Multinational corporation
A multinational company (MNC)[a][1] is a corporate organization that owns and controls the production of goods or services in at least one country other than its home country.[2][3] 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 simply to diversify financial risks. Black's Law Dictionary suggests that a company or group should be considered a multinational corporation if it derives 25% or more of its revenue from out-of-home-country operations.[4] A multinational corporation can also be referred to as a multinational enterprise (MNE), a transnational enterprise (TNE), a transnational corporation (TNC), an international corporation, or a stateless corporation.[5] There are subtle but real differences between these terms.
Most of the largest and most influential companies of the modern age are publicly traded multinational corporations, including Forbes Global 2000 companies. Multinational corporations are subject to criticisms for lacking ethical standards. They have also become associated with multinational tax havens and base erosion and profit shifting tax avoidance activities.
The history of multinational corporations began with the history of colonialism. The first multinational corporations were founded to build set up colonial "factories" or port cities.[6] In addition to carrying on trade between the mother country and the colonies, the British East India Company became a quasi-government in its own right, with local government officials and its own army in India .[7][8] The two main examples were the British East India Company, and the Dutch East India Company. Others included the Swedish Africa Company, and the Hudson's Bay Company.[9] These early corporations engaged in international trade and exploration, and set up trading posts.[10]
The Dutch government took over the VOC in 1799 and during the 19th century, other governments increasingly took over the private companies, most notable in British India.[11] During the process of decolonization, the European colonial charter companies were disbanded,with the final colonial corporation, the Mozambique Company, dissolving in 1972.[10]
Mining of gold, silver, copper and especially oil major activities early on and remain so today. International mining companies became prominent in Britain in the 19th century, such as the Rio Tinto company founded in 1873, which started with the purchase of sulfur and copper mines from the Spanish government. Rio Tinto, now based in London and Melbourne Australia, has made many acquisitions and expanded globally to mine aluminium, iron ore, copper, uranium, and diamonds.[12] European mines in South Africa began opening in the late 19th century, producing gold and other minerals for the world market, jobs for the locals, and business and profits for the companies.[13] Cecil 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 his base in southern Africa.[14]
The "Seven Sisters" was a common term for the seven multinational companies which dominated the global petroleum industry from the mid-1940s to the mid-1970s.[15]
