Managing the Multinational Corporation: Evolution Essay, MGT3540

This essay provides a comprehensive overview of the evolution of multinational corporations (MNCs), tracing their development and significance in the global economy. It examines the historical context, highlighting the dominance of MNCs from developed countries and the emergence of new multinational corporations from emerging economies. The essay delves into key theoretical contributions, including industrial organization theory, organizational capability theory, transaction cost theory, contingency theory, and business network theory, explaining how each theory contributes to understanding the existence and strategies of MNCs. Additionally, the essay explores different types of MNCs, such as Heterarchy, transnational companies, and Meta-national companies, emphasizing their distinct approaches to internationalization and management. The conclusion summarizes the key findings, emphasizing the importance of MNCs in international business and the relevance of the discussed theories in understanding their evolution and operation. The essay references various scholars and provides a strong foundation for understanding the complexities of managing multinational corporations.

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Managing the Multinational Corporation
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1/9/2020
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Managing the Multinational Corporation 1
Evolution of the multinational corporation (MNC) with reference to key
theoretical contributions
The essay will include the focused discussion on Multinational Corporation considering
business environment globally. Multinational corporations have been involved decades ago,
which will be part of the discussion in this essay considering the geographic location of this
aspect. The relevance of MNC that has been contributing towards emerging economies will
be included considering various theoretical perspectives. For instance, organisational
capability theory, industrial organisation theory, and business network theory. There have
been various research is conducted on multinational corporations along with the location
strategies. As per the researcher, a multinational company is defined as an organisation that
has been engaged in FDI which is also known as foreign direct investment. The scholars
consider activities like controlling value added activities in various nations, which are often
lead to a place in form of wholly owned subsidiary (Craig & Douglas, 2015).
There have been various forms in which multinational companies have existed that range
from investing abroad to managing subsidiaries in various nations. The statistics provided by
UNCTAD it reflects that there have been 82,000 MNCs across the globe in 2011 (Prange &
Mayrhofer, 2015). Considering the evolution of multinationals it can be said that MNCs have
been in most several decades ago where are the global economy has found to be dominated
by Various MNCs among triad countries that is Japan, North America and Western Europe
as MNCs are mostly located in home nations or developed nations. The period of
multinationals has been considered as significant, among the emerging nation which aims to
become the global leaders. Such new multinationals have been identified to develop
particular internationalise Asian patterns that are also some of the existing challenging model
for multinational companies. Thereafter MNCs have found to be rapidly expanded in

Managing the Multinational Corporation 2
international market with the purpose of upgrading their capabilities and enhancing the global
reach in the industries (Oh, 2015).
Moreover, the benefit of strong positioning in the domestic market and thereafter allowing
them to internationalisation by adopting global business environment. The MNCs used
various model of adoption in international market for instance bond global has been created
in order to stay competitive advantage by selling their products and services directly in
international markets. Other than this the company is found to be in need of organisational
configuration and strategies in order to sustain in industry and remain competitive. It has
been identified that for this purpose the MNCs introduce network structures and out sourcing
strategies in order to face challenges in global business arena (Schlegelmilch, 2016).
Theoretical perspectives have also been contributed in evolution of multinational companies
as some of the theories that could contribute towards existence of MNCs in a better way
include industrial organisational theory. According to this theory multinationals is considered
to be the organisation that is looking forward to exploit monopolistic advantage in
international region. Organisational configuration has largely focus towards the radical
structure which includes pre-dominant role of headquarters among corporate strategy and
business activities management and multinationals (Cabral & Mathiason, 2015).
Another theory contribution includes transaction cost theory, according to which a
multinational is a corporation that contributes on internal Isis transactions in markets across
national boundaries which are not easily possible among independent films. Foreign
subsidiary creation has found to be responding to global efficiency logistics of a company.
Another theory includes organisational capability theory which argues towards the needs of
Multinational Corporation in order to gain competitive advantage. This is based on the
resource-based view which has been able to transfer, create, combine and have been able to

Managing the Multinational Corporation 3
use various organisational capabilities in international boundaries. Thus, it can’t you say that
according to this theory capabilities are the key aspect that is considered in multinational
which includes specific configuration of competencies and resources that are eventually
distributed in such a way among the groups that it can able to create competitive advantage
(Whitaker et al., 2017).
Another theory includes contingency theory which has included the focus of this question
towards the multinational corporation’s capacity to adopt challenges, changes and complexity
in international business environment. According to this theory a multinational is able to
sustain in long-term perspective in case the company has been able to adapt and the profit
organisation and controlling system as per the changing environment. This theory focus
towards the values shared by organisational members which also include analysing the
environment and contacting the organisational structure according to the local context in
international market (Prange & Mayrhofer, 2015).
Business network theory is another theoretical perspective that has contributed in evolution
and understanding of multinational corporations which is largely dependent on resource
dependence theory and network theory. According to this theory the relevance of business
networks has been considered which include networking with customers, government,
distributors and suppliers. The cutie reflect that this is one of the major strategic resources for
the company which can be developed by local subsidiaries in order to dispose the power
among the company and can influence the strategic decision making considering their local
business networking. Institutionalisation theory contributed towards the view of
multinationals as one of the political actor instead of considering it as a business act (Calboli,
2015).

