Skip to main content
SpringerLink
Log in

Analysing Foreign Market Entry Strategies: Extending the Internalisation Approach

  • Chapter
The Multinational Enterprise Revisited

Abstract

Empirical studies of FDI have become much more ambitious in scope over the last 30 years. In the 1960s, the main focus of the Hymer-Kindleberger theory (Hymer, 1976; Kindleberger, 1969) and the product cycle theory (Vernon 1966) was exporting versus FDI. In the 1970s the internalisation approach identified licensing, franchising and subcontracting as other strategic options. The resurgence of mergers and acquisitions in the 1980s — often as a ‘quick fix’ route to globalisation — highlighted the choice between greenfield ventures and acquisitions. At the same time, the growing participation of US firms in IJVs drew attention to the role of cooperative arrangements.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
eBook
USD 16.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 16.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 54.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Agarwal, S. and Ramaswami, S. N. 1992. Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors. Journal of International Business Studies, 23: 1–27.

    Article  Google Scholar 

  • Anderson, E. M. and Coughlan, A. T. 1987. International Market Entry and Expansion via Independent or Integrated Channels of Distribution. Journal of Marketing, 51: 71–82.

    Google Scholar 

  • Anderson, E. M. and Coughlan, A. T. and Gatignon, H. 1986. Modes of Foreign Entry: A Transaction Costs Analysis and Propositions. Journal of International Business Studies, 17: 1–26.

    Article  Google Scholar 

  • Bakema, H. G., Bell, J. H. J. and Pennings, J. M. 1996. Foreign Entry, Cultural Barriers and Learning. Strategic Management Journal, 17: 151–66.

    Article  Google Scholar 

  • Beamish, P. W. 1985. The Characteristics of Joint-Ventures in Developing and Developed Countries. Columbia Journal of World Business, 20: 13–20.

    Google Scholar 

  • Beamish, P. W. 1987. Joint Ventures in Less Developed Countries: Partner Selection and Performance. Management International Review, 27(1): 23–37.

    Google Scholar 

  • Beamish, P. W. and Banks, J. C. 1987. Equity Joint Ventures and the Theory of the Multinational Enterprise. Journal of International Business Studies, 18: 1–15.

    Article  Google Scholar 

  • Beamish, P. W. and Banks, J. C. and Killing, J. P. (eds). 1987. Cooperative Strategies, 3 volumes, North American Perspectives, European Perspectives, Asian Pacific Perspectives. San Francisco, CA: New Lexington Press.

    Google Scholar 

  • Benito, G. R. G. and Gripsrud, G. 1992. The Expansion of Foreign Direct Investments: Discrete Rational Locational Choices or a Cultural Learning Process? Journal of International Business Studies, 23: 461–76.

    Article  Google Scholar 

  • Blodgett, L. L. 1992. Factors in the Instability of International Joint Ventures: An Event History Analysis. Strategic Management Journal, 13: 475–81.

    Article  Google Scholar 

  • Buckley, P. J. 1983. New Theories of International Business: Some Unresolved Issues, in Mark Casson (ed.) The Growth of International Business. London: Allen and Unwin, 34–50.

    Google Scholar 

  • Buckley, P. J. and Casson, M. 1976. The Future of the Multinational Enterprise. London: Macmillan.

    Google Scholar 

  • Buckley, P. J. and Casson, M. 1981. The Optimal Timing of a Foreign Direct Investment. Economic Journal, 92(361): 75–87.

    Article  Google Scholar 

  • Buckley, P. J. and Casson, M. 1988. A Theory of Cooperation in International Business, in Farok J. Contractor and Peter Lorange (eds), Cooperative Strategies in International Business. Lexington, MA: Lexington Books.

    Google Scholar 

  • Buckley, P. J. and Casson, M. 1996. An Economic Model of International Joint Ventures. Journal of International Business Studies, 27(5): 849–76.

    Article  Google Scholar 

  • Buckley, P. J. and Ghauri, P. N. 1993. The Internationalization of the Firm. London: Dryden Press.

    Google Scholar 

  • Buckley, P. J and Pearce, R. D. 1979. Overseas Production and Exporting by the World’s Leading Enterprises. Journal of International Business Studies, 10(1): 9–20.

