A multinational corporation (MNC) is a corporate organization that owns and controls the production or trade of goods or services in at least one country other than its home country.12 Control is considered an important aspect of an MNC to distinguish it from international portfolio investment organizations, such as some international mutual funds that invest in corporations abroad to diversify financial risks. A MNC may also be called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation.3
Currently, most of the largest and most influential companies are publicly traded multinational corporations, including Forbes Global 2000 companies.
Loading the rest of the article…
Recent changes
Rabbit hole
Where Multinational corporation leads. Every connection below has a source: a link in this article, a shared Wikipedia category, or CirrusSearch text similarity. Articles already on your trail are left out.
A multinational corporation (MNC) is a corporate organization that owns and controls the production or trade of goods or services in at least one country other than its home country.
multinational enterprise
A MNC may also be called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation.
MNE
A MNC may also be called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation.
transnational enterprise
A MNC may also be called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation.
TNE
A MNC may also be called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation.
transnational corporation
A MNC may also be called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation.
TNC
A MNC may also be called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation.
international corporation
A MNC may also be called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation.
stateless corporation
A MNC may also be called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation.
Terms the article defines in bold, quoted in context.
Categories:
Multinational companies
International business
Economic globalization
Corporate law
2,645 words · 54 references · revision 1384572009 · CC BY-SA 4.0
A multinational corporation (MNC) is a corporation incorporated in one country that produces or sells goods or services in various countries.4 Two common characteristics shared by MNCs are their large size and centrally controlled worldwide activities, which can include:5
Making significant investments in a foreign country
Buying and selling licenses in foreign markets
Engaging in contract manufacturing—permitting a local manufacturer in a foreign country to produce its products
Opening manufacturing facilities or assembly operations in foreign countries
Multinational enterprise (MNE) is the preferred term used by international economists and is defined as an enterprise that controls and manages production establishments, known as plants, located in at least two countries.6 The MNE engages in foreign direct investment (FDI) as it makes direct investments in host country plants for equity ownership and managerial control, to avoid some transaction costs.7
Stateless corporation is a term used for MNCs which are broadly active across the world without a concentration in one state (these have also been called "transnational corporations" though this term is also used synonymously with MNC8). As of 1992, a corporation must be legally domiciled in a particular country and engage in other countries through foreign direct investment and the creation of foreign subsidiaries.9 Geographic diversification can be measured across various domains, including ownership and control, workforce, sales, and regulation and taxation.9
MNCs may gain from their global presence in a variety of ways. MNCs can benefit from the economy of scale by spreading R&D expenditures and advertising costs over their global sales, pooling global purchasing power over suppliers, and utilizing their technological and managerial experience globally with minimal additional costs. Furthermore, MNCs can use their global presence to take advantage of underpriced labor services often found in developing countries while gaining access to special R&D capabilities residing in advanced countries.10
The problem of moral and legal constraints upon the behavior of multinational corporations, given that they are effectively "stateless" actors, is one of several urgent global socioeconomic problems that have emerged during the late twentieth century.11
Alternatives and arrangements
For small corporations, registering a foreign subsidiary can be expensive and complex, involving fees, signatures, and forms;12 a professional employer organization (PEO) is sometimes advised as a cheaper and simpler alternative,12 but not all jurisdictions have laws accepting these types of arrangements.13
Economic theory
The actions of multinational corporations are strongly supported by economic liberalism ideology of free market systems in a globalized international society. According to the economic realist view, individuals act in rational ways to maximize their self-interest which creates markets, and that these function most efficiently in a free market system where there is little government interference. This advocates the free exchange of goods and services to maximize international wealth.14
To many economic liberals, MNCs are the vanguard of the liberal order.15 They are seen as an embodiment of the liberal model of an interdependent world economy, taking the integration of national economies beyond trade and money to the internationalization of production. In this view, production, marketing, and investment are being organized on a global scale rather than in terms of nationally bounded economies.16
Academic research has been carried out in the specialist field of international business, producing economic theories of MNCs including internalization theory and the eclectic paradigm (a.k.a. the OLI framework).
