Multinational Or Transnational Enterprise Is An Enterprise Essay

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“Multinational or transnational enterprise is an enterprise that engages in foreign direct investment(FDI) and owns or, in some way, controls value-added activities in more than one country.” is described by Dunning(2008). By contrast to domestic firms, MNE have to deal with some unique risks such as foreign exchange risks(like the volatile currencies) and political risks (like macro risk of expropriation), but interestingly those risks also could arise a positive effect on motivating companies to invest abroad for achieving the goal of shareholder wealth maximization. According to definition of MNE, the main motives for transnational enterprises to invest abroad come from FDI rather than foreign portfolio(or indirect) investment as MNEs are investors who still hold the ownership of transferred assets and not only transfer the financial capital but also other resources. These motives of FDI could be divided to 4 main types by Dunning & Lundan (2008), which are taken by MNE to promote objectives of strategies(proactive actions) or to maintain their market position as the impact of government or competitor(defensive actions): 1.natural resource seeking: the MNE are motivated to acquire specific types of resources, which could be with greater quality or lower cost from host countries than resources from home countries. These resources could be split to 3 main kinds: first is physical resources which tend to be location specific and maybe not available at home (like minerals,
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