A Theoretical Analysis of the Tenets of Multinational Enterprise (MNE) (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 transaction cost theory of the multinational enterprise
1991
Until the development of transaction-cost theory, economics did not have a theory of why firms exist and grow. Transaction costs theory seeks to explain which activities are organized within the firm and which ones are performed by independent agents. It is a theory of the role and size of firms. Since multinational enterprises are firms that extend their hierarchies across national boundaries, transaction costs theory can throw considerable light on the reasons behind the existence and the growth of such firms [4; 17; 9; 15]. With a few notable exceptions [5: 9; 15], most applications of the transaction costs approach to the multinational enterprise have focused on the internalization of knowledge. This reflects the postwar predominance of horizontal investments in manufacturing by knowledge-intensive firms. This emphasis on the internalization of knowledge as a cause of multinational expansion may have given the erroneous impression that the applicability of transaction costs theory is restricted to post-World War II multinational enterprises. This paper argues that this is not the case. It seeks to explain the existence and growth of multinational enterprises in the tin industry, and, in the process, shows that transaction costs can be used to account for a very wide range of multinational enterprises, including those that do not fit the traditional mold. Recent research in business history has shown that the growth of European multinational enterprises differed in many ways from that of their *This paper has benefited from frequent discussions with Mira Wilkins and from Steve Nicholas' comments. Financial support from the Wharton Center for International Management Studies is gratefully acknowledged.
Transformations in Business and Economics
Multinational enterprises – as key determinants and results (in the same time) of the globalization process that characterize the economic world nowadays – know a lot of different approaches in the academic literature; this is a consequence of the refinement (in time) of the (firm's) internationalization strategies and practices – which is determined, at its turn, by the continuous dynamics and challenges of the world economy. By this paper we would like to bring into attention two of these general theoretical frameworks; they were developed by Wladimir Andreff (into his 2003 book: Les multinationals globales), and Mats Forsgren respectively (into his 2008 book: Theories of the Multinational Firm). The main idea is to capture the essence of the theories of the multinationals on one hand (no matter if they claim their roots to be into the international business, theory of the firm or international management academic field), and to discover the particularities that each one of th...
The Role of Multinational Enterprises in Globalization: An Empirical Overview
The activities of multinational enterprises drive the economic globalization process to a very large degree. This paper lists some facts about their dominant role in all channels of globalization. Therefore, the importance of multinational enterprises in foreign direct investment and production abroad is examined as well as their contributions to the international transfer of knowledge and technology and to foreign trade. It is argued that economic theory must account for multinationals' activities in the analysis of the globalization process.
Transactions cost economics and the multinational enterprise An Assessment
Journal of Economic Behavior & Organization, 1986
This paper applies transactions cost principles to the multinational enterprise in order to ascertain its distinctive properties as a mode of economic organization. The analysis helps identify just when and where contractual alternatives to the multinational firm are likely to be viable. This turns out to depend upon the nature of the technology, the re,me of appropriability within which the firm operates, and the characteristics of the markets in question. Transactions cost analysis is also extended to the multinational enterprise-host country relationship. Impfications for management and public policy are derived.
Transformations in Business and Economics
Multinational enterprises (MNEs) represent both cause and result of the new economic geography of globalization. Thus, the dynamics and trends of the world's most influential MNEs contribute decisively to the new global architecture and to the economic development, being influenced, at their turn, by these processes of continuous reconfiguration and evolution that take place on the global arena. The paper proposes a comparative (in space) and historical (in time) analysis of the most well known global rankings of the multinational enterprises – Fortune Global 500 on one hand, and The world's top 100 non-financial TNCs, ranked by foreign assets and Top 100 non-financial TNCs from developing and transition economies ranked by foreign assets (classifications made by UNCTAD), on the other hand.