What Are the Disadvantages of Transnational Corporations?

disadvantages-transnational-corporations Credit: Paul Bradbury/OJO Images/Getty Images

The disadvantages of transnational corporations include job insecurity, environmental degradation, poor working conditions and the risk of outsourcing. The arrival of transnational corporations to new areas is generally met with enthusiasm, but there are downsides to having multinational corporations expand into new territories too. From exploitation of natural resources to market domination, there are several consequences of business expansion around the globe.

Environmental harm is one of the primary pitfalls of multinational corporations. The companies that have the financial resources to expand operations to different countries often establish plants, factories and corporate headquarters. Product production often increases significantly, which requires the consumption of greater amounts of electricity. The offices and warehouses established by these organizations also use more electricity, which ultimately contributes to an increase in air and water pollution. Transnational corporations may also present social and economic problems. They may subject employees to poor or unsafe working conditions and employ fewer workers as jobs are consolidated and outsourced. Additionally, most revenue generated by these companies is sent overseas, which translates to little reinvestment and economic stimulation for local economies. Lastly, large corporations may contribute to market dominance and drive smaller companies and retailers out of business as they establish monopolies.