the limits of explanation testing the internalization theory of the multinationial enterprise the paper explores the difficulties of testing the internalization approach in the modern theory of the multinational enterprise the structure of the theory is elaborated and the conclusion drawn that testing cannot occur at the most general theoretical level but that the theory requires careful restricting assumptions to be placed on it to allow rigorous testing several empirical circumstances would constitute refutation if they could be shown to hold however the use of unconventional cases or outliers does not constitute disproof more rigour is required in formulating and testing the theory but the current verdict on the theory must be not disproven

learning from failure towards an evolutionary model of collaborative ventures this paper reports on a longitudinal case study of the interaction between two partners to a failed international joint venture we develop a model of the collaboration process in partnership and alliances based on earlier work by ring and van de ven 1994 and by doz 1996 we employ a series of events that occurred in the course of the relationship as the unit of analysis in order to trace the interactions between the partners and to explicate the impact that external shocks have on their perceptions of efficiency and equity the impact of these events as well as the responses they elicit on the quality of the relationship and vice versa are also considered we find that the partners assessments cause them to either engage in renegotiation of the terms of the contract or to modify their behavior unilaterally in an attempt to restore balance to the relationship the process feeds back until a new mutual understanding of equity is restored or else the relationship deteriorates gradually until a point when the venture is dissolved we conclude that positive feedback loops are critical in the evolutionary process that relationship quality is both an outcome and a mediating variable and that procedural issues are critical from the start in fostering a climate for positive reinforcement and the building of mutual trust and confidence in the relationship

control and performance of international joint ventures control is a critical concept for successful management and performance of international joint ventures ijvs this paper reviews and synthesizes prior studies addressing the conceptualization and operationalization of control within ijvs as well as the ijv control performance relationship the paper also presents a new conceptualization of ijv control as well as a conceptual frame work for studying control of ijvs

residential construction using the urban growth model to estimate housing supply abstract this article presents an empirical model of housing supply derived from urban growth theory this approach describes new housing construction as a function of changes in house prices and costs rather than as a function of the levels of those variables which previous studies have used empirical tests support this specification over the leading alternative models our estimates show that a 10 rise in real prices leads to an 0 8 increase in the housing stock which is accomplished by a temporary 60 increase in the annual number of starts spread over four quarters

modeling foreign equity control in sino foreign joint ventures with neural networks abstract equity control is one of the key areas of research in international business this study employs artificial neural networks anns to model foreign equity control comparisons are made with traditional statistical modeling approaches it was found that anns produce a more parsimonious set of independent variables that yield higher classification rates than logistic regression thus it can be concluded that anns with their complex nonlinear structure are able to model the relationship between transaction cost factors and majority minority ownership and percent equity ownership more accurately than the linear statistical approaches

competitive consequences of interfirm collaboration how joint ventures shape industry profitability recent international business research on international joint ventures focuses on how firms can use such ventures for knowledge access and learning to enhance their competitiveness thereby increasing competition in the industry by contrast research in industrial organization economics has observed that firms can also use joint ventures in various ways to attenuate competition in this paper we join these two streams of research to investigate the conditions under which joint ventures reduce or enhance competition by empirically testing the effects of different types of joint ventures on industry profitability our results suggest that joint ventures can be pro competitive or anti competitive depending on whether or not they are formed between competing firms represent foreign market entry and operate in relatively concentrated industries our paper shows the importance of adopting a contingent approach to evaluating the competitive implications of joint ventures and it also points to the value of reinvigorating international business research on the competitive context and consequences of interfirm collaboration

phasing the operation mode of foreign subsidiaries reaping the benefits of multinationality through internal capital markets the lifetime of foreign equity partnerships is often limited research suggests that mncs abandon their local partners when the need for sharing ownership in foreign subsidiaries has diminished this study shows that mncs may abandon their local equity partners to reap the benefits of multinationality as mncs gain a competitive advantage from leveraging resources across borders they will initially benefit from sharing ownership with a local firm to embed their foreign subsidiaries in the local environment and access local resources more effectively later they will benefit from taking over the local partner s equity share to better embed their subsidiaries in the parent organization and transfer locally accessed resources to the mnc s other locations moderated mediation regressions provide evidence of such practice in the context of cross border transfers of capital resources this strategy seems to work as a corollary of our model panel regressions suggest that sharing ownership with local firms in a host country with a capital resource advantage is associated with appropriating more capital resources from the local debt market while abandoning these partner firms later is associated with transferring more capital resources from this host country via internal capital markets to other parts of the mnc

