See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/372344720

The Importance of Being …Transnational

Article in Critical Perspectives on International Business · July 2023

DOI: 10.1108/cpoib-02-2023-0013

CITATIONS READS

2 43

1 author:

Grazia Ietto-Gillies
London South Bank University. Birkbeck University of London
86 PUBLICATIONS 1,633 CITATIONS

SEE PROFILE

All content following this page was uploaded by Grazia Ietto-Gillies on 19 June 2023.

The user has requested enhancement of the downloaded file.

 The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1742-2043.htm

The importance
The importance of being of being . . .
. . . transnational transnational
Grazia Ietto-Gillies
London South Bank University, London, UK and
Birkbeck University of London, London, UK
Received 18 February 2023
30 March 2023
Abstract Accepted 5 April 2023

Purpose – 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.
Design/methodology/approach – 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.
Findings – 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.
Research limitations/implications – 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.
Practical implications – There are implications for theory development, policies and for research
agendas.
Social implications – 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.
Originality/value – 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.
Keywords Multi-national companies, Advantages of transnationality, Nation-states, GVCs,
Regulatory regimes, Spatial dimension
Paper type Research paper

critical perspectives on
The author is grateful to Rudolf Sinkovics for insightful comments on previous drafts. Two international business
reviewers of this journal have given very useful comments leading to a widening and improvement of © Emerald Publishing Limited
1742-2043
the content of this paper. DOI 10.1108/cpoib-02-2023-0013
CPOIB 1. Introduction
In “The MNE as the ‘Crown of Creation’: A Commentary on Mainstream Theories of Multi-
national Enterprises” Mats Forsgren and Mohamed Yamin (F&Y) discuss and criticize three
standard theories of the multi-national enterprise (MNE): the Internalization Theory, the
Evolutionary Theory [1] and the Dynamic Capability Theory. According to the paper,
the three theories assume that the MNEs have special advantages compared to non-MNEs.
The authors end by noting that, nonetheless, all three theories: “[. . .] are surprisingly silent
when it comes to why MNEs are superior compared to, for example, domestic (uninational)
firms or other types of economic agents”. Silent on this issue are also our two authors: they
do not discuss what such advantages might be and where they might originate from. The
present paper aims to fill the gap.
There has been, for a long time going back to Hymer’s (1960) and Kindleberger’s (1969)
works, an assumption that operating directly abroad carries extra costs and risks, that there
was, indeed, a “liability of foreignness” (Zaheer, 1995, 2015; Forsgren, 2017, p. 16). However,
given the success of transnational companies (TNCs) [2] in the past five or so decades, the
assumption of special advantages and superiority seems plausible.
But where do such advantages come from? Most theories of the MNE – including the
three discussed by F&Y – look for advantages within the firm itself and its markets,
including the interaction of the firm with its rivals. The advantages can be – and are –
sought, respectively, in the three theories discussed by F&Y in more efficient exploitation
and transfer of knowledge (the Internalization Theory); the character of the firm as a social
community able to develop identity and commitment among its staff (the Evolutionary
Theory); and the firm’s ability to orchestrate entrepreneurial actions (the Dynamic
Capabilities Theory).
My contention is that there do exist advantages of multi-nationality per sè and that they
must be sought not within the firm but outside it, i.e. in the environment in which it operates
as a “multi/trans-national” company and, specifically, in two dimensions of the nation-state.
Section 2 analyses the first dimension – the regulatory regimes one – and the advantages
of operating across different nation-states deriving from it. Section 3 discusses the spatial
and cultural dimensions of nation-states and their impact on TNCs. Section 4 considers the
interaction between regulatory regimes and spatial/cultural dimensions of nation-states.
Section 5 summarises and concludes.

