Purpose – The purpose of this paper is to analyse the role that the nation-state plays on the behaviour of the transnational companies (TNCs) and how it affects our view of TNCs as efficiency versus strategy driven. Design/methodology/approach – Starts with a brief historical analysis of the main theories of international production and the TNCs to which it then relates the role of the nation-state and of strategic approaches to explanations. Findings – The characteristics of the nation-states that affect the behaviour of TNCs are linked to their regulatory regimes regarding fiscal, currency and social security regulations. These create opportunities for advantages of operating across frontiers and thus for specific strategic behaviour towards labour and governments. Research limitations/implications – The theoretical approach presented will need to be supported by empirical findings. Practical implications There are policy implications specifically related to the fact that multinationality per se gives advantages and that actors other than the TNCs may have to move towards achieving a multinational organization. Originality/value – It questions the inter-national character of most current theories of the TNC; it argues about the necessity to put the nation-states with their different characteristics at the heart of the explanations of TNCs‟ activities; it argues for a strategic rather than efficiency approach to theories of the TNC.
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