Multinational Corporations

Bruce Kogut, Alicja Reuben

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

A multinational corporation (MNC) is an organizational vehicle to transfer knowledge from one country to another while preserving cash flow and control rights. The MNC has its origins in the uncertainty of international trade and investment, and its modern form coevolved with the emergence of institutional and political structures that permitted owners to realize and retain profits from the utilization of its organizational knowledge in foreign countries and territories. Since operating overseas incurs costs, the MNC is only viable if its transfer of organizational capabilities permits it to compete effectively against domestic and other foreign competition. With the diffusion of knowledge, local competitors often compete with the MNC in the long run. However, an MNC has the advantage of profiting from arbitraging across markets and leveraging its scale and scope globally. The impact of the revolution in information technologies has consequently an ambiguous effect, both enabling the MNC to operate globally more effectively and enabling markets to contract to more efficiently compete against organizational solutions.

Original languageEnglish (US)
Title of host publicationInternational Encyclopedia of the Social & Behavioral Sciences: Second Edition
PublisherElsevier Inc.
Pages74-80
Number of pages7
ISBN (Electronic)9780080970875
ISBN (Print)9780080970868
DOIs
StatePublished - Mar 26 2015

Keywords

  • Domestic competition
  • Globalization
  • Information technologies
  • Institutions and politics
  • Knowledge transfer
  • Multinational corporations
  • National imprinting
  • Operating flexibility
  • Organizational know-how
  • Real options

ASJC Scopus subject areas

  • Social Sciences(all)

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    Kogut, B., & Reuben, A. (2015). Multinational Corporations. In International Encyclopedia of the Social & Behavioral Sciences: Second Edition (pp. 74-80). Elsevier Inc.. https://doi.org/10.1016/B978-0-08-097086-8.73004-2