edf40wrjww2CF_PaperMaster:Desc
multinational corporation (MNC) is a corporation or enterprise that manages production establishments or delivers services in at least two countries. Very large multinationals have budgets that exceed those of many countries. Multinational corporations can have a powerful influence in international relations and local economies. Multinational corporations play an important role in globalization; some argue that a new form of MC is evolving in response to globalization (Wikipedia) 1
"Corporation that has production facilities or other fixed assets in at least one foreign country and makes its major management decisions in a global context; sometimes called transnational corporation".2 however the Harvard multinational enterprise project required subsidiaries in six or more nations (Vernon, 1971, p. 11).
According to Ferdows (1997), the reasons behind formation of MNCs include:
? reduce direct and indirect costs;
? reduce capital costs;
? reduce taxes;
? reduce logistics costs;
? overcome tariff barriers;
? provide better customer service;
? spread foreign exchange risks;
? build alternative supply sources;
? preempt potential competitors;
? learn from local suppliers, foreign customers, foreign competitors, and foreign research centers; and
? attract talent globally.
The earliest studies of MNCs were strongly influenced by the economics paradigm with the focus on offshore manufacturing. In the first major research project on multinational corporat ...