Globalization and Terrorism: Multinational Corporations as Part of the Solution

Other than the direct effect of terrorist attacks to business, (international) managers seldom realize the interaction currently going on between globalization, which is the frontier where they work, and terrorism itself –especially how globalization can turn into great advantage for terrorism. At this time the mainstream perception on fighting terrorism focuses more on security-intelligence improvement and superior warfare. Meanwhile, there is a major role that the business world can and should play to effectively deter terrorism globally.

Terrorism is arguably not caused by modern globalization. The concept of dramatical and organized killing in public exposure for fanaticism or political means has dated back to the crusades period (Lewis, 2003) or even way before (Laqueur, 1999). Neither is globalization caused by modern terrorism. Cooperation to fulfill the urge for a wealthier state has been around throughout humanity. Though the two notions are initially separate issues, they are not mutually exclusive – in fact, a discomforting interaction is taking place.

1. Status Quo Globalization Facilitates Terrorism

Albeit the idealistic utterance globalization is trying to achieve i.e. an affluent world with no nation left behind, the current stage of its process is both cumbersome and critical. Performing erroneous next steps without proper care and thoughts might lead into great peril. One of the rough surfaces that need to be addressed is how globalization at status quo actually facilitates if not breastfeed modern day terrorism.

1.1. A more inter-connected world

Within the past decades, communication technology has been developing itself at a stunning pace. Media coverage is expanding and news swiftly travels across the globe. Terrorist groups recognize such state of affairs and are taking advantage of it. Now, more than ever, their act of terror and therefore the terror itself can spread literally to every corner on earth, and even beyond, if space station is included. A single terrorist attack aimed at an exposed target will cause not only misery to the victims, but also terrorize the rest of humanity for fear such attack will come unto them.

The widening attention terrorists get nowadays is exactly the ultimate ride they want in order to fulfill their goals. More media coverage means more audience for them to get their message (through terror) across. In turn, terrorists expect both more support for their cause and submission to their demand. None of which satisfy the world at large.

Not only that, globalization also means a more economically dependent world. A crash in Wall Street will not only affect Nikkei or Amsterdam Stock Market, but Jakarta Stock Exchange alike. A bomb blast in a train or in a plane perpetrated by terrorists will cause major headache in public transportation sector worldwide with unlimited domino effect from security concerns to unemployment.

What by most people perceived as the current benefits of globalization are seen as extra boost and incentive by minority groups to commit atrocious attacks.

1.2. The discontent of mismanaged globalization

On the other side of the coin, the discontent of globalization also tremendously benefits radical groups. If globalization is seen as a tool for greater public good, then it has not been used properly. International bodies that are directing globalization are often accused of the mismanagement of globalization that caused environmental degradation, exploitation of the poor and unstable global economy (Stiglitz, 2002). Multinational corporations are also frequently perceived as key agents.

Regardless of the debates on such scrutiny, it is the ideal scapegoat in answering why the global social and economic gaps are widening. It can also lead to a more skeptical attitude in which the capitalistic west is seen as trying to take over the world for their benefit at the cost of the worlds poor and frail.

These instances nurture terrorism and give them major advantage in getting new recruits and support. Terrorist groups found new recruiting grounds as there are more and more people, especially the poor that feel oppressed by the current politico-economic condition. Amidst their daily hardships of life, radical and terrorist groups give them ideological doctrines that will both satisfy and channel their frustration – alas habitually on the expense of others.

Again, in combination with the inter-connected world, those messages are spreading fast and wide. Unfortunately, counter efforts and reaction to the terrorist may backfire and dig a deeper hole.


2. Force vs. Trade

The urgency of tackling terrorism is almost a truism in itself. It is of the interest of peaceful and prosperous humanity to make sure that the status quo changes immediately to the right direction. Terrorism must go down, a fair and well-managed globalization must take place. If at this very crucial point in time the process fails, then the corollaries will be frightening at best. The purpose may be clear, but the means are certainly not. This paper as with any other paper will not suggest a mean where the world can be free from terrorism, but simply try to analyze the more effective scheme.