2. Regulatory regimes and advantages of transnationality

Characteristics such as size, market power, internal organization, managerial superiority or
access to markets and/or resources are all very important in the success of firms, in general,
be they uni- or multi-nationals. However, they are not the specificity of multi-national
companies or the source of their superiority. To find the latter, we must look at what is
specific about multi/transnationality, i.e. at the ability to benefit from operations in and
across several nation-states. This means that we must look at characteristics specific to
nation-states in their interaction with companies that operate in several of them and across
them.
These characteristics fall within two major dimensions of nation-states: the regulatory
regime dimension and the spatial dimension. The first dimension looks at nation-states as
jurisdictional loci of laws, rules and regulations; they are specific to each country and are
related to its social and historical conditions. Nation-states differ from each other in terms of
laws and regulation that govern markets, production, labour, taxation and social security,
among others. In terms of the interaction between nation-states and transnational
companies, the most relevant sets of laws are highlighted in Box 1 Section A. Specifically
they are regulation of labour markets, including the organization of labour and its trade The importance
unions (TUs); safety standards in the workplace; social security system; industrial, of being . . .
innovation/technology and competition policies; laws on safety standards in relation to
consumers, production processes and the environment; fiscal regimes including corporation
transnational
tax and excise duties; and currency regimes.
Any of the sets of regulations in Section A of Box 1 can be more or less company-friendly;
nonetheless, this is not the only element relevant in assessing advantages of trans/multi-
nationality. What is important in this respect is the advantage deriving from differences in
specific regulations across nation-states and the ability of companies to exploit such
differences and arbitrage between them.

Box 1. Dimensions of nation-states relevant for TNCs’ activities

A B
Regulatory regimes dimension Spatial and cultural dimension
Labour markets and TUs laws Impact on:
Safety standards in workplace Size of market
Social security regulations Transport costs
Labour supply
Industrial, innovation/technology
and competition policy Operations in many countries
and risk spreading
Laws protecting:
Consumers
The environment Diversity of cultures and knowledge
acquisition
Fiscal laws including corporation tax
Currency regulations

Operating in different countries characterized by different regulatory regimes as a unified

strategic decision-maker gives the TNC a choice on where to locate additional activities but,
most crucially, it gives bargaining power towards those agents that, by their very nature, do
not possess the ability to operate and co-ordinate across countries or not to the same extent
as the transnational company. Governments and institutions of a nation-state tend not to co-
ordinate with corresponding ones in other nation-states when it comes to bargaining with
TNCs. On the contrary, they are likely to compete with each other for the attraction of
foreign direct investment. This creates power imbalance between TNCs and institutions of
the nation-state.
The economics literature in the decades after World War II (WWII) has devoted much
work to the issue of market power, i.e. competitive power towards rival companies. The
issue of power towards other agents they have business with has received less attention [3].
Yet the latter type of power has not only relevance of its own, but it is also crucial in the
forging of the company’s overall advantages, including market advantages.
The agents towards whom such type of power can be held are, in particular: (i) labour; (ii)
governments of nation states and regions within them; and (iii) suppliers and contractors.
The acquisition of extra bargaining power towards one or more of these agents leads to
lower costs, and it eventually impacts on market power.
CPOIB Regarding (i), neither the economics nor the international business literature devotes
much work to the role of power in the bargaining of companies with labour [4], and yet this
is a key issue because of its effects on distribution as well as on costs of production. Why
does transnationality give companies extra bargaining power towards labour? Essentially
because, so far, the organization of labour and its trade unions (TUs) have not much moved
outside the confines of the nation-state. Moreover, solidarity within the workforce tends to
be much stronger within each nation-states than across them. We, therefore, have a situation
in which an institution – the TNC – that can truly plan, organize and strategically manage
across nation-states confronts one that, for historical, traditional and institutional reasons,
operates within the confines of the nation-state. Transnationality is, therefore, bound to give
TNCs extra bargaining power resulting in cost advantages from which may derive also
advantages of market power. Balcet and Ietto-Gillies (2020) present research on the case of
the FIAT [5] company. In it, we see, among other strategies and tactics by the company’s
managers bargaining for new contracts with the Italian labour force, the threats of
relocation to other countries. FIAT is certainly not the only company to have used threats of
relocation towards TUs representing its labour force. Indeed, often no threat is necessary; it
may be enough to mention similar threats or relocating actions by other companies to induce
the counterpart to give more favourable condition to the bargaining company (Galgoczi
et al., 2007, p. 23).
Turning to (ii) – transnationality and power towards governments – the costs and
benefits in the relationship between companies and governments are complex. In each
country, successive governments provide the physical, legal and social infrastructures
within which companies operate and thrive or fail: from public transport and road networks
to laws regulating competition or labour markets or property or commercial disputes to
financial support for special industries to education of the labour force and to medical and
sanitary infrastructure to secure its health and wellbeing. However, governments also levy
taxes on profits and wider incomes and/or on sales/value added or on foreign trade. They
also develop regulations on: (a) safety of products for the protection of consumers and users;
(b) safety in the workplace for the protection of labourers; (c) environmental protection; and
(d) regulations on industrial policy designating sectors and activities to be encouraged or
discouraged via special concessions and subsidies or via higher rates of taxation for
example on VAT.
At the early stages of their planned investment in one or more foreign countries,
bargaining companies have leverage towards governments over some of these policy
areas. Increasingly, politician in potential host countries want to attract foreign
investment; big headlines about potential job creation hit the media and increase the
popularity of relevant politicians and their parties. Moreover, governments of different
potential host countries compete with each other in their bids. Competition takes the form
of special tax concessions or subsidies or relaxation on TUs regulations. The end gainers
of the process are the TNCs as companies that can plan, organize and strategically
manage across different countries facing agents – in this case the governments of host
countries – which do not co-ordinate with other nation states’ governments but are
fragmented and competing against each other. The TNC is bound to be the winner and
ends up having considerable cost advantages vis-a-vis the operations of comparable uni-
national companies and institutions.
As for (iii), power towards suppliers favours the TNC versus the large number of
potential suppliers scattered in many countries and competing with each other. The latter
compete against each other to get the contracts for supplying the foreign TNC. The nature of
the bidding between suppliers and a large contractor tends to be competitive for the
suppliers, whether the latter are all located within a single country or several. However, in The importance
the latter case, there are also social, legal and information constraints isolating them from of being . . .
each other. For example, sector’ associations tend to be common at the country level and less
so at the international level. Fragmentation of suppliers by nation-states once again favours
transnational
the company that can plan, organize and manage strategically across many countries.

