A multinational corporation is a corporate organization that owns and controls the production of goods or services in at least one country other than its home country. 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".
In economics, internationalization or internationalisation is the process of increasing involvement of enterprises in international markets, although there is no agreed definition of internationalization. Internationalization is a crucial strategy not only for companies that seek horizontal integration globally but also for countries that addresses the sustainability of its development in different manufacturing as well as service sectors especially in higher education which is a very important context that needs internationalization to bridge the gap between different cultures and countries. There are several internationalization theories which try to explain why there are international activities.
A foreign direct investment (FDI) refers to purchase of an asset in another country, such that it gives direct control to the purchaser over the asset. In other words, it is an investment in the form of a controlling ownership in a business, in real estate or in productive assets such as factories in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment or foreign indirect investment by a notion of direct control.
International business refers to the trade of Goods and service goods, services, technology, capital and/or knowledge across national borders and at a global or transnational scale.
Stephen Herbert Hymer was a Canadian economist. His research focused on the activities of multinational firms, which was the subject of his PhD dissertation The International Operations of National Firms: A Study of Direct Foreign Investment, presented in 1960, but published posthumously in 1976, by the Department of Economics from Massachusetts Institute of Technology. Charles P. Kindleberger, his thesis supervisor, submitted it for publication, as mentioned by him on the introduction of Hymer's thesis dissertation.
Daniele Archibugi is an Italian economic and political theorist. He works on the economics and policy of innovation and technological change, on the political theory of international relations and on political and technological globalisation.
The eclectic paradigm, also known as the OLI Model or OLI Framework, is a theory in economics. It is a further development of the internalization theory and published by John H. Dunning in 1979. Modern Trade Theory incorporates this paradigm using the Grossman-Hart-Moore Theory of the firm
John Harry Dunning was a British economist and is widely recognised as the father of the field of international business. He researched the economics of international direct investment and the multinational enterprise from the 1950s until his death. In the 1980s, he published the eclectic paradigm or OLI-Model/Framework as further development on Internalization theory. OLI remains the predominant theoretical perspective to study international business activities, notably foreign direct investment and multinational enterprises. His first book, American Investment in British Manufacturing Industry (1958), is the first seminal work in the international business field.
Sanjaya Lall was a development economist and Professor of Economics at the University of Oxford. Lall's research interests included the impact of foreign direct investment in developing countries, the economics of multi-national corporations, and the development of technological capability and industrial competitiveness in developing countries. One of the world's pre-eminent development economists, Lall was also one of the founding editors of the journal Oxford Development Studies and a senior economist at the World Bank.
Gabriel Robertstad Garcia Benito is a Norwegian economist, Professor of Strategy and International Business and a previous Dean of Doctoral Studies at BI Norwegian Business School, in Oslo, Norway. He is known for his work on foreign direct investments.
Alan M. Rugman (1945-2014) was a leading scholar in the field of international business. In his last academic role, he served as Head of International Business and Strategy at Henley Business School, University of Reading in Reading, UK.
Internalization theory is a branch of economics that is used to analyse international business behaviour. Internalization theory focuses on imperfections in intermediate product markets. Two main kinds of intermediate product are distinguished: knowledge flows linking research and development (R&D) to production, and flows of components and raw materials from an upstream production facility to a downstream one. Most applications of the theory focus on knowledge flow. Proprietary knowledge is easier to appropriate when intellectual property rights such as patents and trademarks are weak. Even with strong protections firms protect their knowledge through secrecy. Instead of licensing their knowledge to independent local producers, firms exploit it themselves in their own production facilities. In effect, they internalise the market in knowledge within the firm. The theory claims the internalization leads to larger, more multinational enterprises, because knowledge is a public good. Development of a new technology is concentrated within the firm and the knowledge then transferred to other facilities.
