Multinational Corporations (MNCs) Defined


Many authorities, scholars, and authors have variously defined multinational corporations from different perspectives. A few of these definitions are meticulously written below:

The Research Machines (2004) gives 4 definitions to MNCs. First, it defines MNC as a company that has its facilities and other assets in no less than one country aside from its home country, or that, which has offices and/or factories in several countries and typically has a centralized head office where they coordinate global management. Second, it defines MNCs as a business enterprise with manufacturing, sales, or service subsidiaries in a number of foreign countries, also often known as Transitional or International Corporation (TNC or INC).

The third definition given by Research Machines is that which sees MNC as an organization or enterprise operating in several countries, often defined as one which has 25 percent or more of its output capability situated outside its country of origin. The last definition as given sees MNC as a company or enterprise that manages production establishment situated in no less than two countries.

All these definitions, as given by Research Machines (2004) discover that MNCs operate outside its own residence country. Research Machine’s first definition indicate to an important point that MNCs also acquire assets in these foreign countries where they operate and possibly own offices/factories to ease achievement of objectives. Which means they do prefer to utilize the available resources of the host country. Likewise, it added that MNCs do have a spot; often the worldwide headquarters are also put in place. Which means reports on funds, sales, purchases, marketing, etc are properly coordinated and accounted for on the headquarters.

Research Machines’ second definition points to a different vital point about MNC stating that their services isn’t limited to manufacturing alone but in addition includes selling and reminding services through sales and repair subsidiaries. Research Machines’ third definition goes further to allocate percentage to MNCs output. It stated that for a company to be termed multinational, it must have gotten its output of 25 percent exported to other countries. What may very well be deduced from that is that a company could also be operating outside its country of origin but can’t be known as MNC except it has disposed 25 percent or more of its output to outside countries.

The Encyclopedia of Management (2005) put multinational corporations as businesses concern with operation in multiple country. These operations outside the corporate’s home country could also be linked to the parent by merger, operated as subsidiaries or have considerate autonomy. According Drucker (1974), THE multinational company grew from the emergence of a real world market demand transcending national, cultural and ideological boundaries, as a result of the data explosion.

Iyayi, Agbonifoh and Ehiametalor (1984) see multinational corporations as multi-management with several layers of management decision making bases from local to regional to global. Within the words of Hodgetts and Luthans (1997), multinational corporations are firms having operations in multiple country, international sales, and nationality mixture of managers and owners. Coventry (1981) and Johansson (2000) give the identical definition to MNCs, as corporations that sometimes have various foreign production sites and thus various international markets.

Going by all these definitions highlighted above, it may very well be asserted that all of them took a multinational company and defined it from structural, functional and geographical perspectives and from the purpose of scope covered geographically.


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