Valuing Intellectual Capital: Multinationals and Taxhavens: 23 (Management for Professionals)

Intellectual capital
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Alliances were sought with unrelated business associations that might have an interest in resisting the potential contagion effects of this instance of international regulation. Joint ventures with governments were proposed, weak national policies were encouraged, CSR initiatives were promoted as an alternative, and freedom of expression in labeling invoked. Needless to say, such an effort required sophisticated professional coordination.

Multinational firms specializing in such services were enlisted. Essentially, those same services were provided by public relations and crisis management firms advocating climate change denial on behalf of their clients. The tobacco multinationals at first had sought to prevent the treaty negotiations from taking place at all, then to undermine them, and failing that, to weaken the final product. At the end of the day, there now is a widely ratified treaty that leaves implementation measures to national discretion.

But the story doesn't end with the FCTC. As individual countries began to act on its provisions they faced lawsuits by those same companies under bilateral investment treaties BITs : for trademark infringements and regulatory takings if the required packaging turned out to be particularly gruesome, as indeed some are, or if plain packaging was required.

In sum, lobbying is a standard form by means of which business exercises instrumental power. There is more of it in major centers of governance with international influence, be it Washington or Brussels; it has gone global, as in the case of the FCTC; and if business loses at the legislative level, legal actions against regulators national, regional, and global , has become a routine extension of lobbying.

Structural power exists but it is easy to reify.

Conducting R&D in Countries with Weak Intellectual Property Rights Protection

However, except in special cases, bond markets haven't done much intimidating of late. The reason is simply that gross domestic product measures value added, whereas annual turnover measures final sales without subtracting the intermediate costs that went into producing the ultimate good or service. Multinationals enjoy a number of intrinsic sources of structural power. Above all, states are territorially fixed entities competing for investments while multinationals typically have locational options, in some measure even in the extractive sectors. Particular outcomes, of course, are determined by a host of additional factors.

The first concerns the right of foreign investors to sue governments under binding international arbitration, included in BITs and investment chapters of free trade agreements. This is a right not granted to states. Unlike in the WTO, no appellate procedure exists to challenge rulings. The awards for violating an agreement and losing the case can be steep, and they are legally enforceable.

A standard view is that states win at least as many cases as multinationals, which could suggest that no structural power is in play Franck But as Mann notes, investors win over 70 percent of jurisdictional determinations — whether the treaty preconditions for arbitration have been met, which could be interpreted as a low bar to entry for investors. It is worth noting that China, whose outward foreign investment is on the verge of exceeding inward flows, has broadened the scope of issues it has agreed to subject to international arbitration in its most recent BITs Zhang This may enable firms to administer or negotiate prices that differ from market prices.

Official statistics are of only limited use; most countries collect few, some none.

But here are two things we do know. Where they don't — for example, where some form of intellectual property is involved, or where the service component in transactions is high — multinationals have considerable pricing discretion UNCTAD Unless and until tax and tariff rates are harmonized, this remains a source of structural power for multinationals.

Third, multinationals' structural power is greatly augmented by the existence of tax havens. These have increased rapidly in number and magnitude since the s. Their number now may exceed 50 Palan et al. Tax havens are not simply a place to park profits, however. A nominal presence in tax havens for the purposes of tax avoidance is not limited to any particular sector. For example, in the extractive and infrastructure industries a shell company registered in a tax haven may sell or lease capital equipment to an affiliate belonging to the same corporate group and operating in a third country, offering transfer pricing opportunities.

Or instead of the parent company repatriating its overseas profits, its shell company affiliate in the tax haven can issue loans to the parent company, which then permits the parent company to deduct the interest payments from its home country tax obligations. That case is under appeal. But the ability of multinationals to augment their structural power through tax havens is unlikely to disappear anytime soon.

A fourth source of structural power stems from how little is known about trade flows at the firm level, and what impact this may have on official trade policy. But no public institution anywhere has the mandate or capacity to collect systematic and universal data on such trade. That this raises potentially serious questions about the efficacy of trade policy did not escape then WTO Director General Pascal Lamy in a plea to corporate leaders: It no longer suffices that you trade while relying on governments to craft the regulatory framework for you in the WTO through which your trade relations take place.