The Reading School of International Business is widely understood in the field of international business (IB), management and economics to embody a stream of conceptual, and theoretically-driven empirical research, and consists of a group of economists that have a common approach to analyzing multinational enterprise and foreign direct investment. Some are based in the Department of Economics and in Henley Business School at the University of Reading, England, but membership is international. The Reading School builds upon the pathbreaking theoretical work of Peter Buckley and Mark Casson on internalization theory. This was complemented by simultaneous work by John Dunning as he developed the eclectic paradigm of international business as an envelope explanation containing three principal drivers of foreign direct investment, comprising ownership (O); location (L); and internalization (I). The Reading School approach continues through the work of its academic disciples around the world, as well as through The John Dunning Centre at Henley Business School, University of Reading, under the directorship of Rajneesh Narula.
The Institute for Studies in Industrial Development (ISID) is a public-funded, non-profit, autonomous institution dedicated to conducting policy research, advocacy, capacity-building, and outreach activities to foster the industrial transformation of India.
Lorraine Eden is Professor Emerita of Management in the Mays Business School of Texas A&M University, College Station, Texas. She also holds a joint appointment as a research professor in the Texas A&M School of Law. Dr. Eden is an expert in the field of International Transfer Pricing, which is the pricing of products that move between subunits of Multinational Enterprises (MNEs).
The springboard theory or springboard perspective is an international business theory that elucidates the unique motives, processes and behaviors of international expansion of emerging market multinational enterprises. Springboard theory was developed by Luo and Tung (2007), and has since been used to examine EM MNEs. At the core of this theory is the argument that EM MNEs systematically and recursively use international expansion as a springboard to acquire critical resources needed to compete more effectively against their global rivals at home and abroad and to reduce their vulnerability to institutional and market constraints at home. These efforts are systematic in the sense that “springboard” steps are deliberately designed as a grand plan to facilitate firm growth and as a long-range strategy to establish more solidly their competitive positions in the global marketplace. They are also recursive because such “springboard” activities are recurrent and revolving.
Professor Xiaolan Fu is a British-based Chinese economist, and Fellow of the Academy of Social Sciences. She is the Founding Director of the Technology and Management Centre for Development (TMCD). She is a Professor of Technology and International Development and Fellow of Green Templeton College at the University of Oxford.
Raphael Malcolm Kaplinsky is an Honorary Professor at the Science Policy Research Unit and an Emeritus Professorial Fellow at the Institute of Development Studies, University of Sussex. In 2024 he was awarded an Honorary Doctorate by the University of Johannesburg, South Africa. He was an active and well-known opponent to Apartheid in South Africa during the 1960s, and played a leading role in 1968 in the Mafeje affair. Kaplinsky was not allowed to return to his country of birth until Nelson Mandela was released from prison in 1990, after which he played an active role in policy development at the national and regional levels. He spent the bulk of his professional career at the University of Sussex where he led research programmes on industrial and technology policy and on Global value chain. He led and participated in a number of Advisory Missions to governments in Africa, Asia, Latin America, the Caribbean and Europe.
Peter H. Egger is an Austrian economist who currently works as Professor of Applied Economics at the ETH Zurich. His research areas are industrial economics, innovation and international competition. In 2011, his contributions to economic research were awarded the Gossen Prize. His brother Hartmut is professor of economics at the University of Bayreuth.
Kevin Iyk Ibeh is a British-Nigerian academic, author and speaker. He is the Pro Vice-Chancellor (International) at Birkbeck, University of London, and a Commissioner of the Commonwealth Scholarship Commission. He is most known for his work on firm internationalization and developing economies, as well as his work on how non-dominant firms, including small and medium-sized enterprises (SMEs) and entrepreneurial firms, capitalize on growth opportunities internationally. Among his authored works are publications in academic journals, including Journal of World Business, Journal of Business Ethics, British Journal of Management, Journal of Business Research, International Business Review, and European Journal of Marketing as well as books such as Contemporary Challenges to International Business and Growth Frontiers in International Business.
