Transnational Corporations and Poverty Reduction: Strategic and Regional Variations

Abstract

Corporate interest in the issue of poverty is as old as the industrial revolution. In the nineteenth century, the founders of major corporations not only invested in the establishment of their factories, but also created ‘company villages’ and ‘social programmes’ with a view to enhancing the social well-being of their workers. Most strategies represented a combination of enlightened self-interest, efforts to keep the (upcoming) trade unions at bay and attempts to either prevent government regulation or fill the gaps left by laissez-faire governments. In the post-war period the poverty issue became the prime responsibility of governments (welfare states) and civil society (development aid and local charity). If any, corporations had only indirect responsibility for poverty. Gradually, since the mid-1990s and with increasing pace since the beginning of the twenty-first century, the (potential) contribution and direct responsibility of corporations to alleviating global poverty — as opposed to local poverty — has received increasing attention again (Kolk et al. 2006;Wilson and Wilson 2006;Prahalad 2005). This attention is accompanied by major controversy: in particular, the role of transnational corporations (TNCs) investing in developing countries has been heralded by some as a positive force to alleviate poverty, while others have been stressing the job-displacing and income inequalities precipitating effects of the same investments.