International Business and Politics
International business is continuing to be conducted at very high levels throughout the world. Corporations are making multi-billion dollar deals with other companies. With the rise of globalization, international business is done much quicker than decades past. With the speed of travel, an individual can travel throughout most parts of the world in a relatively short time span. In addition, with the advent of the Internet and the rise of media applications and technology, staying connected is becoming easier and easier, not to mention cheaper. It is no wonder that international business continues to be a staple in the international system.
There are many factors that a corporation may discuss and evaluate before making an investment in a country. One factor that is important to discuss is the relationship between international business and politics, or international business and international relations. The political environment in international business if a very important factor that is considered when business leaders consider before making a financial investment in a country. There are many reasons that a business (or a business student) should be knowledgable about with regards to international relations.
To begin, with the importance of ensuring international human rights, international business should ensure that they are adhering to all domestic and international law. Having a detailed understanding of organizations such as the United Nations, and documents and laws such as the Universal Declaration of Human Rights, as well as familiarity with the ethics of responsibilities that corporations have towards establishing fair labor standards, codes of conduct, amongst other principles are necessary for sound, ethical international business practices. Along with knowing about human rights norms, international business students and corporate leaders would also be best served to learn about international relations and/or international politics for other reasons.
For example, if there exists domestic tension in a country, a business would want to know about domestic issues in that country. If there is instability in a country, then a corporation may think twice about investing in that country, particularly if their financial investments are at risk. In addition, an international business person would also be advised to study the regime of the country that they are planning to invest in. If the country has financial problems, or if the regime has had a history of violating human rights, then a company may wonder about whether the government will lease to additional risk or challenges. Furthermore, understanding domestic conditions such as infrastructure, domestic law, as well as political movements will allow for greater insight into international business investment practices.
As the FAO explains, “The legal/political aspect is very important in global marketing. “International law” can be defined as rules and principles that states and nations consider binding upon themselves. This raises two interesting characteristics of international law. The first is that “law” belongs to individual nations and international law only exists to the degree that individual nations are willing to relinquish their rights. The second is the lack of an adequate international judicial and administrative framework or a body of law which would form the basis of a truly comprehensive international legal system.” They go on to say that “The international business is also subject to political decrees made by governments both in “home” and “host” countries. Home governments can apply pressure not to deal with disapproved parties. These measures may take the refusal to grant an export licence, or withdrawal of export guarantee cover. The host government may take measures like taxation, ownership controls, operating restrictions or expropriation.”
In fact, it is difficult to believe that corporations will spend millions (if not billions) of dollars investing in foreign countries without understanding not only markets, but also the political climate of the country. It is for this reason that an individual has a nuanced understanding of not only international business (and international finance), but also a thorough background in international relations and politics.
There are many ways in which a person can become better versed in international business and politics. For example, when someone is reading the news, they can couple their international business interests with also reading about domestic politics and international relations; they may want to study the politics and history of a country and/or region that they are considering conducting international business in. In addition, there are many academic works on the relationship between international business and politics. Furthermore, someone interested in conducting international business may be interested in learning a foreign language. Given the increased level of business throughout the world, it would be a great idea to know a foreign language, as that may be able to help a person while they are traveling or working abroad.
Lastly, there are are many international business graduate programs that have courses on teaching students about the political environment in international business. More specifically, there are also international business masters programs, and other international business graduate programs that also offer international relations components that can help students gain more insight on the relationship between international business and politics. For example, “Master’s in international business programs usually take an interdisciplinary approach, combining international business topics with history, politics, and foreign culture. The core curriculum is similar to an MBA program and typically includes core courses in economics, finance, accounting, management, and marketing. Additional coursework covers the international business environment, international trade policy, international marketing, international negotiations, cultural differences, and related topics” (InternationalRelationsonline.com). In addition, “Some MIB programs focus on conducting business in specific world regions such as Asia, Europe, India or Latin America. Some programs require graduating students to demonstrate proficiency in a second language, though this is not as universally required as it is for MIR programs. Most programs require students to complete an independent capstone project that demonstrates depth of knowledge in a niche area of expertise.” In fact, there are many international business courses that offer discussions and topics on international relations. These international business graduate programs are helpful in preparing an individual for a career in transnational business.
There are actually international business graduate programs that have combined topics of international business with international relations. For example, there many Master’s programs which combine both international Relations and Business Administration. These programs can allow for students to complete both a Master’s in International Relations, as well as a Master’s degree in International Business. These sorts of graduate programs in international business allow students the depth of continuing their studies in international business, with added attention to international relations issues.
Thus, when one is studying international business, or for individuals and corporation that are conducting intentional business, is is imperative that they also have a firm understanding of international relations and the political environment of a country. This will allow them to not only stay safe, but it will also help when making financial investment decisions in the international business environment.