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Summary all articles International Business Context
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In this document I summarized all the articles for the exam (week 1-4)
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InhoudTheme 1: introduction to IBC.................................................................................................................2
Buckley & Casson (1976), the future of the multinational enterprise................................................2
Casadesus Masanell et al. (2011), how to redesign a winning business model..................................2
Dunning (1980), toward an eclectic theory of international production: some empirical tests.........3
Narula et al. (2019), applying and advancing internalization theory..................................................4
Theme 2: institution...............................................................................................................................5
North (1990), institutions...................................................................................................................5
Berry et al. (2010), an institutional approach to cross-national distance...........................................6
Hall & Soskice (2001), an introduction to varieties of capitalism........................................................6
Mintzberg (1991), managing government, governing management..................................................7
Theme 3: Culture....................................................................................................................................8
Chiu & Hong (2007), cultural processes: basic principles...................................................................8
Ghemawat & Altman (2016), Emerging Economies: Differences and Distances.................................9
Sarala & Vaara (2010), Cultural differences, convergence, and crossvergence as explanations of
knowledge transfer in international acquisitions.............................................................................10
Voss et al. (2014), Supranational Culture II: Comparison of Schwartz Value Survey Data against
Hofstede, GLOBE, and Minkov as Predictors of Civilizational Affiliation...........................................11
Theme 4: Corporate Governance.........................................................................................................12
Aguilera & Jackson (2003), The Cross-National Diversity of Corporate Governance: Dimensions and
Determinants....................................................................................................................................12
Haxhi & Aguilera (2017), An Institutional Configurational Approach to Cross-National Diversity in
Corporate Governance.....................................................................................................................13
Subramanian (2015), Corporate Governance 2.0.............................................................................15
Oliver (1991), Strategic Responses to Institutional Processes..........................................................16
1
,Theme 1: introduction to IBC
Buckley & Casson (1976), the future of the multinational enterprise
Currently there is no established theory for MNEs. The orthodox theory key assumption is
about perfect competition and profit-maximisation. This new theory is based on three
postulates
1. Firms maximise profit in a world of imperfect markets
2. When markets in intermediate products are imperfect, there is an incentive to bypass
them by creating internal markets
3. Internalisation of markets across national boundaries generates MNEs
Four main factors by deciding to internalise or not
1. Industry-specific factors main focus of this article
2. Region-specific factors
3. Nation-specific factors
4. Firm-specific factors
The theory predicts that the more research-intensive firms will exhibit higher rates of growth
and profitability, and will be more multinational than the average
A market in an intermediate good will be internalised if and only if the benefits outweigh the
cost
An MNE is created whenever markets are internalised across national boundaries
Five benefits from internalizing the market
1. Creation of internal futures markets
2. Imposition of a discriminatory pricing system
3. Avoidance of the costs of bilateral bargaining
4. Elimination of buyer uncertainty
5. Ability to minimise the impact of government interventions through transfer pricing
Types of costs
o Resource cost of fragmentation of the market
o Additional communication cost more distance, means more costs
o Cost of political discrimination against foreign-owned firms
o Administrative cost of the internal market
R&D risks
o Results obtained are useless or be trivial
o Market has changed since R&D process was started
o Final product may be copied or imitated
Prior to the Second World War multinationalism was a by-product of the internalisation of
intermediate-product markets in multistage production processes. Post-war it is a by-product
of the internalisation of markets in knowledge
Casadesus Masanell et al. (2011), how to redesign a winning
business model
Most companies don’t know exactly how to create the best business model
The problem is the fact that they are looking at their business models in isolation
Good business models create virtuous cycles that, over time, result in competitive advantage
Smart companies know how to strengthen their virtuous cycles, weaken those of rivals, and
even use the cycle to turn competitors into complementary players by turning competitors’
strengths into weaknesses
2
, Business Model consists of a set of managerial choices and the consequences of those
choices, which influence the company’s logic of value creation and value capture
Two types of consequences
1. Flexible
2. Rigid
Three types of choices
1. Policy choices actions of an organization across all its operations
2. Asset choices tangible resources a company deploys
3. Governance choices how a company arranges decision-making rights over the other
two
Three characteristics of a good business model
1. Align with company goals
2. Self-reinforcing internal consistency, choices should complement each other
3. Robust sustain effectiveness over time by fending off four threats
o Imitation
o Holdup
o Slack
o Substitution
The most powerful and neglected aspect of business models is the fact that it should
generate virtuous cycles, or feedback loops, that are self-reinforcing
Leaders gather accumulated assets by making smart choices (consequence of business model
choices). The consequences enable further choices, and so on. This process generates
virtuous cycles that continuously strengthen the business model, creating a dynamic that’s
similar to that of network effects. As the cycles spin, stocks of the company’s key assets (or
resources) grow, enhancing the enterprise’s competitive advantage. Smart companies design
business models to trigger virtuous cycles that, over time, expand both value creation and
capture
They usually reach a limit and trigger counterbalancing cycles, or they slow down because of
their interactions with other business models. In fact, when interrupted, the synergies work
in the opposite direction and erode competitive advantage
To compete with rivals that have similar business models, companies must quickly build rigid
consequences so that they can create and capture more value than rivals do
Companies can compete through business models in three ways
1. Strengthen their own virtuous circles
2. Weaken competitors cycles
3. Turn competitors into complements
Business models vs. strategy vs. tactics
o Business models refer to the logic of the company
o Strategy is the plan how to create competitive advantage
o Tactics are the choices one make when performing the strategy
Dunning (1980), toward an eclectic theory of international
production: some empirical tests
Eclectic paradigm OLI-framework, Ownership, Location and Internalization
The more ownership-specific advantages possessed by an enterprise the greater the
inducement to internalize them
Many of today’s ownership advantages = reflection of yesterday’s location advantages of
countries
3
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