Transnational Corporation

(redirected from Multinational corporation)
Also found in: Dictionary, Thesaurus, Medical, Financial, Acronyms, Encyclopedia, Wikipedia.

Transnational Corporation

Any corporation that is registered and operates in more than one country at a time; also called a multinational corporation.

A transnational, or multinational, corporation has its headquarters in one country and operates wholly or partially owned subsidiaries in one or more other countries. The subsidiaries report to the central headquarters. The growth in the number and size of transnational corporations since the 1950s has generated controversy because of their economic and political power and the mobility and complexity of their operations. Some critics argue that transnational corporations exhibit no loyalty to the countries in which they are incorporated but act solely in their own best interests.

U.S. corporations have various motives for establishing a corporate presence in other countries. One possible motive is a desire for growth. A corporation may have reached a plateau meeting domestic demands and anticipate little additional growth. A new foreign market might provide opportunities for new growth.

Other corporations desire to escape the protectionist policies of an importing country. Through direct foreign investment, a corporation can bypass high tariffs that prevent its goods from being competitively priced. For example, when the European Common Market (the predecessor of the European Union) placed tariffs on goods produced by outsiders, U.S. corporations responded by setting up European subsidiaries.

Two other motives are more controversial. One is preventing competition. The most certain method of preventing actual or potential competition from foreign businesses is to acquire those businesses. Another motive for establishing subsidiaries in other nations is to reduce costs, mainly through the use of cheap foreign labor in developing countries. A transnational corporation can hold down costs by shifting some or all of its production facilities abroad.

Transnational corporations with headquarters in the United States have played an increasingly dominant role in the world economy. This dominance is most pronounced in the developing countries that rely primarily on a narrow range of exports, usually primary goods. A transnational corporation has the ability to disrupt traditional economies, impose monopolistic practices, and assert a political and economic agenda on a country.

Another concern with transnational corporations is their ability to use foreign subsidiaries to minimize their tax liability. The Internal Revenue Service (IRS) must analyze the movement of goods and services between a transnational company's domestic and foreign operations and then assess whether the transfer price that was assigned on paper to each transaction was fair. IRS studies indicate that U.S. transnational corporations have an incentive to set their transfer prices so as to shift income away from the United States and its higher corporate tax rates and to shift deductible expenses into the United States. Foreign-owned corporations doing business in the United States have a similar incentive. Critics argue that these tax incentives also motivate U.S. transnational corporations to move plants and jobs overseas.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
We are hated because our government denies these things to people in Third World countries whose resources are coveted by our multinational corporations. That hatred we have sown has come back to haunt us in the form of terrorism.
This expansion is to ensure that related parties within multinational corporations will not reap the benefits of having these transactions classified as debt.
Internal corporate social responsibility practices and the adoption of codes of responsibility are powerful tools for a multinational corporation to both assert its stance as a good corporate actor to those with whom it works and also to assert this stance to the public, particularly those members of the public that are or could become its customers.
With occasional assistance from state and local government--and where these are non cooperative, from state and local voter initiatives--local communities can effectively "communitize" multinational corporations. Progressive activists and media will be at the forefront of this struggle if we can energize and unite the fragments of the anti-NAFTA mobilization into a campaign with a coherent vision: communities versus corporate greed, stakeholders versus stockholders.
Representatives of business community, different multinational corporations from across the country participated in the Summit.
They consider how conventional incentive systems foster or prevent corruption in these corporations, how these systems should be adjusted to ensure more effective compliance with formal anti-bribery rules and multinational corporations, how incentive systems should be adjusted to foster anti-bribery whistleblowing, and the difficulties in introducing anti-bribery incentives.
The offices should let the government of their host nation and its departments, legislators, media, multinational corporations and airlines know Taiwan's official stance in the matter, Lee said.
The counsel contended that the law had been passed depriving the farmers of their traditional farming practices and instead the multinational corporations had been accomodated to protect their genetically breeding practices which was contagious to the environment,anti competitive harmful for the national economy.
The petitioner had maintained that the law has been passed to facilitate the multinational corporations after which the farmers would be forced to purchase expensive seeds from them, adding that it deprives the local farmers of a fair competition in the market making food expensive in the upcoming years.
InvestKL, a Malaysian government agency, boosts efforts to lure key multinational corporations, including oil and gas firms, to locate their operations in Greater Kuala Lumpur.
SHANGHAI, Aug 14, 2015 - (ACN Newswire) - China Salary Guide 2015 recently published by ZW HR Consulting, concludes that candidates possessing fluency in the English language are seeing exponential growth in pay and hiring demands for Multinational Corporations (MNCs).
Her practice includes representing multinational corporations, financial institutions and multilaterals and export credit agencies with secured and unsecured private financing.

Full browser ?