Multinational corporation

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Multinational corporations (MNC) or multinational enterprises (MNE)[1] are organizations that are owned or control productions of goods or services in one or more countries other than the home country.[2] For example, when a corporation is registered in more than one country or has operations in more than one country, it may be attributed as MNC. Usually, a MNC is a large corporation which produces or sells goods or services in various countries.[3] It can also be referred as an international corporation, or a "transnational corporation", or perhaps best of all, as a stateless corporation.[4]

The problem of moral and legal guiding behaviors of MNC's, given that they are effectively "stateless" actors, is one of the urgent global socioeconomic problems that emerged during the late twentieth century. MNC's plays an important role in globalization. Arguably, the first multinational business organization was the Knights Templar, founded in 1120.[5][6][7] After that came the British East India Company in 1600[8] and then the Dutch East India Company, founded March 20, 1602, which would become the largest company in the world for nearly 200 years.[9]

Conflict of laws[edit]

Main article: Conflict of laws

Conflict of laws is a set of procedural rules that determines which legal system and which jurisdiction applies to a given dispute.

The term conflict of laws itself originates from situations where the ultimate outcome of a legal dispute depended upon which law applied, and the common law court's manner of resolving the conflict between those laws. In civil law, lawyers and legal scholars refer to conflict of laws as private international law. Private international law has no real connection with public international law and is instead a feature of local law which varies from country to country.

The three branches of conflict of laws are:

  • Jurisdiction – whether the forum court has the power to resolve the dispute at hand
  • Choice of law – the law being applied to resolve the dispute
  • Foreign judgments – the ability to recognize and enforce a judgment from an external forum within the jurisdiction of the adjudicating forum.

Transnational corporations[edit]

A transnational corporation (TNC) differs from a traditional MNC in that it does not identify itself with one national home. While traditional MNCs are national companies with foreign subsidiaries,[10] TNCs spread out their operations in many countries sustaining high levels of local responsiveness.[11] An example of a TNC is Nestlé who employ senior executives from many countries and try to make decisions from a global perspective rather than from one centralized headquarters.[12] Another example of a Transnational Corporation is the Royal Dutch Shell corporation whose headquarters may be in The Hague, Netherlands but its registered office and main executive body where the decisions are made is headquartered in London, United Kingdom.

Criticism of multinationals[edit]

Anti-corporate advocates criticize multinational corporations for entering countries that have low human rights or environmental standards.[13] They claim that multinationals give rise to large merged conglomerations that reduce competition and free enterprise, raise capital in host countries but export the profits, exploit countries for their natural resources, limit workers' wages, erode traditional cultures, and challenge national sovereignty.

The aggressive use of tax avoidance schemes allows multinational corporations to gain competitive advantages over small and medium-sized enterprises.[14] Organizations such as the Tax Justice Network criticize governments for allowing multinational organizations to escape tax since less money can be spend for public services.[15]

See also[edit]


  1. ^ Pitelis, Christos; Roger Sugden (2000). The nature of the transnational firm. Routledge. p. 72. ISBN 0-415-16787-6. 
  2. ^
  3. ^ Doob, Christopher M. (2013). Social Inequality and Social Stratification in US Society. Upper Saddle River, NJ: Pearson Education Inc. 
  4. ^ Roy D. Voorhees, Emerson L. Seim, and John I. Coppett, "Global Logistics and Stateless Corporations," Transportation Practitioners Journal 59, 2 (Winter 1992): 144-51.
  5. ^ The History Channel, Lost Worlds: Knights Templar, July 10, 2006, video documentary written and directed by Stuart Elliott.
  6. ^ Ralls, Karen (2007). Knights Templar Encyclopedia. Career Press. p. 28. ISBN 978-1-56414-926-8. 
  7. ^ Benson, Michael (2005). Inside Secret Societies. Kensington Publishing Corp. p. 90. 
  8. ^ "GlobalInc. An Atlas of The Multinational Corporation" Medard Gabel & Henry Bruner, New York: The New Press , 2003. ISBN 1-56584-727-X
  9. ^ VOC at the National Library of the Netherlands (in Dutch)
  10. ^ Drucker, Peter F. (1997). The Global Economy and the Nation State. Council on Foreign Relations. p. 167. 
  11. ^ Case study: The Relationship between the Structure/Strategy of Multinational Corporations and Patterns of Knowledge Sharing within them. Oxford University Press. 2009. 
  12. ^ Schermerhorn, John R. (2009). Exploring Management. John Wiley and Sons. p. 387. ISBN 0-470-16964-8. 
  13. ^ Marc 'Globalization, Power, and Survival: an Anthropological Perspective', pg 484–486. Anthropological Quarterly Vol.79, No. 3. Institute for Ethnographic Research, 2006
  14. ^ Library of the European Parliament Corporate tax avoidance by multinational firms
  15. ^ Tax Justice Network Taxing corporations

External links[edit]