International Business Operations in Democracies and Autocracies

This essay delves into the complexities of international business operations, contrasting the experiences of multinational corporations in authoritarian regimes and liberal democracies. It begins by defining international business and highlighting the impact of globalization, emphasizing how political factors, such as government regulations and censorship, significantly influence business activities. The essay then compares the challenges faced by companies like Google in countries with differing political climates, using examples such as Google's withdrawal from China due to censorship policies. It also discusses the role of religion and intellectual property rights in shaping business practices. The Uppsala model and Dunning's Eclectic paradigm are used to analyze the business climate and challenges in autocratic and democratic countries. The essay concludes by highlighting the importance of understanding these differences for successful international business strategies. This document is available on Desklib, a platform providing past papers and solutions for students.

Running head: INTERNATIONAL BUSINESS OPERATIONS
INTERNATIONAL BUSINESS OPERATIONS
Name of the Student
Name of the University
Author Note

1INTERNATIONAL BUSINESS OPERATIONS
Introduction
International business operations are related to the process in which goods,
technology and services are traded between the national borders. This is mainly based on the
cross-border transactions which are made with the help of different services and goods. The
transactions based on different economic resources thereby include skills, people and capital
for production of services and goods on an international level. Multinational organizations
which are responsible for conducting business operations in different overseas markets need
to bridge various national markets in a global marketplace1. Two major macro scale factors
are able to affect the process of globalization. First factor is based on the elimination of
different barriers for making cross-border based trade. On the other hand, the second factor is
based on effective technological change which takes place in information processing,
transportation of technologies and communication 2.
The essay will be based on the analysis of differences between international business
operations that are performed by organizations which operate in authoritarian regimes and
liberal democracies. The differences which are experienced between the ways by which
transactions are made between the organizations operating in two types of economies will be
analysed in detail. The major levels of issues which are being faced by the international or
multinational business organizations in different countries will be analysed in the essay in
detail. The advantages and disadvantages of operations of multinational corporations in
autocratic and democratic countries will be an important part of the analysis which will be
done in the report 3.
1 Cohn, Theodore H. Global political economy: Theory and practice. Routledge, 2016.
2 Balaam, David N., and Bradford Dillman. Introduction to international political economy. Routledge,
2015.
3 Dupuy, Kendra, James Ron, and Aseem Prakash. "Hands off my regime! Governments’ restrictions
on foreign aid to non-governmental organizations in poor and middle-income countries." World Development 84
(2016): 299-311.

2INTERNATIONAL BUSINESS OPERATIONS
Comparison based on international business operations
As discussed by Lankina, Libman and Obydenkova4, cross-cultural business
operations or international business based operations have started growing with a rapid pace
in the current environment. The levels of awareness based on the usage of internal resources
is not able to help the country in order to develop its position. The possession of enough
amounts of resources does not exactly mean that the country is able to use the capabilities
effectively. The countries require support or services from different external countries in for
the proper exploitation of resources. Foreign direct investment or FDI is thereby considered
to be highly inevitable for the effective economic progress.
As argued by Bader 5, globalization is helpful for the countries in order to liberalize
different norms and laws which are based on foreign direct investment and international
business. Politics is considered to be an important factor which is related to the ways by
which investments are made in foreign countries. Business and politics are thereby linked
with each other with respect to effective investments made in operations. The business related
activities which are performed in autocratic countries are considered to be different as
compared to those that are conducted in democratic countries.
As discussed by Dean 6, international business faces lesser levels of constraints in the
liberal economies or democratic countries as compared to the autocratic countries. For
example, an American organization will face lesser troubles in their operations in democratic
countries as compared to operations in an autocratic country. An organization like Google
4 Lankina, Tomila, Alexander Libman, and Anastassia Obydenkova. "Authoritarian and democratic
diffusion in post-communist regions." Comparative political studies 49, no. 12 (2016): 1599-1629.
5 Bader, Julia. "Propping up dictators? Economic cooperation from C hina and its impact on
authoritarian persistence in party and non party regimes."‐ European Journal of Political Research 54, no. 4
(2015): 655-672.
6 Dean, Mitchell. "Rethinking neoliberalism." Journal of Sociology 50, no. 2 (2014): 150-163.

