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Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

The purpose of this paper is twofold: to analyse what theories assume about multinational enterprises (MNEs) when they claim these are superior and to discuss possible explanations for why MNE superiority seems to be dominant in the international business (IB) research field.

A common theme in mainstream IB theories is that multinational enterprises (MNEs) are superior in terms of cost efficiency and innovativeness compared with other types of organizations. A closer look at transaction cost economics (TCE)/internalization theory, evolutionary theory and dynamic capability theory reveal a bias toward MNE supremacy because of how MNEs are conceptualized as firms and therefore fail to explain the essence of “multinational advantage”. These revelations and the strong dependence on the benevolence to provide unbiased data means that MNE supremacy posited by mainstream IB theories is as much a rationalized myth as an empirical fact.

Although mainstream theories differ when it comes to the building blocks that constitute MNE supremacy, they have one attribute in common: they are silent as to why MNEs are superior compared with, for example, domestic firms or other types of economic agents. Irrespective of whether the focus is the strength of the hierarchy, the skill of managers or a common identity, nothing in the theories tells us that these factors are more pronounced in MNEs than in other types of economic actors.

The paper deals with the issue of multinational advantage. It claims that mainstream theories of MNEs tend to assume, explicitly or implicitly, that MNEs are superior in terms of cost efficiency and innovativeness compared with other types of economic agents. The analysis demonstrates that this tendency is a consequence of how MNEs are conceptualized as firms in the different theories as well as of the strong dependence in IB research on the benevolence of MNEs to provide unbiased data. It is concluded that MNE supremacy posited by mainstream IB theories is as much a rationalized myth as an empirical fact.

We argue that multinational enterprises (MNEs) not only strive to minimize transaction costs but also attempt to maximize transaction values when interacting with local firms in foreign markets. We put forth our thesis regarding MNE governance structure, that it is contingent on the institutional environment of the host country and the characteristics of the transaction. Specifically, we suggest that MNEs’ choice of market, hierarchy or hybrid (joint ventures) form of governance, depends on the interplay between the costs and benefits of a transaction relationship. For high knowledge content products/services, MNEs choose hierarchy when the institutional environment is not well developed. As the institutional environment develops, hybrid replaces hierarchy. However, in a very strong institutional environment, hierarchy again turns out to be optimal for MNEs. For low or no knowledge content products/services, the presence of market is possible in a very advanced institutional environment.

We examine the mode of international expansion as an equilibrium governance contract between home country and host country factor owner. The focus is on agency costs, a form of transactions costs. Two phenomena are shown to be related to the agency costs imposed by factor owners: (i) the choice of different modes of international expansion by one firm in different locations, and (ii) the simultaneous occurrence of several forms of foreign involvement in the same location. We attempt to characterize the dynamic relationship between the mode of an offshore operation and changes in factor market conditions that affect agency costs.

Transfer pricing stands at the heart of a MNE management control system. We review the theories of TCE and RBV and develop antecedents and consequences of transfer prices based on these theories. We propose viewing transfer pricing decisions through a TCE and RBV value chain framework. We review a sample of transfer pricing literature based on this theoretical perspective and show how it fits within our framework. Our framework suggests that setting transfer pricing policy is indeed a complex problem that includes many factors and has many consequences, some of which may be at odds with each other. We give some suggestions for future research based on this framework.

Investigates how large UK multinational firms evaluate individual and multiple banking relationships, and how they exercise control over their portfolios of banks. The identification and description of how firms do this is important for those banks marketing a wide range of financial services to the corporate sector. Between 1986 and 1990, 15 confidential corporate case studies were developed from interviews with UK firms. The case firms were a sample of 15 large UK‐based multinational companies (MNCs) drawn from the FT100. Senior finance personnel were interviewed during 1986‐90 in all 15 firms using a semi‐structured questionnaire. Uses a theoretical perspective to interpret this decision behaviour and explores the nature and function of these decision rules.

This paper develops a moral hazard model applied to a multinational firm’s decision between foreign direct investment and international subcontracting. We compare the results of the moral hazard model, characterised by the fact that the multinational firm cannot control the operations performed by the subcontractor firm, with the traditional model of symmetric information. We conclude that the uncertainty associated with the subcontractor firm’s behaviour, despite increasing the multinational firm’s preference to engage in foreign direct investment, does not change its optimal decision, which is to subcontract. The exception occurs when the subsidiary stands as more efficient than the subcontractor firm.

To re‐examine empirically internalisation and transaction cost theories of firm FDI.

Empirical analysis based on cross sectional multivariate regressions and the Fama‐French three factor event study procedure. In addition to the key explanatory variables the paper introduces and models several important control variables.

The paper finds evidence consistent with the internalisation and transaction cost hypotheses. Firms classified with internalisation advantages earn event period abnormal returns of 6.84 percent above firms that are classified without such advantages. In support of transaction cost theory the paper finds that FDIs generate an average abnormal event period return of −2.36 percent. Further, in line with transaction cost theory firms classified with intangible asset advantages also tend to engage in the more complex forms of foreign and industrial diversification.

The paper does not determined if the effect linked to the possession of intangible asset advantages is temporary or permanent. FDI is costly, but firms that enjoy high market valuations tend to do well in M&A or FDI activity.

The study provides new and strengthened support for internalisation theory. The study provides new evidence in support of transactions cost theory.

This paper delves into the mechanism of the contingency framework for foreign entry mode decisions and identifies two essential tasks that jointly determine the outcome of the entry mode decision. It then recognizes a critical weakness in previous research pertaining to the comparison of entry modes along a key decision criterion, the degree of control. Existing studies generally treat equity involvement as the only source of entrant control, while largely ignoring non‐equity sources of control (i.e., bargaining power and trust). Non‐equity sources of control, when underutilized, amount to missed opportunities, increased resource commitments, and heightened risk exposures in foreign markets. Drawing from a pluralism perspective in transaction and relationship governance, the author presents a more integrative method for the ranking of entry modes along the degree of control. The central message is that companies entering foreign markets should make an earnest effort to identify trust and bargaining power situations and fully utilize their control potential in making entry mode decisions.

Two major advances in the theory of the firm and (micro)economics more generally are arguably transaction costs economics (TCE) and the theory of firm resources. TCE has originally been applied to the theory of the firm, but found applications in virtually all fields of economic inquiry. The theory of firm resources currently spans much of the industrial organisation (IO) and strategic management literature. In some fields, e.g. diversification, it has already acquired dominant status. Despite significant progress in TCE there still seem to remain significant unresolved issues. Indeed we claim that transaction cost economics fail to supply convincing answers to the issues of the nature of the firm (why do firms exist?), and their essence (running a business). It offers a partial explanation of the “nature” and little on the “essence”. The resource value view complements the nature side and goes far beyond on the essence issue. It provides a fruitful starting point for an integrative framework. This, we suggest, should be based on the resource value perspective story and craft (dynamic) transaction costs in the ensuing evolutionary tale.