Home-Country Needs

Home-Country Needs

Thus far we have implied that terms of operations are highly dependent on the interplay of needs between the MNE and the host country. Although this is true, it overlooks the role of the home country. Although concerns vary widely among home countries, the home country seldom takes a neutral position in the relationship. Like the host government, the home-country government is interested in achieving certain economic objectives (such as tax receipts and full employment) and may give incentives to or place constraints on the foreign expansion of its firms in order to gain what it sees as its due share of the rewards from transactions. The home government has direct political interests with the host government that temper its position as well.
The influence of home governments is illustrated by the efforts made when France was selling off interests in its government-owned companies during the mid-1980s. The U.S. government interceded to pressure the French government to accept AT&T's bid to take over CGCT, the French government-owned switchmaker, by threatening to bar U.S. government purchases of French equipment. Chancellor Helmut Kohl of Germany personally lobbied French Prime Minister Jacques Chirac on behalf of Siemen's bid for CGCT. Caught between two powers, the French government accepted the bid of a Swedish firm, Ericsson.

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