The Rise of Multinational Corporations - Essay Example

A discussion on whether these efforts have been successful shall also be carried out. Body Multinational corporations have been defined based on the fact that their business usually spans other borders or countries. During ancient times, these borders were between Greek city-states, and the activities of imperial Rome were the early beginnings of corporations. However, the political borders at this point proved to be stronger boundaries and defining traits for these associations. The rise of multinational corporations is nevertheless linked with the early beginnings of trade among cultural groupings, and these communities are still important in making up the various sectors of the trading community.

Early trade has been seen with the exchange of goods across neighbouring towns and borders and trade activities have been supported by the limitations in resources across the regions. Some areas have been considered rich in vegetation and in fruit trees, and others rich in copper or metal. Since all these resources are essential to survival, trading became a useful tool for business. Travels across long distances among traders have also been seen because of these differences in resources. Silent trade became one of the common practices among traders, and the strong demand for goods from other towns or regions were gradually filled by these trade activities.

Such trading activities persisted and evolved throughout the years until much profit was eventually seen from such foreign trade. With difficulties in availing some foreign products, the price of trading increased. Early solutions to this shortage and business dilemma saw the initial stirrings of multinational corporations. These MNCs were able to establish transactions within their boundaries. Fairs became one of the solutions, and the traders met their customers in one place. The Romans were soon prompted to establish commercial laws to govern these transactions.

This gave the traders more legal options in trading, and this gave the traders another means of monitoring their products. In order to ease the transacting processes, partnerships were established. This started the process of investments made on these trading activities, and the corporations allowed capital investments by outsiders, with the prospect of future shares in the profits. In the 19th century, the limited liability rule was seen, along with the reduced impact of the state as a means of limiting the growth of the joint-stock and as a result, the multinational corporations expanded to Europe and to the US.

The motivation to invest overseas was seen as profitable because of the banking and bond markets. The needs of the growing railroad system also established a market for the sale of railroad bonds9. With the increasing wealth and power of the western nations, massive foreign investments were seen in the 19th and on to the early 20th century. This marked the start of the globalization trends10. The UK has been known to export about 25% of its capital before WWII, and France has been known to invest in foreign ventures to an even greater percentage.

These investments were directed towards countries that were eager to benefit from the industrial revolution already taking place in the west. Britain invested in South and North America, and the label is known as the free-standing company was established as a kind of investment seen in the British territories.