globalisation economic geography and the strategy of multinational enterprises the intention of this paper is to review the literature linking ownership and location strategies to economic geography and theories of globalisation and to explore new areas of research this paper examines globalisation in terms of conflicts between markets and economic management and suggests that the differential pace of globalisation across markets presents a number of challenges to policy makers in local national and regional governments and in international institutions in examining the changing location and ownership strategies of mnes it shows that the increasingly sophisticated decision making of managers in mnes is slicing the activities of firms more finely and in finding optimum locations for each closely defined activity they are deepening the international division of labour ownership strategies too are becoming increasingly complex leading to a control matrix that runs from wholly owned units via fdi through market relationships such as subcontracting including joint ventures as options on subsequent decisions in a dynamic pattern the input of lessons from economic geography is thus becoming more important in understanding the key developments in international business the consequences of the globalisation of production and consumption represent political challenges and reaction against these changes has led to a questioning of the effects of global capitalism as well as to its moral basis these four issues are closely intertwined and present a formidable research agenda to which the international business research community is uniquely fitted to respond

marginal tax reform externalities and income distribution the paper examines welfare improving and revenue neutral directions marginal policy reforms for an economy with nonidentical individuals and an externality that has a feedback effect on the consumption of taxed goods it considers three types of policy instruments the indirect taxes the uniform poll transfer and public abatement this extends the framework set up by ahmad and stern 1984 bovenberg and de mooij 1994 and schob 1996 the theoretical model is illustrated for a specific externality namely congestion caused by peak car transport

modal choice in a world of alliances analyzing organizational forms in the international hotel sector in the new management landscape where interfirm collaborations are common international companies today have fully owned operations and equity joint ventures as well as non equity alliances which in the service sector include franchising and management service agreements what determines the optimum choice of organizational mode the new syncretic theory developed in this paper combines concepts from transaction costs theory agency theory corporate knowledge and organizational capability theories to answer this question the paper then tests these concepts to explain the incidence of these modes in the international hotel business using canonical discriminant analysis as well as logistical regression using a generalized logit model the choice of entry mode is shown to be determined by both country or environmental variables as well as firm specific variables

the internalisation theory of the multinational enterprise a review of the progress of a research agenda after 30 years 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

analyzing foreign market entry strategies extending the internalization approach a new fully integrated analysis of the foreign market entry decision is presented encompassing the choice between exporting licensing joint venturing and wholly owned foreign investment the choice between acquisition and greenfield investment is examined and so too are options based on subcontracting and franchising the model extends the insights of internalization theory and draws on concepts from the economics of industrial organization a special feature of the model is the distinction between investment in production facilities and investment in distribution facilities an important practical distinction that has been overlooked in much of the international business literature the strength of competition from indigenous rivals is emphasized as a determinant of entry strategy into both production and distribution

on the design of stable joint ventures abstract an analytical model is developed to study the problem of designing stable joint ventures aimed at jointly developing and supplying a new technology the analysis focuses on the extent to which traditional motives for joint ventures like cost sharing synergy effects or technological spillovers may shape the incentives for firms to cheat on the arrangement and hence despite larger cooperative benefits endanger the formation of a stable agreement the cheating firm although supplying the contractually specified inputs to the venture manages to keep its knowhow proprietary while benefiting from the loyal partner s know how through spillovers from the venture only if know how can be kept sufficiently proprietary within the venture will synergy effects stimulate the formation of a stable joint venture increasing the profitability of cooperation while at the same time stifling the incentives to cheat but if know how becomes difficult to appropriate synergy effects may increase the incentives to cheat resulting in no agreement at least when both parties have perfect foresight

compact or spread out cities urban planning taxation and the vulnerability to transportation shocks this paper shows that cities made more compact by transportation taxation are more robust than spread out cities to shocks in transportation costs such a shock indeed entails negative transition effects that are caused by housing infrastructure inertia and are magnified in low density cities distortions due to a transportation tax however have in absence of shock detrimental consequences that need to be accounted for the range of beneficial tax levels can therefore be identified as a function of the possible magnitude of future shocks in transportation costs these taxation levels which can reach significant values reduce city vulnerability and prevent lock ins in under optimal situations

death rates life expentancy and china s economic reforms a critique of a k sen abstract sen s recent work has emphasized the ineffectiveness of economic growth in achieving fundamentally important human ends here his influential propositions concerning post mao china are assessed factors affecting mortality rates and life expectancy in china since the mid 1970s are discussed in section 2 in section 3 it is shown that contrary to his claims post mao china achieved a widespread decline in death rates an improvement in life expectancy and a reduction in the number of people living in absolute poverty the poorest rural households were not excluded from the benefits of rapid growth of output after the reforms

