The internalisation theory of the multinational enterprise: A review of the progress of a research agenda after 30 years (original) (raw)
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Journal of International Business Studies, 2003
This paper assesses the continued relevance of Buckley and Casson's (1976) book on The Future of the Multinational Enterprise (MNE), against a background of increasing criticism of transaction-cost-related scholarly work. We demonstrate that the 'schism' that can currently be observed in the field between international business and international management is misguided, as the transaction cost/internalization school may offer useful insights to both management scholars and managers. For this to occur, however, it is necessary first to extend the empirical scope of transaction-cost-based reasoning to include the functioning of differentiated network MNEs. The paper suggests that Buckley and Casson's book still represents a beacon of clarity and a superb starting point for the study of the MNE, even if the complexity of this governance structure has grown far beyond what any international business scholar or even international management scholar could have predicted 25 years ago.
The Governance of the Multinational Enterprise: Insights from Internalization Theory
Journal of Management Studies, 2010
The objectives of this paper are to outline the contribution of internalization theory to our understanding of the governance of the MNE, and to highlight aspects of the theory that we believe have received insufficient attention in the literature. In particular, we suggest two promising lines of future research. The first focuses on the internal transaction costs associated with the governance and organization of the activities within the MNE, and here we highlight the costs of information acquisition and transmission, the costs of coordination, and the costs of aligning the interests of different stakeholders within the MNE. The second addresses the implications of different assumptions about the risk propensity of the MNE.
Business History Review, 2015
The recent surge of emerging-economy multinational enterprises (EMNEs) has prompted a debate on whether existing international business theory—particularly internalization theory—can accommodate this phenomenon. Our view is that no new, EMNE-centric theory is required to study EMNEs. Using historical evidence, we argue that “new” internalization theory is sufficient to address the complexity of EMNEs, and we illustrate our argument with examples of ten successful EMNEs from Asia and the Americas. We further argue that a business history lens can illuminate the behavior of developed-economy multinationals. We show how management scholars can advance their research agendas by engaging with business history and how business historians can use internalization theory to analyze the history of multinationals.
Knowledge, Scope, and Internal Organization of the Multinational Corporation
2003
This paper integrates the explanation for the multinational expansion of firms and the explanation for the internal organization of MNCs. This more unified framework incorporates insights from past studies on MNC structures and insights from a number of theoretical perspectives (the internalization theory, resource-based view and new institutional economics) whose potential for explaining the internal organization of MNCs has been largely overlooked.
Marketing and the multinational: extending internalisation theory
Journal of the Academy of Marketing Science, 2011
Introducing marketing explicitly into the internalisation theory of the multinational enterprise considerably extends the power of the theory. In particular, it enables a comparison of marketing-led and technology-led multinationals and highlights the benefits of collaboration between them. It facilitates the analysis of outsourcing, and in particular of R&D. It highlights the importance to marketing-led firms of owning product rather than facilities. The analysis addresses key issues relating to "hollow firms", "flagship firms" and the "global factory".
Coase and International Business: The Origin and Development of Internalisation Theory
Managerial and Decision Economics
The internalisation theory of the multinational enterprise is a significant intellectual legacy of Ronald Coase. US direct investment in Europe became highly political in the 1960s, and neoclassical trade theory had no explanation. A theory of the multi-plant enterprise was required, and internalisation theory filled this gap. Using Coasian economics to explain the ownership of production plants, and the geography of trade to explain their location, internalisation theory offered a comprehensive account of MNEs and their role in the international economy. This paper outlines the development of the theory, explains the Coasian contribution, and examines in detail the early work of Hymer, McManus and Buckley and Casson. It then reviews the current state of internalisation theory and suggests some future developments.
Institutional and Cultural Implications on Internationalization Analysis of Multinational Firms
This paper is aimed to analyze some of the institutional and cultural implications on internationalization analysis of multinational firms. The analysis begins questioning what the main institutional and cultural variables are considered in the involvement of internationalization of multinational firms. To answer this question, firstly it is reviewed the literature on internationalization of multinational firms based on institutional and cultural frameworks to find the main research tendencies. Secondly, these institutional and cultural variables are analyzed to integrate findings. Considering some findings of the reviewed literature on institutionalism and culture, this paper centers the analysis on the implications of intangible capital, learning and innovation on multinational firms. This paper also explores a more dynamic and multivariable approach to organizational culture to explain the complexities of multicultural distributed teams and contextual factors on performance of multinational firms. While doing so, the paper reviews the involvement of organizational culture in internationalization processes of multinational firms centered on strategic alliances and joint ventures and the creation of a third culture of management and leadership styles. Finally, it is discussed and concluded the need to design a better institutional and cultural balance among the development of a glocal-regional transformation, convergence and governance.