3INTERNATIONAL BUSINESS OPERATIONS
will thereby face fewer problems in the operations in India in comparison to the operations
which are performed in China. The major reasons behind withdrawal of Google from China
are based on the censorship policy and the human rights based violations in the country.
According to Ruhs 7, the business operations that are conducted by Google are based
on its duty related to information which is provided to the users. The information which is
provided by Google to the consumers in China is not acceptable by the government and their
interests. News related to different controversial incidents are not allowed to be provided in
China. Google is restricted from providing different information based on news which can be
offered to the users as there are chances of major issues which can be take place in the
country. The possibility of riots which can take place in the country is also quite high if news
is spread among the customers. Google has thereby taken the decision to withdraw its
operations from China in spite of the huge growth based opportunities which are offered by
the market 8.
Google has not faced any major difficulties related to spreading news in liberal
countries like India. The organization is thereby able to provide effective information based
on different issues without any barrier. The news related to criticisms which are faced by the
Prime Minister of India related to different steps taken by him in the country have been
provided without any barriers to the users in the country. The multinational organizations
which have their operations in the country are allowed free trials due to the liberal
environment that has been developed in India 9.
7 Ruhs, Martin. "Labor immigration policies in high-income countries: Variations across political
regimes and varieties of capitalism." The Journal of Legal Studies 47, no. S1 (2018): S89-S127.
8 Wilson, Jeffrey D. "Understanding resource nationalism: economic dynamics and political
institutions." Contemporary Politics 21, no. 4 (2015): 399-416.
9 Moon, Chungshik. "Foreign direct investment, commitment institutions, and time horizon: How some
autocrats do better than others." International Studies Quarterly 59, no. 2 (2015): 344-356.

4INTERNATIONAL BUSINESS OPERATIONS
The activities of a multinational corporation like Google in China are affected due to
the type of economy which has been developed in the country. Religion is also able to act as
a major barrier to the operations of Google in another autocratic country like Saudi Arabia.
The organization is also not allowed to provide effective information to the users related to
different issues due to the religious environment which has been developed in Saudi Arabia
10.
According to Connell and Dados 11, a Chinese organization which operates in other
countries like, India and America is a completely different case. The Chinese organizations
which have their operations in the two countries are not affected by international relations
that are developed between the countries. The organizations are able to operate in a profitable
and free manner in both the countries. The Chinese multinational corporations can seek any
type of legal help if they face issues while operating in the two countries.
The laws which are developed and implemented in the democratic countries and
autocratic countries are considered to be quite different. The international organizations are
able to establish business operations directly in the democratic countries like America and
India. The establishment of operations in China however requires an effective partnership
with local Chinese organizations. Joint venture can thereby be considered to be the only
process which can help the organizations to enter China 12. The partner who is a part of the
joint venture may also not receive fair levels of treatment in the country. For example, a
major multinational corporation named Volkswagen had to enter China with the help of
10 Bader, Julia. "China, autocratic patron? An empirical investigation of China as a factor in autocratic
survival." International Studies Quarterly 59, no. 1 (2015): 23-33.
11 Connell, Raewyn, and Nour Dados. "Where in the world does neoliberalism come from?." Theory
and Society 43, no. 2 (2014): 117-138.
12 Tallberg, Jonas, Thomas Sommerer, and Theresa Squatrito. "Democratic memberships in
international organizations: Sources of institutional design." The Review of International Organizations 11, no.
1 (2016): 59-87.

