What lies between market and hierarchy? Insights from internalization theory and global value chain theory

In this paper, we suggest that internalization theory might be extended by incorporating complementary insights from GVC theory. More specifically, we argue that internalization theory can explain why lead firms might wish to externalize selected activities, but that it is largely silent on the mechanisms by which those lead firms might exercise control over the resultant externalized relationships with their GVC partners. We advance an explanation linking the choice of control mechanism to two factors: power asymmetries between the lead firms and their GVC partners, and the degree of codifiability of the information to be exchanged in the relationship

Internalisation Theory and outward direct investment by emerging market multinationals

The rise of multinational enterprises from emerging countries (EMNEs) poses an important test for theories of the multinational enterprise such as internalisation theory. It has been contended that new phenomena need new theory. This paper proposes that internalisation theory is appropriate to analyse EMNEs. This paper examines four approaches to EMNEs—international investment strategies, domestic market imperfections, international corporate networks and domestic institutions—and three case studies—Chinese outward FDI, Indian foreign acquisitions and investment in tax havens—to show the enduring relevance and predictive power of internalisation theory. This analysis encompasses many other approaches as special cases of internalisation theory. The use of internalisation theory to analyse EMNEs is to be commended, not only because of its theoretical inclusivity, but also because it has the ability to connect and to explain seemingly desperate phenomena

Trans-specialization understanding in international technology alliances: The influence of cultural distance

In the information age, the firm's performance hinges on combining partners' specialist knowledge to achieve value co-creation. Combining knowledge from different specialties could be a costly process in the international technology alliances (ITAs) context. We argue that the combination of different specializations requires the development of "trans-specialization understanding" (TSU) instead of the internalization of partners' specialist knowledge. This article examines the extent to which inter-firm governance in ITAs shapes TSU, and whether the development of TSU is endangered by cultural distance. We hypothesize that relational governance, product modularity, and cultural distance influence TSU development, which in turn influences firm performance. We collected data from 110 non-equity ITAs between software and hardware firms participating in the mobile device sector. We analyzed the data using partial least squares path modeling. Our findings suggest that TSU largely depends on product modularity and relational governance in alliances. However, while cultural distance negatively moderates the path from relational governance to TSU, it has no effect on the relationship between product modularity and TSU. Based on this, we conclude that product modularity can substitute for relational governance when strong relational norms are not well-developed in international alliances. Thus cultural distance does not invariably amount to a liability in ITAs

Globalization, development, and history in the work of Edith Penrose

Edith Penrose's work on the multinational enterprise and the political economy of globalization and development is assessed as it relates to her views on business history. This essay was written on the occasion of the fiftieth anniversary of Penrose's classic 1959 book and her 1960 prize-winning paper on Hercules Powder, which was published in the Review. Penrose came close to providing a theory of "internalization," compared foreign direct investment to market-type contracting relations, and even discussed transaction costs-related arguments. However, she largely accepted the existence of firms and did not examine why firms exist vis-à-vis alternatives, such as markets. Her views on the political economy of globalization, relations between multinational enterprise and the state, and development have proved to be incisive, mostly accurate, and ahead of their time. © 2011 The President and Fellows of Harvard College

The sustainable competitive advantage and catching-up of nations: fdi, clusters and the liability (asset) of smallness

We explore the role of foreign direct investment and (its relationship to) clusters for the competitiveness (and catching-up) of small(er) developing countries. We suggest that while size per se need not matter, small(er) developing countries need to explicitly account for any liabilities of smallness when devising and implementing strategies for competitiveness and catching-up. We claim that international strategic management scholarship can add insights on this important issue, by complementing extant literature and contributions by international trade and economic development scholarship. ©Gabler-Verlag 2009

Learning, innovation, increasing returns and resource creation: Luigi Pasinetti's 'original sin' of, and call for a post-classical, economics

© The Author 2016. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved. We draw on the seminal contribution to economics by Luigi Pasinetti, respond to his call to reverse what he saw as the 'original sin' of classical economists exacerbated by neoclassical economists, namely the assumption of non-increasing returns to scale, and move towards building a post-classical economics. We outline the contours of a post-classical framework that draws on key themes and contributions from Pasinetti on learning, technical progress, increasing returns, resource creation, trade and catching up, and contributions from within and without economics that are in line with, lend support to and challenge it. We advocate the pressing need and opportune timing for a concerted effort to revitalise ideas from the once vibrant 'Cambridge School' of economics and help develop a fresh, more pluralist and inclusive post-classical economics that cuts across divides and opens up opportunities for a less 'dismal science'

On PIIGS, GAFFS, and BRICS: An insider-outsider's perspective on structural and institutional foundations of the Greek crisis

We discuss structural and institutional underpinnings of the Greek 'Debt' Crisis. We suggest that the Greece's de facto catching-up competitiveness model was misguided, short-term focused, and eventually doomed. Alongside this 'model' were behaviours and attitudes that assisted the realisation of an anticipated collapse. Our assessment also accounts for other actors, at the European and wider levels, both public and private. It takes into account implications from the emergence of the new 'competitors', and briefly explores global security and governance implications. © The Author 2012. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved