China, Multinational Corporations, and Globalization: Beijing and Microsoft Battle over the Opening of China’s Gates

There are two perspectives on the relationship between states and multinational corporations (MNCs). One, the "state in command" perspective, sees states as dominant, with globalization only worsening the situation. The other—the "MNCs in command" view—sees MNCs as all-powerful as a result of their assets. Globalization from that perspective is not necessarily bad and may actually empower states against multinational firms. China’s dealings with Microsoft Corporation from the early 1990s to the present show that neither perspective is accurate. China got some of what it wanted while Microsoft got some of what it wanted. In lieu of these approaches, a third model is offered here—a modified bargaining power perspective that focuses on the balance of needs, alliances, and the institutional environment as important factors shaping the bargaining dynamic between China and multinational enterprises. A case study of the China-Microsoft model demonstrates the usefulness of the model.