Managing the Multinational Corporation 4
According to this theory the approach of being Multinational Corporation in international
market is to focus on various institutional environments that have been influencing the
company as part of business environment. It can be said that the subsidiaries and the
headquarters of Multinational Corporation are needed to manage conflicts and political
situations in different institutional context at international and national level.
In today’s world some of the common MNC’s include Wal-mart, Toyota motors,
Volkswagen, General motors, British petroleum, and Volkswagen. There are large numbers
of multinationals that have been strategizing according to nation in which the company has
been conducting business and some of the company have adopted globalising strategy that is
to consider the whole world as one market (Du et al., 2018).
The evolution of literature of international business includes various kinds of multinational
companies that have been introduced and emphasised to what is changing and heterogeneous
character. The researchers have considered the multinational company that have been
persisting various decisions centres as though hierarchy that is needed be coordinated. The
research included company as Heterarchy that reflect MNC configuration towards hierarchal
structure that reflect the need for unity in the organisation and strong integration among
various departments and recommended avoidance of centralisation approach (He, 2017).
Another multinational that has been introduced is transnational company that is reflecting a
company to go beyond decentralisation or centralisation dialectic. This model or type of
MNC reflects assigning various responsibilities and roles towards foreign subsidiaries.
Considering strong independence among the parent company and subsidiaries, and
organisational management will include learning capabilities of the company which
eventually enhance the competitiveness of Multinationals (Schlegelmilch, 2016).

Managing the Multinational Corporation 5
Another type of MNC that have been evolved includes Meta national company which
developed based on the knowledge that will be acquired by the subsidiaries in the foreign
market. Moreover, the researcher includes that the knowledge economy reflecting
competitive advantage. Three competencies of this type of MNC is identification of new
knowledge that will be developed from various parts across the globe; use of the gained
knowledge for innovation; and creating value for the company and customers through use of
innovative idea and strategy through marketing and promotional strategies around the globe.
For instance, the food and industry chains that are the MNC’s have been adopting this
strategy that is gain enough knowledge from the subsidiaries to strategies according to local
preference. For example, McDonald’s that have changed the taste and ingredients use for
preparation of the products so as to work as per the local region like not using beef in India
(Prange & Mayrhofer, 2015).
From the essay, the discussion concluded that multinational companies are enterprises that
are entering into international market by either establishing the subsidiaries or managing and
controlling the goods and services production in other nation than home country.
Multinational corporations have been involved decades ago contributing towards emerging
economies. In today’s world some of the common MNC’s include Wal-mart, Toyota motors,
Volkswagen, General motors, British petroleum, and Volkswagen. The evolution of
multinationals, the global economy has found to be dominated by Various MNCs among
Triad countries that is Japan, North America and Western Europe; aims to become the global
leaders. Theories contributed in evolution include organisational capability theory, industrial
organisation theory, and business network theory. The evolution of literature of international
business includes various kinds of multinational companies like Heterarchy, transnational
company, and Meta national company reflecting the focus on different strategies.

Managing the Multinational Corporation 6
References
Cabral, A. & Mathiason, T., 2015. Symposium: Managing the global environment through
trade: WTO, TPP, and TTIP negotiations, and bilateral investment treaties versus regional
trade agreements: Introduction. American University International Law Review, 30(3), p.1.
Calboli, I., 2015. Geographical indications of origin at the crossroads of local development,
consumer protection and marketing strategies. IIC-International Review of Intellectual
Property and Competition Law, 46(7), p.760.
Craig, C.S. & Douglas, S.P., 2015. International Marketing Research. Chichester: John wiley
& sons.
Du, Y., Su, J. & Cui, M., 2018. Implementation processes of online and offline channel
conflict management strategies in manufacturing enterprises: A resource orchestration
perspective. International Journal of Information Management, pp.136-45.
He, S., 2017. Towards a new wave in internationalization of innovation? The rise of China's
innovative MNEs, strategic coupling, and global economic organization. Canadian Journal
of Administrative Sciences/Revue Canadienne des Sciences de l'Administration, 34(4),
pp.343-55.
Oh, C.H., 2015. Regional and product diversification and the performance of retail
multinationals. Journal of International Management, 21(3), pp.220-34.
Prange, C. & Mayrhofer, U., 2015. Multinational Corporations (MNC s) and Enterprises
(MNE s). Wiley encyclopedia of management, pp.1-5.
Schlegelmilch, B., 2016. Global Marketing Strategy. Switzerland: Springer.

Managing the Multinational Corporation 7
Schlegelmilch, B.B., 2016. The Future of Global Marketing Strategy. In Global Marketing
Strategy , p.221.
Whitaker, J., Ekman, P. & Thompson, S., 2017. How Multinational Corporations Use
Information Technology to Manage Global Operations. Journal of Computer Information
Systems, 57(2), pp.112-22.