5INTERNATIONAL BUSINESS OPERATIONS
partnership with a Chinese organization named Shanghai Automotive Industry Corporation or
SAIC.
In the year 1984, Shanghai Volkswagen was established in China with the help of this
partnership. Volkswagen had started facing major issues related to the manufacturing based
operations which are to be performed in China. Shanghai Automotive Industry Corporation
later ended its partnership with Volkswagen and formed a new partnership with General
Motors. Volkswagen had later faced huge levels of competition from the organization which
had previously developed a partnership in order to operate in the same country. The new
alliance which was thereby developed by the Chinese organization with the biggest
competitor of Volkswagen was not questionable in the courts in China 13.
As discussed by Mastanduno 14, the intellectual property based rules which are
developed in the autocratic countries are not good in comparison to the laws formed in
democratic countries. The organizations which are a part of different autocratic countries do
not have issues in stealing technologies from other organizations. For example, China is
famous for the duplication of different products that are offered by different organizations.
Legal system which has been developed by autocratic countries are not free as compared to
the liberal countries.
According to Juncos 15, the interests of local organizations are provided more
importance in the autocratic countries. This is considered to be a major reason behind the
issues which are faced by the international organizations that operate in autocratic countries.
13 Mastanduno, Michael. "Liberal hegemony, international order, and US foreign policy: A
reconsideration." The British Journal of Politics and International Relations (2018): 1369148118791961.
14 Mastanduno, Michael. "Liberal hegemony, international order, and US foreign policy: A
reconsideration." The British Journal of Politics and International Relations (2018): 1369148118791961.
15 Juncos, Ana E. "Resilience as the new EU foreign policy paradigm: a pragmatist turn?." European
Security 26, no. 1 (2017): 1-18.

6INTERNATIONAL BUSINESS OPERATIONS
The business based climate which has been developed in the autocratic or democratic
countries are considered to be different. The various challenges which are faced by the
international organizations in the autocratic and the democratic countries can be analysed
with the help of two models namely, Uppsala model and Dunning’s Eclectic paradigm.
As discussed by Kobrin 16, the principles of Uppsala model based on
internationalization suggest that the organizations try to internationalize the operations to
countries which are psychically closer as compared to the distant markets. The American
organizations search for opportunities which are available in India as compared to those that
are available in China. This choice of American companies is mainly based on psychological
closeness of the two countries. China however is a communist country and principles which
are followed in the country are also communist in nature. China has also been able to provide
high levels of competition to America with respect to the organizations which operate in the
country. The organizations of America are thereby not able to operate in a comfortable
manner in China as compared to that in India.
According to Lankina, Libman and Obydenkova 17, the effective levels of cooperation
are possible among the firms which belong to the countries which are psychically similar in
nature and further they move to the markets which are psychically distant as well. For
example, the giant of British supermarket industry, namely Tesco has been able to establish
different business units in various major Asian and European countries before the company
decided to move to the distant markets.
16 Kobrin, S.J., 2015. Is a global nonmarket strategy possible? Economic integration in a multipolar
world order. Journal of World Business, 50(2), pp.262-272.
17 Lankina, Tomila, Alexander Libman, and Anastassia Obydenkova. "Authoritarian and democratic
diffusion in post-communist regions." Comparative political studies 49, no. 12 (2016): 1599-1629.

7INTERNATIONAL BUSINESS OPERATIONS
Another major model which can be used for the analysis of international business
operations is Dunning’s Electic paradigm. This model has been able to explain different
opportunities and challenges which are faced with respect to international business operations
in the democratic and autocratic countries. Dunning has stated that an organization which
operates in the foreign country can face many issues which include, the lack of information
and poor access to the distribution based channels. It has also been pointed out by Dunning
that an organization which operates in the foreign country can face many cultural, spatial and
linguistic issues as well 18.
As discussed by Balaam and Dillman 19, the work based culture which has been
developed in the democratic and the autocratic countries is different. Trade union based rights
are thereby allowed to the workers who are a part of the organizations in the democratic
countries. On the other hand, the trade based rights and labour rights are not provided to
employees in autocratic countries. International organizations which operate in the
democratic countries can face high levels of demands from employees as compared to those
from the autocratic country. The employees in autocratic countries are thereby exploited quite
easily as compared to those who are a part of organizations which operate in the democratic
countries.
Conclusion
The international or multinational organizations have to face huge number of
challenges as compared to the opportunities in the autocratic countries or the authoritarian
regimes. The business based climate, legal system and business principles which are
18 Ruhs, Martin. "Labor immigration policies in high-income countries: Variations across political
regimes and varieties of capitalism." The Journal of Legal Studies 47, no. S1 (2018): S89-S127.
19 Balaam, David N., and Bradford Dillman. Introduction to international political economy.
Routledge, 2015.

