The importance of being … transnational

The paper takes the lead from Forsgren and Yamin (2022), “The MNE as the ‘crown of creation’?: A commentary on mainstream theories of multi-national enterprises”, and accepts that the MNE can, indeed, be seen as the “crown of creation” in the world of business. The purpose of the paper is to show that this is due to advantages of multi/transnationality that must be sought outside rather than within the firm itself.

The paper argues that the advantages of multi-nationality derive from the differences in regulatory regimes between nation-states and, specifically, from laws and regulations regarding the following: labour and social security, industrial policy, taxation and environmental regulations. Some examples are given.

It is claimed that the transnational company (TNC) has the ability to operate as a unified centre of strategic decision-making, and this gives it an advantage compared to operators it bargains with who do not possess such ability. Three such operators are discussed: labour, governments of nation-states and suppliers. In TNCs’ operations with foreign countries, a distinction is made between the spatial dimension and the regulatory regimes dimension. The interaction between these two dimensions leads to discussions on: regions within nation-states and their regulatory regimes, global value chains (GVCs) and free/investment zones (F/IZs). The conclusions draw policy implications and research agenda implications touching also on issues of TNCs as creator/destructors of social values.

The paper refers to other published work by the author – solo or as co-author – where the arguments are further developed, including the finding of a detailed case study. There are policy implications regarding labour and its trade unions (TUs) as well governments and their taxation and industrial policies. Details of such policies need further development.

There are implications for theory development, policies and for research agendas.

Governments of nation-states and institutions within them – such as TUs – should try to co-ordinate rather than compete with each other in their bargaining with transnational companies. The breakaway of regions within nation-states further increases the power of TNCs.

In the development of theories of the TNC, this work shifts the focus from internal characteristics within the firm and its markets to external ones: to the nation-states as jurisdictional loci. The distinction between spatial and regulatory regimes dimensions in dealing with transnational activities allows a novel viewpoint on: regions, GVCs and IZs. A novel viewpoint is also given in relation to the role of TNCs in social value.