The Internationalization of Business

The multinational firm which has evolved as the central institution in the tremendous postwar expansion of international business has two basic roles: transmission of resources, especially technological and managerial skills; and organization of unified multi-nation economic activities, notably in fields where there are advantages from the global integration of research and development, logistics, and financing. In pursuit of these roles the multinational firm encounters fundamental obstacles in nationalism and the structure of the nation-state. Nationalistic resistance to outsiders is aroused by the multinational firm which penetrates host nations, exercising control and extracting profits. Its global approach to economic decisions is often at odds with the nation-oriented criteria of governments. Furthermore, its control of critical economic elements, notably technology and investment, weakens the ability of elites to control their own national affairs. Despite these obstacles the multinational firm has expanded steadily because of the basic values of its economic contributions. It seems likely that this progress will continue with a gradual evolution of effective accommodation with nationalism and the nation-state even though there may be periods of greater tension along the way.