Difference Between Multinational and Transnational

In the word multinational, multi means many, and national means state. So initially, it means many states. This defines that the companies which handle their business in more than one country at the same time are known as multinational companies.

In a transnational company, there is one company which starts its business with one name, and then this company would also get expanded in other countries but, they do not have any main company which would keep a track and hold of it.

Comparison Table Between Multinational and Transnational

Parameters of ComparisonMultinationalTransnational
Home companyIn a Multinational company, there exists a main company.In a transnational company, there is no existence of any kind of main company.
ManagementThere is a centralized system of management that is followed in a multinational company.There is no centralized system of management that is followed in a transnational company.
BarriersIn Multinational companies, they may undergo some barrier, when it comes to decisions to be made for their company.In transnational companies, they are free to make decisions as per their needs of the operating company.
Subsidiary companiesA multinational company has many subsidiary companies under it.A transnational company does not have any subsidiary company under it.
WorkingIn a multinational company, the working is carried out for all the companies as a whole.In a transnational company, the working is carried out for that specific operating country only.

What is Multinational?

In the word multinational, multi means many, and national means state. This defines that the companies which handle their business in more than one country at the same time are known as multinational companies.

A company becomes a multinational company when it Incorporates its businesses in any one country and later expands its company in many other countries.

Having a management system that is centralized means that all the important decisions regarding the functioning of all the companies under that name are taken by the main company.

What is Transnational?

In a transportation company, there is one company which starts its business with one name, and then this company would also get expanded I’m other countries but, they do not have any main company which would keep a track and hold of it.

Therefore they act as all different companies, and the decisions taken regarding the functioning of every transnational company are taken according to the objective of that specific company and not all the companies as a whole.

It is also often observed that the company operated under a transnational company isn’t loyal when it comes to maintaining and carrying the same type and amount of budget as the main company.

Main Differences Between Multinational and Transnational

  1. A multinational company has many subsidiary companies under it, and on the other hand, and a transnational company does not have any subsidiary company under it.
  2. In a multinational company, the working is carried out for all the companies as a whole, and on the other hand, in a transnational company, the working is carried out for that specific operating country only.

Conclusion

Both multinational as well transnational companies operate all over the world, having foreign investors. The only difference is that one has a centralized system of management and the other videos not. One has a barrier in making decisions regarding its enterprise, and the other does not.

For one to make their company have a national-level reach, they need to understand the concept of a multinational as well as a transnational company and manage their functioning as per that. Multinational companies are more loyal as a whole as compared to transnational companies when it comes to working together.

References

  1. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/colhr37&section=13
  2. https://www.jstor.org/stable/1339838

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