The difference between Traditional Authority, Legal-Rational Authority, and Charismatic Authority
Authority refers to accepted power, that is, power that people agree to follow. People listen to authority figures because they feel that these individuals are worthy of respect. Not all authority figures are police officers, elected officials or government authorities. Besides formal offices, authority can arise from tradition and personal qualities. Economist Max Weber realized this when he examined individual action as it relates to authority. Based on his work, Weber developed a classification system for authority. His three types of authority are traditional authority, charismatic authority and legal-rational authority (Weber 1922). According to Weber, the power of traditional authority is accepted because that has traditionally been the case; its legitimacy exists because it has been accepted for a long time. Followers accept the power of charismatic authority because they are drawn to the leader`s personal qualities. In rational-legal authority, power is vested in a particular rationale, system, or ideology and not necessarily in the person who implements the specifics of that doctrine.
Also, via expanding globally (i.e. the development of multinational companies) , the size of the market greatly increases. For example, if 1 out of 6 UK citizens are interested in an X product, it is obvious that respectively, more citizens in the world’s market will be interested in the same product. Therefore, becoming “multinational” not only contributes in the augment of the firms’ profits and gives exposure to more markets but also adds more costumers to the company’s potential database. Moreover, expanding a company’s market, helps increase the world’s GDP, something that constitutes a crucial factor in the outcome of the world’s economy.
Furthermore, as the market is becoming more global-especially through internet- it is a case of “multinational to survive”. More specifically, various companies use the Internet, the greatest innovation of our times, in order to advertise and sell their products. In that way, competition for small companies/firms increases by a high rate, putting companies that use the Internet in advanced position compared that tend to not use it.
Hence, the amount of companies that use the Internet in order to sell their products rapidly increases, making the market global, interconnecting several countries’ market and leading to the boost of multinational corporations.
Moreover, another important factor for firms to develop into multinational companies is cheap labour and cheaper raw materials in several countries abroad. These two factors have a great impact on a company’s profits since they reduce unit costs and hence increase the final profit. Therefore, a firm developing into a multinational company, not only by augment of income (since the company’s product will be available for a larger population) but also by means of reduction of unit costs. Hence, at the simultaneously a company can reduce its unit costs and increase its incomes by just joining another country’s market (i.e. becoming “multinational”).
