Many authorities, academics and authors have defined multinational companies in different ways from different perspectives. Some of these definitions are meticulously written down below:
Research Machines (2004) gives four definitions of multinationals. First, it defines MNC as a corporation that has its facilities and other assets in at least one country other than its home country, or that has offices and/or factories in different countries and generally has a centralized head office where they coordinate global management. Second, it defines a multinational corporation as a business enterprise with manufacturing, sales, or service affiliates in one or more foreign countries, also known as a Transitional or International Corporation (TNC or INC).
The third definition given by Research Machines is one that views an MNC as a company or enterprise that operates in multiple countries, generally defined as one that has 25 percent or more of its production capacity located outside of its home country. The last definition given sees the MNC as a corporation or company that manages a production establishment located in at least two countries.
All of these definitions, as given by Research Machines (2004), identify that multinationals operate outside their own country of origin. Research Machine’s first definition makes a crucial point that multinationals also acquire assets in these foreign countries where they operate and possibly own offices/factories to facilitate the achievement of objectives. This means that they prefer to make use of the available resources of the host country. He also added that transnationals do have a place; world headquarters is usually installed as well. This means that reports on finance, sales, purchasing, marketing, etc. are duly coordinated and accounted for at headquarters.
The second definition of Research Machines makes another vital point about multinationals which states that their services are not limited to just manufacturing but also include sales and reminder services through sales and service subsidiaries. The third definition of Research Machines goes further and assigns a percentage to the production of multinationals. He claimed that for a corporation to be called a multinational, it should have exported its 25 percent output to other countries. What could be deduced from this is that a corporation may be operating outside of its home country, but cannot be called an MNC unless it has sold 25 percent or more of its production to outside countries.
The Encyclopedia of Management (2005) classifies multinational companies as companies with operations in more than one country. These operations outside the company’s home country may be linked to the parent by merger, operate as subsidiaries, or have considerable autonomy. According to Drucker (1974), the multinational company grew from the emergence of a genuine world market demand that transcended national, cultural and ideological borders, due to the information explosion.
Iyayi, Agbonifoh, and Ehiametalor (1984) view MNEs as multi-management with several layers of management decision-making bases, from local to regional to global. In the words of Hodgetts and Luthans (1997), multinational companies are companies that have operations in more than one country, international sales, and a mix of nationalities of managers and owners. Coventry (1981) and Johansson (2000) give the same definition to multinational companies, as companies that usually have several production sites abroad and therefore several international markets.
Following all these definitions highlighted above, it could be stated that they all took a multinational company and defined it from the structural, functional and geographical perspectives and from the point of scope covered geographically.
