Journal of International Business Studies

, Volume 40, Issue 9, pp 1432–1454 | Cite as

Down with MNE-centric theories! Market entry and expansion as the bundling of MNE and local assets

  • Jean-François HennartEmail author


Both Anderson and Gatignon and the Uppsala internationalization model see the initial mode of foreign market entry and subsequent modes of operation as unilaterally determined by multinational enterprises (MNEs) arbitraging control and risk and increasing their commitment as they gain experience in the target market. OLI and internalization models do recognize that foreign market entry requires the bundling of MNE and complementary local assets, which they call location or country-specific advantages, but implicitly assume that those assets are freely accessible to MNEs. In contrast to both of these MNE-centric views, I explicitly consider the transactional characteristics of complementary local assets and model foreign market entry as the optimal assignment of equity between their owners and MNEs. By looking at the relative efficiency of the different markets in which MNE and complementary local assets are traded, and at how these two categories of assets match, I am able to predict whether equity will be held by MNEs or by local firms, or shared between them, and whether MNEs will enter through greenfields, brownfields, or acquisitions. The bundling model I propose has interesting implications for the evolution of the MNE footprint in host countries, and for the reasons behind the emergence of Dragon MNEs.


transaction cost theory internationalization theories and foreign market entry internalization theory agency theory evaluation of current theories multinational corporations (MNCs) and enterprises (MNEs) 



I owe special thanks to Departmental Editor Alain Verbeke for his guidance. I also thank the three anonymous JIBS referees, Alex Eapen, Tom Roehl, and Manuel Bueno for their useful comments. Valuable comments were also received at seminars at Baruch College, City University of New York, the University of Calgary, the University of Sydney, the University of Newcastle, Hong Kong University of Science and Technology, Keio Business School, and at the Graduate School of International Strategy at Hitotsubashi University. Financial support from the Japan Society for the Promotion of Science, Osaka City University, and the Japan Foundation is gratefully acknowledged.


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© Academy of International Business 2009

Authors and Affiliations

  1. 1.CentER and Department of Organization and StrategyTilburg UniversityThe Netherlands

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