The Political Economy of Global Business: the Case of the BRICs
Gaining greater knowledge of the characteristics of large firms that dominate the global economy is an inherently important endeavour. Brazil, Russia, India and China (the BRIC economies) have gained influence in the global economy and this is reflected in the increasing weight of their companies in Fortune Global 500 rankings. Uneven access to data and information makes understanding the strategy, structure, ownership and performance of large business an ambitious programme of research. The BRIC economies are different from each other and this is also true as far as the heights of their respective business worlds are considered. But they also share some crucial features: concentrated ownership, with governments and families at the helm, diversification and internationalisation.
- State ownership of big business remains prevalent across large emerging economies, and in BRICs in particular. Family capitalism is the second most widespread form of corporate organisation. This means that companies from these states are not subject to the discipline of the market for corporate control.
- As widespread and pervasive government intervention has shaped their ownership structures, so too has it driven their strategies more than global market forces. With the possible exception of Brazil, the BRICs’ big corporations are primarily domestic firms that have been produced by, and are therefore emerging from, their home states.
- Big BRIC business is speeding up internationalisation and may increasingly collide with competitors headquartered in traditional industrial nations. The legacy of previous policy choices, and the institutional path dependence they have created, mean that governance norms in BRIC and non-BRIC companies should not be expected to converge fully in future.
- Despite their differences, big BRIC business and multinational enterprises have common interests and are likely to find common ground to influence global trade and investment rules.