Another theoretical dimension of the role of MNCs concerns the relationship between the globalization of economic engagement and the culture of national and local responses. This has a history of self-conscious cultural management dating from the 1960s. For example, psychiatrist and marketing expert Ernest Dichter, writing in Harvard Business Review in 1963, observed that companies with "foresight to capitalize on international opportunities" must recognize that " will be an important tool for competitive marketing". This involved manipulating attachments to a consumer's nation in order to internationalize the nation and facilitate a global corporate village inhabited by "world customers".
The first multinational corporations are tied to the history of colonialism, and were founded to establish colonial "factories" or port cities.19 The two main examples are the British East India Company, founded in 1600, and the Dutch East India Company (VOC), founded in 1602. In addition to conducting trade between Great Britain and its colonies, the British East India Company became a quasi-government in its own right, with local government officials and its own army in India.2021 Other examples include the Swedish Africa Company, founded in 1649, and the Hudson's Bay Company (HBC), founded in 1670.22 These early corporations engaged in international trade and exploration and set up trading posts.23
The Dutch government took over the VOC in 1799, and through the 1800s other governments increasingly took over private companies, most notably in British India.24 HBC, while losing its trade and land monopoly in 1870,25 maintained its trading posts as general goods stores for settlers, evolving into a chain of modern department stores which continued until 2025. During the process of , the European colonial were disbanded, with the final colonial corporation, the , dissolving in 1972.
When a corporation invests in a country in which it is not domiciled, this is called foreign direct investment (FDI).36 Countries may place restrictions on direct investment; for example, China has historically required partnerships with local firms or special approval for certain types of investments by foreigners,37 although some of these restrictions were eased in 2019.38 Similarly, the Committee on Foreign Investment in the United States reviews foreign investments in that country.
In addition, corporations may be prohibited from various business transactions by international sanctions or domestic laws. For example, Chinese citizens and domestic corporations have limitations on their ability to make foreign investments, in part to reduce capital outflow.39 Countries have imposed extraterritorial sanctions on foreign corporations for doing business with certain countries or corporations, which occurred with the 2019 US sanctions against Iran; European companies were faced with the possibility of losing access to the US market if they traded with Iran.40
Multinationals can select from a variety of jurisdictions for various subsidiaries, but the ultimate parent company can select a single legal domicile. In 2014, The Economist suggested that the Netherlands has become a popular choice, as its company laws have fewer requirements for meetings, compensation, and audit committees,41 and that Great Britain had advantages due to laws on withholding dividends and a double-taxation treaty with the United States.41 Economist Raymond Vernon reported in 1977 that of the 455 largest manufacturing MNCs, 250 were headquartered in the US, 115 in Western Europe, 70 in Japan, and 20 in the rest of the world. Of the 45 largest banking MNCs, 20 were headquartered in the US, 13 in Europe, 9 in Japan, and 3 in Canada.42
Corporations can legally engage in tax avoidance through their choice of domiciled jurisdiction, though they may be accused of breaching tax evasion laws. Multinational corporations may be subject to the laws and regulations of both their domicile and the additional jurisdictions where they are engaged in business.43 In some cases, the jurisdiction can help to avoid burdensome laws, but regulatory statutes often target the "enterprise" with statutory language around "control".43
As of 1992, most OECD countries lack the legal authority to tax a domiciled parent corporation on its worldwide revenue, including its subsidiaries.9 As of 2019, the US applies its corporate taxation "extraterritorially",44 which has motivated tax inversions to change the domiciled state. By 2019, most OECD nations, with the notable exception of the US, had moved to territorial tax in which only revenue inside the border was taxed; however, these nations typically scrutinize foreign income with controlled foreign corporation (CFC) rules to avoid base erosion and profit shifting.44
In practice, even under an extraterritorial system, taxes may be deferred until remittance, with possible , and subject to . Countries generally cannot tax the worldwide revenue of a foreign subsidiary, and taxation is complicated by arrangements with parent corporations.
