Difference Between Similar Terms and Objects

Difference Between Multinational and Transnational

Various factors such as modern, affordable and reliable communication technology have made it easy for companies to operate in other countries apart from the mother country. International corporations are classified based on business structure, products and services offered and also investment type. Examples of international corporations based on business structure include multinational and transnational corporations. These two form the base in international business operations. Because they operate under similar conditions, multinational and transnational corporations are sometimes labeled as one. This, however, should not be the case as they have various differences.


What is Multinational?

This is a corporation that has assets and facilities in one or more countries, other than the home country, and has a centralized office where global management is coordinated. Decision making hence affects all the subsidiaries globally.


What is Transnational?

These are corporations which operate in other countries, other than the home country, and do not have a centralized management system. Decisions are hence made to suit the operating zone. Similar firms operating in other countries cannot be referred to as subsidiaries, since the management system is not centralized. Transnational companies are also not loyal to the operating country’s value system, but are focused on business expansion.


Similarities between Multinational and Transnational

  • Both have foreign affiliates and operate globally
  • Both have local services as well as production hence affect employment, standards of living and household incomes


Differences between Multinational and Transnational


Multinational refers to a corporation that has assets and facilities in one or more countries, other than the home country, and has a centralized office where global management is coordinated. On the other hand, transnational refers to a corporation which operates in other countries, other than the home country, and do not have a centralized management system.


While multinationals have subsidiaries in other countries, a transnational does not have subsidiaries in other countries. 

Decision making

Decision making in a multinational is made in the mother country and should be effected in all the subsidiaries globally. On the other hand, decision making in a transnational is made by individual transnational corporations.

Local markets

Multinationals face restrictions when it comes to local markets since they have centralized management systems. On the other hand, transnational companies are free to make decisions independently based on local markets.

Multinational vs. Transnational: Comparison Table


Summary of Multinational vs. Transnational

While both multinational and transnational corporations operate globally, multinational corporations have a centralized global management system while transnational corporations do not have a centralized management system. For this reason, business decisions occur at different levels. This limits decisions that can be made by individual multinational corporations. Both, however, are major contributors to economic development through the provision of goods and services as well as employment creation.


Sharing is caring!

Search DifferenceBetween.net :

Email This Post Email This Post : If you like this article or our site. Please spread the word. Share it with your friends/family.

Leave a Response

Please note: comment moderation is enabled and may delay your comment. There is no need to resubmit your comment.

References :

[0]Dunn C & Bornschier V. The Future of Global Conflict. SAGE Publishers, 1999. https://books.google.co.ke/books?id=WaSZ9MG8b9EC&pg=PA180&dq=difference+between+multinational+and+transnational&hl=en&sa=X&ved=0ahUKEwiKkqqtxtniAhV9SxUIHQCiDGsQ6AEITTAH#v=onepage&q=difference%20between%20multinational%20and%20transnational&f=false

[1]N. Anguelov. Policy and Political Theory in Trade Practice: Multinational Corporations and Global Governments. Springer Publishers, 2014. https://books.google.co.ke/books?id=BP2nAwAAQBAJ&pg=PT8&dq=difference+between+multinational+and+transnational&hl=en&sa=X&ved=0ahUKEwiKkqqtxtniAhV9SxUIHQCiDGsQ6AEIPTAE#v=onepage&q=difference%20between%20multinational%20and%20transnational&f=false

[2]Dunning John. The Multinational Enterprise (RLE International Business). Routledge Publishers, 2013. https://books.google.co.ke/books?id=t4Qnj7TUXeMC&printsec=frontcover&dq=difference+between+multinational+and+transnational&hl=en&sa=X&ved=0ahUKEwiKkqqtxtniAhV9SxUIHQCiDGsQ6AEIMjAC#v=onepage&q=difference%20between%20multinational%20and%20transnational&f=false

[3]Image credit: https://pixabay.com/de/illustrations/gesch%C3%A4ft-global-unternehmen-3443608/

[4]Image credit: https://commons.wikimedia.org/wiki/File:Multinational_corporation_-_panoramio.jpg

Articles on DifferenceBetween.net are general information, and are not intended to substitute for professional advice. The information is "AS IS", "WITH ALL FAULTS". User assumes all risk of use, damage, or injury. You agree that we have no liability for any damages.

See more about : ,
Protected by Copyscape Plagiarism Finder