Globalization is the key word that characterizes the 21st century, the world is the stage of all the economic, social and financial activities. The MNEs are the major players that dominate the scene. But what is exactly an MNE? The definition
The word MULTINATIONAL is often used to describe a giant corporation but multinationals are not only giant players such as Coca Cola, there are a lot of medium sized enterprises that have limited market power in domestic and foreign markets and they have one or more subsidiaries in foreign countries. Investing abroad and becoming a Multinational is a strategy open to many types of firms.
The first use of the term Multinational in relation to a corporation has been attributed to David E. Lilienthal who in 1960 wrote a paper entitled “Management and Corporations 1985” which was later published under the title “The Multinational Corporation”. In his work he defined Multinational Corporations(MNCs) as “Corporation which have their home in one country but which operate and live under the laws and customs of other countries as well.” A multinational corporation (MNC) or transnational corporation (TNC), also called multinational enterprise (MNE) , is a corporation or an enterprise that manages production or delivers services in more than one country. Nowadays many corporations have offices, branches or manufacturing plants spread all over the world. According to Venables “Multinationals are firms that own a significant equity share-typically 50% or more-of another company operating in a foreign country.” According to Brooke and Remmers a Multinational company is a company that “has activities other than marketing in more than one country”. They later corrected their definition by defining an MNE as “Any firm which performs its main operations either manufacture or provision of a service in at least two countries”. (Reference) Dunning in 1974 defined Multinationals as “Firms which own and control income generated assets in more than one country”. Whichever of the above definitions one decides to work with, one fact common to all of them, is that business is carried out in other geographical areas outside the area of origin. Some of the reasons for the movements are: availability of capital in one place, labour in another and market in another encourages movement from one place to another. Some investments are directly or indirectly decided by the management while some movements are made due to strategic reasons. Other definitions about what exactly does an MNE are given by the OECD. The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, theinformation economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members.
1. The OECD Guidelines for Multinational Enterprises (the Guidelines) are recommendations addressed by governments to multinational enterprises. They provide...