3. The spatial and cultural dimensions of nation-states

In the discussion of the previous section, the emphasis was on a specific dimension of the
nation-state: the regulatory regimes dimension and how possible differences between
regulatory regimes of different nation-states can generate advantages for the TNCs. There is
another dimension of the nation-state of great relevance for the operations of TNCs: the
spatial dimension. Nation-states are characterized by their own spatial geography.
Some countries are spatially small – such as Portugal – some are large such as the USA. The
size of countries matters in economics and in business decisions because it affects the size of
the market and/or of the labour supply as well as transportation costs within the country.
The spatial dimension has the potential for further advantages by TNCs: operating in
several nation-states can potentially give TNCs two other types of advantages: risk
spreading and acquisition of knowledge. Operating in several countries spreads the risk of
disruption to production due to a variety of possible problems: from strikes to natural
calamities.
On the second issue, we note that each nation-state tends to have its own cultural
environment though there may not be uniformity within it; for example, the cultural
environment of northern Italy may have more similarities with that of Switzerland than the
one in some regions of southern Italy.
Several researchers have emphasized a cultural dimension, i.e. the relevance of
operations in diverse cultural, social and innovation environments for the acquisition of
knowledge (Cantwell, 1989, 2009; Castellani and Zanfei, 2002; Forsgren, 2017). Knowledge
acquisition may take place within each country of operation at the local level spreading from
the local environment to the local subsidiary of a TNC via its external networks of
customers, suppliers and consultants. It is then likely to spread across countries from
subsidiary to subsidiary and to headquarters via the internal network of the TNC.
The diffusion of knowledge is not a one-way traffic facilitated by internal and external
networks; it is a two-way process in which the TNC as a whole – through its subsidiaries –
acquires knowledge from the local environment, but it also facilitates the spillover of
knowledge from it to the local environment. The conduit for such spillovers is often labour
moving across different employers. Contacts with other agents, such as customers, suppliers
and collaborators, also play a considerable role. In helping to spread knowledge across space
and nation-states, the TNCs may be seen to generate potential and, often, real social value in
the countries in which they operate. We shall return to this issue in the last section.
Three further issues should be stressed at this point. Firstly, the various advantages
highlighted above are likely to lead to potential or real cost savings, and eventually, they
lead also to advantages towards rival companies and thus to overall market power.
Secondly, so far, I have stressed the advantages of transnationality; however, there are also
problems and disadvantages. The diversity of regulatory regimes and cultures across
various countries requires an initial effort and cost to acquire the relevant knowledge on
how to operate in different environments and cultures; there are costs, and there is
uncertainty to be reckoned with. The recent Covid-19 pandemic and the war in Ukraine –
both ongoing as I write – have highlighted the monetary and social costs of reliance on
suppliers from a myriad of institutions in a variety of countries, often far away. The third
CPOIB issue leading to limitations in exploiting advantages of transnationality derives from the
TNC’s difficulty in co-ordinating – and reconciling – the specific objectives of many units
and their managers scattered across several countries [6]