Economist Sanjaya Lall in 1974 proposed a spectrum of scholarly analysis of multinational corporations, from the political right to the left. He put the business school how-to-do-it writers at the extreme right, followed by the liberal laissez-faire economists, and the neoliberals (they remain right of center but do allow for occasional mistakes of the marketplace, such as externalities). Moving to the left side of the line are nationalists, who prioritize national interests over corporate profits, then the "dependencia" school in Latin America that focuses on the evils of imperialism, and on the far left, the Marxists. The range is so broad that scholarly consensus is difficult to discern.45 Recent historical scholarship has examined multinational corporations not only as economic organizations, but also as institutions with social, political, environmental, and cultural effects across different national settings.46
Anti-corporate advocates criticize MNCs for being without a basis in a national ethos, which appears in their practice of doing business with countries that have low human rights or environmental standards.47 The aggressive use of tax avoidance schemes and multinational tax havens allows MNCs to gain competitive advantages over small and medium-sized enterprises.48 Organizations such as the criticize governments for allowing MNCs to escape taxation, particularly by using (BEPS) tax tools, since less money can be spent for public services. Moreover, academics found that profit shifting by multinational corporations led to a reduction in domestic profit in much of the world, with the losing upwards of 20% while developing countries lost up to 5% due to billions being transferred to . While research has found that anti-transfer pricing may be effective in raising corporate revenue, many advocates continue to argue that more needs to be done since profit shifting, coupled with other methods such as , reduces government revenue for services that support lower and middle-class citizens, increases income and profits for high income shareholders, and reduce after-tax income for workers.
Chandler, Alfred D.; Amatori, Franco; Hikino, Takashi, eds. (1997). Big Business and the Wealth of Nations. doi:10.1017/CBO9780511665349. ISBN 978-0-521-48123-6.
Chernow, Ron (2010). The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance. Grove/Atlantic. ISBN 978-0-8021-9813-6.
Davenport-Hines, R. P. T.; Jones, Geoffrey (1989). British business in Asia since 1860. Cambridge University Press. ISBN 978-0-521-33527-0. OCLC1484989511. OL2034223M.
Dunning. John H. and Sarianna M. Lundan. Multinational Enterprises and the Global Economy (2nd ed. 2008), major textbook 1993 edition online
Habib-Mintz, Nazia (2009). "Multinational corporations' role in improving labour standards in developing countries". . (2): 1–20. :.
The concept of stateless corporations arose in the 1990s. A theory suggested that such entities could be empirically defined "with analytical tools at the intersection between demographic analysis and transportation research". This intersection is known as logistics management, and describes the importance of rapidly increasing global mobility of resources. For a quarter-century, stateless corporations have procured source materials on a worldwide basis to produce and customize products for markets in individual countries.18
Mining of gold, silver, and copper was a major activity in the colonial period and remains so today. International mining companies became prominent in Britain in the 19th century, such as the Rio Tinto company, founded in 1873 to purchase sulphur and copper mines from the Spanish government. The corporation made many acquisitions and expanded globally to mine aluminum, iron, copper, uranium, and diamonds.27 European mines in South Africa began operations in the late 19th century, producing gold and other minerals for the world market.28Cecil Rhodes (1853–1902) was one of the few businessmen in the era who became Prime Minister (of South Africa 1890–1896). His mining enterprises included the British South Africa Company and De Beers. The latter company practically controlled the global diamond market from its base in southern Africa.29
By the 1930s, seven MNCs dominated global oil production, owning nearly all rights to the oil in Iran, Iraq, Saudi Arabia, and the Persian Gulf.30 These MNCs became known as Consortium for Iran cartel or the "Seven Sisters". They shared control of the major oil fields and colluded, adjusting oil production in order to keep prices high while simultaneously forcing the countries they operated in to compete against each other for lower tax rates and oil royalties.30 In the 1970s, nationalized oil companies took over production, with the OPEC cartel gaining market dominance, though oil MNCs continued to be profitable. In the late 1990s and early 2000s, there were numerous mergers in the global energy sector, resulting in the "super-major" integrated oil companies or Big Oil. These MNCs are among the largest and most-profitable companies.31
Manufacturing
During the 1930s, about 80% of international investment by MNCs were in resource extraction (especially oil) and agriculture (rubber, tobacco, sugar, palm oil, coffee, cocoa, and tropical fruit), mostly in colonies. This changed during the rebuilding processes following WWII, as opportunity arose for MNCs to establish manufacturing in industrialized countries, particularly in the transportation, vehicle, chemical, pharmaceutical, and electronics sectors.32
Studies of host economies have also emphasized that the impact of multinational enterprises varied by national context; research on Australia, for example, has examined how foreign MNCs arrived in successive waves and interacted with local sectors, government policy, and resource-based development.33
Sweden's leading manufacturing concern was SKF, a leading maker of bearings for machinery. In order to expand its international business, it decided in 1966 that it needed to use the English language. Senior officials, although mostly still Swedish, all learned English, and all major internal documents were in English, the lingua franca of multinational corporations.34
Proliferation
Toyota is one of the world's largest multinational corporations, with its headquarters in Toyota City, Japan.