    Article  Google Scholar 

  • Casson, M. 1985. Multinational Monopolies and International Cartels, in P. J. Buckley and Mark Casson, The Economic Theory of the Multinational Enterprise. London: Macmillan.

    Google Scholar 

  • Casson, M. 1991. Internalization Theory and beyond, in Peter J. Buckley (ed.), New Horizons in International Business: Research Priorities for the 1990s. Aldershot: Edward Elgar, 4–27.

    Google Scholar 

  • Casson, M. 1994. Internationalization as a Learning Process: A Model of Corporate Growth and Geographical Diversification, in V. N. Balasubramanyam and David Sapsford (eds), The Economics of International Investment. Aldershot: Edward Elgar.

    Google Scholar 

  • Caves, R. E. 1971. International Corporations: The Industrial Economics of Foreign Direct Investment. Economica, 38: 1–27.

    Article  Google Scholar 

  • Contractor, F. J. 1984. Choosing between Direct Investment and Licensing: Theoretical Considerations and Empirical Tests. Journal of International Business Studies, 15(3): 167–88.

    Article  Google Scholar 

  • Contractor, F. J. 1990. Ownership Patterns of US Joint Ventures and Liberalisation of Foreign Government Regulation in the 1980s: Evidence from the Benchmark Surveys. Journal of International Business Studies, 21: 55–73.

    Article  Google Scholar 

  • Contractor, F. J. and Lorange, P. (eds). 1988. Cooperative Strategies in International Business. Lexington, MA: Lexington Books.

    Google Scholar 

  • Davidson, W. H. 1980. The Location of Foreign Direct Investment Activity: Country Characteristics and Experience Effects. Journal of International Business Studies, 11(2): 9–22.

    Article  Google Scholar 

  • Dubin, M. 1975. Foreign Acquisitions and the Spread of the Multinational Firm. DBA Thesis: Graduate School of Business Administration, Harvard University.

    Google Scholar 

  • Dunning, J. H. 1980. The Location of Foreign Direct Investment Activity, Country Characteristics and Experience Effects. Journal of International Business Studies, 11: 9–22.

    Article  Google Scholar 

  • Flowers, E. B. 1976. Oligopolistic Reaction in European and Canadian Direct Investment in the United States. Journal of International Business Studies, 7: 43–55.

    Article  Google Scholar 

  • Franko, L. G. 1971. Joint Venture Survival in Multinational Corporations. New York: Praeger.

    Google Scholar 

  • Geringer, J. M. 1991. Strategic Determinants of Partner Selection Criteria in International Joint Ventures. Journal of International Business Studies, 22(1): 41–62.

    Article  Google Scholar 

  • Geringer, J. M. and L. Hebert. 1991. Measuring Performance of International Joint Ventures. Journal of International Business Studies, 22(2): 249–63.

    Article  Google Scholar 

  • Gomes-Casseres, B. 1987. Joint Venture Instability: Is it a Problem? Columbia Journal of World Business, 22(2): 97–107.

    Google Scholar 

  • Gomes-Casseres, B. 1991. Firm Ownership Preferences and Host Government Restrictions. Journal of International Business Studies, 21: 1–22.

    Article  Google Scholar 

  • Gorg, H. 1998. Analysing Foreign Market Entry: The Choice between Greenfield Investments and Acquisitions. Trinity College, Dublin, Technical Paper 98/1.

    Google Scholar 

  • Graham, E. M. 1978. Transatlantic Investment by Multinational Firms: A Rivalristic Phenomenon. Journal of Post-Keynesian Economics, 1: 82–99.

    Article  Google Scholar 

  • Graham, E. M. 1992. The Theory of the Firm, in P. J. Buckley (ed.), New Directions in International Business. Cheltenham; Edward Elgar.

    Google Scholar 

  • Gulati, R. 1995. Does Familiarity Breed Trust? The Implications of Repeated Ties for Contractual Choices in Alliances. Academy of Management Journal, 28(1): 85–112.

    Article  Google Scholar 

  • Hallen, L. and Wiedersheim-Paul, F. 1979. Psychic Distance and Buyer-Seller Interaction. Organisasjon, Marknad och Samhalle, 16(5): 308–24. Reprinted in Buckley and Ghauri, 1993.