a general tce model of international business institutions market failure and reciprocity in this study i propose a general transaction cost economics tce model of international business institutions in which cross border transactions can be conducted at multiple market levels e g output asset and equity and the buyer seller relationship can go both ways a sells to b and b sells to a this general model addresses two major gaps in the literature first although market failure is the driving force behind the rise of multinational enterprises mnes most researchers have focused on the failure of a single market without exploring the presence of substitute markets for cross border transactions second many previous studies have begun their analysis with a bilateral setup between an mne and an indigenous firm for example a licensing agreement but concluded with a unilateral decision made by the mne to evade the indigenous firm in the case of direct investment in bridging the two literature gaps i propose a general tce model to integrate all institutional modes available to firms for governing international business such as licensing outsourcing acquisitions and joint ventures built on a multi market framework my analysis reveals that the choice of the optimal international business institution is tantamount to the selection of the most efficient market to conduct cross border transactions drawing on a bilateral setup it explicitly recognizes the power of reciprocity in solving the problem of market failure this distinct approach points out promising directions for future researchers to advance international business studies particularly after my transaction level analysis has been expanded to also consider institutional contexts and firm capabilities

the eclectic paradigm of international production a restatement and some possible extensions this article reviews some of the criticisms directed towards the eclectic paradigm of international production over the past decade and restates its main tenets the second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only the economic rationale of economic production but many organisational and impact issues in relation to mne activity as well

licensee technological potential and exclusive rights in international licensing a multilevel model granting of exclusive rights is an important consideration for firms using licensing as a mode of entry into foreign markets as exclusive contracts reduce licensors flexibility in a given market during the term of the agreement by granting exclusivity to a licensee with greater technological potential the exchange partners can increase the potential transactional value of the licensing agreement at the same time a licensee with strong technological potential will increase the threat of transactional hazards due to underinvestment and rent appropriation in this paper we develop and empirically test a model that evaluates the balancing of transactional value and transaction costs in exclusive licensing in particular we identify the conditions under which exclusive contracts are likely to be granted to foreign licensees with strong technological potential empirical results from a multilevel model based on 375 international licensing agreements of us firms in high technology industries during 1995 2008 show that licensees with a stronger technological potential are more likely to be granted exclusive rights in countries with strong intellectual property rights protection and in industries with a high rate of technological change but are less likely to be granted exclusive rights when there is a high degree of overlap between licensor and licensee products

the optimal timing of a foreign direct investment analyses of the optimal timing of foreign direct investment fdi decisions have been curiously lacking in the general literature on multinational enterprises cf buckley 1979a b although comparative static analyses exist comparing exporting to the host country with market servicing from a production unit sited in the host country horst 1971 hirsh 1976 the only attempt to predict the timing of the switch from exporting to foreign based production is that of aliber 1970 although vernon 1966 gives a cost based rationale for the switch this chapter attempts to fill this gap in the theory of fdi section 2 1 outlines and criticises previous attempts to deal with the problem sections 2 2 4 present a simple model which ignores set up costs and sections 2 5 and 2 6 give a more detailed analysis including such costs further extensions of the theory are considered in section 2 7 and the conclusions are summarised in section 2 8 the problem emerges as being more complex than had previously been appreciated

technology productivity and the multinational enterprise this article reviews the relevance of the transactions costs model to the role of the firm in production and diffusion of knowledge a revival of interest in technology productivity and growth has generated a new empirical and theoretical literature a review of these developments suggests that they have not yet been reflected in significant adaptation of the conventional firm versus market concept research has been severely hampered by data gaps and suggestions are made with respect to improvements in the information base finally technology issues are and will be of increasing significance in both domestic and international policy and must be factored into the conceptual template of corporate strategy

performance and survival of joint ventures with non conventional ownership structures the international joint venture jv literature has focused on two parent jvs formed between one foreign and one local firm yet other types of jvs exist this paper identifies four distinct forms of jvs based on the jv partners nationality and equity affiliation these are i jvs that are formed between affiliated home country based firms ii jvs that are formed between unaffiliated home country based firmsl iii jvs that are formed between home country based and local firms and iv jvs that are formed between home country and third country based firms our analysis of 737 japanese jvs in asia demonstrates that the conventionally assumed form of jv represented only 30 percent of the total further each of the four jv forms significantly differed in terms of incidence performance and survival likelihood