4. Interaction between dimensions

The regulatory regimes and the spatial dimensions interact with each other in several ways.
Firstly, in terms of regions within nation-states. Individual nation-states are often spatially
organized as regions that may have power to legislate on their own laws and regulations
regarding some of the issues discussed above. However, the differences in regulatory
regimes within nation-states – i.e. between regions of the same nation-state – are usually not
as wide and comprehensive as those between nation-states. They often refer to only some
aspects of the relevant laws and regulations. When we analyse the behaviour of
transnational companies, we tend to focus on their investment and activities in and across
nation-states and less so in and across regions of the same nation-state. Nonetheless, TNCs’
investment decisions take account of differences in regional regulatory regimes and are
likely to aim for location in specific regions of a nation-state [7].
A second interaction takes place via global value chains (GVCs) [8] in which components
produced in one country are transported to other(s) for further processing and assembly
before reaching the final product’s destination: its market. The spatial dimension and spatial
distance between countries affect transportation costs within and across them. The
relevance is particularly significant for companies that operate across countries in terms of
location of their investment for production of specific components internally or externally to
the company. The past few decades have seen considerable technological developments
leading not only to increased use of digital technology in all aspects of production and
management but also to decrease in transportation costs. All these developments have led to
increase in GVCs
The interaction between the spatial and the regulatory regimes dimensions in relation to
GVCs comes about for the following reason: spatial distance affects costs of transportation;
the regulatory regimes dimension affects the costs of production – for example, via labour
costs or less stringent regulation on environmental protection – as well as the overall
profitability via the incidence of taxation. The TNC’s top management must take account of
all these elements of cost and profitability in their decisions on where to locate components.
The Covid-19 pandemic and the current war in Ukraine have disrupted GVCs forcing a
reconsideration of the location of components of the production process. There has been
much discussion on whether this will eventually lead to shorter, closer-to-home supply
chains and to the reshoring of many activities. There are dissenting voices on the likelihood
of big changes in the location of GVCs (Antras, 2021).
A third type of interaction between the spatial and regulatory regimes dimensions relates
to the development of additional and alternative regulatory regimes within the space of the
nation-state itself but not linked to the regional structure. While noting that differences in
regulatory regimes may favour the location of some components in other countries far away
in terms of spatial, cultural and regulatory regimes distance, politicians and heads of
business have realized that distance between regulatory regimes can be created within the
same country via the establishment of so-called free zones (FZs).
FZ is used as a comprehensive term for export processing zone (EPZs), free trade zones
(FTZs) or investment zones (IZs). They are all territorial areas of investment and production
within the nation-state in which specific rules and regulations apply, which are different
from the standard ones at national level. The rules and regulations usually relate to taxation
and, at time, also to labour or industrial policy affecting the right to strike or special
concessions on loans or the use of land. In essence, artificial jurisdictional areas are created The importance
within the nation-state to attract investment by foreign TNCs. of being . . .
A specific case of IZs is that of post-Brexit UK. Alongside preoccupations with
interruptions in the supply chains, the past couple of years have seen, in post-Brexit Britain,
transnational
political discussions about successive Conservative Governments’ plans to establish/
increase IZs on UK soil. In other words, to try and attract direct investment by foreign
TNCs, legal engineering is applied to create different regulatory regimes within the UK, a
strategy dubbed by some critics as “Singapore on the Thames”. There are, in fact, some
negative effects of this overall strategy of competition to the bottom within the country
itself. They include the following: social problems regarding labour employed in the IZs
versus the rest of the labour force in the country; social, economic and foreign policy impact
of the relaxation of environmental laws in the IZs; the potential for development of so-called
round-trip investments [9].