    Google Scholar 

  • Harrigan, K. R. 1988a. Joint Ventures and Competitive Strategy. Strategic Management Journal 9: 141–58.

    Article  Google Scholar 

  • Harrigan, K. R. 1988b. Strategic Alliances and Partner Asymmetries, in F. J. Contractor and Peter Lorange (eds), Cooperative Strategies in International Business. Lexington, MA: Lexington Book

    Google Scholar 

  • Hennart, J-F. 1982. A Theory of Multinational Enterprise. Ann Arbor, MI: University of Michigan Press.

    Google Scholar 

  • Hennart, J-F. 1988. A Transaction Costs Theory of Equity Joint Ventures. Strategic Management Journal, 9: 361–74.

    Article  Google Scholar 

  • Hennart, J-F. and Park, Y-R. 1993. Greenfield vs Acquisition: The Strategy of Japanese Investors in the United States. Management Science, 39: 1054–70.

    Article  Google Scholar 

  • Hennart, J-F. and Park, Y-R. 1994. Location, Governance and Strategic Determinants of Japanese Manufacturing Investment in the United States. Strategic Management Journal, 15(6): 419–36.

    Article  Google Scholar 

  • Hill, C. W. L., Hwang, P. and Kim, C. W. 1990. An Eclectic Theory of the Choice of International Entry Mode. Strategic Management Journal, 11: 117–28.

    Article  Google Scholar 

  • Hirsh, S. 1976. An International Trade and Investment Theory of the Firm. Oxford Economic Papers, 28: 258–70.

    Google Scholar 

  • Hofstede, G. 1980. Culture’s Consequences: International Differences in Work-Related Values. Beverly Hills, CA: Sage.

    Google Scholar 

  • Horst, T. D. 1972. Firm and Industry Determinants of the Decision to Investment Abroad: An Empirical Study. Review of Economics and Statistics, 54: 258–66.

    Article  Google Scholar 

  • Hymer, S. H. 1976. The International Operations of National Firms: A Study of Direct Foreign Investment. Unpublished 1960 PhD thesis, Cambridge MA: MIT Press.

    Google Scholar 

  • Inkpen, A. C. and Birkenshaw, J. 1994. International Joint Ventures and Performance: An Interorganizational Perspective. International Business Review, 3(3): 201–17.

    Article  Google Scholar 

  • Johanson, J. and Vahlne, J-E. 1977. The Internationalization Process of the Firm — a Model of Knowledge Development and Increasing Foreign Market Commitments. Journal of International Business Studies, 8(1): 23–32.

    Article  Google Scholar 

  • Johanson, J. and Vahlne, J-E. and Wiedersheim-Paul, F. 1975. The Internationalization of the Firm — Four Swedish Cases. Journal of Management Studies, 12: 305–22.

    Article  Google Scholar 

  • Killing, J. P. 1983. Strategies for Joint Ventures. New York, NY: Praeger.

    Google Scholar 

  • Kim, W. C. and Hwang, P. 1992. Global Strategy and Multinational’s Entry Mode Choice. Journal of International Business Studies, 23: 29–53.

    Article  Google Scholar 

  • Kindleberger, C. P. 1969. American Business Abroad. New Haven, CT: Yale University Press.

    Google Scholar 

  • Knickerbocker, F. T. 1973. Oligopolistic Reaction and Multinational Enterprise. Boston, MA: Harvard University Press.

    Google Scholar 

  • Kogut, B. 1988. Joint Ventures: Theoretical and Empirical Perspectives. Strategic Management Journal, 9: 319–32.

    Article  Google Scholar 

  • Kogut, B. 1989. The Stability of Joint Ventures: Reciprocity and Competitive Rivalry. Journal of Industrial Economics, 38(2): 183–98.

    Article  Google Scholar 

  • Kogut, B. and Singh, H. 1987. Entering the United States by Joint Venture: Industry Structure and Competitive Rivalry, in F. J. Contractor and Peter Lorange, Cooperative Strategies in International Business.

    Google Scholar 

  • Kogut, B. and Singh, H. 1988. The Effect of National Culture on the Choice of Entry Mode. Journal of International Business Studies, 19(3): 411–32.