towards an appraisal of the impact of rural reform in china 1978 85 china s economic institutions have been radically transformed since 1978 the most dramatic changes have been in the countryside where a virtual de collectivisation has taken place see nolan 1983 with profound direct effects on the 800 million rural dwellers as well as important implications for china s 200 odd million urban population 1 the significance of these changes goes beyond china s boundaries their self evident success in stimulating output growth must lead to a wide ranging reassessment of the appropriateness of collective institutions in agriculture it is no surprise that a delegation of soviet economists in china early in 1985 showed special interest in the agricultural reforms in contemporary china official policy changes so fast as to render obsolete any appraisal of their prospective consequences and to make forecasts somewhat akin to astrology and given the severely incomplete while rapidly improving statistical base analysis of the past still borders on archaeology nonetheless evidence from a wide range of sources both official and informal as well as written oral and visual is sufficient to construct a reasonably comprehensive picture of the impact of the agricultural reforms of 1978 83 this article examines two main issues the first section looks at some important indicators of the performance of the rural economy and considers some of the main factors that have affected it the second section examines the impact of the reforms on inequality and poverty in the countryside

new frontiers in international strategy this paper studies a new frontier in the understanding of international strategy is to explore it we propose the analogy of the ecology of firms and places as a way to emphasize that the real problem is the colocation of different places with different types of firms locations are in fact the distinctive content of international business strategy we deal with this problem with four different perspectives first differences across countries must be addressed with integrative frameworks able to represent the multidimensionality of semiglobalization or intermediate states between total localization and total integration second differences in the development of intermediary markets in a particular place influence firm positioning and industry structure in that place but their impact also crosses different places and it is endogenous to the ecology of places and firms in a systemic integrative way that makes simplifications extremely risky in the design of competitive strategy in an international context third places firms and strategies form a complex ecology that can be studied with a framework focused in understanding the geography strategy link that incorporates different levels of analysis new economic actors and a set of primitives finally firms around the ecology of places face the challenge of developing strategies and business models to serve the majority of humanity today excluded from world trade it is a fundamentally different way to think about the ecology of places and firms overall we present an intriguing new frontier with the capacity to impact both research and practice in the field of international strategy based in understanding the interplay among firms and places

knowledge transfer capacity and its implications for the theory of the multinational corporation this study updates and extends research on foreign entry modes by examining the impacts of knowledge transfer capacity and knowledge tacitness research on international corporate expansion has long emphasized that deploying intangible knowledge based assets is required for successful international expansion more recently research from a knowledge based perspective has addressed the role of tacitness in constraining a firm s ability to transfer knowledge internationally we combine these perspectives to describe how knowledge tacitness affects the relative suitability of four archetypal entry modes exporting licensing establishing an alliance and wholly owned entry we then examine and develop conceptually a seldom studied firm characteristic knowledge transfer capacity we offer predictions that describe the combined effects of knowledge tacitness and transfer capacity on entry mode choice we distinguish between the transfer capacity of the organization that develops knowledge source transfer capacity and that of the organization that seeks to access that knowledge recipient transfer capacity the discussion addresses how our model generalizes to knowledge seeking strategies and to the study of ongoing multinational networks the study enriches and reconciles multiple theoretical perspectives on entry strategy it brings together the study of knowledge characteristics and firm heterogeneity in the theory of the multinational corporation and in international and strategic management more generally journal of international business studies 2003 34 356 373 doi 10 1057 palgrave jibs 8400037

location specificity and the transferability of downstream assets to foreign subsidiaries we investigate the effect of firm specific advantages being local in scope and the influence of subsequent location specific disadvantages on the choice of foreign entry mode and subsidiary performance to look into this issue we examine japanese fdi data from the wholesale and retail industries two sectors that have productive activity concentrated in downstream processes and location bound resources our theoretical and empirical analyses demonstrate that in situations where required capabilities must be developed through local experience and where location specific resources were subject to market failure acquisition and joint venture strategies were preferred greenfield entries were successful in industries that permitted the offsetting of location specific disadvantages with firm specific advantages from our results we draw implications for the entry mode literature and offer a perspective on the performance of the entry mode choice

equity joint ventures and the theory of the multinational enterprise this paper extends the internalization approach to the theory of the multinational enterprise mne to include an expanded role for equity joint ventures using the transaction cost paradigm of williamson this paper explains why joint ventures may sometimes be preferred over wholly owned subsidiaries also presented is empirical work on joint venture performance in developing countries which demonstrates that under certain conditions joint ventures can be the optimal mode of foreign direct investment

