Transnational Corporations

Transnational corporations (TNCs) consist of firms that have production or service facilities in more than one country. Under this definition, there is a huge variety of transnational corporations with differing degrees of internationalization. The United Nations Conference on Trade and Development (UNCTAD) has produced a method for assessing the degree of transnationality of any particular corporation. Its transnationality index (TNI) is a composite of percentage of assets overseas (compared to home), percentage of employees overseas (compared to at home), and percentage of sales overseas (compared to at home). In the World Investment Report 2005 produced by UNCTAD, data on the top 100 TNCs (by assets) is presented. The largest TNC based on foreign assets is the U.S company General Electric, but this company is ranked 77th on the TNI with a score of 43.2%. This is mainly because the majority of its assets, sales, and employment are in the United States. The number one position in the TNI is the Canadian media corporation, Thomson, with a score of 98%, reflecting the fact that most of its businesses, in terms of assets, employees, and sales, are outside Canada. However, even this sort of measure is a blunt instrument and tells us little about the degree of dispersion of such companies. For example, Rugman has argued that there are no “global firms,” only “regional multinationals.” His data on sales show that most companies sell primarily in their home region of the triad comprising North America, Europe, and Japandominated Asia and few have strong sales in all three regions. These debates reflect the fact that we still know too little about how transnational corporations are organized at a detailed level.