The Study On The Building Of Transnational Operating Capabilities Of TNCs

The contemporary Transnational Corporations (TNCs) are playing an important role in the global economic development. Meanwhile, the TNCs are showing obvious characteristics, the forms of expression of their strong transnational operating capabilities. The transnational operating capabilities of TNCs are defined as the capabilities to acquire, combine and transfer original resources and apply the capability resources to compete with competitors in a scope wider than one country. It is the transnational operating capabilities that determine whether or not a TNC can gain the competitive advantages in the global competition. The study on the building of the transnational operating capabilities of TNCs is an important part of the studies of the developing mechanisms of TNCs.1The real theory about TNCs emerged in the middle of the 20th century in the United States. At that time the practice of TNCs called for the theories of TNCs and also provided the researchers with the necessary conditions of studies. The traditional theories can be divided into four categories, ie the theories based on the industrial organization theory, the theories based on the international trade theory, the eclectic theory of international production and the theories based on the management and strategy theory. In the first category, the theory of monopolistic advantage makes a breakthrough in the hypotheses of perfect competition, sufficient information and immobility of productive factors between countries. This theory puts its emphasis on the advantages which are brought to an enterprise by various imperfect markets and can be transferred from one country to another and makes a proposition that the foreign direct investment is a favorable method for the enterprise to exploit these advantages. The theory of intemalization incorporates the concept of transaction cost into the TNC theory and particularly emphasizes the imperfection of intermediary markets especially the market of knowledge product. According to this theory, an enterprise becomes a TNC when it uses its internal market to overcome this kind of market imperfection and the intemalization goes beyond one country. In the second category, the product cycle hypothesis explains the foreign operating behaviors of TNCs by the comparative advantages that an enterprise possesses when its products are at different stages. An enterprise arranges its production in different countries according to the technology, market and cost conditions in new product stage, maturing product stage and standardized product stage, thus foreign direct investment takes place. The marginal industry expansion theory is a theoretical framework which supposes that a domesticindustry with the comparative disadvantage, decided by higher production cost in mother country than in host country, should be transferred to the host country. Foreign investment and foreign trade are complementary. The eclectic theory of international production, also known as the three advantages paradigm, combines the theory of monopolistic advantage, the theory of internalization and the theory of location advantage into a system with an eclectic method, thus forms a theory to explain the foreign direct investment behaviors of an enterprise. The last category, mainly including the value chain theory and the oligopolistic reaction theory, represents a new direction of development of the TNC theory. Because of the abundant achievements, the existing theories about TNCs pave a broad way for the succeeding studies in this area. But there is a clear shortcoming in these theories. They fail to integrate the study of the existing mechanisms of TNCs with the study of the developing mechanisms of TNCs effectively.The transnational operating behaviors of TNCs are always related with the operating environment that consists of political environment, economic environment, social and cultural environment, scientific and technological environment and policy environment. The characteristic of the current operating environment can be simply expressed b...