choosing an appropriate alliance governance mode the role of institutional cultural and geographical distance in international research development r d collaborations we identify a variety of r d alliance modes in a knowledge intensive industry e g pharmaceuticals and classify them into four ordered categories which go beyond the traditional binary equity vs non equity alliance classification this enriches our understanding of alliance governance structures and broadens the application of alliance modes in what is today a more complicated international r d collaboration setting we then explore national industry and firm factors that determine the selection of an appropriate r d alliance governance mode using a sample of 237 international alliance deals the likelihood of using a more integrated alliance governance mode decreases as the difference or distance between nations of the partner firms increases in terms of human capital and cultural distance on the other hand a greater geographic and institutional difference is positively associated with the selection of more integrated alliance governance modes furthermore firms in the research stage are more likely to use a more integrated governance mode as opposed to firms in the development stage these findings advance research on alliance governance structure they reveal the factors affecting the r d alliance governance mode choice

foreign investor reactions to risk and uncertainty in antitrust u s merger policy investigations and the deterrence of foreign acquirer presence motivated by the potential for antitrust and competition policies to be protectionist in effect we formulate the theoretical prior that merger policy deters foreign acquirer participation in local m a markets the policy risk and policy uncertainty characteristic of merger review may negatively affect foreign acquirers more so than domestic acquirers thereby disadvantaging foreign acquisitions of local firms and deterring future cross border investment activities we test this prior by employing sector level data on u s merger policy investigations and foreign acquirer presence in u s m a markets over the 2002 2017 period our panel data methodological approach indicates that the risk and uncertainty characteristic of u s merger policy disproportionately deters the acquisition activities of foreign investors the empirical results also suggest that the application of competition and merger policies in other national jurisdictions where there is less of a strong commitment to antitrust principles might also be effectively protectionist

determinants of the foreign equity share of international joint ventures abstract due to host government restrictions a multinational corporation is required to form a joint venture with a local partner rather than set up a wholly owned subsidiary both parties to the joint venture simultaneously decide their respective equity shares and the time to exercise an irreversible investment project via nash bargaining since the multinational corporation has a cost advantage over its local partner it will therefore hold a share larger than its relative bargaining power however if its cost advantage is less significant uncertainty is greater or the cost of exercising the investment option is increasing over time at a lower rate the multinational firm will hold a smaller share and will also be more hesitant as regards exercising the investment option

rural industrialization an engine of prosperity in postreform rural china abstract the postreform period post 1978 in china has been marked by very sharp increases in both income and consumption of peasant households such sustained high growth over a period of more than a decade is impressive by any standard the fast growing rural industries acted as the engine of prosperity achieved by the peasant households of china during this period with very high rates of growth achieved by such industries the emergence and rapid growth of private enterprises and institutional changes that took place in methods of recruitment and payment of wages in collectively owned industries rural industries as a whole became an important source of income for peasant households in addition to the direct contribution these industries played an important role in fostering the growth of agriculture e g by providing funds for social investment in irrigation and by facilitating farm mechanization and the use of fertilizers and thus made a valuable indirect contribution to peasant income

models of the multinational enterprise flexibility is identified as the hallmark of recent modelling of the multinational enterprise the focus on flexibility is a response to the rationalization and restructuring of international business which has occurred since the end of the golden age of western economic growth flexibility has been south in factor markets intermediate product markets and markets for final products it has been sought by both governments and firms flexible firms are attracted to locations with flexible host governments this article contrasts the modern research agenda based on flexibility with the more traditional research agenda which predominates in the literature reviewed by caves 1996

a tale of three countries italian spanish and swiss manufacturing operations in china in this paper the choice of joint venture versus wholly foreign owned enterprise wfoe made by italian spanish and swiss multinationals in china as shaped by the risk of dissipation of intangible assets is investigated probit estimates based on an entirely new firm level dataset constructed by the author show that wfoe is more likely to emerge when know how easily spills over namely for firms endowed with more intangible assets or belonging to high tech sectors in line with the theoretical expectations

an economic model of international joint venture strategy the strategic choice between joint ventures licensing agreements and mergers is analysed using eight key factors suggested by internalisation theory the model explains the increasing role of international joint ventures in the 1980s in terms of the accelerating pace of technological innovation and the globalisation of markets it offers a range of predictions about the formation of joint ventures within industries across industries across locations and over time it exploits a powerful modelling technique that has many other applications in international business strategy