5. Summary and conclusions

The paper starts from the article “The MNE as the ‘Crown of Creation’: A Commentary on
Mainstream Theories of Multi-national Enterprises” to develop an aspect not considered in
the article itself: an analysis of the sources of advantages by MNEs/TNCs. It posits that to
understand why the TNC may be considered as the “Crown of Creation”, we need to look for
special characteristics, not inside the company but outside it, specifically in its dealings with
institutions of nation-states.
The sources of advantages are seen as emanating from the existence of different
regulatory regimes across different nation-states as loci of different jurisdictions. The
transnationals as companies able to plan, organize and strategically manage across
frontiers, confront agents which, by their nature, history and institutional organization, are
not able to do so or not to the same extent as TNCs. This creates power imbalance in the
bargaining and gives an advantage to the TNC. Such advantage can then be turned also into
market advantage.
The regulatory regimes of relevance in the context of TNCs’ activities are those related
to: labour and social security regulations; taxation; currency; the environment; and
industrial policy. Bargaining with suppliers spread in different countries gives also an
advantage to the TNC. Moreover, operating in different countries gives the company the
following advantages: risk spread and access to diverse knowledge and innovation
environments. Against these advantages, Section 3 mentions possible extra costs, problems
and limitations from operations in several countries.
The above analysis has implications for theory, policy and research agendas. At the level
of theories, I feel that whatever the approach to explanations of the activities of firms, the
issue of regulatory regimes within nation-states should have a paramount role when
applying those theories to the TNC, i.e. to a company operating directly across nation-states.
In terms of policies, several conclusions derive from the above analysis. Institutions
within nation-states should try to co-ordinate more with the corresponding ones in other
nations-states and avoid being pitted against each other; for example, TUs in each nation-
state should strengthen their strategies of international co-ordination. Digitalization helps
companies to organize their production processes and the overall management of the
company across many nation-states and across many internal and external production units
within each nation-state. The very same technology can and should be used to support
institutions that engage in bargaining with it, such as TUs. The obstacles to further
progress are many, including cultural barriers and nationalistic feelings. Nonetheless, it can
CPOIB be done, and it is beginning to happen as reported by many sources (Pulignano, 2009;
Martinez Lucio, 2010; The Observer, 2014; Döellgast et al., 2015).
A further consequence that emerges from this analysis is that the more fragmented the
nation-state is in its bargaining, the more it is likely to lose. This is a conclusion against
separatist regional movements. The resulting autonomous region will establish its own
regulatory regime, and it will compete with its original country or other regions within it. In
other words, fragmenting the nation-state into separate regions is good for TNCs but less so
for the countries they operate in, its labour force, consumers or tax-payers.
Regarding the research agendas, there are, of course, many areas that need further
research. I shall here refer to a specific issue touched on in Section 3: the creation of social
value. It is an issue in which there is an increasing amount of interesting literature in a
variety of disciplines [10] brought about by social problems linked to the recent Covid-19
pandemic as well as the social and economic problems emerging – and expected to increase
– from climate change. Transnational companies have risen high on this social value
discussion because of their power and potential as economic operators and because of their
operations at the interface with nation-states and across them.
Does the approach developed in the previous pages give us any possible clue on whether
we can expect TNCs to be harbingers of social value creation? As mentioned on one specific
issue – the spread of knowledge across nation-states – the potential is there, and there is also
potential for the destruction of social value. TNCs are certainly value creators on a global
scale; they are also generators of many of the problems we have currently: from
environmental damage to sickness (on which we see smoking and cancer; diet and heart
diseases; and pollution and asthma). In the approach we presented, the emphasis is on the
power of TNCs in bargaining with governments of nation-states or with TUs or suppliers in
each nation-state they operate in. The ultimate goal of TNCs as privately-owned companies
is not to create social value but to create private, shareholders and managers’ value. In the
process towards achieving their private aims, the TNCs may also create or destroy social
value. It is the task of governments to see that social problems are addressed and social
value created.
Nonetheless, in this conundrum, we can insert third parties’ operators: consumers and
users of TNCs’ products on one side and electors of politicians whose task it is to bargain
with TNCs on the other side. If these two groups put significant pressure respectively on the
TNCs – to devote some of their resources to creating social value – and to politicians – to
address social value problems in bargaining with TNCs or risk not being re-elected – then
we can make inroads into the social value agendas.
The pressure of third parties’ operators could just be to induce governments of various
nation-states to cooperate in negotiating together with TNCs. A recent example of this gives
some glimmer of hope for the future. For years researchers in international institutions have
been aware of the low taxation that digital TNCs were able to pay in the vast majority of the
countries in which they operated and raised large revenues. Pressures from below led to
discussions in many countries on how to address the problem, which was eventually taken up
by researchers at the Organization for Economic Cooperation and Development (OECD) [11].
They developed a feasible framework to overcome the problem of so-called Base Erosion and
Profit Shifting in taxation. Some EU countries – specifically France – threaten to go it alone in
taxing revenue rather than profits. Revenue is easily ascertainable in each country; profits are
not because costs can easily be shifted from high tax-rate countries to low tax-rate ones. The
shifting of costs across countries – the so-called manipulation of transfer prices – is a well-
known strategy (Eden, 2019; OECD, 2010) by most if not all TNCs. In the case of digital
companies, the problem is heightened and exacerbated by the fact that it is more difficult to
ascertain to which jurisdiction specific company’s costs pertain: after all, work to sort out The importance
problems in country X can be done remotely anywhere else. of being . . .
Eventually, the G20 countries embraced the OECD proposed framework and arrived at
the following joint decision: profits of companies with revenue of over e20bn and profit-to-
transnational
revenue ratios of over 10% would be taxed in their entirety in the home country of the
digital TNC. The fiscal revenue will be distributed to each host country in proportion to their
own revenue and on the assumption that the corporation rate of taxation would be no less
than 15% in each country. A definite case of governments of different countries sticking
together in bargaining with powerful TNCs. It shows that it is possible and that pressure
should be put on politician throughout the world to make it a more common feature.
However, before we become too optimistic, we must note two obstacles. The first one is
ongoing and affects the start of the scheme: some countries object to the minimum 15%
corporation tax. The second is what I would expect to happen: i.e. that clever accountants
will work worldwide to bypass the regulation on digital taxation. They will be able to
develop strategies in this direction. I can already see a possible weak point in the proposal:
smaller digital companies will not be subject to the regulation. Are we likely to see a
proliferation of small companies emerging from – and owned by – the large digital ones?

