In an increasingly globalizing and interconnected world the boundaries between sovereign states and non-states actors are blurring. Transnational corporations (TNCs) are among the non-state actors having the largest capacity to influence states’ activities through their economic and political activities, and to compete with states in the sphere of global governance. Such rivalry may, on the one hand limit capacity of particular states, while on the other hand it can complement states’ capacities and make global governance more efficient. In order to evaluate these impacts of TNCs, this paper analyzes the different direct and indirect mechanisms of TNCs influence on sovereign decision making and decision enforcement. Bringing together existing research in political, managerial and business studies, this paper argues that TNCs indeed challenge states’ sovereignty on different levels; however, these challenges have not necessary negative impact on the societies under such influence, and, hence, both sovereignty and TNCs should be reevaluated in order to maximize the benefits of the state-TNC interactions for societies.