The number of businesses having at least one foreign country operation rose from a few thousand before WWII to 78,411 in 2007. The rise in the number of MNCs could be due to a stable political environment that encourages cooperation, advances in technology that enable management of faraway regions, and favorable organizational development that encourages business expansion into other countries. Three-quarters of MNCs are headquartered in economically advanced countries. Developing and former communist countries such as China, India, and Brazil are the largest recipients of MNC investment. However, 70% of foreign direct investment went into developed countries in the form of stocks and cash flows.35
According to Crotty, Epstein, and Kelly (1998), the mobility of multinational corporations within a neoliberal policy regime increases their bargaining power vis-à-vis labor and governments, which can lead to a "race to the bottom" in taxes, regulation, and wages. Through threat and spillover effects, this may contribute to greater inequality, persistent unemployment, and wage stagnation. However, the authors emphasize that the effects of foreign direct investment are context-dependent. When investments take place in an environment with high aggregate demand, strong institutions, and clear rules that limit coercive competition, and effective coordination among governments, multinationals may instead contribute to higher wages, improved working conditions, and broader economic development.53
Economist Paul Krugman argued in his essay "In Praise of Cheap Labor" (1997) that the jobs created by multinational corporations in developing countries, despite low wages and poor working conditions, are often an improvement compared to the available alternatives such as marginal farming or the informal economy. He maintained that "bad jobs at bad wages" are better than no jobs at all, since factory work in export-oriented sectors can serve as a stepping stone to broader economic development. According to Krugman, countries such as South Korea, Taiwan, Indonesia, and Bangladesh have achieved measurable progress in income, nutrition, and living standards through export-led industrialization. Although multinationals are primarily driven by profit, Krugman argued that the main beneficiaries are not capital owners but workers in developing countries.54
14Mingst, Karen A. (2014). Essentials of international relations. W. W. Norton & Company. p. 310. ISBN 978-0-393-92195-3.
15Mingst, Karen A. (2015). Essentials of international relations. W. W. Norton & Company. p. 311. ISBN 978-0-393-92195-3.
16Gilpin, Robert (1975). Three models of the future. International Organization. p. 39.
17James, Paul (1984). "Australia in the Corporate Image: A New Nationalism". Arena (63): 68. See also, Richard Barnet and Ronald Muller, Global Reach: The Power of Multinational Corporations, New York, Simon and Schuster, 1975, p. 30. On page 21, Barnet and Muller quote the Chairman of the Unilever Corporation as saying: "The Nation-State will not wither away. A positive role will have to be found for it."
18Holstein, William J. et al., "The Stateless Corporation", Business Week (May 14, 1991), p. 98. Roy D. Voorhees, Emerson L. Seim, and John I. Coppett, "Global Logistics and Stateless Corporations", Transportation Practitioners Journal 59, 2 (Winter 1993): 144–51.
20Alex Jeffrey and Joe Painter, "Imperialism and Postcolonialism," in Political Geography: An Introduction to Space and Power (London: SAGE, 2009), pp. 174–75.
21Nick Robins, This Imperious Company: The Corporation That Changed the World How the East India Company Shaped the Modern Multinational (London: Pluto, 2006), pp. 24–25.
22Stephen A. Royle, Company, Crown and Colony: The Hudson's Bay Company and Territorial Endeavor in Western Canada (London: I.B. Tauris, 2011).
23Micklethwait, John, and Adrian Wooldridge, The company: A short history of a revolutionary idea (New York: Modern Library, 2003).
24Nick Robins, Nick. The Corporation That Changed the World How the East India Company Shaped the Modern Multinational. London: Pluto, 2006. 145.
32John H. Dunning and Sarianna M. Lundan, Multinational Enterprises and the Global Economy (2nd ed. 2008) pp 37–39.
