Abstract
This paper assesses the continued relevance of Buckley and Casson's (1976) book on The Future of the Multinational Enterprise (MNE), against a background of increasing criticism of transaction-cost-related scholarly work. We demonstrate that the ‘schism’ that can currently be observed in the field between international business and international management is misguided, as the transaction cost/internalization school may offer useful insights to both management scholars and managers. For this to occur, however, it is necessary first to extend the empirical scope of transaction-cost-based reasoning to include the functioning of differentiated network MNEs. The paper suggests that Buckley and Casson's book still represents a beacon of clarity and a superb starting point for the study of the MNE, even if the complexity of this governance structure has grown far beyond what any international business scholar or even international management scholar could have predicted 25 years ago.
Similar content being viewed by others
References
Acs, Z.J., Morck, R., Shaver, J.M. and Yeung, B. (1997) ‘The internationalization of small and medium-sized enterprises: a policy perspective’, Small Business Economics 9: 7–20.
Almeida, P. (1996) ‘Knowledge sourcing by foreign multinationals: patent citation analysis in the US semiconductor industry’, Strategic Management Journal 17: 155–165.
Bartlett, C.A. (1986) ‘Building and Managing the Transnational: The New Organizational Challenge’, in M.E. Porter (ed.) Competition in Global Industries, Harvard Business School Press: Harvard, pp. 367–401.
Bartlett, C.A. and Ghoshal, S. (1989) Managing Across Borders: The Transnational Solution, Harvard Business School Press: Boston.
Birkinshaw, J. (2000) Entrepreneurship in the Global Firm, Sage: London.
Buckley, P.J. and Casson, C. (1976) The Future of the Multinational Enterprise, Macmillan: London.
Burgelman, R.A. (1983) ‘A process model of internal corporate venturing in the diversified major firm’, Administrative Science Quarterly 28(2): 223–244.
Cantwell, J. (1989) Technological Innovation and Multinational Corporations, Blackwell: Oxford.
Chandler Jr., A.D. (1962) Strategy and Structure: The History of American Industrial Enterprise, MIT Press: Cambridge, MA.
Chen, H. and Chen, T.-J. (1998) ‘Network linkages and location choice in foreign direct investment’, Journal of International Business Studies 29(3): 445–468.
Coase, R.H. (1937) ‘The nature of the firm’, Economica 4: 386–405.
Doz, Y. and Prahalad, C.K. (1981) ‘Headquarters influence and strategic control in MNCs’, Sloan Management Review 23(1): 15–29.
Doz, Y. and Prahalad, C.K. (1991) ‘Managing DMNCs: a search for a new paradigm’, Strategic Management Journal 12: 145–164.
Dunning, J.H. (1973) ‘The determinants of international production’, Oxford Economic Papers 25(3): 289–336.
Dunning, J.H. (1998) ‘Location and the multinational enterprise: a neglected factor? Transnational Corporations 5(3): 1–30.
Dunning, J.H. and Pearce, R.D. (1975) Profitability and Performance of the World's Largest Companies, Financial Times Ltd: London.
Dunning, J.H. and Rugman, A.M. (1985) ‘The influence of Hymer's dissertation on the theory of foreign direct investment’, American Economic Review 228–232.
Dyer, J.H. and Singh, H. (1998) ‘The relational view: cooperative strategy and sources of interorganizational competitive advantage’, Academy of Management Review 23(4): 660–680.
Ghemawat, P. (2003) ‘The incomplete integration of markets, location-specificity, and international business strategy’, Journal of International Business Studies 34: 138–152.
Ghoshal, S. (1987) ‘Global strategy: an organizing framework’, Strategic Management Journal 8: 425–440.
Ghoshal, S. and Moran, P. (1996) ‘Bad for practice: a critique of transaction cost theory’, Academy of Management Review 21: 13–47.
Hedlund, G. (1994) ‘A model of knowledge management and the N-form corporation’, Strategic Management Journal 15(3): 73–91.
Hennart, J.F. (1982) A Theory of Multinational Enterprise, University of Michigan Press: Ann Arbor.
Hennart, J.F. (1991) ‘Control in multinational firms: the role of price and hierarchy’, Management International Review 31: 71–97.
