profitability of the social goods, maintain uneconomical units so as to maintain jobs positions among others. Conflicts arise when the decrease in net profits threatens the survival of the organization. The final group is the companies that operate to meet as well as respond to the interest of the community. Therefore, these organizations consider communal needs as very vital while profits are realized later. In this group, conflicts arise in striving to maintain the operation of the organization effective and efficient as well as minimizing the requirements such as subsidy requirements.

Citizens’ power has much impact on both the government and the corporations (EUISSS & UNU-CRIS, 2010). Information technology and communication have opened doors for power and influence among citizens hence significant growth in citizens empowerment. There has also been increased development of networks both geographically and socially that enable a vast number of citizen to collectively come together and express their challenges. For example, a small group of individual may rapidly mobilize significantly many people in social media about a given topic which may have a positive or negative impact to the concerned party. Citizen power has been observed when the citizen protest against the action of government or corporate that may seems to oppress them such as hiking prices of goods and services, poor governance leading to misuse of the public funds among others. They do that to make their preference known by concerned parties. This results in corporate and government change in some instances.

The civil groups are involved in consultation process between the government and corporation. The recent gains have been in observed in global policy execution where institutions have been developed both in international ad regional level to enhance formal consultation of the needs of the citizen (Toure, et al., 2012). However, citizen power is being restraints by the government through erecting barriers to hinder mobile phone communication, restricting the access of fund to those civil society groups that airs the voice of citizens and through the poor administration of registration processes.

Recommendation and Conclusion

Recommendation

The main limitation of Multinational Corporations is that they focus more on meeting the demand of the shareholders and significantly forget the impact of their decision on the interest of other small stakeholders. It is, therefore, important that corporate reforms are initiated both in the national and global level. These reforms include; through the corporate tax that aims at collecting fee to compensate the public service due to the extra cost imposed through the negative externalities of some multinational corporation. Also through amendment and administration of antitrust law to restrict the power of large corporation that obtains the monopoly power. Finally through finance reforms campaign to limit the power of multinational corporations in the political environment (Greer, 2013).

With the growing globalization, there is need for the governments of all nations to establish and preserve a conducive and enabling environment to accommodate the private businesses and communal actions. The government should also encourage a sustainable and healthy competition among organization through the formulation and implementation of rules and regulations such as encouraging free trade policy to protect consumers from being exploited. Government should also take immediate action to ease the registrations and licensing procedures and regulation of businesses. This will help initiate the entrepreneurial skills that will in turn result to improved economic performance of the state. The present world is dynamic hence there is need for the governments to maintain and strengthen its institutions and social to move with the pace of globalization (Jacoby, 2014).

The government and corporation should not ban and discourage the activities of its citizens. This is because through citizens raising their challenges government is able to recognize the need for change for the fair dealing with its citizens. Also partnership of government, corporation and citizens results to realization of useful ideas that can be utilized for the development of a nation as a whole.

Conclusion

Power may be divided into three distinctions which include the government power, corporation power and citizen power. All the powers are paramount in one way or the other hence they are interdependent to each other. For example, corporations may apply political influence to obtain favor from the government such as reduction in tax rate burden. It may also formulate policies which may add value or devalue the lives of millions of lives. Multinational Corporations play a major role in provision of goods and services at a reduced cost as well they attract employees through the fringe benefits they provide. Governance is a fundamental element in the development of any country and ensuring that the impacts of globalization benefit the whole society. The government may partner with corporations and citizens to bring developments such as poverty reduction and alleviating unequal distribution of income, environmental protection and managing conflicts.

There are four main drive forces behind recent globalization which include entrepreneurial, liberalization of trade, increased innovations in technology and communication and also growth in the social networks globally. It is important to note that the government through its power has played a vital role in integration of certain activities which has encouraged interdependence in economics. The role of government is also to provide services such as quality education and health care services, good infrastructures and reliable social networks to its citizens. Like government and corporation, civil societies play a crucial role in shaping lives of billions people from interaction to policies and law formulations. They have to be considered in every decision either the government or corporation is making for a sustainable long term benefits to be achieved.

References

Calomiris, C., 2012 A Globalist Manifesto for Public Policy:
Occasional Paper no. 124.

Coll, S., 2012, Private empire: ExxonMobil and American power. New York: Penguin Press.

Greer, E., 2013, Big steel: Black politics and corporate power in Gary, Indiana. New York: Monthly Review Press.

Dunning, J., 2009, Multinational Enterprises and the Global Economy. Wokingham: Addison- Wesley Publishing Company, England.

EUISSS, European Commission, and UNU-CRIS (2010), the Role of Civil Society in Global Governance, Brussels: European Union.

Herman, E., 2009. Corporate control, corporate power. Cambridge: Cambridge University Press.

French, J. & Raven, B, 2012, The bases of social power in D. Cartwright (ed.) Studies in Social Power. Ann Arbor, MI: University of Michigan Press.

McGiffen, S., 2008, Biotechnology: Corporate power versus the public interest. London: Pluto.

Jones, B., 2009, The World Turned Upside Down?:Globalization and The Future of the State, St. Martin’s Press, New York.

Jacoby, N. 2014, Corporate power and social responsibility: A blueprint for the future. New York: Macmillan.

Stern, N., 2014 Globalization and Poverty, address at the Institute of Economic and Social Research. Faculty of Economics: University of Indonesia.

Toure, et al., 2012, African Development Bank: The Civil Society Engagement Framework, Abidjan: African Development Bank.