Discursive power is the ability to influence outcomes through promoting ideas, setting social norms and expectations, and even shaping identities. Its exercise involves persuasion and emulation, not coercion. Her references range from companies conducting focus groups and sponsoring TV advertisements to promoting the idea of free markets and limited government. For the purposes of the present discussion, I offer three broader observations.

The first is that corporate globalization has benefited from a massive shift in discursive power that favored business even if it was not always directly driven by business itself. This is the story the neoliberalism narrative tells Crouch It involved displacing prevailing ideas, norms, and identities. By then, globalization had attained a near transcendent status. Corporate globalization benefited from this shift, and in turn reinforced it. My second observation is that certain ideational elements of this broader shift can be closely related to the power of business.

For instance, Teles' book, The Rise of the Conservative Legal Movement, takes us some way toward understanding the origins of key ideas concerning regulation in the US. It is a detailed scholarly analysis of deliberate intellectual institution building, beginning with the new field of Law and Economics. Over time, the effort fundamentally altered dominant conceptions about when regulation was called for, how regulations were to be designed, and how regulatory agencies were expected to calculate the costs and benefits of proposed actions.

The creation of that movement was followed by the founding of the Federalist Society, now the most important organization of conservative legal professionals in the US, of which a significant number have found their way into the upper reaches of US courts. Moreover, conservative think tanks were established, including the American Enterprise Institute, the Heritage Foundation, and the libertarian Cato Institute and Competitive Enterprise Institute. Their active research agenda promotes limited government, lower taxes, fewer regulations, and it seeks to cast doubt on global challenges, such as climate change, which might require policies at variance with their preferences.

Beyond the think tanks lie such entities as the American Legislative Exchange Council, which among other things drafts model legislation for individual state legislatures to undermine and reverse progressive laws on the books. Some of this thinking inevitably spilled over into the international realm.

Raymond Vernon, a pioneer in the study of multinational enterprises going back to the s, published a book in entitled In the Hurricane's Eye: The Troubled Prospects of Multinational Enterprises. Vernon , pp. Yet today, the multinational enterprise is the standard mode of organizing economic activities across countries. Of course there exist different national variants of multinational firms, as well as different types of ownership and governance structures. But the convergence around the multinational corporate form is universal.

Perhaps nowhere is it more remarkable than in the case of China. Among policymakers, the multinational has been normalized. This may simply reflect their greater efficiency in providing access to investments and markets, thereby creating economic opportunities and stimulating growth. The economic transformation in emerging market countries and many developing countries lends strong support to that view.

But that the convergence has occurred so rapidly and so thoroughly suggests that mimetic and normative factors have also been in play. The normative dimension comes into play when such consequentialist considerations are supplemented or even yield to the logic of appropriateness — that this, not that, is the appropriate and expected form of conduct. Whatever combination of factors best explains the outcome, it endows the multinational with a reservoir of discursive power that it can draw upon in pursuing its interests.

In sum, the institution of the multinational has considerable transnational instrumental, structural, and discursive power — and of course the three are dynamically related. Contrary to early theorizations of these developments, however, this does not necessarily come at the expense of the territorial state as a political institution Strange ; the two are too closely interwoven to support that argument. Examining multinationals' source and exercise of authority sheds further light on this relationship.

The boundary between power and authority is blurry. The key difference between them lies in the voluntary suspension of individual judgment based on a widely accepted and institutionalized belief that the authoritative entity is entitled or has the right to prescribe. Weber's classic categorization of the sources of authority differentiated between charismatic, traditional, and legal sources.

Leaving charisma aside, it seems clear that multinational enterprises today draw upon and embody a combination of traditional and legal authority. Crucially, even states that lack political liberal institutions domestically, such as China, adhere to this transnational authority structure so as to be in a position to participate in and benefit from the global economic system. Core elements of this traditional source of authority are enshrined in, elaborated by, and enforced through public and private law, including obligations under the WTO and international investment agreements.

