The Governance of Transnational Firms: some preliminary hypotheses

Despite the tremendous importance of transnational firms in the world economy, relatively little is known about the structure of their boards and how they are governed. Four hypotheses, suggested by intuition and the general literature, are examined: that the composition of boards of large transnationals is likely to be substantially different from that of national boards; that boards of transnationals will take a leadership role in dealing with social and economic issues that transcend national boundaries; that boards of subsidiaries of transnationals are playing an increasing role in the general operations of transnationals; and that boards of transnationals will show a larger concern for stakeholders than boards of national firms. On the basis of very limited data it is concluded that all hypotheses are false. Moreover, based on Canadian experience, it is suggested that the strategy of many large transnationals of eliminating the boards of subsidiaries may be a major mistake. Finally, a request is made for anyone wishing to participate in a large research project on the governance of transnational corporations to contact the authors.