The Divide And Rule In The Development Of The Service Multinational Corporations

The theory of divide and rule by Service multinational corporations (MNCs) is not a mere continuation based solely on the mainstream service MNCs development theories, but a new theory that can explain the transnational expansion of service MNCs. The divide and rule strategy relies on the asymmetry between liquidity of labor and capital factors, thereby weaken the power of labor collusion in order to enhance the profitability of capital factor.This paper attempts to explain the coexistence of rapid development of service MNCs and increasing severe conflicts between labor and capital, analyses the inherent relations between those two, in favor of further understand the developmental pattern of service MNCs and its effects on income distribution. Starting from the basic assumptions, this paper explores the similarities and differences between divide and rule theory and other classic service MNCs theories by comparison analysis. Later on, this paper analyses the mechanisms of service MNCs divide and rule strategy from competitive exchange and specific human capital perspectives. Strong capital and weak labor causes divide and rule to ordinary workers; while strong labor and weak capital causes anti-divide and rule to high-knowledge and human capital employees. Divide and rule implies that capital factor occupies labor factor income, while anti-divide and rule reflects the knowledge-oriented features in the development of service MNCs. In addition, the paper takes Wal-Mart as a typical example, proves divide and rule theory through investigations on worker's wage, manager's income and capital profitability. Finally, this paper summarizes the effect of divide and rule strategy on company growth, internal income distribution, economy of host countries and balances of world economy, and proposes some policy suggestions to our government and enterprises on how to deal with divide and rule strategy.