Human Rights and the Multinational Corporation

A multinational corporation (MNC) is defined simply as a company that owns property or operates in at least two countries. Today, such corporations are common and take many forms (Muchlinski, 2007). Smaller MNCs may operate in only two countries and engage primarily in cross-border trade. Others may operate across a broader regional area. Increasingly MNCs do not merely own facilities or otherwise control production in multiple locations but operate subsidiary companies abroad. This may be for the purposes of selling in new markets, such as the parent company Starbucks coffee owning a subsidiary in China with the same branding and products. Subsidiaries also allow companies to enter new sectors, with Starbucks having owned subsidiaries producing bottled water, a record label, and a bakery chain. Subsidiaries can serve a third purpose of separating assets to reduce liabilities or to minimize tax liabilities, following the possibilities for profit maximization contained within company law. Another type of MNC is the investment fund or private equity firm. These are companies that invest in or purchase other companies, either because they are a good immediate investment or because the managers believe the company has untapped potential. Blackstone, a self-described ‘investment business’ that combines private equity purchases with hedge fund investments, claims on its website to ‘support’ over 200 companies. These firms will have a constantly rotating portfolio of companies under their management and the buying and selling, merging and splitting, of companies is a core part of their business strategy.