With companies like Kmart and Enron recently going the way of the buffalo, questions arise about whether huge companies that span international borders are safe in recessions.

While no company’s stability is guaranteed, most multinational corporations would be glad to know that Kmart and Enron are the exception rather than the rule.

Tomas Kohn, a School of Management professor of Strategy and Policy, said the inherent nature of multinational corporations — spreading assets into many different countries — helps protect them against downfall in recessions.

“Corporations are just like individuals. They’re interested in diversifying their risk,” he said. “It wouldn’t be a very good idea for a large corporation to rely on the economic condition of one country.”

Another SMG Strategy and Policy professor, Gary Insch, explained the recession protection multinationals have.

“From a general theoretical standpoint, a company that has assets in many countries might not be hurt as badly [as one based solely in the U.S.],” he said. “They’ll be impacted but maybe not to the extent of 20 percent — maybe 10 or 15 percent.”

However, Insch added that if a particular country’s economy is especially powerful, the corporation could get hurt.

“The United States is really the major driver of the world economy. Multinationals will say, ‘We’re not doing as well as we could be because the U.S. economy is slipping,'” Insch said. “[General Electric] is slipping because the U.S. isn’t buying them.”

Kohn said while multinationals may minimize risk in their home countries, they assume risks of recession in foreign countries. Insch agreed.

“[The companies] would see those effects,” he said. “They may have manufacturing plants. People are rioting in the streets; people are on strike. They’re not going to work in the factory.”

Neither Insch nor Kohn would say if the global nature of business helped large corporations avoid extensive damage in the recent recession in the United States.

“That would require some serious analysis. I’d like to see a lot of study,” Kohn said. “I think that the recession was small because of basic economic conditions which were set up by many years of government.”

Kohn said healthy business strategies can help corporations avoid destruction. He added that Kmart and Enron’s problems stemmed from poor financial policy.

“The best way to deal with a recession is to make sure that you continue to innovate,” he said. “Kmart, Polaroid, Enron — with these companies the recession provided the proverbial straw that broke the camel’s back, but the camel was already pretty overloaded.”