The economic theory of the firm as a foundation for international business theory (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.
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.
Capability and Multinational Enterprises (MNEs)
The Palgrave Encyclopedia of Strategic Management, 2016
Academic approaches to the activities of the MNE have been dominated by the internalization theories developed in the field of ▶ international business (IB), including the envelope approach known as the ▶ eclectic paradigm. These theories are helpful but have several shortcomings, including an emphasis on the cost of investment decisions rather than on the opportunities they can create, a limited focus on managerial decision-making, and no model of the creation and maintenance of firmlevel advantage. These problems can be addressed by a capability-based approach, such as the dynamic capabilities framework. Definition The activities of the multinational enterprise (MNE) frequently involve the extension, leveraging, and creation of capabilities across borders. However, the literature on crossborder investment is dominated by theories based on concepts that ignore capabilities, such as transaction costs. Non-capabilities-based theories reveal little about the use of strategy to build competitive advantage. Capability-based explanations for MNE activities received relatively little attention until the 2000s.
A Theoretical Analysis of the Tenets of Multinational Enterprise (MNE)
In this paper, we analyzed the basic tenets of multinational enterprise (MNE) from a theoretical perspective, shedding light on the growing significance of MNEs in today’s global economy. The concept of MNE has been reviewed. We examined two theories of MNE – the trade theory and the transaction cost or internalization theory, in line with emerging global trends. We conclude that no single theory can explain MNE, rather, a combination of theories.
Emerging market multinationals and internalisation theory
International Business Review
There is ongoing debate about the applicability of internalisation theory to Emerging Market Multinationals (EMNEs). Internalisation theory normally describes multinationals exploiting superior knowledge directly abroad rather than licensing its use to foreign firms. We argue that EMNEs can be explained readily in terms of internalisation theory. This involves internalisation in the opposite direction: knowledge is internalised by EMNEs which then exploit it utilising home-country cost advantages. However, this is normally achieved by means that avoid the licensing of key technologies from leading firms. This clarifies the theoretical basis of EMNE strategic asset seeking investment. Market-seeking investments are also linked to technology-seeking investments through fixed costs. A model formalises the arguments, establishing conditions leading to different types of equilibria when an advanced-economy firm competes with an emerging-economy firm. The range of factors that it incorporates means that it is also compatible with other theories of the EMNE.
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...
Journal of International Business Studies, 2009
This paper reviews the progress of the research agenda initiated by The Future of the Multinational Enterprise (1976). Focusing initially on the problem of explaining the existence of the multinational enterprise, the agenda soon broadened to encompass the analysis of alternative modes of foreign market entry, the role of international joint ventures, the impact of innovation on corporate growth, and the role of culture in international business. The core philosophy -based on the Coasian nature of the firm and on rational action modelling -has remained constant, while the widening range of applications has encouraged synthesis with theories developed in other fields of research. Success in answering any one question invariably generates new questions, which must in turn be answered through a further extension of the theory, and this dynamic continues to drive the development of the theory today. Internalisation theory has retained its validity and its vitality over the past 30 years, and is currently being extended into new fields of international business research.
The Internationalization of Multinational Companies: A comparison among firms from
This research aims to show that there are similarities and differences for MNCs from developed and developing countries in the processes of internalization. This will be achieved using a multiple case study of MNCs from Japan which is a developed country and Uzbekistan which is an emerging economy. The culmination of this study will answer the main research question. What are the similarities and the differences in the internationalization process of MNCs from different development levels?