A transnational corporation is an enterprise that is involved with the international production of goods or services, foreign investments, or income and asset management in more than one country. It sets up factories in developing countries as land and labor are cheaper there.
Characteristics
Transnational corporations share many qualities with
multinational corporations
A multinational company (MNC), also referred to as a multinational enterprise (MNE), a transnational enterprise (TNE), a transnational corporation (TNC), an international corporation or a stateless corporation with subtle but contrasting senses, i ...
, with the subtle difference being that multinational corporations consist of a centralized management structure, whereas transnational corporations generally are decentralized, with many bases in various countries where the corporation operates. While traditional multinational corporations are national companies with foreign subsidiaries, transnational corporations spread out their operations in many countries to sustain high levels of local responsiveness.
A transnational corporation operates substantial facilities, does business in more than one country, and does not consider any particular country its corporate home. One of the significant advantages of a transnational company is that they are able to maintain a greater degree of responsiveness to the local markets where they maintain facilities.
Transnationality also refers to the extent to which a firm engages in value-creating activities across national borders. Faced with accelerated globalization, managers often make decisions to expand a firm's transnationality in order to enable the firm to effectively compete with rivals on a global scale (e.g.
Nestlé
Nestlé S.A. (; ; ) is a Switzerland, Swiss multinational food and drink processing conglomerate corporation headquartered in Vevey, Vaud, Switzerland. It is the largest publicly held food company in the world, measured by revenue and other me ...
,
Deutsche Post
The Deutsche Post AG, operating under the trade name Deutsche Post DHL Group, is a German multinational package delivery and supply chain management company headquartered in Bonn, Germany. It is one of the world's largest courier companies ...
,
Toyota
is a Japanese multinational automotive manufacturer headquartered in Toyota City, Aichi, Japan. It was founded by Kiichiro Toyoda and incorporated on . Toyota is one of the largest automobile manufacturers in the world, producing about 10 ...
, etc.), who employ senior executives from many countries and tries to make decisions from a global perspective rather than from one centralized headquarters.
Actions taken with transnational cooperation can help create better relationships between nations. Resources that are found in nations often need to be spread out throughout the world and thus transnationality helps this process.
The history of transnational corporations dates back to Western Europe in the 16th century. During this time firms like the British
East India Company
The East India Company (EIC) was an English, and later British, joint-stock company founded in 1600 and dissolved in 1874. It was formed to trade in the Indian Ocean region, initially with the East Indies (the Indian subcontinent and Sou ...
were founded.
["How the East India Company became the world's most powerful business". https://www.nationalgeographic.co.uk/history-and-civilisation/how-east-india-company-became-worlds-most-powerful-businessNational Geographic. Retrieved 2020-10-23.]
See also
*
Randolph Bourne
References
Political terminology
Transnationalism
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