2.1. Force alone will fail

Psychologically perhaps it is justifiable to fight a violent attack with another defensive one. Extending it to an offensive manner or pre-emptive attempts are also necessary preventions. However the latter need not solely focused on vigorous force. As a matter of fact, it should not.

Upheavals in Afghanistan and Iraq, to name the most recent and popular concerns, proof how the use of military might to combat terrorism in such scale backfires. This specific policy from the White House actually generates more recruits from Afghans and Iraqis as their life are being scattered with the military invasion. Bombing and military campaigns do not help to fight the root of terrorism – it actually creates more reasons to join terrorist groups or to support intifada. It might eliminate some actors or even ring-leaders, but while growing another dozens of them.

Domestically, governments especially those of allied forces are tightening their own security. Various anti-terrorist laws and their derivatives are in effect. Security measures are stepped up to a level where tolerance is running thin. One may argue that this method are counter-productive and in reality create its own kind of terror out of paranoia. Surely, officials might claim that it has been safer since the introduction of anti-terrorist laws. But this is an almost impossible claim to be proven. No one knows for sure how many more attacks will be conducted had the new laws not take place. What is much easier to quantify is the increasing number of detainees captured without proper procedure and often denied legal rights, or the number of visa applicants being rejected to enter United States without explanation other than Uncle Sam just said no.

Multi-billion dollars security campaign, in which American taxpayers cough up most of the bills, has not proven itself favorable for America itself. Other than bulging military and security expenditures, Americans are suffering the intangible namely the image of arrogance and bear with increasing hatred worldwide. This is absolutely not sustainable because it will lead to further terrorism. Adopting the game theory, a negative sum action will lead to a negative sum response and so forth (Frey, 2003), ending up only in a deepest hole for all parties, benefiting none.

Thus, with a mean where the effectiveness is dubious whilst the cost keeps rising, a different approach need to be seriously considered.

2.2. Trade and development

The main precondition for terrorist groups to gain ground in recruiting their conscripts is poverty. Initially the recruits need not be violent or have extreme ideology. Those are something that their superior will deal with, along with training and equipment all in one indoctrination package.

Although the terrorist leaders usually are not impoverished, their supporters and field agents typically are. War on terrorism – in spite of any connotation and misuse of the term – should try to gain these grounds out from the terrorist groups. Such efforts should not take form of mainly bombs and ammos, but trade and aid. The fight on terror should not be directed to people, but the poverty where terrorism gains the most recruits.

International trade that is focused on human and market development is the most perfect tool to do so (Fandl, 2004). In combination with tied aid, poverty in the less developed parts of the globe will be reduced at the same time where trade increases. This scheme will also invest for a better economic and social sphere of the poor areas.

At a glance, it seems like the donor countries will have to spend a lot. But that is not entirely true, especially compared with the cost of the alternative that is currently dominating i.e. vigorous force as explained previously. For example with the tied aid concept, where the aid given is used to procure services and product from donor countries, it will also benefit companies in the donor countries and thus their home economy as well (Fandl, 2004). In the long run, where the less developed countries have achieved a certain level of progress, where basic needs are provided and primary social infrastructure are fulfilled, not only will the world trade benefit from another able supplier and buyer, but more importantly in this context, terrorism will starting to loose its nurturing soil. In addition, if conducted properly, there will be fewer reasons to tag westerners “invaders” than “colleague”.


3. Corporations: The Missing Bullet

Having said that trade is a vital chain in combating terrorism; it is plausible then to expect one of the main actors of international trade to play its role well: multinational corporations.

Terrorism affects MNCs in numerous ways. Risk management, recruitment, expatriation, insurance, security, and operational hindrances are just to name a few. Post 9/11 era certainly is not easier for MNCs. Some even prefer to acknowledge terrorist groups especially in international business as a distinct stakeholder (Wartick & Wood, 1998, p. 106). This demonstrates the increasing concerns within the business environment to terrorism.

