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Book part
Publication date: 20 June 2008

Alan M. Rugman and Alain Verbeke

Internalization theory explains the existence and functioning of the multinational enterprise. It contributes to understanding the boundaries of the multinational enterprise, its…

Abstract

Internalization theory explains the existence and functioning of the multinational enterprise. It contributes to understanding the boundaries of the multinational enterprise, its interface with the external environment and its internal organizational design. Much work in the international strategic-management sphere has unfortunately not taken on board internalization-theory thinking and lacks the insights provided by this comparative institutional approach. In this chapter, we show how well-known international strategic-management models could be enriched and their normative implications altered by adopting an internalizing-theory lens.

Details

International Business Scholarship: AIB Fellows on the First 50 Years and Beyond
Type: Book
ISBN: 978-0-7623-1470-6

Book part
Publication date: 4 January 2014

Jenny Hillemann and Alain Verbeke

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…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Research implications

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.

Practical implications

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.

Originality/value

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.

Book part
Publication date: 24 February 2023

Romina Gómez-Prado, Aldo Alvarez-Risco, Jorge Sánchez-Palomino, Berdy Briggitte Cuya-Velásquez, Sharon Esquerre-Botton, Luigi Leclercq-Machado, Sarahit Castillo-Benancio, Marián Arias-Meza, Micaela Jaramillo-Arévalo, Myreya De-La-Cruz-Diaz, Maria de las Mercedes Anderson-Seminario and Shyla Del-Aguila-Arcentales

In the academic field of business management, several potential theories were established during the last decades to explain companies' decisions, organizational behavior…

Abstract

In the academic field of business management, several potential theories were established during the last decades to explain companies' decisions, organizational behavior, consumer patterns, and internationalization, among others. As a result, businesses and scholars were able to analyze and decide based on theoretical approaches to explain the current conditions of the market. Secondary research was conducted to collect more than 36 management theories. This chapter aims to develop the most famous theories related to business applied in the international field. The novelty of this chapter relies on the compilation of recognized previous research studies from the academic literature and evidence in international business.

Book part
Publication date: 2 September 2010

Bo Bernhard Nielsen and Sabina Nielsen

This paper offers a discussion of the key multilevel issues pertaining to the multinationality–performance (M–P) relationship. Arguably, one of the most important areas of…

Abstract

This paper offers a discussion of the key multilevel issues pertaining to the multinationality–performance (M–P) relationship. Arguably, one of the most important areas of research in international business, firm internationalization and its consequences are multilevel phenomena, influenced by forces at different managerial and structural levels: from the executive, subsidiary and firm, to the country and industry. We suggest that accounting for important factors at each level and for their cross-level interactions may help reconcile inconsistent findings and advance our understanding of the M–P relationship. Based on a critical review of the literature, we offer recommendations regarding the appropriate levels of theory, measurement, and analysis to guide future research.

Details

The Past, Present and Future of International Business & Management
Type: Book
ISBN: 978-0-85724-085-9

Book part
Publication date: 1 January 2006

Jongmoo Jay Choi and Eric C. Tsai

Conventional foreign direct investment (FDI) theories regard FDIs as strategic moves based on operational or industrial organization considerations. We demonstrate that financial…

Abstract

Conventional foreign direct investment (FDI) theories regard FDIs as strategic moves based on operational or industrial organization considerations. We demonstrate that financial factors are also important in corporate FDI decisions. The financial factors concern internal capital market strength and corporate governance and include exchange rate changes, internal and external financing cost, risk diversification, and agency costs. There is variability in the significance of financial variables depending on industries and destinations. The integrated model with both strategic and financial factors is superior to either component model in explaining FDIs. However, financial factors are no less important in explaining the prevailing FDI phenomena than strategic or operational variables.

Details

Value Creation in Multinational Enterprise
Type: Book
ISBN: 978-1-84950-475-1

Book part
Publication date: 30 May 2013

Jean-François Hennart

In this chapter I would like to recall how I got started on my research on the multinational enterprise (MNE) and outline how my thinking on this important economic institution…

Abstract

In this chapter I would like to recall how I got started on my research on the multinational enterprise (MNE) and outline how my thinking on this important economic institution has evolved through the years.11I thank Sondra Grace of Gracefully Put for editing this manuscript.

Details

Philosophy of Science and Meta-Knowledge in International Business and Management
Type: Book
ISBN: 978-1-78190-713-9

Book part
Publication date: 10 November 2005

Abstract

Details

Internalization, International Diversification and the Multinational Enterprise: Essays in Honor of Alan M. Rugman
Type: Book
ISBN: 978-0-76231-220-7

Book part
Publication date: 16 October 2003

Carol A Howard

A case can be made that, to some extent at least, the marketing discipline has not kept pace with the practice of international marketing. Recognizing that internationalization is…

Abstract

A case can be made that, to some extent at least, the marketing discipline has not kept pace with the practice of international marketing. Recognizing that internationalization is a dynamic process that may vary across the business of marketing, the development of marketing thought, the direction of marketing education, and the marketing research process, this paper explores that premise. Then, given the current emphasis on the integration of business activities on a worldwide basis, it suggests an interdisciplinary approach, grounded in the concept of market imperfections and internalization theory, to deal with the major challenges that now confront international marketing scholars.

Details

Leadership in International Business Education and Research
Type: Book
ISBN: 978-1-84950-224-5

Content available
Book part
Publication date: 24 February 2023

Abstract

Details

Sustainable Management in COVID-19 Times
Type: Book
ISBN: 978-1-80382-597-7

Book part
Publication date: 21 October 2019

L. Jeremy Clegg, Hinrich Voss and Liang Chen

The acronym and neologism “VUCA” is employed by management and some scholars to denote the unpredictability of the modern world and its impact on business. The VUCA approach…

Abstract

The acronym and neologism “VUCA” is employed by management and some scholars to denote the unpredictability of the modern world and its impact on business. The VUCA approach suggests that a rational firm’s response should be to: protect against volatility by engineering-in redundancy and slack, gather information to reduce uncertainty, develop expertise to make complexity computable, and learn heuristically to reduce ambiguity. We combine a critical perspective on the VUCA approach with the global factory model, popularly used to describe the flexibility sought by advanced economy multinational enterprises (MNEs) within the global value chain. Both VUCA and the global factory would seem to account less well for the expansion of emerging multinational enterprise (EMNEs) abroad, particularly the preference for equity-based control and inflexibility when seeking strategic assets. Also, both approaches fail to incorporate behavioral principles toward risk. Using International Business theory, we propose a research agenda that may help to make VUCA more tractable, the global factory more useful, and the internationalization of EMNEs more comprehensible.

Details

International Business in a VUCA World: The Changing Role of States and Firms
Type: Book
ISBN: 978-1-83867-256-0

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