A multinational corporation owns or controls operations in more than one country. It may move capital, technology, management, and products across borders. Foreign direct investment occurs when an investor gains a lasting interest or control in an enterprise abroad, such as building or buying a factory. This differs from purchasing a small amount of foreign stock without managerial control.

Outsourcing means contracting work to another organization. Offshoring means moving work to another country. A company can outsource payroll to a nearby firm without offshoring it. It can also offshore work to its own foreign subsidiary without outsourcing. Keeping these decisions separate helps identify who employs workers and which laws apply.

Lead firms can govern a chain without owning every workplace. A large retailer may set price, speed, quality, packaging, and delivery demands for suppliers. Suppliers facing a low price and short deadline may push risk onto workers through temporary contracts, long hours, or unsafe production. This does not make every lead firm responsible for every local decision. Researchers need contracts, audits, purchasing practices, wage records, and worker testimony to trace the pressure.

Value is often concentrated in activities protected by patents, brands, finance, distribution networks, or control of customer data. Physical production can remain highly competitive, allowing buyers to switch among suppliers. Workers and small producers may then have less bargaining power than firms that control design and market access.

States are active participants. They build infrastructure, regulate labor and pollution, set taxes, negotiate trade, and create special economic zones. Governments may compete for investment by offering subsidies or weak enforcement. They may also require local sourcing, worker training, technology transfer, or environmental safeguards. Globalization does not remove the state. It changes the arena in which states negotiate.

Quick review: Map the chain before judging it. Who controls design, price, contracts, production, transport, branding, and retail? Which stage can switch partners most easily? Bargaining power often follows control over the hardest link to replace.

Watch the lesson connection

Theories of Global Stratification gives you a second explanation of the ideas surrounding this lesson. As you watch, pause when the lesson concept appears and explain how the example fits.

Try the idea yourself

Write one original example, one close nonexample, and one observation that would help you tell them apart. That small exercise turns a definition into a sociological tool you can use in daily life.