ABSTRACT
Investigations of the role of the multinational firm have been mainly exercises in microeconomics. A growing body of scholars has examined the multinational firm’s financial and entrepre neurial behaviour in the face of a myriad of intercountry dif ferences in laws, regulations, economic and geographic conditions. Detailed empirical investigations have been undertaken to identify and explain the conditions under which the firm raises capital in different markets, transfers funds between currencies, and engages in production in different localities. Some writers have suggested the notion of stages of development which describe, albeit imprecisely, when the firm begins to establish branch plants in a country instead of exporting to that market from some other country. Among the factors influencing the location of production are economies of scale, the technological lag between countries in the production of new products, and the role of tariffs and quotas in protecting firms which could not otherwise survive foreign competition. As a result of these empirical studies, (e.g. Horst, 1972a and Klein, 1973), we have been led to accept the idea that the multinational firm is indeed a vehicle for the transfer of capital and technology between countries.
