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Sources of information and problems in establishing a list

Multinational Business Enterprises: A New Category of International Organizations (Part #4)

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The most serious difficulty in establishing any list of multinational corporations is the lack of published information on corporations throughout the world which covers the items mentioned in the possible criteria above. Very few directories give an indication in detail of the number of countries in which a parent company has affiliates and the extent to which these affiliates are in fact controlled by the parent. The relationship between parent, subsidiary, branch and sub-subsidiary is normally very difficult to follow through. A final difficulty is the rapid change in the situation from month to month as subsidiaries are sold or parent companies merge or are taken over by other companies,

It would have been possible to attempt to send questionnaires to a wide selection of companies but the results obtained would have required a considerable amount of analysis to permit comparison. The percentage of answers would not have provided the basis for a complete selection.

The alternative chosen was to analyse information already available in published form to provide a preliminary list of possible multinational corporations which could be used as the basis for a more critical list in a subsequent edition of the Yearbook. The directory which proved suitable to this program was ' Who Owns Whom '. This lists approximately 120,000 affiliate companies throughout the world whose 16,000 parents have their headquarters in the major European countries and the USA. It also indicates whether the affiliate is wholly owned or controlled (i.e. a " subsidiary ') or represents only a non-controlling-financial interest (i.e. an ' associate '}. The other types of parent-daughter relationship are covered by these two terms which are defined in detail below. The main advantage of using this directory was that it included all categories of business enterprises, not just manufacturing enterprises as do the majority of directories of this type.

The choice of the first source was based on the assumption that a multinational corporation must, in terms of each national legislation, form at least one subsidiary in each foreign country in which it operates directly. By checking the location of subsidiaries a direct count of the number of countries should be obtained.

The main disadvantage of this directory is that it did not cover all the major industrialized countries. No information was available in comparable form on Canadian and Japanese parent companies and their affiliates. In addition the information on the U.S. parent companies was restricted to details on their European affiliates. Since the U.S. parent companies are considered to be the major group of potential multinational corporations, a second source of information was required.

The only suitable directory which could be located that was not restricted to one type of entreprise was the ' Directory of American Firms Operating in Foreign Countries '. This listed the countries in which 4,000 American parent companies had approximately 14,000 affiliates. The disavantage of this directory was that only the 1966 edition was available. It was possible to update the information on European affiliates by making use of the first directory, which was available in a 1968 edition. In addition this directory did not make any comparable distinction between subsidiaries, associates and branches.

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