Notes
1. In the evolutionary theory the authors include the one by Kogut and Zander (1993, 1996 and
2003) – based on social elements – though not the one by John Cantwell based on innovation and
technological advantages (Cantwell, 1989). The reason for its exclusion is given in their end note
iv.
2. F&Y’s paper uses the expression multi-national enterprise (MNE). On the whole, I prefer the
adjective transnational to emphasize that the key element of their activities is the ability of
operating across nation-states and not just in many of them. In this article the terms will be used
interchangeably.
3. On the power to make strategic decisions and to exercise control, see Zetlin (1974) and Cowling
and Sugden (1998).
4. There are exceptions: Sugden (1991) further developed in Peoples and Sugden (2000) and both
with origin in Cowling and Sugden (1987); Ietto-Gillies (2007 and 2019: Ch. 15).
5. Following several mergers, the Fabbrica Italiana Automobili Torino (FIAT) is now part of
Stellantis headquartered in Amsterdam and established in 2021 from the merger between FIAT
Chrysler Automobiles and the French PSA Group.
6. This last point was suggested by a reviewer of this journal.
7. The issue of TNCs’ activities and variety of geographies is addressed in Iammarino and McCann
(2013: Ch. 13).
8. The literature on GVCs is huge. I refer the reader to the following few: (United Nations
Conference on Trade and Development (UNCTAD), 2013; Gereffi and Fernandez-Stark, 2016;
Forsgren, 2017; Ponte et al., 2019; Humphrey, 2019; Sinkovics and Sinkovics, 2019).
9. In the practice of round-trip investments, a company registered in country A establishes a new
company in country X and endows it with relevant capital. The latter company can then invest in
country A and this will be foreign investment therefore entitled to special treatment of
concessions and low taxation (Sutherland and Ning, 2011). Similar issues are considered in
United Nations Conference on Trade and Development (UNCTAD) (2015).
10. See Sinkovics and Archie-Achempong (2020) as well as Dörrenbäch et al. (2021).
CPOIB 11. The issue of fair taxation of TNCs’ profits world-wide had been of interest to the OECD for some
time. See OECD (2010).

