Knowledge transfer considerations and the future of the internalization hypothesis

The paper demonstrates how the scope of the internalization hypothesis can be extended by an explicit consideration of knowledge transfer costs and requirements. The paper outlines three important routes for advancing the internalization hypothesis: one is by adding a dynamic dimension to the internalization decision, the other is by adding more complexity to internalization decisions and the third is by taking a global system view rather than the traditional single firm view. The paper finally calls for a dynamic modeling of the complexities in knowledge transfer costs within a global competitive setting as a way to further advance the scope of the internalization hypothesis.