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We discuss Professor Jean-François Hennart’s key contributions to international strategic management theory, with a special focus on his integrative, 2009 Journal of International Business Studies article, ‘Down with MNE-centric theories! Market entry and expansion as the bundling of MNE and local assets’. In Hennart’s (2009) model, complementary assets co-determine the MNE’s initial entry mode choice and the subsequent evolution of the MNE foreign operations’ governance. Hennart (2009) describes this perspective on MNE governance as one based on asset bundling. We focus on the paper’s conceptual insights and discuss how Hennart’s model of foreign market entry informs managerial practice in the realm of international strategy.

This chapter discusses the global factory paradigm. We show how mainstream international business (IB) thinking, namely, internalization theory, can guide multinational enterprise (MNE) strategic decision-making in the context of a global factory network.

We identify the key assumptions made in the global factory paradigm about the fine slicing of economic activities and the related implications for the ownership status and location of each activity. In order to overcome the global factory paradigm’s relative lack of predictive capacity, as compared to internalization theory, we propose an asset-bundling approach. This approach uses a clear and unambiguous criterion, namely, the tradability of resources (and resource combinations) to determine which sets of activities can best be left to external market contracting or should on the contrary be internalized on the basis of efficiency considerations.

We describe the enhanced role of developing/transition countries in the functioning of the global economy and show that these countries represent an increasing share of worldwide economic activities. Given this macrolevel development, the global factory, as a complex organizational form governing both internal activities and contracts with external parties, is rapidly gaining in importance. We describe, at the conceptual level, the strengths and weaknesses of the global factory and propose a “decision dynamics” matrix to support global factory, senior managers’ strategies in the realm of ownership status and location.

Future research on the MNE should focus on in-depth analysis of firms that embody “global factory”-type characteristics in order to understand better the evolution of this type of company and to capture the close requisite links among the focal firm, external contracting parties, and the broader environment. Such research should also lead to a better understanding of innovative resource combination processes and the transferability of non-location-bound firm-specific advantages (FSAs) across the global factory network.

In the global factory, the MNE head office assumes the role of resource orchestrator and is responsible for key strategic decisions on ownership status and location. Here, the head office must assess critically the operations that are part of the MNE’s value chain and reflect on the firm’s international dispersion of economic activities on an ongoing basis, given a myriad of broad environmental changes and changes in external competitive pressures. Our “decision dynamics” matrix provides a simple but effective managerial tool supporting MNE ownership status and location decisions, but the head office’s capability to make these decisions should not be overestimated.

We explicitly link internalization theory with the global factory paradigm and explore unresolved issues in the relevant literature. Internalization theory prescribes the optimal ownership status and location for each economic activity considered. The theory focuses on the bundling of firm-level resources and complementary ones held by external parties, for each fine-sliced economic activity. It also considers explicitly the nature of the linkages among these activities.

The purpose of this chapter is to demonstrate that sound, mainstream international business (IB) thinking should be applied when assessing the economic opportunities available to multinational enterprises (MNEs) in Bottom of the Pyramid (BOP) markets.

We describe and evaluate critically the key points made in the BOP literature about the alleged attractiveness of BOP markets, and the alleged strengths of MNEs to penetrate these markets successfully. We revisit the managerial implications from the BOP literature using an internalization theory lens.

We demonstrate the weak conceptual grounding of conventional BOP thinking, which suggests that MNEs from developed economies should be very entrepreneurial and should systematically serve BOP markets with new products and business models. We also show the fallacy of the idea that a “success template” in one BOP market would be easily replicable in other BOP markets and would allow the MNE to earn economies of scale and scope.

IB researchers should start conducting serious studies on the attractiveness of BOP markets for MNEs. They should also analyze seriously the micro-foundations of successful knowledge recombination in BOP markets and the limits to the transferability of success templates. Mainstream IB theory, namely internalization theory, is particularly well equipped to analyze the costs and benefits of entering BOP markets, building upon a comparative institutional logic.

Senior MNE managers should not allow themselves to be blinded by BOP gurus, advocating the alleged great benefits of penetrating BOP markets. BOP markets may be especially challenging international expansion targets for MNEs because of large institutional voids, high uncertainty, high “distance” vis-à-vis the home country market and the difficulties of transferring relevant knowledge from one BOP market to another.

This chapter is the first to show that mainstream IB research can be usefully applied to analyze the “real” attractiveness of BOP markets for MNEs. Comparative institutional analysis is proven to provide substantially more insight to make BOP market penetration work than past guru-talk on BOP markets.

Location-specific advantages (LSA) and the liability of foreignness (LOF) are key concepts in international business and management research. To combine these concepts in a systematic framework, I develop a two-by-two matrix focusing on the nature of International Business (IB) research using four key terms: firm, context, comparative and interactive. This framework serves as a heuristic device in describing three main challenges IB scholars face when advancing the role of LOF and LSAs. These challenges relate to our understanding of the nature of relative advantage, to the development of a dynamic (so-called non-ergodic) world view and to the inclusion of the relevant spatial heterogeneity.

We contend that the concept of liability of foreignness is inadequate to describe the set of disadvantages faced by emerging economy multinational enterprises (MNEs) in international markets. In order to address this theoretical gap, we develop the concept of “liabilities of origin” (LOR). We propose that the concept of LOR explains how the national origins of the MNE shape its disadvantages in international markets through three distinctive contexts of the MNE's ongoing activity: the home country context, the host country context, and the organizational context. We argue that in order to understand how emerging economy MNEs overcome their LOR, we need to engage simultaneously with the theoretical perspectives provided by the institutional entrepreneurship and organizational identity literatures. We suggest, further, that the concept of LOR may be useful to understand the character of MNE disadvantage in any international foray where the national origins of the MNE engender legitimacy-based and capability-based disadvantages for the MNE in a host country.

Benchmarking has proven itself as a tool of management, not belonging to the typical management fads. Well-known both in research and business practice, employing benchmarking as a means of increasing the competitiveness goes along with considerable problems and challenges. By analyzing the very nature of benchmarking, it turns out that the respective problems can be explained in a comprehensive way by referring to the competence-based view. The paper points out the numerous threats connected with benchmarking. The isolating mechanisms, well-known from competence-based research, help to explain why it can be so difficult for firms to make use of benchmarking effectively. Among others, the concept of the absorptive capacity plays a major role when the real character of benchmarking is to be described. Understanding benchmarking as way to get access to firm-addressable resources, the recognition, the assimilation, and the exploitation of the benchmarked “best practices” represent the crucial steps of an effective benchmarking process. Pointing out the implications of benchmarking by a competence-based analysis and to draw some managerial and theoretical conclusions represent the main objectives of this paper.

Intellectual capital (IC) and social capital (SC), as forms of intangible value in organizations, are crucial assets in today's volatile business environment. Efforts to retain and develop these intangibles are becoming more deliberate and disciplined. However, organizations fail to recognize the relationship between organizational distress and the loss and/or reduction of intangible value. The loss of intangible value may potentially impact an organization with equal or greater damage than the loss of more tangible value. IC and SC generate many outcomes beneficial to the individual and the organization. These benefits are reduced when stress of employees becomes excessive and damaging. The relationship between the health of an organization and the degree of impact of distress serves as a lingering threat to organizational financial resources. Managers must build upon the growing knowledge from research and practice to help organizations account for the costs of organizational distress, translate the importance of intangible value into tangible terms, and garner support for developing IC and SC to obtain business objectives. Deliberate and disciplined effort to build collaborative capital can facilitate the growth of IC and SC which minimize the damage of organizational distress.