Theories of International Business
Content
Theme 1: Core IB Theories ................................................................................................................................................ 4
1.1 Core Theories .......................................................................................................................................................... 4
1.2 Industry and Company Value Chains ...................................................................................................................... 4
1.3 Product Life Cycle.................................................................................................................................................... 6
1.4 Firm Specific Advantages ........................................................................................................................................ 7
1.5 Eclectic or OLI Theory.............................................................................................................................................. 7
1.6 Stages (Uppsala) Model .......................................................................................................................................... 9
1.7 Resource-Based View ............................................................................................................................................ 11
1.8 Institutional Based View ....................................................................................................................................... 11
Article: Fifty Years of International Business Theory and Beyond – Rugman, Verbeke & Nguyen (2011) ................. 12
Article: The internalisation theory of the multinational enterprise: A review of the progress of a research agenda
after 30 years – Buckley & Casson (2009)................................................................................................................... 14
Article: Towards an Institution-Based View of Business Strategy – Peng (2002) ....................................................... 15
Article: The resource-based view and international business – Peng (2001) ............................................................. 15
Article: The eclectic paradigm as an envelope for economic and business theories of MNE activity – Dunning (2000)
.................................................................................................................................................................................... 16
Theme 2: Regional & Global Integration Processes ........................................................................................................ 19
2.1 Intro to Integration and Globalization .................................................................................................................. 19
2.2 Drivers of Globalization (Garrett article) .............................................................................................................. 20
2.3 Semi Globalization (Ghemawat) ........................................................................................................................... 22
2.4 Globalization? Regionalization! (Rugman and Verbeke) ...................................................................................... 24
2.5 Anti-globalization? ................................................................................................................................................ 25
Recap: Links to IB Theory ............................................................................................................................................ 25
Article: The Causes of Globalization – Garrett (2000) ................................................................................................ 26
Article: Semiglobalization and International Business Strategy – Ghemawat (2003) ................................................ 27
Article: A perspective on regional and global strategies of multinational enterprises – Rugman & Verbeke (2004) 27
Article (Friday Discussion): Getting to Sí, Ja, Oui, Hai, and Da (how to negotiate across cultures) – Meyer (2015).. 27
1
,Theme 3: Entry Modes of MNEs and FDI Motivations.................................................................................................... 29
3.1 FDI Motives ........................................................................................................................................................... 29
3.2 Market Entry Modes: Non-Equity ......................................................................................................................... 30
3.3 Market Entry Modes: Equity ................................................................................................................................. 33
3.4 Selection: How to select between the entry modes? ........................................................................................... 34
Article: Location and the multinational enterprise: A neglected factor? – Dunning (1998) ...................................... 36
Article: A “Strategy Tripod” Perspective on Export Behaviours: Evidence from domestic and foreign firms based in
an emerging economy – Gao, Murray, Kotabe & Lu (2010) ....................................................................................... 36
Article: The Hierarchical Model of Market Entry Modes – Pan & Tse (2000)............................................................. 37
Article: Boundaries of the firm: Insights from international entry mode research – Brouthers & Hennart (2007) ... 38
Article (Friday Discussion): How Netflix expanded to 190 countries in 7 years – Brennan (2018) ............................ 39
Theme 4: Home and Host Countries and Concepts of Distance ..................................................................................... 41
4.1 Distance – Intro ..................................................................................................................................................... 41
4.2 Distances ............................................................................................................................................................... 41
4.3 Cultural distance ................................................................................................................................................... 43
4.4 Critique of cultural distance .................................................................................................................................. 44
4.5 CAGE Model .......................................................................................................................................................... 45
4.6 (Double) Diamond Model ..................................................................................................................................... 47
4.7 Distances – summary ............................................................................................................................................ 51
Article: The Concept of Distance in International Business Research: A review and research agenda –
Hutzschenreuter, Kleindienst & Lange (2015) ............................................................................................................ 52
Article: A generalized double diamond approach to the global competitiveness of Korea and Singapore – Moon,
Rugman & Verbeke (1998) .......................................................................................................................................... 53
Article: The Business of International Business is Culture – Hofstede (1994) ............................................................ 53
Article (Friday Discussion): Distance Still Matters – Ghemawat (2001) ..................................................................... 54
Theme 5: New MNEs....................................................................................................................................................... 57
5.1 New & Emerging Types of MNEs – Intro ............................................................................................................... 57
5.2 International New Ventures and Born Globals ..................................................................................................... 57
5.3 New Theory? Emerging Market Multinationals (EMNEs) ..................................................................................... 60
Article: International Expansion of Emerging Market Enterprises – Luo & Tung (2007) ............................................ 64
2
,Article: Toward a Theory of International New Ventures – Oviatt & McDougall (2005)............................................ 66
Article: The Global Entrepreneur – Isenberg (2008) ................................................................................................... 68
INV internationalization .............................................................................................................................................. 70
3
, Theme 1: Core IB Theories
1.1 Core Theories
Traditionally, international business (IB) is defined as a business (or firm) that engages in international (cross-border)
economic activities.