8INTERNATIONAL BUSINESS OPERATIONS
developed in the autocratic countries are not highly favourable for the international
organizations. The different principles which are developed in these countries are mainly
based on the ways by which the organizations aim at safeguarding the needs and interests of
the local organizations as compared to those of the international organizations as well.
The international organizations on the other hand are able to receive fair levels of
treatment in the democratic countries. The judicial system and laws related to business are
able to provide effective levels of support to the multinational corporations which operate in
the countries. Different issues which are faced by the multinational corporations in
democratic countries are lesser as compared to those in autocratic countries. An organization
which originates from a democratic country faces major issues in the operations which are to
be conducted in an autocratic country. The highly globalized market in autocratic countries
on the other hand cannot be ignored as they are able to provide effective levels of
opportunities.

9INTERNATIONAL BUSINESS OPERATIONS
References
Bader, Julia. "China, autocratic patron? An empirical investigation of China as a factor in
autocratic survival." International Studies Quarterly 59, no. 1 (2015): 23-33.
Bader, Julia. "Propping up dictators? Economic cooperation from C hina and its impact on
authoritarian persistence in party and non party regimes."‐ European Journal of Political
Research 54, no. 4 (2015): 655-672.
Balaam, David N., and Bradford Dillman. Introduction to international political economy.
Routledge, 2015.
Cohn, Theodore H. Global political economy: Theory and practice. Routledge, 2016.
Connell, Raewyn, and Nour Dados. "Where in the world does neoliberalism come
from?." Theory and Society 43, no. 2 (2014): 117-138.
Dean, Mitchell. "Rethinking neoliberalism." Journal of Sociology 50, no. 2 (2014): 150-163.
Dupuy, Kendra, James Ron, and Aseem Prakash. "Hands off my regime! Governments’
restrictions on foreign aid to non-governmental organizations in poor and middle-income
countries." World Development 84 (2016): 299-311.
Juncos, Ana E. "Resilience as the new EU foreign policy paradigm: a pragmatist
turn?." European Security 26, no. 1 (2017): 1-18.
Kim, Dong-One, and Johngseok Bae. Employment relations and HRM in South Korea.
Routledge, 2017.
Kobrin, Stephen J. "Is a global nonmarket strategy possible? Economic integration in a
multipolar world order." Journal of World Business 50, no. 2 (2015): 262-272.

10INTERNATIONAL BUSINESS OPERATIONS
Lankina, Tomila, Alexander Libman, and Anastassia Obydenkova. "Authoritarian and
democratic diffusion in post-communist regions." Comparative political studies 49, no. 12
(2016): 1599-1629.
Mastanduno, Michael. "Liberal hegemony, international order, and US foreign policy: A
reconsideration." The British Journal of Politics and International Relations (2018):
1369148118791961.
Moon, Chungshik. "Foreign direct investment, commitment institutions, and time horizon:
How some autocrats do better than others." International Studies Quarterly 59, no. 2 (2015):
344-356.
Ruhs, Martin. "Labor immigration policies in high-income countries: Variations across
political regimes and varieties of capitalism." The Journal of Legal Studies 47, no. S1 (2018):
S89-S127.
Tallberg, Jonas, Thomas Sommerer, and Theresa Squatrito. "Democratic memberships in
international organizations: Sources of institutional design." The Review of International
Organizations 11, no. 1 (2016): 59-87.
Wilson, Jeffrey D. "Understanding resource nationalism: economic dynamics and political
institutions." Contemporary Politics 21, no. 4 (2015): 399-416.