Existing theories of the transnational corporation (TNC) tend to focus exclusively on the supply-side or demand-side factors leading to internationalization of production and the TNC. In this paper we attempt to integrate these two sets of factors. We suggest that supply-and demand are dialectically linked. Competition in the supply side, leading to increasing concentration and centralization of capital, tends to result in a demand side of stagnation, internationalization of capital and the TNC. Within this framework a host of supply-side factors can provide an ex-ante explanation of the TNC; most notably power over markets, labor and the nation state as well as internalization of market transaction costs. Ex-post, oligopolistic reaction and increased international competition will fuel the process.
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