African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4092

Full Length Research Paper

Enterprise individual characteristic and analysis framework of transnational corporations (TNCs’) origin and formation: Empirical study on Chinese listed companies from 2001 to 2009

  Xiaoguang Lu*, Yanhong Zhou and Qingchun Lu    
  Business School, Hohai University, Nanjing, P. R. China.
Email: [email protected]

  •  Accepted: 29 August 2011
  •  Published: 23 November 2011

Abstract

 

Based on the practice of transnational corporations (TNCs) and theories of new classical economics and new institutional economics, we demonstrated that the necessary condition for establishing TNCs is factor endowments dominance (FED) at the macro level, and the sufficient condition for establishing TNCs was enterprise individual characteristic at the micro level. On these grounds, an analysis framework of TNCs’ origin and formation was constructed, namely, in an imperfect competitive market, international business develops from the potential profits produced by bi-directional FED between host countries and home country. Corporations with enterprise individual characteristic could gain potential profits derived FED by establishing TNCs, when the transaction cost of establishing TNCs was lower than that of international trade. This paper adopted panel data of Chinese listed companies’ annual statement from 2001 to 2009. Then, we used interacting multivariate analysis of variance (MANOVA) for the empirical study. It was concluded that the analysis framework was effective, advantage of operation scale was common feature of enterprise individual characteristic and different types of TNCs had their own special features.

 

Key words: Transnational corporation (TNCs), enterprise individual characteristic (EIC), international business (IB), factor endowments dominance (FED), analysis framework, multivariate analysis of variance (MANOVA).