‪Financialization and Organizational Changes in Multinational Enterprises‪

Angelo Salento, Giovanni Masino and Domenico Berdicchia

Revue d'économie industrielle, 2013, vol. n° 144, issue 4, 145-176

Abstract: ?The goal of this paper is to provide both a theoretical and an empirical contribution to the debate concerning the relationship between the financialization process of the economy and the organizational changes implemented by large multinational enterprises. ? Our hypothesis is that there is a tight connection between the two elements, and that the analysis of such connection provides key insights about how to critically interpret the development, in the last few decades, of managerial practices. In order to find support to our hypothesis, we performed an empirical research concerning several large multinational corporations ? both some major Italian multinational companies, and some non-Italian multinational enterprises with large scale operations in Italy as well.Our main findings include (1) firms tend to abandon investments in areas where returns are expected to be uncertain and long term; (2) there is an increasing organizational relevance and power of CFOs and, in general; (3) mergers and acquisitions become both increasingly frequent, strategically relevant and organizationally problematic; (4) a strong focus on the reduction of labor costs, through various means, can also be seen as a way to materialize a short-term, financially oriented view of the firm; (5) a cognitive fragmentation of production seems to emerge, by which the firm is conceived as a ?chain? of activities that can be separately assessed and managed according to a ?shareholder value? orientation; (6) outsourcing practices are no longer explainable solely in terms of a traditional ?core business? focalization strategy, but also in financial terms, as a way to gather resources to be used for short-term shareholder value optimization practices.The implications of these results are discussed in the paper.

Keywords: Corporate Governance; Financial Structure; Strategy and Performance (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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