33Ville, Simon; van der Eng, Pierre; Sammartino, André; Merrett, David; Keneley, Monica (2026). Global Enterprise in Australia: International Business Down Under since Federation. Routledge. doi:10.4324/9781003586272. ISBN 978-1-003-58627-2.
34Christopher Tugendhat, The Multinationals (1973) p 147.
35Fagan, GH; Munck, R (2009). "Chapter 22: Transnational Corporation". Globalization and Security: An Encyclopedia. ABC-CLIO. pp. 410–428. ISBN 978-0-275-99693-2.
45Charles P. Kindleberger, "Reviews". Business History Review (Dec. 1977).
46Jones, Geoffrey; Pitteloud, Sabine, eds. (2025). The Cambridge Companion to the History of Multinationals and Society. Cambridge University Press. doi:10.1017/9781009679558. ISBN 978-1-009-67955-8.
50Tørsløv, Thomas; Wier, Ludvig; Zucman, Gabriel (5 May 2023). "The Missing Profits of Nations". The Review of Economic Studies. 90 (3): 1499–1534. doi:10.1093/restud/rdac049.
Hunt, Michael H. (1977). "Americans in the China Market: Economic Opportunities and Economic Nationalism, 1890s-1931". The Business History Review. 51 (3): 277–307. doi:10.2307/3113634. JSTOR3113634.
Jones, Geoffrey. Multinationals and Global Capitalism: From the Nineteenth to the Twenty-first Century (2005)
Lumby, Anthony (September 1988). "Economic history and theories of the multinational corporation". South African Journal of Economic History. 3 (2): 104–124. doi:10.1080/10113436.1988.10417151.
Stopford, John M. (1974). "The Origins of British-Based Multinational Manufacturing Enterprises". The Business History Review. 48 (3): 303–335. doi:10.2307/3112951. JSTOR3112951. ProQuest205504767.
Wells, Louis T. Third world multinationals: The rise of foreign investments from developing countries (MIT Press, 1983) on companies based in Third World
Ciafone, Amanda. Counter-Cola: A Multinational History of the Global Corporation (U of California Press, 2019) on Coca-Cola.
Fritz, Martin; Karlsson, Birgit (2006). SKF - a Global Story: 1907 - 2007. Informationsförl. ISBN 978-91-7736-576-1.
Scheiber, Harry N. (1969). "World War I as Entrepreneurial Opportunity: Willard Straight and the American International Corporation". Political Science Quarterly. 84 (3): 486–511. doi:10.2307/2147271. JSTOR2147271.
Historiography
Hernes, Helga. The Multinational Corporation: A Guide to Information Sources (Gale, 1977). online
Protecting economic value by managing risk exposure
Financial risk management is the practice of protecting economic value in a firm by managing exposure to financial risk - principally credit risk and market risk, with more specific variants as listed aside - as well as some aspects of operational risk.
The world economy or global economy is the economy of all humans in the world, referring to the global economic system, which includes all economic activities conducted both within and between…
Globalization is the process of increasing interdependence and integration among the economies, markets, societies, and cultures of different countries worldwide.
Any of various types of risk associated with financing
Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default.
Production is the process of combining various inputs, both material (such as metal, wood, glass, or plastics) and immaterial (such as plans, or knowledge) in order to create output.
Low "effective" tax rates for foreign corporations
A Corporate haven, corporate tax haven, or multinational tax haven, is a jurisdiction that multinational corporations find attractive for establishing subsidiaries or headquarters.
Global workforce refers to the international labor pool of workers, including those employed by multinational companies and connected through a global system of networking and production, foreign…
Base erosion and profit shifting (BEPS) is a category of corporate tax avoidance strategies used by multinationals to "shift" profits from higher-tax jurisdictions to lower-tax jurisdictions or…
Logistics is the part of supply chain management that deals with the efficient forward and reverse flow of goods, services, and related information from the point of origin to the point of consumption according to the needs of customers.
General term for activities in connection with corporate or governmental innovation
Research and development (R&D or R+D), aka Research and Technical (or Technological) Development (RTD), is the set of innovative activities undertaken by corporations, wealthy industrialists, or governments in developing new services or products.