    Article  Google Scholar 

  • Kogut, B. and Zander, U. 1992. Knowledge of the Firm, Combinative Capabilities and the Replication of Technology. Organization Science, 3: 383–97.

    Article  Google Scholar 

  • Kogut, B. and Zander, U. 1993. Knowledge of the Firm and the Evolutionary Theory of the Multinational Corporation. Journal of International Business, 24: 625–45.

    Article  Google Scholar 

  • Meyer, K. E. E. 1997. Determinants of Direct Foreign Investment in Transition Economies in Central and Eastern Europe. PhD thesis, University of London.

    Google Scholar 

  • Nitsch, D., Beamish, P. and Makino, S. 1996. Entry Mode and Performance of Japanese FDI in Western Europe. Management International Review, 36: 27–43.

    Google Scholar 

  • Penrose, E. 1959. The Theory of the Growth of the Firm. London: Basil Blackwell.

    Google Scholar 

  • Prahalad, C. K. and Hamel, G. 1990. The Core Competence and the Corporation. Harvard Business Review, May: 71–91.

    Google Scholar 

  • Root, F. R. 1987. Entry Strategies for International Markets. Lexington, MA: Lexington Books.

    Google Scholar 

  • Rugman, A. M. 1981. Inside the Multinationals: The Economics of Internal Markets. London: Groom Helm.

    Google Scholar 

  • Shane, S. 1994. The Effect of National Culture on the Choice between Licensing and Direct Investment. Strategic Management Journal, 15: 627–42.

    Article  Google Scholar 

  • Stopford, J. M. and Wells, L. T. Jr. 1972. Managing the Multinational Enterprise: Organization of the Firm and Ownership of Subsidiaries. London: Longman.

    Google Scholar 

  • Svensson, R. 1996. Foreign Activities of Swedish Multinational Corporations. Uppsala: Department of Economics, Uppsala University, Economic Studies 25.

    Google Scholar 

  • Tirole, J. 1988. The Theory of Industrial Organization. Cambridge, MA: MIT Press.

    Google Scholar 

  • Vernon, R. 1966. International Investment and International Trade in the Product Cycle. Quarterly Journal of Economics, 80: 190–207. Reprinted in Buckley and Ghauri, 1993.

    Article  Google Scholar 

  • Wilson, B. 1980. The Propensity of Multinational Companies to Expand through Acquisitions. Journal of International Business Studies, 12(2): 59–65.

    Article  Google Scholar 

  • Woodcock, C. P., Beamish, P. and Makino, S. 1994. Ownership-Based Entry Mode Strategies and International performance. Journal of International Business Studies, 25: 253–73.

    Article  Google Scholar 

  • Yip, G. 1982. Diversification Entry: Internal Development Versus Acquisition. Strategic Management Journal, 3: 331–45.

    Article  Google Scholar 

  • Young, S., Hamill, J., Wheeler, C. & Davies, J. R. 1989. International Market Entry and Development. Hemel, Hempstead: Harvester Wheatsheaf.

    Google Scholar 

  • Yu, C-M. & Ito, K. 1988. Oligopolistic Reaction and Foreign Direct Investment: The Case of the US Tyre and Textiles Industries. Journal of International Business Studies, 19: 449–60.

    Article  Google Scholar 

  • Zejan, M. C. 1990. New Ventures or Acquisitions: The Choice of Swedish Multinational Enterprises. Journal of Industrial Economics, 38: 349–55.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Leeds, UK

    Peter J. Buckley (Professor of International Business)

  2. University of Reading, UK

    Mark Casson (Professor of Economics)

Authors
  1. Peter J. Buckley
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Mark Casson
    View author publications

    You can also search for this author in PubMed Google Scholar

Copyright information

© 2010 Peter J. Buckley and Mark Casson

About this chapter

Cite this chapter

Buckley, P.J., Casson, M. (2010). Analysing Foreign Market Entry Strategies: Extending the Internalisation Approach. In: The Multinational Enterprise Revisited. Palgrave Macmillan, London. https://doi.org/10.1057/9780230250468_8

Download citation

Publish with us

Policies and ethics

Search

Navigation