The idea of the Multinational Enterprise (MNE) has been around since the first industrial revolution, firms look to expand overseas in a bid to increase profits, improve efficiency and lower costs. If successful, an MNE can expect vast returns from its investments. An MNE is a company or enterprise that manages production or delivers a service in multiple countries; when these enterprises decide to invest money abroad, it is usually in the form of a Foreign Direct Investment (FDI). Hu (1992) defined multinationals as ‘national firms with international operations, based on measures such as domestic vs. foreign sales and assets, ownership and control, nationality of people in the organization and legal nationality and taxation’ (Hood & Young, 2000, p.399). Companies decide to expand production and service for multiple reasons, such as reducing costs, increasing efficiency or maximizing market share and profits in their home country. Firms who successfully integrate their enterprise internationally can expect to see such benefits and in some cases revenue can rise higher than some country’s GDP. Apple, in 2012 was worth $500bn (Nutall & Walters, 2012). This figure is larger than the GDP of Poland.
From the ‘1880s to the 1980s the national income of twelve countries grew thanks to rapid technological change and rising economic efficiency, particularly industrial productivity’ (Chandler & Amatori,1997, P.5) confirming the rapid growth of the MNE and the benefits it brings to host nations. MNE’s such as Coca Cola, with its red can and white ribbon, are able create a sense of brand loyalty and industry domination that all firms aspire to achieve. It has been argued by experts that the key drivers behind this phenomenon are innovations in technology and management science as well as the fundamental nature of capitalisms evolution.
Many experts have argued over which factors have the most substantial effect on business, such as Chandler, Casson and Hymer who...
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