Let me not be misunderstood. The host state is the public authority in any particular country. It has the right to determine certain parameters of the operations of a multinational's local subsidiaries, affiliates, and contractual parties. Compliance with applicable laws is a formal requirement, although it is not always rigorously enforced or elements may be waived altogether, as in export processing zones. The state can require the multinational to take on local joint venture partners.

It can require permits the company needs in order to operate. It negotiates the taxes and royalties the company must pay. It can refuse access to particular sites. Competition authorities can regulate mergers and acquisitions. A number of states have gone so far as to demand that multinationals share encryption keys of their communication systems with local authorities, or use Internet servers located in the host country.

But this isn't the whole story of the relationship between the public authority of the state and the private authority of the multinational. This is a figure of Chinese legend recently popularized in a Hong Kong fantasy film, but based on a classic 16th century novel by Wu Cheng'en entitled Journey to the West. The Chinese government, in turn, committed to providing Disney special protection from intellectual property piracy, which remains common in China.

These examples illustrate the obvious point that states possess authority in their dealings with multinationals. Specific outcomes will vary depending on the balance of interests and power; not every country is China, and not every company Disney. But they also illustrate a fundamental institutional fact: a dynamic interplay between two different centers of power, each with its own basis of authority. One is transnational and rests on private property rights, and the other is territorial and rests on sovereignty.

The power of each in some measure is constrained by the authority of the other. Neither supplants the other. To elaborate on the scope and scale of multinationals' authority, I address two further questions: over what or whom do they have authority? And in the next section I ask: in whose name or on whose behalf do they exercise that authority? Multinationals have authority over themselves. This is not as trite as it may sound when we consider the number of multinationals in the world today; the number of countries in which many operate; the range of activities they encompass; the already vast and still expanding private transnational legal order they have generated; and their capacity to affect workplace conditions, the welfare of communities, and even national economic prospects around the world.

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Intellectual capital - Wikipedia

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Obviously many countries in the European Union are places where aggressive tax optimisation finds its place," Pierre Moscovici, the European commissioner for economic affairs and taxation, told reporters in Brussels yesterday. I want to address this.

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Valuing Intellectual Capital: Multinationals and Taxhavens (Management for Professionals) [Gio Wiederhold] on ubynasipujag.tk *FREE* shipping on qualifying . Editorial Reviews. From the Back Cover. Valuing Intellectual Capital provides readers with Valuing Intellectual Capital: Multinationals and Taxhavens ( Management for Professionals Book 23) - Kindle edition by Gio Wiederhold. Download it once and read it on your Kindle device, PC, phones or tablets. Use features like.

An asset is a resource that is controlled by the entity as the result of past events for example purchase or self-creation and from which future economic benefits inflows of cash or other benefits are expected. For a business, translating the potential of its intellectual capital is crucial. A term " Workforce -in-place" can be used as a category when companies with their staff are purchased. In order to profit from intellectual capital, knowledge management has become a task for management. Intellectual capital Intellectual capital is the intangible value of a business, covering its people human capital , the value inherent in its relationships Relational capital , and everything that is left when the employees go home [1] Structural capital , of which Intellectual property IP is but one component.

Classification Intellectual capital is normally classified as follows: Human capital , the value that the employees of a business provide through the application of skills, know-how and expertise. Human capital is inherent in people and cannot be owned by an organization. Therefore, human capital can leave an organization when people leave, and if management has failed to provide a setting where others can pick up their know-how.

Human capital also encompasses how effectively an organization uses its people resources as measured by creativity and Innovation. Structural capital , the supportive non-physical infrastructure, processes and databases of the organisation that enable human capital to function.

Because of its diverse components, structural capital can be classified further into organization, process and innovation capital. Process capital includes the techniques, procedures, and programs that implement and enhance the delivery of goods and services. Innovation capital includes intellectual property such as patents,trademarks and copyrights, and intangible assets.