What characterizes a multinational firm?

A multinational firm is characterized by significant coordination across its subsidiaries. This means that while these firms operate in multiple countries, they do not simply treat each subsidiary as a standalone entity. Instead, multinational corporations strive for an integrated approach where they coordinate strategies, share resources, and align operations across their various international branches. This coordination can enhance efficiencies, foster innovation, and create synergy between different markets, allowing the firm to compete more effectively on a global scale.

Extensive local operations and a focus on global product uniformity may also be components of a multinational firm's strategy, but they are not defining characteristics of what sets these firms apart. Additionally, a strong reliance on domestic resources typically indicates a national rather than a multinational focus, which does not align with the nature of multinational firms that leverage resources and markets worldwide. Therefore, the emphasis on coordination highlights one of the primary aspects that differentiate multinational firms from other types of international businesses.