Multinational corporation

Replica of an East Indiaman of the Dutch East India Company/United East India Company (VOC). The VOC is often considered by many to be the world's first formally listed public company and the first historical model of the multinational corporation (or transnational corporation) in its modern sense.[1][2][3][4][5][6][7][8][9]

A multinational corporation (MNC) or worldwide enterprise is a corporate organization that owns or controls production of goods or services in at least one country other than its home country.[10][11] Black's Law Dictionary suggests that a company or group should be considered a multinational corporation if it derives 25% or more of its revenue from out-of-home-country operations.[12] A multinational corporation can also be referred to as a multinational enterprise (MNE), a transnational enterprise (TNE), a transnational corporation (TNC), an international corporation, or a stateless corporation.[13] There are subtle but real differences between these three labels, as well as multinational corporation and worldwide enterprise.

Most of the largest and most influential companies of the modern age are publicly traded multinational corporations, including Forbes Global 2000 companies. Multinational corporations are subject to criticisms for lacking ethical standards. They have also become associated with multinational tax havens and base erosion and profit shifting tax avoidance activities.

Overview

Toyota is one of the world's largest multinational corporation(s) with their headquarters in Toyota City, Japan.
Toyota is one of the world's largest multinational corporations with their headquarters in Toyota City, Japan.

A multinational corporation (MNC) is usually a large corporation incorporated in one country which produces or sells goods or services in various countries.[14] The two main characteristics of MNCs are their large size and the fact that their worldwide activities are centrally controlled by the parent companies.[15]

  • Importing and exporting goods and services
  • Making significant investments in a foreign country
  • Buying and selling licenses in foreign markets
  • Engaging in contract manufacturing — permitting a local manufacturer in a foreign country to produce their products
  • Opening manufacturing facilities or assembly operations in foreign countries

MNCs may gain from their global presence in a variety of ways. First of all, MNCs can benefit from the economy of scale by spreading R&D expenditures and advertising costs over their global sales, pooling global purchasing power over suppliers, and utilizing their technological and managerial know-how globally with minimal additional costs. Furthermore, MNCs can use their global presence to take advantage of underpriced labor services available in certain developing countries, and gain access to special R&D capabilities residing in advanced foreign countries.[16]

The problem of moral and legal constraints upon the behavior of multinational corporations, given that they are effectively "stateless" actors, is one of several urgent global socioeconomic problems that emerged during the late twentieth century.[17]

Potentially, the best concept for analyzing society's governance limitations over modern corporations is the concept of "stateless corporations". Coined at least as early as 1991 in Business Week, the conception was theoretically clarified in 1993: that an empirical strategy for defining a stateless corporation is with analytical tools at the intersection between demographic analysis and transportation research. This intersection is known as logistics management, and it describes the importance of rapidly increasing global mobility of resources. In a long history of analysis of multinational corporations we are some quarter century into an era of stateless corporations - corporations which meet the realities of the needs of source materials on a worldwide basis and to produce and customize products for individual countries.[18]

One of the first multinational business organizations, the East India Company, was established in 1601.[19] After the East India Company, came the Dutch East India Company, founded March 20, 1603, which would become the largest company in the world for nearly 200 years.[20]

The main characteristics of multinational companies are:

  • In general, there is a national strength of large companies as the main body, in the way of foreign direct investment or acquire local enterprises, established subsidiaries or branches in many countries;
  • It usually has a complete decision-making system and the highest decision-making centre, each subsidiary or branch has its own decision-making body, according to their different features and operations to make decisions, but its decision must be subordinated to the highest decision-making centre;
  • MNCs seek markets in worldwide and rational production layout, professional fixed-point production, fixed-point sales products, in order to achieve maximum profit;
  • Due to strong economic and technical strength, with fast information transmission, as well as funding for rapid cross-border transfers, the multinational has stronger competitiveness in the world;
  • Many large multinational companies have varying degrees of monopoly in some area, due to economic and technical strength or production advantages.
Other Languages
asturianu: Multinacional
azərbaycanca: Transmilli şirkət
беларуская (тарашкевіца)‎: Транснацыянальная карпарацыя
català: Multinacional
español: Multinacional
euskara: Multinazional
français: Multinationale
한국어: 다국적 기업
Bahasa Indonesia: Perusahaan multinasional
italiano: Multinazionale
日本語: 多国籍企業
norsk nynorsk: Fleirnasjonalt selskap
oʻzbekcha/ўзбекча: Transmilliy korporatsiya
srpskohrvatski / српскохрватски: Multinacionalna korporacija
Tiếng Việt: Công ty đa quốc gia
中文: 跨國公司