The Multinational Corporation

Abstract

A multinational corporation is a multiple unit business enterprise, vertically managed, that operates in various countries, called host economies. Operations beyond national borders are controlled and managed from one location or headquarters, called the home economy. The units or business activities such as manufacturing, distribution, and marketing are, in the modern multinational as opposed to other forms of international business, all structured under a single organization. The location of the headquarters of the multinational corporation, where the business is registered, defines the “nationality” of the company. While United Kingdom held ownership of over half of the world’s foreign direct investment (FDI), defined not as acquisition but as a managed, controlled investment that an organization does beyond its national border, at the beginning of the 20th century, the United States grew to first place throughout the 20th century—in 2002, 22 percent of the world’s FDI came from the United States, which was also home to ten of the fifty largest corporations in the world. The US-based, large, modern corporation, operated by salaried managers with branches and operations in many nations, emerged in the mid-19th century and has since been a key player and driver in both economic and cultural globalization. The development of corporate capitalism in the United States is closely related with the growth of US-driven business abroad and has unique features that place the US multinational model apart from other business organizations operating internationally such as family multinational businesses which are more common in Europe and Latin America. The range and diversity of US-headquartered multinationals changed over time as well, and different countries and cultures made the nature of managing business overseas more complex. Asia came strong into the picture in the last third of the 20th century as regulations and deindustrialization grew in Europe. Global expansion also meant that societies around the world were connecting transnationally through new channels. Consumers and producers globally are also part of the history of multinational corporations—cultural values, socially constructed perceptions of gender and race, different understandings of work, and the everyday lives and experiences of peoples worldwide are integral to the operations and forms of multinationals.