Multinational Companies

Origin of Multinational Companies

Multinational business is not a new phenomenon. Many Business firms of the West operated in many parts of the world from the very beginning of the modern era. Multinational business got boost particularly during the colonial era. Business firms of the Western countries focused on each colony's exports and imports on their home countries. Their purpose was to suppress any colonial production that competed with products of the mother country. These colonial-type firms have been extinct since 1960.

During the beginning of the twentieth century, many big-sized business firms emerged in the US, UK and West Europe. Some examples of such firms are Singer Sewing Machine, General Electric, Fiat, Kodak, IT&T, Ciba, Imperial Chemicals, Ford, Nestle, Siemens, and Uniliver. Some of these companies started to invest in overseas manufacturing facilities. Other companies expanded their business overseas. But the rush to operate internationally started during the 1960s. This resulted in substantial direct investment of Western countries in foreign manufacturing facilities. In the 1960s, firms like banks, insurance companies, marketing consultants, and the like expanded overseas. Thus, after 1960s, multinational companies became quite common.

In the 1970s, the pattern reversed. Big business houses of Asian Countries started investing in the Western countries, mainly in the US. As a result, many Japanese, Korean, Taiwanese, Chinese, and Indian companies started their operations in the Western countries. Thus, the most dramatic developments of the 20th century had been the expansion of MNC's across the world.

Today, the presence of MNCs is widespread. Their importance has been growing in the world economy. Really speaking, the MNCs have become the primary engines for globalization of economic activities. It is not surprising, therefore, that the MNCs, as they are called, are seen as one of the major features of the current world economy.