Learn what a transnational corporation is and how they operate. Understand the meaning of transnational and discover examples of transnational corporations. Updated: 04/20/2022
Shaline Wayne has an MBA in Business Administration and Sociology from The University of Illinois and a Bachelor’s degree in Economics from the West Virginia University. She has more than 7 years of teaching experience as a Lecturer in Business related courses.
What is a Transnational Corporation?
Today’s world is more intertwined than ever, and many businesses have ventured to other countries. Terms such as “transnational corporation” have been used to explain these large companies. So, what is a transnational corporation?
A transnational corporation (TNC) is defined as a company that operates in two or more countries. They are also called multinationals. In the business world, a TNC is also an enterprise that undertakes foreign direct investment, possesses or controls revenue-producing resources in multiple countries, produces goods or services outside of its home country, or engages in international production.
Transnational corporations usually have headquarters in their country of origin. They then open different branches in other countries to increase the size of their operations. They are typically set up in developing countries for several reasons: cheap labor availability, availability of raw materials for production functions, and influence on developing countries’ governments.
Multinationals are structured differently from standard businesses. This is because of their sheer size and the multiple functions that the companies have. They are usually run by global management based in the country of origin that controls the activities of all its branches globally. Below the global leadership is the regional manager for each country that directs the operations in every country individually. Company structure like this is related to geographical reasons and the need for specialized management for each region.
What is the Meaning of “Transnational”?
The word transnational means moving or expanding beyond national borders in general. The meaning of transnational is also seen in the transnational corporation definition adopted in the business world. The word transnational in the business world reflects a company with branches in multiple countries.