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Multinational Enterprise and Economic Analysis

01 Jan 2007-Research Papers in Economics (Cambridge University Press)-
TL;DR: The third edition of Multinational Enterprise and Economic Analysis surveys the contributions that economic analysis has made to our understanding of why multinational enterprises exist and what consequences they have for the workings of the national and international economies.
Abstract: The third edition of Multinational Enterprise and Economic Analysis surveys the contributions that economic analysis has made to our understanding of why multinational enterprises exist and what consequences they have for the workings of the national and international economies. It shows how economic analysis can explain multinationals' activity patterns and how economics can shed conceptual light on problems of business policies and managerial decisions arising in practice. It addresses the welfare problems arising from multinationals' activities and the logic of governments' preferences and choices in their dealings with multinationals. Suitable for researchers, graduates and upper-level undergraduates. The third edition of this highly accessible book incorporates the many additions to our knowledge of multinationals accumulated in research appearing in the past decade.
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Journal ArticleDOI
TL;DR: In this paper, the authors investigated the influence of national culture on the choice of entry modes in the United States market by analysing data on 228 entries into the market by acquisition, wholly owned greenfield and joint venture.
Abstract: Characteristics of national cultures have frequently been claimed to influence the selection of entry modes. This article investigates this claim by developing a theoretical argument for why culture should influence the choice of entry. Two hypotheses are derived which relate culture to entry mode choice, one focusing on the cultural distance between countries, the other on attitudes towards uncertainty avoidance. Using a multinomial logit model and controlling for other effects, the hypotheses are tested by analysing data on 228 entries into the United States market by acquisition, wholly owned greenfield, and joint venture. Empirical support for the effect of national culture on entry choice is found.

5,894 citations

Journal ArticleDOI
TL;DR: In this article, a nodal (i.e., subsidiary) level analysis of knowledge transfer within multinational corporations (MNCs) is proposed, where the authors predict that knowledge outflows from a subsidiary would be positively associated with value of the subsidiary's knowledge stock, its motivational disposition to share knowledge, and the richness of transmission channels.
Abstract: Pursuing a nodal (i.e., subsidiary) level of analysis, this paper advances and tests an overarching theoretical framework pertaining to intracorporate knowledge transfers within multinational corporations (MNCs). We predicted that (i) knowledge outflows from a subsidiary would be positively associated with value of the subsidiary’s knowledge stock, its motivational disposition to share knowledge, and the richness of transmission channels; and (ii) knowledge inflows into a subsidiary would be positively associated with richness of transmission channels, motivational disposition to acquire knowledge, and the capacity to absorb the incoming knowledge. These predictions were tested empirically with data from 374 subsidiaries within 75 MNCs headquartered in the U.S., Europe, and Japan. Except for our predictions regarding the impact of source unit's motivational disposition on knowledge outflows, the data provide either full or partial support to all of the other elements of our theoretical framework. Copyright © 2000 John Wiley & Sons, Ltd.

3,672 citations

Journal ArticleDOI
TL;DR: The authors empirically examined the decision to transfer the capability to manufacture new products to wholly owned subsidiaries or to other parties and found that the less codifiable and the harder to teach is the technology, the more likely the transfer will be to wholly-owned operations.
Abstract: Firms are social communities that specialize in the creation and internal transfer of knowledge. The multinational corporation arises not out of the failure of markets for the buying and selling of knowledge, but out of its superior efficiency as an organizational vehicle by which to transfer this knowledge across borders. We test the claim that firms specialize in the internal transfer of tacit knowledge by empirically examining the decision to transfer the capability to manufacture new products to wholly owned subsidiaries or to other parties. The empirical results show that the less codifiable and the harder to teach is the technology, the more likely the transfer will be to wholly owned operations. This result implies that the choice of transfer mode is determined by the efficiency of the multinational corporation in transferring knowledge relative to other firms, not relative to an abstract market transaction. The notion of the firm as specializing in the transfer and recombination of knowledge is the foundation to an evolutionary theory of the multinational corporation.

3,354 citations

Journal ArticleDOI
TL;DR: The resource-based approach as discussed by the authors is an emerging framework that has stimulated discussion between scholars from three research perspectives: traditional strategy insights concerning a firm's distinctive competencies and heterogeneous capabilities.
Abstract: The resource-based approach is an emerging framework that has stimulated discussion between scholars from three research perspectives. First, the resource-based theory incorporates traditional strategy insights concerning a firm's distinctive competencies and heterogeneous capabilities. The resource-based approach also provides value-added theoretical propositions that are testable within the diversification strategy literature. Second, the resource-based view fits comfortably within the organizational economics paradigm. Third, the resource-based view is complementary to industrial organization research. The resource-based view provides a framework for increasing dialogue between scholars from these important research areas within the conversation of strategic management. Resource-based studies that give simultaneous attention to each of these research programs are suggested.

3,329 citations


Cites background from "Multinational Enterprise and Econom..."

  • ...Unique assets may take the form of human capital (Becker, 1964), physical capital (Klein, Crawford and Alchian, 1978), legal capital (Alchian, 1984; Barzel, 1989), organizational capital and experience (Huff, 1982; Prahalad and Bettis, 1986; Spender, 1989), and intangible capital (Caves, 1982)....

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  • ...R&D expenditure is a reasonably effective proxy for capturing an enterprise's endowment of unique knowledge possessed by individuals and teams within the organization (Caves, 1982)....

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  • ...The result of these market imperfections is that recognition, disclosure, team organization, monitoring and dissipation costs are incurred in contractual exchange (Caves, 1982; Teece, 1982)....

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Journal ArticleDOI
TL;DR: In this paper, a framework is presented that explains the existence of international new ventures by integrating international business, entrepreneurship, and strategic management theory, and it describes four necessary and sufficient elements for such organizations: organizational formation through internalization of some transactions, strong reliance on alternative governance structures to access resources, establishment of foreign location advantages, and control over unique resources.
Abstract: Organizations that are international from inception – international new ventures – form an increasingly important phenomenon that is incongruent with traditionally expected characteristics of multinational enterprises. A framework is presented that explains the phenomenon by integrating international business, entrepreneurship, and strategic management theory. That framework describes four necessary and sufficient elements for the existence of international new ventures: (1) organizational formation through internalization of some transactions, (2) strong reliance on alternative governance structures to access resources, (3) establishment of foreign location advantages, and (4) control over unique resources.

3,148 citations