The defining characteristic of a multinational company (MNC), also known as a multinational enterprise (MNE), is that it owns, controls, and manages income-generating assets and operations in more than one country. This involves foreign direct investment (FDI), where the company establishes a physical presence abroad, such as factories, sales offices, or subsidiaries. This direct operational control in a foreign country is the primary feature that distinguishes an MNC from a domestic company, which confines its operations to its country of origin.

A. A domestic company can have foreign stockholders through international portfolio investment; this does not make it a multinational operator.

B. A company that only exports its products is an international company, but not necessarily a multinational one, as it lacks direct operational presence abroad.

D. Using foreign raw materials describes an international supply chain, which a purely domestic company can utilize without having operations in other countries.

1. Dunning

J. H.

& Lundan

S. M. (2008). Multinational Enterprises and the Global Economy (2nd ed.). Edward Elgar Publishing. In Chapter 1

an MNE is defined as "a firm that owns and controls value-adding activities in more than one country" (p. 4). This directly supports the concept of operating outside the country of origin.

2. Daniels

J. D.

Radebaugh

L. H.

& Sullivan

D. P. (2018). International Business: Environments and Operations (16th ed.). Pearson. Chapter 1 distinguishes between different forms of international business

defining a multinational enterprise (MNE) as a company that "takes a global approach to markets and production... It is willing to consider markets and production in any country... [and has] foreign direct investments." This emphasizes active operations and investment

not just trade.

3. OECD. (2008). OECD Benchmark Definition of Foreign Direct Investment (4th ed.). OECD Publishing. Section I

Paragraph 5

states that FDI reflects the objective of establishing a "lasting interest" and a "long-term relationship" where the investor has a "significant degree of influence on the management" of the foreign enterprise. This level of control and management is synonymous with "operating" in another country.