The Empirical Setting: EU Enlargement and the Process of Regulatory Convergence

Abstract

In Chapters 2 and 3, we have set up our analytical and theoretical framework for examining the role of MNEs in the process of regulatory convergence. We have argued that both the IPE and IBS literatures have significantly aided our understanding of the important influence of the MNE in the world political economy. Based on these insights, we attempted a synthesis of the two literatures in Chapter 3 by focusing on how MNEs influence the process of regulatory convergence by using higher industrial standards as a tool of competitive rivalry. Taking Murphy’s (1995) terminology, we called this regulatory competitive advantage. This was because we showed how an MNE could use its higher industrial standards to compete with domestic rivals. We suggested that exploitation of higher standards was especially salient in service industries where the main means of MNEs to differentiate themselves is to use higher service standards than the local firms. Indeed, quality of service (at a similar or lower price) is the hallmark of excellence in service sectors.