References
Antras, P. (2021), “De-Globalisation? Global valuer chains in the post-covid-19 age”, ECB Forum:
‘Central Banks in a Shifting World, Conference Proceedings.
Balcet, G. and Ietto-Gillies, G. (2020), “Internationalization, outsourcing and labour fragmentation: the
case of FIAT”, Cambridge Journal of Economics, Vol. 44 No. 1, pp. 105-128.
Cantwell, J.A. (1989), Technological Innovation and Multi-national Corporations, Blackwell, Oxford.
Cantwell, J.A. (2009), “Location and the multi-national enterprise”, Journal of International Business
Studies, Vol. 40 No. 1, pp. 35-41.
Cowling, K. and Sugden, R. (1998), “The essence of the modern corporation: markets, strategic decision-
making and the theory of the firm”, The Manchester School, Vol. 66 No. 1, pp. 59-86.
Castellani, D. and Zanfei, A. (2002), “Multi-national experience and the creation of linkages with local
firms: evidence from the electronics industry”, Cambridge Journal of Economics, Vol. 26 No. 1,
pp. 1-25.
Cowling, K. and Sugden, R. (1987), Transnational Monopoly Capitalism, Wheatsheaf, Brighton.
Döellgast, V., Sarmiento-Mirwaldt, K. and Benassi, C. (2015), “Union campaigns to organize across
production networks in the European telecommunications industry: lesson from the UK, Italy,
Sweden and Poland”, in Jan, D. (Ed.), The Outsourcing Challenge: Organizing Workers across
Fragmented Production Networks, The European Trade Union Institute, Bruxelles, Ch. 8,
pp. 177-98.
Dörrenbächer, C., Sinkovics, R.R., Becker-Ritterspach, F., Boussebaa, M., Curran, L., de Jonge, A. and
Khan, Z. (2021), “The Covid-19 pandemic: towards a societally engaged IB perspective”, Critical
Perspectives on International Business, Vol. 17 No. 2, pp. 149-164, doi: 10.1108/cpoib-02-2021-
0021.
Eden, L. (Ed.) (2019), The Economics of Transfer Pricing, Edward Elgar Publishing, Cheltenham, UK
and Northampton, MA, USA.
Forsgren, M. (2017), Theories of the Multi-national Firm: A Multidimensional Creature in the Global
Economy, 3rd ed., Edward Elgar Publishing, Cheltenham and Northampton, MA.
Forsgren, M. and Yamin, M. (2022), “The MNE as the ‘crown of creation’?: A commentary on
mainstream theories of multi-national enterprises”, Critical Perspectives on International
Business, Advance online publication, doi: 10.1108/cpoib-05-2022-0048.
Galgoczi, B., Keune, M. and Watt, A. (2007), “Relocation: challenges for European trade unions”,
Working Paper 03, European Trade Union Institute for Research, Education and Health and
Safety (ETUI-REHS).
Gereffi, G. and Fernandez-Stark, K. (2016), “Global value chain analysis: a primer”, Center on
Globalization, Governance and Competitiveness at the Social Science Research Institute,
available at: www.slideshare.net/ClipConectaDEL/global-value-chain-analysis-by-gary-gereffi-
karina-fernandezstark,Duke
Humphrey, J. (2019), Global Value Chains, Edward Elgar, Cheltenham and Northampton, MA.
Hymer, S.H. (1960), The International Operations of National Firms: A Study of Direct Foreign
Investment, 1976 Edition, MIT Press, Cambridge, MA.
Iammarino, S. and McCann, P. (2013), Multinationals and Economic Geography: Location, Technology
and Innovation, Edward Elgar Publishing, Cheltenham, UK and Northampton, MA, USA.
Ietto-Gillies, G. (2007), “Theories of international production: a critical perspective”, in Critical
Perspectives on International Business, Vol. 3 No. 3, pp. 196-210.
Ietto-Gillies, G. (2019), Transnational Corporations and International Production, Edward Elgar, The importance
Concepts, Theory, Effects, Cheltenham, UK and Northampton, USA.
of being . . .
Kindleberger, C.P. (1969), American Business Abroad, Yale University Press, New Haven, CT.
transnational
Kogut, B. and Zander, U. (2003), “A memoir and reflection: Knowledge and an evolutionary theory of
the multi-national firm 10 years later”, Journal of International Business Studies, Vol. 34 No. 6,
pp. 505-515.
Kogut, B. and Zander, U. (1993), “Knowledge of the firm and the evolutionary theory of the multi-