Hennart, J.F. (2001) ‘Theories of Multinational Enterprise’, in A.M. Rugman and T.L. Brewer (eds.) The Oxford Handbook of International Business, pp. 127–149.
Hirsch, S. (1967) The Location of Industry and International Competitiveness, Oxford University Press: Oxford.
Johnson, H.G. (1970) ‘The Efficiency and Welfare Implications of the Multinational Corporation’, in C.P. Kindleberger (ed.) The International Corporation: A Symposium, MIT Press: Cambridge, MA, pp. 33–56.
Kuemmerle, W. (1999) ‘The drivers of foreign direct investment into research and development: an empirical investigation’, Journal of International Business Studies 30(1): 1–24.
Markusen, A. (1996) ‘Sticky places within slippery space: a typology of industrial districts’, Economic Geography 72(3): 293–313.
Nohria, N. and Ghoshal, S. (1997) The Differentiated Network, Jossey-Bass: San Francisco, CA.
Pearce, R.D. (1990) The Internationalisation of Research and Development, Macmillan: London.
Penrose, E. (1959) The Theory of the Growth of the Firm, Basil Blackwell: Oxford.
Prahalad, C.K. and Doz, Y.L. (1981) ‘An approach to strategic control in MNCs’, Sloan Management Review 22(4): 5–14.
Rugman, A.M. (1981) Inside the Multinationals: The Economics of Internal Markets, Columbia University Press: New York.
Rugman, A.M. (1996) The Theory of Multinational Enterprises, Edward Elgar: Cheltenham.
Rugman, A.M. (2000) The End of Globalization, Random House: London.
Rugman, A.M. and D’Cruz, J. (2000) Multinationals as Flagship Firms: Regional Business Networks, Oxford University Press: Oxford.
Rugman, A.M. and Verbeke, A. (1992) ‘A note on the transnational solution and the transaction cost theory of multinational strategic management’, Journal of International Business Studies 23(4): 761–771.
Rugman, A.M. and Verbeke, A. (2001) ‘Subsidiary-specific advantages in multinational enterprises’, Strategic Management Journal 22(3): 237–250.
Rugman, A.M. and Verbeke, A. (2002) ‘The contribution of Edith Penrose to the resource-based view of strategic management’, Strategic Management Journal 23(8): 769–780.
Rugman, A.M. and Verbeke, A. (2003) ‘Multinational enterprises and clusters: an organizing framework’, Management International Review (in press).
Shan, W. and Song, J. (1997) ‘Foreign direct investment and the sourcing of technological advantage: evidence from the biotechnology industry’, Journal of International Business Studies 28(2): 267–284.
Teece, D.J. (1977) ‘Technology transfer by multinational firms: the resource cost of transferring technological know how’, Economic Journal 87: 242–261.
Vernon, R. (1966) ‘International investment and international trade in the product cycle’, Quarterly Journal of Economics 80: 190–207.
Vernon, R. (1971) Sovereignty at Bay: The Multinational Spread of US Enterprises, Basic Books: New York.
Wells Jr., L.T. (1971) ‘The multinational enterprise: what kind of international organisation? International Organization 25(3): 447–464.
Wesson, T.J. (1993) An alternative motivation for foreign direct investment Ph.D. dissertation, Harvard University, Cambridge, MA.
Williamson, O.E. (1975) Markets and Hierarchies, Free Press: New York.
Williamson, O.E. (1981) ‘The modern corporation: origins, evolution, attributes’, Journal of Economic Literature 19(4): 1537–1569.
Williamson, O.E. (1999) ‘Strategy research: governance and competence perspectives’, Strategic Management Journal 20(12): 1087–1108.
Author information
Authors and Affiliations
Corresponding author
Additional information
Accepted by Tom Brewer, outgoing Editor, August 2002. This paper has been with the author for 1 revision.
Rights and permissions
About this article
Cite this article
Rugman, A., Verbeke, A. Extending the theory of the multinational enterprise: internalization and strategic management perspectives. J Int Bus Stud 34, 125–137 (2003). https://doi.org/10.1057/palgrave.jibs.8400012
Received:
Revised:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1057/palgrave.jibs.8400012