IB is about managing complexity and uncertainty:
• Cross-border activity brings new challenges…
• …requiring awareness and strategic thinking
Core theories of international business
I. At the country level
II. At the firm level
III. At the subsidiary level (daughter company)
• Resource-based view of IB
• Institutional-based view of IB
1.2 Industry and Company Value Chains
4
Content
Theme 1: Core IB Theories ................................................................................................................................................ 4
1.1 Core Theories .......................................................................................................................................................... 4
1.2 Industry and Company Value Chains ...................................................................................................................... 4
1.3 Product Life Cycle.................................................................................................................................................... 6
1.4 Firm Specific Advantages ........................................................................................................................................ 7
1.5 Eclectic or OLI Theory.............................................................................................................................................. 7
1.6 Stages (Uppsala) Model .......................................................................................................................................... 9
1.7 Resource-Based View ............................................................................................................................................ 11
1.8 Institutional Based View ....................................................................................................................................... 11
Article: Fifty Years of International Business Theory and Beyond – Rugman, Verbeke & Nguyen (2011) ................. 12
Article: The internalisation theory of the multinational enterprise: A review of the progress of a research agenda
after 30 years – Buckley & Casson (2009)................................................................................................................... 14
Article: Towards an Institution-Based View of Business Strategy – Peng (2002) ....................................................... 15
Article: The resource-based view and international business – Peng (2001) ............................................................. 15
Article: The eclectic paradigm as an envelope for economic and business theories of MNE activity – Dunning (2000)
.................................................................................................................................................................................... 16
Theme 2: Regional & Global Integration Processes ........................................................................................................ 19
2.1 Intro to Integration and Globalization .................................................................................................................. 19
2.2 Drivers of Globalization (Garrett article) .............................................................................................................. 20
2.3 Semi Globalization (Ghemawat) ........................................................................................................................... 22
2.4 Globalization? Regionalization! (Rugman and Verbeke) ...................................................................................... 24
2.5 Anti-globalization? ................................................................................................................................................ 25
Recap: Links to IB Theory ............................................................................................................................................ 25
Article: The Causes of Globalization – Garrett (2000) ................................................................................................ 26
Article: Semiglobalization and International Business Strategy – Ghemawat (2003) ................................................ 27
Article: A perspective on regional and global strategies of multinational enterprises – Rugman & Verbeke (2004) 27
Article (Friday Discussion): Getting to Sí, Ja, Oui, Hai, and Da (how to negotiate across cultures) – Meyer (2015).. 27
1
,Theme 3: Entry Modes of MNEs and FDI Motivations.................................................................................................... 29
3.1 FDI Motives ........................................................................................................................................................... 29
3.2 Market Entry Modes: Non-Equity ......................................................................................................................... 30
3.3 Market Entry Modes: Equity ................................................................................................................................. 33
3.4 Selection: How to select between the entry modes? ........................................................................................... 34
Article: Location and the multinational enterprise: A neglected factor? – Dunning (1998) ...................................... 36
Article: A “Strategy Tripod” Perspective on Export Behaviours: Evidence from domestic and foreign firms based in
an emerging economy – Gao, Murray, Kotabe & Lu (2010) ....................................................................................... 36
Article: The Hierarchical Model of Market Entry Modes – Pan & Tse (2000)............................................................. 37
Article: Boundaries of the firm: Insights from international entry mode research – Brouthers & Hennart (2007) ... 38
Article (Friday Discussion): How Netflix expanded to 190 countries in 7 years – Brennan (2018) ............................ 39
Theme 4: Home and Host Countries and Concepts of Distance ..................................................................................... 41
4.1 Distance – Intro ..................................................................................................................................................... 41
4.2 Distances ............................................................................................................................................................... 41
4.3 Cultural distance ................................................................................................................................................... 43
4.4 Critique of cultural distance .................................................................................................................................. 44
4.5 CAGE Model .......................................................................................................................................................... 45
4.6 (Double) Diamond Model ..................................................................................................................................... 47
4.7 Distances – summary ............................................................................................................................................ 51
Article: The Concept of Distance in International Business Research: A review and research agenda –
Hutzschenreuter, Kleindienst & Lange (2015) ............................................................................................................ 52
Article: A generalized double diamond approach to the global competitiveness of Korea and Singapore – Moon,
Rugman & Verbeke (1998) .......................................................................................................................................... 53
Article: The Business of International Business is Culture – Hofstede (1994) ............................................................ 53
Article (Friday Discussion): Distance Still Matters – Ghemawat (2001) ..................................................................... 54
Theme 5: New MNEs....................................................................................................................................................... 57
5.1 New & Emerging Types of MNEs – Intro ............................................................................................................... 57
5.2 International New Ventures and Born Globals ..................................................................................................... 57
5.3 New Theory? Emerging Market Multinationals (EMNEs) ..................................................................................... 60
Article: International Expansion of Emerging Market Enterprises – Luo & Tung (2007) ............................................ 64
2
,Article: Toward a Theory of International New Ventures – Oviatt & McDougall (2005)............................................ 66
Article: The Global Entrepreneur – Isenberg (2008) ................................................................................................... 68
INV internationalization .............................................................................................................................................. 70
3
, Theme 1: Core IB Theories
1.1 Core Theories
Traditionally, international business (IB) is defined as a business (or firm) that engages in international (cross-border)
economic activities.
IB is about managing complexity and uncertainty:
• Cross-border activity brings new challenges…
• …requiring awareness and strategic thinking
Core theories of international business
I. At the country level
II. At the firm level
III. At the subsidiary level (daughter company)
• Resource-based view of IB
• Institutional-based view of IB
1.2 Industry and Company Value Chains
4