Unlike suggestion of MNCs dependence to government in fighting terrorism is a must (Eiteman, Stonehill, Moffet, 2004, p.459) this paper believes that MNCs can and must deal with terrorism in their own ways as essential agents of international trade on top of governmental cooperation. Multinational corporations share at least one same feature with terrorism, although not without a cost, and that is for being everywhere (Krug & Reinmoller, 2004).

Active role of multinationals in the struggle against terror is by making international trade especially in developing countries a success, not only dollar wise but human and social aspects as well. In order to do so there are three main interrelated conceptions to be addressed: strategic commitment on ethical conduct, reputation management, and cooperation with other MNCs. Neither of the three focuses solely on high-tech security, armed bodyguards, or armored vehicles for executives. This is in accordance with the main theme of less vigorous show of force and more proactive approach in ruling out grounds for terrorism.

3.1. Strategic commitment on ethical conduct

The commitment of MNCs to perform their business ethically needs to be done from strategic level to be engaged practically in all operational aspects. Statements like General Business Principles or company’s policy on human rights etc. should not be perceived merely as a certificate but factual guidelines for implementation. The challenge to apply ethical standards is much harder in emerging markets. However, only by withholding tight to the standards, differences can be made (Moon et. al., 2001, p. 132).

With ethics come corporate social responsibilities. Modern business theories suggest how CSR can be beneficial to the companies instead of just a social money spending program. In society where the marginal benefits of improvements are larger, so is the benefit for the company who conduct such program.

3.2. Reputation management

So as to achieve the ultimate goal, having ethical programs and operations are not enough without appropriate communication strategy. Those programs will bring its fullest advantage if communicated properly. Society needs to know that multinationals are not there to exploit cheap labor or plunder natural resources. The poor need to realize that the gigantic factory next to their neighborhood is helping them en route for better living standards.

Continuous public relations campaign must be run in the framework of a more broad reputation management. The core objective of such reputation management is to establish and maintain a favorable image of multinational corporations mainly in the societies where they operate and beyond. When the society is attached to the company as such that they fully aware that if the company goes down, they go down with it, then intuitively they will be active in guarding the company’s existence and at the very least reduce significantly any terrorist attacks toward it.

3.3. Cooperation with other MNCs

No complex global issues can be solved alone. The above mentioned concepts need to be done by all multinationals for them to reach a positive image of MNCs. Currently multinationals, especially from the west, suffer from damaging image due to some MNCs conduct in third world countries. Negative image is easier to be generalized to a group, namely multinationals, then favorable one. Therefore, it takes all multinationals, hand in hand, to pursue the appropriate endeavor.

Cooperation among MNCs may have different forms for different issues. It was suggested to form Trans-Corporate Security Cooperative to professionally deal with security threats to multinational operations ( Harvey, 1985).

In dealing with broader issues facing the social side of business there are cooperation such as National Business Initiative in South Africa, Philippines Business for Social Progress, and Instituto Ethos in Brazil (Moon et. al., 2001, p. 131).



Although globalization is meant for the good of all, the way it is currently running poses discontents and in some ways benefits terrorist activities. Resistance toward terrorism can not be focused on the use of force, but need the establishment of a progressive and fair international trade in order to prevail.

Multinational corporations being at the heart of international trade can and should take active part in fighting terrorism by conducting ethical business principles supported with good reputation management in cooperation with other multinationals. Only then, a sustainable and less terrorized business and society can be achieved.

Nevertheless, rough ideas incorporated in this paper are still far from rigor. Deeper insight and confirmation of data are still necessary.


Literature list

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-Rotterdam, 18 October 2004

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    Michael is a professional leader in the fields of energy investments, complex commercial deals, and sustainability with extensive international experience. His personal interests span from socio-political issues, history, and culture.