national corporation”, Journal of International Business Studies, 4th quarter, Vol. 24 No. 4,
pp. 625-645.
Kogut, B. and Zander, U. (1996), “What do firms do? Coordination, identity and learning”, Organization
Science, Vol. 7 No. 5, pp. 502-518.
Martinez Lucio, M. (2010), “Dimensions of internationalism and the politics of the labour movement.
Understanding the political and organizational aspects of labour networking and co-ordination”,
Employee Relations, Vol. 32 No. 6, pp. 538-556.
Organisation for Economic Co-operation and Development (OECD) (2010), Transfer Pricing Guidelines
for Multi-national Enterprises and Tax Administrators, OECD, Paris.
Peoples, J. and Sugden, R. (2000), “Divide and rule by transnational corporations”, in Pitelis, C.N.
and Sugden, R. (Eds), The Nature of the Transnational Firm, 2nd ed., Routledge, London,
pp. 92-174.
Ponte, S., Gereffi, G. and Raj-Reichert, G. (Eds) (2019), Handbook on Global Value Chains, Edward Elgar
Publishing, Cheltenham, doi: 10.4337/9781788113779.
Pulignano, V. (2009), “International cooperation, trans-national restructuring and virtual networking in
Europe”, European Journal of Industrial Relations, Vol. 15 No. 2, pp. 187-205.
Sinkovics, N. and Archie-Acheampong, J. (2020), “The social value creation of MNEs – a literature
review across multiple academic fields”, Critical Perspectives on International Business, Vol. 16
No. 1, pp. 7-46, doi: 10.1108/cpoib-06-2017-0038.
Sinkovics, N. and Sinkovics, R.R. (2019), “International business and global value chains”, in Ponte, S.,
Gereffi, G. and Raj-Reichert, G. (Eds), Handbook on global value chains, Edward Elgar,
Cheltenham, UK, pp. 417-431, doi: 10.4337/9781788113779.00035.
Sugden, R. (1991), “The importance of distributional considerations”, in Pitelis, C.N. and Sugden, R.
(Eds), The Nature of the Transnational Firm, Routledge, London, pp. 93-168.
Sutherland, D. and Ning, L. (2011), “Exploring ‘onward-journey’ ODI strategies in China’s
private sector business”, Journal of Chinese Economic and Business Studies, Vol. 9 No. 1,
pp. 43-65.
The Observer (2014), “US fast food workers battle McDonald’s as franchise ruling opens way to better
wages”, 3rd August, p. 20.
United Nations Conference on Trade and Development (UNCTAD) (2013), World Investment Report
2013, Investment and Trade for Development,. Global Value Chains, United Nations,
Geneva.
United Nations Conference on Trade and Development (UNCTAD) (2015), World Investment Report
2015. Reforming International Investment Governance, United Nations, Geneva.
Zaheer, S. (1995), “Overcoming the liability of foreignness”, Academy of Management Journal, Vol. 38
No. 2, pp. 341-363.
Zaheer, S. (2015), “Overcoming the liability of Foreignness”, in Buckley, P. and Ghauri, P. (Eds),
International Business Strategy, Theory and Practice, Routledge, London, pp. 362-380.
Zetlin, M. (1974), “Corporate ownership and control: the large corporation and the capitalist class”,
American Journal of Sociology, Vol. 79 No. 5, pp. 1073-1119.
CPOIB About the author
Grazia Ietto-Gillies is an Emeritus Professor of Applied Economics at London South Bank University
and a Research Fellow at the CIMR, Birkbeck University of London. She has researched widely on
transnational corporations and on internationalization issues, including the development of
internationalization indices. She has also contributed to research on: internationalization and
innovation; de-industrialization of UK economy; digital economy and the concept of a transnational
corporations; digitalization and the changing structure of sectors; probability and economics in
the work of Bruno de Finetti; and the peer review system of research assessment. She has
published several books and many papers in refereed journals. Grazia Ietto-Gillies can be contacted
at: g.iettogillies@yahoo.co.uk

For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: permissions@emeraldinsight.com

View publication stats