Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
1002361 | Journal of World Business | 2015 | 4 Pages |
Abstract
Rugman made the valid point that Multinational Enterprises are value-creating organizations but in this piece I question his explanation of why this is the case. I argue that it is not, as Rugman proposed, because MNEs are better at safeguarding their firm-specific advantages (FSAs) but because having them hold the equity is sometimes the most efficient way to bundle assets. I present a more general model of internalization that shows why MNEs can be the most efficient way to both exploit and acquire FSAs, why a firm does not need to have FSAs to become an MNE, and why internalization is not a question of setting up internal markets but consists instead in the replacement of output by behavior constraints.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Business and International Management
Authors
Jean-François Hennart,