Multinational corporation
A multinational corporation (MNC) – also called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation,[1] with subtle but contrasting senses – is a corporate organization that owns and controls the production of goods or services in at least one country other than its home country.[2][3] Control is considered an important aspect of an MNC to distinguish it from international portfolio investment organizations, such as some international mutual funds that invest in corporations abroad simply to diversify financial risks. 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".[4]
Most of the largest and most influential companies of the modern age are publicly traded multinational corporations, including Forbes Global 2000 companies.
A multinational corporation (MNC) is usually a large corporation incorporated in one country which produces or sells goods or services in various countries.[24] Two common characteristics shared by MNCs are their large size and centrally controlled worldwide activities.[25]
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 experience 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.[26]
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 has emerged during the late twentieth century.[27]
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 that meet the realities of the needs of source materials on a worldwide basis and to produce and customize products for individual countries.[28]
One of the first multinational business organizations, the East India Company, was established in 1601.[29] After the East India Company, came the Dutch East India Company, founded on March 20, 1603, which would become the largest company in the world for nearly 200 years.
The main characteristics of multinational companies are:
Alternatives and arrangements[edit]
For small corporations, registering a foreign subsidiary can be expensive and complex, involving fees, signatures, and forms;[41] a professional employer organization (PEO) is sometimes advertised as a cheaper and simpler alternative,[41] but not all jurisdictions have laws accepting these types of arrangements.[42]
Multinational enterprise[edit]
"Multinational enterprise" (MNE) is the term used by international economist and similarly defined with the multinational corporation (MNC) as an enterprise that controls and manages production establishments, known as plants located in at least two countries.[47] The multinational enterprise (MNE) will engage in foreign direct investment (FDI) as the firm makes direct investments in host country plants for equity ownership and managerial control to avoid some transaction costs.[48]