On the adaptation of the firm to the International Business Environment

Abstract

This paper advances on the importance of the adaptation of the firm to the International Business Environment (IBE). The IBE is a distinguishing factor in international business studies and the firm?s adaptation to the environment has been presented as a basic survival strategy. We argue that adaptation is indeed a dynamic and largely internally driven process that leads the firm to co-evolve with the external environment. The ability to adapt to different international business environments is developed over time through the firm?s experiences and built into its routines. Adaptation is both suggested to incorporate the elements of a planned strategy and of random variation in search for local peaks given bounded rationality, imperfect information and the current pool of resources and capabilities. The ability to adapt to the environment may be conceptualized as a knowledge-based capability and a potential source of competitive advantage for the multinational corporation.Adaptation, International Business Environment, MNC, capabilities, evolution, environmental stability